HORVATH, Gunter - Countering Guerrilla Tactics

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Chapter 2, §2.01: Countering Guerrilla Tactics at the Outset,
Author Throughout and at the Conclusion of the Arbitral Proceedings
Günther J. Horvath Günther J. Horvath; Stephan Wilske; Niamh Leinwather
Niamh Leinwather
Stephan Wilske §2.01 Countering Guerrilla Tactics at the Outset, Throughout and at the
Conclusion of the Arbitral Proceedings
Publication Günther J. Horvath, Stephan Wilske & Niamh Leinwather
Guerrilla Tactics in International [A] The Perspective of Counsel
Arbitration
[1] Introduction
In the current arbitration climate, counsel taking on any form of international arbitration must be aware
Biblographic reference of the increasing tendencies of parties and opposing counsel to exert and deploy guerrilla tactics in
Günther J. Horvath, Stephan order to achieve their goals. It is in the interest of the perspective client for counsel to be well informed
Wilske, et al., 'Chapter 2, §2.01: of this risk or to at least be in a position to recognize the most subtle forms of so-called rough riding.
Countering Guerrilla Tactics at (1)
the Outset, Throughout and at the It is thus beneficial for counsel to prepare itself for arbitration proceedings in such a manner as to
Conclusion of the Arbitral impede, neutralize or counter the potential application of guerrilla tactics by opposing counsel.
Proceedings', in Günther J. Whether a party or its counsel intends to engage in guerrilla tactics is of course difficult to predict but
Horvath and Stephan Wilske preparing for the worst-case scenario is an absolute must. The earlier potential guerrilla behaviour is
(eds), Guerrilla Tactics in detected, the better counsel can react and the less impact such tactics will have on the ultimate
International Arbitration, outcome of the case. The practical question is how do counsel best go about this? What options are
International Arbitration Law P33 available? At the very least, counsel who do not want to deal with arbitrations involving guerrilla tactics
Library, Volume 28 (© Kluwer should be able to realize when to – following the advice of former US President Harry S. Truman – get
Law International; Kluwer Law out of the kitchen if one cannot stand the heat.
International 2013) pp. 33 - 54
Guerrilla tactics can rear their ugly head at any stage of the proceedings. The appropriate reaction of
the affected counsel depends on a number of factors: Whether a party kick starts the arbitration with
such tactics or slyly introduces them at the eleventh hour, whether the form of tactics invoked constitute
ethically borderline conduct that might still be technically legal (2) or cause substantive prejudice and
amount to criminal conduct.
Despite the frustration guerrilla tactics may cause, affected counsel should stay calm, cool and
collected when considering how best to respond to such unethical behaviour. While it may be tempting
to reply in kind, counsel should adapt their approach depending on the impact and severity of the
behaviour in question while retaining the moral high ground. In doing so, counsel should always bear in
mind their relevant code of ethics to ensure they will not be penalized for reacting in an unsuitable
manner.
In minor cases of rough riding it may be most effective for counsel to simply highlight opposing
counsel's misconduct at the most appropriate opportunity, thereby influencing the decision-making of
the arbitrators on at least an emotional level. This would ideally and ultimately result in negative
inferences being drawn by the arbitral tribunal. While subtle and succinct reactions to misconduct may
boost a counsel's credibility, alerting the tribunal without proper evidence may have a negative effect
on counsel's case. (3) Unfortunately, in investment arbitration counsel who represent an investor
against an autocratic or even rogue host state are rarely in a position to submit sufficient evidence
(which does not endanger counsels' own sources of evidence). In such situations, however, it is often
helpful to at least alert the arbitral tribunal as to what is going on behind the scenes. Where opposing
counsel engages in borderline criminal misconduct, counsel may have to undertake more rigorous
measures to trigger action by the arbitral tribunal.
The following sections will deal in more detail with various countermeasures that counsel could employ
at the outset, during, or at the conclusion of the arbitral proceedings.
[2] At the Outset of the Arbitral Proceedings
Under the motto ‘prevention is better than cure’, counsel should be aware that in the course of the
P34 preparation for an arbitral proceeding, the possibilities for preventing unethical behaviour are manifold
(4) and should be maximized in order to ensure that guerrilla tactics do not exert any influence on the
substantive aspects of the case.
[a] Drafting Arbitration Clauses
Arbitration clauses, often also referred to as ‘midnight clauses', tend in practice to be granted minimal
attention during contract negotiations as they are often inserted at midnight after a long day of contract
negotiations. Contract drafters are generally more concerned with agreement on substantive
provisions rather than on securing a proper dispute resolution mechanism. It is, however, advisable for
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parties and their counsel to invest the requisite time and energy into the choice of an arbitration
clause. Most importantly, the potential needs of the parties in the event of a dispute should be carefully
considered.
Ambiguous and imprecise arbitration clauses could provide arbitration guerrillas with bait to
misinterpret clauses to their own advantage, thereby abusing the original will of the parties. (5) By
choosing, for instance, the recommended arbitration clause of a renowned institution such as the
International Court of Arbitration (ICC),Vienna International Arbitral Centre (VIAC), German Institution
of Arbitration (Deutsche Institution für Schiedsgerichtsbarkeit e.V., (DIS), London Court of International
Arbitration (LCIA), etc., parties and their counsel can avoid situations for arbitration guerrillas to
exploit already at the very early stages of the dispute.
The importance of the arbitration clause is also emphasized by the fact that it provides the primary
basis of interpretation of the rights vested in the tribunal. While arbitration guerrillas certainly cannot be
fully hindered simply by contractual language, a cautious drafter can arm the arbitral tribunal with the
necessary tools and weapons to sanction procedural manoeuvres intended to obstruct or derail the
proceedings or, at least, force the arbitration guerrilla to pay a price for such behaviour. On the one
hand, supplementary international commercial arbitration clauses can provide for such sanctions. (6)
P35 On the other hand, cost allocation provisions in numerous institutional arbitration rules already provide
arbitral tribunals power to sanction arbitration guerrilla tactics with cost consequences. (7)
By taking the requisite time to ensure that the arbitration clause will properly serve the purposes
intended, counsel can also ensure that guerrilla tactics do not begin at such an early stage.
[b] Code of Ethics/Code of Conduct in the First Procedural Order
An effective manner for counsel to frustrate anticipated tactics or at least mitigate their effect before
an arbitration gets up and running is to request that the parties and the arbitral tribunal agree on a
code of conduct for the proceedings. While excessive negotiations between parties may provoke
dilatory tactics, agreement between the parties as to acceptable and unacceptable behaviour at the
outset of an arbitration may serve to impede guerrilla tactics at an early stage. At the very least, it
would help the arbitral tribunal enormously if the parties and the arbitral tribunal had agreed at the
outset of the arbitration on what is acceptable or not and – maybe even more important – how to deal
with non-compliance with such self-imposed code of ethics.
Counsel could – with the consent of the arbitral tribunal – propose that both parties each draw up a
checklist enumerating suggestions and proposals as to the duties and obligations of the parties
throughout the proceedings. These lists would subsequently be submitted to the arbitral tribunal. The
arbitral tribunal would review these lists and incorporate agreed items into the first procedural order. In
the event of conflicting positions, the arbitral tribunal would have the option of incorporating one or the
other of the conflicting provisions into the procedural order.
Admittedly, it is not standard practice rather the exception for parties to arbitral proceedings to agree
on a code of conduct for the proceedings. However, this may indeed change in the long run once a
generally accepted code of ethics for international arbitration exists. Such code of ethics may be
sector specific, (8) or it may emanate from individual international arbitration associations such as
P36 International Council for Commercial Arbitration (ICCA) (9) or lawyers' associations such as the
International Bar Association (IBA). (10) In fact, the IBA Council at its session of 25 May 2013 has
approved the IBA Guidelines on Party Representation in International Arbitration. (11) Such
regulatory framework relating to ethics may also stem from individual initiatives by law firms active in
international arbitration and develop into ‘standard conduct’ on the level of national institutions and
organizations. (12)
Certainly, the best solution would be to incorporate an enforceable ethical code of conduct into the
rules of all major arbitral institutions. (13)
As a result, the parties would be – at least to a certain extent – bound to some sort of ethical code. In
the sense of equality of arms, both parties would have disclosed what they deem to be appropriate
and inappropriate tactics. As such, any potential guerrilla tactics would be revealed at the outset of the
proceedings by establishing what tactics the parties deem permissible even with an ethical code in
place. (14)
What suggestions or proposals as to the duties and obligations of the parties throughout the
proceedings should a counsel make if granted the opportunity by the arbitral tribunal? Experience has
shown that it would be prudent – as a precautionary measure – to address, inter alia, the following
issues: adherence to the procedural timetable, the acceptable advocacy style, admissibility and extent
of discovery and treatment of witnesses.
[i] Adherence to the Procedural Timetable
Arbitration guerrillas who at some point during the arbitration realize that they are going to lose, often
P37 turn to delay and obstruction tactics. Indeed, as Edna Sussman's survey on guerrilla tactics in
international arbitration evidences instances of counsel ‘advancing client or personal health concerns
althougth they were in perfect health, or of counsel failing to truthfully represent the client's availability
for hearing appearances', are a popular tool of arbitration guerrillas. (15) It is at least these authors'
personal experience that experienced arbitrators are rather lenient in the negotiation of the procedural
timetable but turn increasingly strict when it comes to enforcement of its schedule. It seems to be an
emerging standard that deadlines once agreed between the parties and the arbitral tribunal and
incorporated in a procedural timetable may only be extended when an unforeseeable event prevents a
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party from meeting them. Certainly, ‘occasional coughing and sneezing’ (16) during hearings should
not suffice to suspend a long-scheduled arbitral hearing. Also, a party may be expected to have at
least its witnesses (who are also its employees) under control to the extent that such witnesses will not
decide at the last minute to go on vacation during the period foreseen for the oral hearing. It may be
particularly helpful to clearly state at the very beginning that the deadlines for the submission of legal
briefs have been decided in consideration of the usual impediments (such as seasonal sicknesses
and vacations of lawyers, party representatives etc.).
[ii] Style of Advocacy
The inherent nature of international arbitration means that – depending on their common law or civil
law jurisdiction – counsel are spoilt for choice as to what style of advocacy they choose to employ. The
discretion and leeway from ‘Mr Nice Guy’ to unethical borderline behaviour is quite broad.
It may therefore be recommendable for counsel at the outset of the proceedings to clarify with the
arbitral tribunal the style of advocacy that should be employed by them. The purpose of the imposition
of such guidelines is to avoid a situation where counsel is forced to engage in conduct that may be
unethical in his/her jurisdiction or suffer the consequences of having his/her hands tied in the
arbitration proceeding. (17)
For instance, the way counsel treat witnesses often very much depends on the counsel's legal
tradition. Common law countries provide for cross-examination as a matter of course, whereas civil
law countries grant control to arbitrators on the basis of a rather inquisitorial procedural background.
(18) Dependent on the cultural and legal background of counsel, it is in their interest to agree in
advance on how to approach witnesses. This will not only secure fast and efficient proceedings but
also provide for a pleasant atmosphere between the parties. Clarification on the restrictions and
P38 requirements of witness contact prior to their testimony at the oral hearing – for instance with respect
to assistance in drafting written witness statements (19) – allows parties to prepare witnesses
accordingly without jeopardizing the credibility of the witness. (20)
To avoid any misunderstandings: It is not these authors' position that any particular style of advocacy
is per se good or bad. What is bad is an abuse of any tool offered by a certain legal culture.
Unfortunately, sometimes common law practitioners cannot resist using a tool from a common law
country such as cross-examination or document production without the legal restrictions of this tool in
its home jurisdiction, thereby trying to ‘play tennis without a net’. (21) Also, it is not unusual for
arbitration practitioners from civil law countries to abuse a rather sophisticated and regulated tool
such as cross-examination when using it beyond their home jurisdiction in the mistaken belief that
cross-examination allows the cross-examiner to intimidate and harass a witness at will.
[iii] Witnesses and Their Treatment
In this same context, a major issue that should be on every counsel's checklist is the treatment of
witnesses. Witnesses are material to the outcome of any case. Accordingly, a common tactic of
guerrilla-influenced opposing counsel is to target the opposing parties' witnesses. Tactics can range
from making witnesses that have a crucial influence on the outcome of a case conveniently unavailable
at the last minute, to witness intimidation, witness tampering or lack of respect or courtesy or even
abusive behaviour toward witnesses in cross-examination.
Counsel may request the arbitral tribunal to issue a recommendation or even an order on how to treat
witnesses and on related matters such as witness accessibility, communication and contact with
witnesses. (22)
With respect to witnesses who cannot or will not appear, Article 4(9) IBA Rules on the Taking of
Evidence 2010 provides a remedy of last resort: counsel can request the arbitral tribunal to force
recalcitrant witnesses to appear – if necessary with the assistance of national courts. However,
undertaking this remedy at the very outset will most likely result in unnecessary hostility between both
P39 the witnesses and the parties and their counsel. (23) It should also be borne in mind that written
witness statements are often disregarded if the witness is absent without good reason. (24) At the
same time, counsel should be extra cautious not to create an incentive for witnesses who submitted a
witness statement which might be detrimental to the opponent's position to suddenly not appear at the
hearing. Indeed, it is these authors' unfortunate experience that in certain cases with high stakes and
influential parties it is not unheard of that parties or parties' counsel try to pressure witnesses with
potentially damaging testimony not to appear at evidentiary hearings. (25) Quite naturally, the question
arises what else counsel can do in such a situation or what can counsel do beforehand to avoid this
very situation?
While such conduct can never be completely prevented, it is important to draw the arbitral tribunal's
attention to what is going on behind the scenes of the arbitration. In order to preserve the civility of
arbitral proceedings, an arbitral tribunal may never turn a blind eye to alleged misconduct but has to
take notice of any such allegations and inquire with the alleged malefactor about what is going on. (26)
In ICSID Case Caratube International Oil Company LLP v. Kazakhstan, (27) the arbitral tribunal
issued a procedural order on 19 October 2010 reminding Kazakhstan that states are under an
obligation not to intimidate, harass or physically harm participants in ICSID proceedings. (28) In the
case of Adem Dogan v. Turkmenistan, (29) allegations of similar witness intimidation by respondent
were brought to the attention of the arbitral tribunal. The allegation was that Turkmenistan pressured a
potential witness to sign a backdated document. In a procedural order dated 4 March 2011, the
arbitral tribunal took the view that it ‘has an inherent power to preserve the integrity of its own process'
and reminded the parties to ‘conduct the procedure in good faith, and to avoid taking any actions that
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would unnecessarily aggravate the dispute or be perceived as causing harassment of the other party’.
(30) It turned out that under the given circumstances this reminder was successful in putting a stop to
P40 further misconduct. In particular, no such backdated document was submitted – which would not have
been credible anyway once the arbitral tribunal became aware of what was going on behind the
scenes.
[iv] Discovery and the Admissibility of Evidence
The issue of discovery and the admissibility of evidence can open up an unendless number of
possibilities for destructive counsel to revel in guerrilla antics. This usually materializes in such a
manner that a party simply refuses to comply with an order for document production, arguing that the
documents no longer exist or counsel drafts burdensome document production requests that clearly
cannot be met – the infamous fishing expeditions – or counsel attacks the document production
requests of the opposing party. This can ultimately result in the proceedings being considerably
delayed.
Such shenanigans – in particular the disappearance of documents or dubious argument that the
documents no longer exist – can to some extent be limited or restrained by early notification to
opposing counsel of upcoming document production requests including a precise, detailed list of the
certain types of documents (including all relevant e-documents). Upon early transmission of this
document request list, counsel can request the party directly to refrain from destroying the documents.
Depending on the party involved and the severity and extent of the guerrilla behaviour, it may be a
wiser and safer option to file a request for interim measures of protection with the arbitral tribunal,
whereby the arbitral tribunal would subsequently order the relevant party to preserve the documents.
An order from the arbitral tribunal is more likely to be followed by a party than a mere direct request
from one party to another. If opposing counsel persists in not adhering to the arbitral tribunal's request,
counsel would be well advised to request the arbitral tribunal to draw adverse inferences. Pursuant to
Article 9(5) of the IBA Rules, an arbitral tribunal may infer that such documents would be adverse to
the interests of that party. The blatant ungrounded refusal to produce documents could be an
indication that the requested documents in fact support counsel's case and/or highlight the
inconsistencies in opposing counsel's own case.
In emergency cases where the arbitral tribunal has not yet been constituted, counsel should consider
filing a request with the national court for relief. In this case, counsel should be aware that most of the
major institutional rules provide that a party may apply to any state court for interim and conservatory
measures before the arbitral tribunal has been constituted and in appropriate circumstances
thereafter. (31)
In undertaking any of the above measures counsel should, however, also be prepared to ensure
preservation of its party's documents in return. (32)
P41 As regards document requests in general: How does counsel go about counteracting guerrillas who
are clearly undertaking a fishing expedition in order to disrupt the proceedings? Or how does counsel
deal with the unjustified allegation by the guerrilla that its document request is too broad when this is
clearly not the case and simply a dilatory tactic? Unfortunately, there is not much counsel can do
except to argue along the lines of a generally recognized standard such as the IBA Rules. A request to
produce should follow Article 3 of the IBA Rules as closely as possible. Counsel should also argue that
this standard applies when the arbitral tribunal needs to decide on the arbitration guerrilla's request to
produce. In real life, the arbitration guerrilla asks for many more documents than can be produced to
its opponent – for reasons which are not always very convincingly presented. What counsel can do, is
nail down the arbitration guerrilla on the alleged non-existence of certain requested documents and
test the truthfulness of this allegation either in cross-examination or on the basis of other existing
evidence (for instance a recent reference to the allegedly missing documents in other documents or by
testimony of another witness). Another possibility is to lure the arbitration guerrilla into a factual
minefield from which escape is only possible with the use of – allegedly non-existing – documents.
[v] Challenge of Arbitrator
Excessive use of arbitrator challenges as a form of guerrilla tactic has become quite widespread
amongst arbitration counsel. (33) In general, the right to challenge is time limited, i.e., it has to be
raised promptly and as soon as the circumstances for the grounds for the challenge have become
known to the parties. Parties who do not do so within the foreseen time limit risk a waiver of rights.
(34) Opposing counsel should be aware of such deadlines in order to nip such procedural antics in the
bud.
There is very little counsel can do to prevent opposing counsel from filing, for example, a fourteenth
challenge against an arbitrator (or against the whole arbitral tribunal) after thirteen unsuccessful
challenges except to hope that in the meantime the arbitrators must be (somewhat) biased against the
challenging party. (35) One can only recommend counsel to be extra cautious in the appointment and
disclosure process since any inadvertent non-disclosure of otherwise harmless facts might provide
ammunition for the arbitration guerrillas. Thus, when dealing with arbitration guerrillas undisclosed
circumstances or contexts listed in the orange list – or even green list – of the IBA Guidelines on
Conflicts of Interest in International Arbitration may serve as a basis for the guerrilla to make
challenges.
P42 [3] Throughout the Proceedings
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Counsel have the option of requesting the arbitral tribunal to undertake some action – sanctions or
otherwise – against parties participating in guerrilla tactics. However when counsel finds itself
between a rock and a hard place, it may also turn to national courts for a remedy. Which is more
effective and the hurdles that may be encountered by counsel when doing so will be discussed in more
detail below.
[a] Request to the Arbitral Tribunal for the Implementation of Sanctions
When faced with severe guerrilla tactics, counsel should take the initiative and bring unethical
behaviour to the attention of the arbitral tribunal. Often an arbitration guerrilla's strategy can be
destroyed if the arbitral tribunal is alerted early on that the arbitration guerrilla is currently trying to forge
documents, pressure witnesses to backdate documents, make witnesses disappear or simply
postpone a hearing (the grounds being a last minute announcement that an important party
representative is getting married for the sixth time, or that the foreign minister of the respondent host
state suddenly has to participate in a state visit to the neighbouring country to inaugurate a
kindergarten named after a local dictator). Highlighting the continued sequence of guerrilla tactics
implemented by opposing counsel gives the arbitral tribunal the opportunity to make negative
inferences. However, counsel can never be sure whether the arbitral tribunal will of its own accord
draw negative or adverse inferences from such behaviour. Thus, it is wise for counsel to explicitly
request the arbitral tribunal to do so.
Another option available to counsel would be to request that the arbitral tribunal implement some form
of interim measures, for instance security for costs. Security for costs may be appropriate in a
situation where the suspected arbitration guerrilla requests a last minute expensive procedural
measure such as the postponement of a week-long hearing or the change of location of the hearing
due to the arbitration guerrilla's key witness alleged inability to travel. Even if such cost-triggering
requests may not be illegitimate, it is only fair to allocate the costs to the one who is causing – with or
without fault – such extra costs. By granting security for costs or by a simple decision by the arbitral
tribunal that a cost-intensive request will be granted but at the expense of the requesting party, an
arbitral tribunal can assure, on the one hand, arbitration guerrilla tactics come with a price tag and on
the other hand, the party suffering extra costs caused by the other party can at least retrieve them.
Unfortunately, the issuance of an order for security for costs is bound to the establishment of
exceptional circumstances. (36)
P43 In extreme cases, a party's misconduct may upon request of opposing counsel even be sanctioned by
the arbitral tribunal by way of dismissing the entire case with prejudice. (37)
Generally, however, counsel would need to consider other options such as requesting that interim
measures be implemented throughout the arbitration proceedings, as outlined above.
A rather novel sanction, which has recently gained significance is the question whether the arbitral
tribunal has the competence to exclude misbehaving counsel. Whether an arbitral tribunal has the
competence ‘to disallow the appearance of counsel’ (38) is not a very recent question although it has
gained recent attention in light of two decisions with different outcomes in the ICSID cases Hrvatska
Elektroprivreda, d.d. v. Republic of Slovenia (39) and Rompetrol Group N.V. v. Romania. (40) It
seems that the main issue relating to the disqualification of counsel appearing before an arbitral
tribunal is not so much whether this is possible but rather whether this competence lies with the arbitral
tribunal itself, the administering institution or state courts. (41)
The ICSID tribunal in Hrvatska Elektroprivreda, d.d. v. Republic of Slovenia is believed to be the first
international arbitral tribunal that has asserted the authority to bar party-selected counsel from
appearing before it based solely on supranational standards of conduct for counsel. (42) The
circumstances of this case did not concern guerrilla tactics but rather dealt with disclosure obligations
and a possible impact of a certain counsel's appearance on the composition of the arbitral tribunal.
The Hrvatska tribunal – after a careful review of legal authorities – found that there is ‘an inherent
power [of an arbitral tribunal] to take measures to preserve the integrity of its proceedings'. (43)
In the ICSID case Rompetrol Group N.V. v. Romania, which also did not concern guerrilla tactics, the
arbitral tribunal considered that it was not ‘called upon to decide definitively what the limits are of any
power an ICSID tribunal might possess to exclude counsel, beyond its finding … that any such power
P44 as may exist would be one to be exercised only rarely, and in compelling circumstances'. (44) The
Rompetrol tribunal pointed out that its analysis should not be seen as second-guessing the
assessment of the Hrvatska tribunal but rather suggested that from its perspective, ‘the Hrvatska
Decision might better be seen as an ad hoc sanction for the failure to make proper disclosure in good
time than as a holding of more general scope’. (45)
It seems obvious to these authors that where an arbitral tribunal has sufficient grounds to believe that a
counsel in an international arbitration (46) is engaging in severely abusive or even illegal conduct, the
right to exclude such counsel does not depend on the idiosyncrasies of national law. (47)
[b] Engaging State Law Authorities: Boon or Bane?
[i] Interim Relief through National Courts
Interim measures issued by arbitral tribunals will impose a major deterrent against guerrilla tactics. In
general arbitral tribunals lack the state courts' power to enforce their orders over the parties or their
property although there have been rare cases where the parties have put in advance certain amounts
at the disposal of the tribunal. (48) Usually however the fact that arbitral tribunals cannot enforce their
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interim measures is insignificant. The lack of coercive powers by an arbitral tribunal is compensated
by its persuasive powers and ability to draw negative inferences from non-compliance with orders
and/or take a party's actions into consideration in the costs award.
What options are available to counsel when an arbitral tribunal does in fact order interim measures but
opposing counsel refuses to follow them? The only real alternative is to turn to the relevant national
court at the seat of the arbitral proceedings. If national courts also cannot enforce the interim
measures, they run the risk of becoming a paper tiger. Unfortunately, national laws rarely deal with
enforcement of interim measures, rather focusing mainly on the enforcement of final awards. The
P45 national laws and regulations on final awards may seldom be applied by analogy to interim measures.
However, some modern recent arbitration laws contain special provisional regulating the enforcement
of provisions measures ordered by arbitral tribunals. (49)
The possibility of enforcement of interim measures through national courts should be considered by
counsel when choosing its seat of arbitration, i.e., when drafting the arbitration clause. Indeed, as
many jurisdictions are competing for arbitration business (50) one factor to consider in choosing an
arbitral seat could be the readiness of national courts to support an arbitral tribunal in fighting
arbitration guerrillas.
[ii] Notification to Bar Associations (51)
Various codes of conduct or guidelines for ethical behaviour are provided for in individual
jurisdictions. In addition, such guidelines exist on a European and international level. Counsel will
generally be bound by their national code with additional model rules or international guidelines
serving as recommendations and applying only where they have been specifically agreed upon. Many
of these rules and guidelines may be directly applicable to certain forms of guerrilla tactics employed
by counsel in international arbitration. These regulations may alleviate the problem where guerrilla
tactics trigger a breach of professional or ethical obligations by counsel but do not trigger a breach of
violation or anything more. (52)
If an attorney were to engage in unethical guerrilla tactics, opposing counsel is free or, in some
jurisdictions, even obligated to report this attorney to the applicable bar association. Domestic
regulations governing attorneys' conduct may in some jurisdictions apply in international arbitration;
the classic example is found in the United States where attorneys licensed in one of the US states are
bound by their applicable bar rules irrespective of whether they appear before a court or arbitral
tribunal in the jurisdiction in which they are licensed or elsewhere. (53) Thus, counsel's behaviour
which violates the applicable state's professional rules while representing a client abroad may
nevertheless give rise to disciplinary proceedings at home. Other jurisdictions are less clear cut.
Would a Swedish attorney report opposing counsel qualified in Japan to the Japanese Bar
Association when the seat of arbitration is Singapore? Even if an attorney exposed to such guerrilla
warfare did in fact decide to report his/her colleague, it very much depends on the individual
P46 jurisdiction whether the home bar association would in fact give consideration to an alleged ethical
violation that has arisen in an international arbitration (probably even in a foreign jurisdiction).
Regardless of whether reporting is voluntary or mandatory, counsel must be mindful of their duty of
confidentiality when reporting as detailed facts and evidence may be confidential.
Reporting the misconduct of attorneys to their home bar association should for actions in international
arbitration be done only after careful consideration and analysis of the applicable rules. Premature or
unnecessary notification could, in some instances, be considered a guerrilla tactic in itself.
Furthermore, such notification during the course of the proceedings is likely to create a tense
atmosphere in the pending proceedings which could, in itself, serve to delay or even derail
proceedings.
[iii] Notification to Arbitral Institution
Where an arbitral institution has incorporated an enforceable ethical code of conduct into its rules,
such arbitral institution would certainly be interested in receiving feedback as to whether participants
in arbitrations under this institution's rules comply with such code of conduct. It certainly would not be
too farfetched to create an obligation for counsel participating in arbitration administered by an
institution to comply with such arbitration institution's code of conduct and to accept sanctions for non-
compliance. Such sanctions for non-compliance would also reflect the expectations of ‘users' of
arbitration services – as they are so often referred to. (54)
One such sanction could be that counsel is barred for a certain period of time from participating in
arbitrations administered by this arbitral institution – a sanction which is not unusual for US
practitioners. (55) Such sanction – which could be accompanied by monetary sanctions – could be
extremely efficient. Counsel would certainly try to avoid a situation in which he or she would be
required to tell clients that he/she cannot personally represent them in ICSID or ICC arbitration
because of a current ban due to misconduct in previous proceedings. A milder sanction might be a
reprimand by the arbitral institution which, for a certain period of time, would be notified to other
arbitral tribunals sitting under the arbitration rules of this arbitral institution before which the arbitration
guerrilla makes an appearance.
[iv] Filing Criminal Action against Arbitration Guerrillas
Parties and – of course also – their counsel may be subject to criminal prosecution for fraudulent
P47 activities and statements made under the law of the place of arbitration. In extreme cases, counsel
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should consider filing criminal complaints against opposing counsel who indulges in guerrilla tactics
that could rise to the level of a crime. (56)
[4] Conclusion of the Arbitral Proceedings
As outlined above, the best approach to nip any form of tactical torpedoing in the bud is to, if possible,
do it at the outset of the proceedings or during the proceedings. However, if this is not an option,
counsel can wait until the proceedings are closed or even after the award has been rendered to take
appropriate action. In this context, it is important to know that arbitral awards tainted through corruption
and/or fraud or other extreme tactics are most likely to be challenged and ultimately vacated by state
courts.
[a] Submission on Costs
Counsel should consider the ‘antics' of opposing counsel when filing his/her submission on costs. In
these times of ongoing global financial and economic crisis, the threat of fully or even partially bearing
the – in most cases considerable – legal fees of the opposing party may act as a deterrent against
guerrilla tactics during the proceedings and as a sanction for such tactics after the proceedings. It is
meanwhile accepted in international arbitration that the ‘allocation of costs can provide a useful tool to
P48 encourage efficient behaviour and discourage unreasonable behaviour’. (57) Indeed, under most
institutional arbitration rules or arbitration statutes, an arbitral tribunal has a certain discretion to award
costs, and in exercising such discretion, the arbitral tribunal may and even should take into account
any unreasonable behaviour by a party. (58) Such cost sanctions do not need to be limited to parties
but – under particular circumstances – should arguably be allowed also to be directed against
counsel.
[i] Cost Sanctions against Parties
Increasingly, cost-conscious arbitration users are demanding that awards on costs should take much
more account of the conduct of the parties and their attorneys. (59)
Moreover, US case law is increasingly encouraging the use of cost awards to police arbitral
proceedings. (60) As Lisa Salkovitz Kohn describes it, cost sanctions may serve as a remedy to
‘repair arbitration's broken promises'. (61) Cost sanctions may also come from courts once the
arbitral award is issued and the losing party – probably in direct continuation of its previous behaviour
– files frivolous court actions to set aside the arbitral award or resist enforcement.
Insofar as arbitral tribunals do not order arbitration guerrillas to pay the price for their behaviour, or if
such arbitration guerrillas simply continue their battle in state courts, (62) one can only encourage
state courts to impose costs sanctions on such parties.
[ii] Cost Sanctions against Arbitration Guerrillas
A more ingenious remedy against counsel who encourages or participates in guerrilla tactics is to hit
P49 where it hurts most, i.e., to impose sanctions on counsel himself/ herself. Again, the role model might
be US courts, which do not shy away from fining lawyers or law firms which do not play by the rules.
(63) In a decision of 9 March 2010 by the United States District Court for the Southern District of New
York in Prospect Capital Corporation et. al. v. Michael Enmon, (64) the court fined a Houston-based
law firm, Arnold & Itkin LLP, for ‘persistent, frivolous litigation filed for the purpose of frustrating
arbitration’ and for misrepresentations made to the court. (65) The firm was sanctioned in the amount
of US Dollars (USD) 354,559.00 plus post-judgment interests. (66) The court well recognized that:
On the one hand, a court should discipline those who harass their opponents and waste judicial
resources by abusing the legal process. On the other hand, in our adversarial system, we expect a
litigant and his or her attorney to pursue a claim zealously within the boundaries of the law and ethical
rules. (67)
It also pointed out – obviously not only to the law firm which was the target of the sanctions – that:
In this age, where law firms have become bottom line oriented, it is important for lawyers to be
reminded that there are certain lines lawyers can not cross in their endeavor to increase the bottom
line, and that their duty of candor towards the Court can not be sacrificed to please a client. (68)
Of course, where an arbitral tribunal assumes such power to impose monetary sanctions upon
counsel, the immediate question is whether counsel of a party is insofar personally bound by
decisions of an arbitral tribunal. However, this question can be answered in the affirmative as counsel
of record is closely involved with the arbitration and is sometimes even addressed by arbitration rules.
(69) At least these authors would consider that it is part of the inherent powers of an arbitral tribunal in
preserving the integrity of its own process (70) to sanction counsel in appropriate circumstances and
that counsel by participating in such arbitration submits to and accepts such inherent powers of the
arbitral tribunal. (71)
P50 [b] Final Decision against Party Using Guerrilla Tactics
As mentioned above, a party's misconduct can be sanctioned by the arbitral tribunal upon request of
opposing counsel to dismiss the entire case with prejudice (72) or by rendering its decision in the
form of a ‘summary judgment’ on the merits against the respondent invoking guerrilla tactics. (73) This
is, however, quite an extreme measure, and the chances that an arbitral tribunal will do so in practice
are probably quite minimal. However, in extreme cases, such as where a rogue party ensures that
none of the opposing party's witnesses reach the hearing room alive, it could be legitimate for an
7
arbitral tribunal to exclude that party from the further proceedings (74) and thereby further developing
the principle of adverse inferences from such behaviour. (75) Fortunately, no precedents for such
extreme situations exist. The claimant in the Libananco case – who perceived itself as the victim of
surveillance by Turkish security forces and of pressure by Turkey on certain witnesses – requested the
arbitral tribunal to exclude the respondent from the rest of the proceedings (76) or even to decide the
P51 case by means of a ‘summary judgment’ on the merits against respondent. The Libananco tribunal
considered the petition for ‘summary judgment’ as being ‘far and away the most difficult, and most
challenging, of the applications which the Tribunal has to determine’, (77) indicating that such a
remedy against arbitration guerrilla methods is not per se out of the question. (78)
The Libananco case even inspired one arbitration practitioner to argue that repeated manipulations of
a party in past arbitral proceedings based on the same or similar facts may justify a future arbitral
tribunal to throw out any future abusive claims on a summary basis. (79)
[c] Challenge of Awards Attained through Guerrilla Tactics
In international arbitration, national courts are often called upon to set aside a rendered award.
Arbitration guerrillas may of course use this practice as an absolute final resort in a desperate attempt
to evade a decision of an arbitral tribunal.
While the New York Convention provides a limited list of grounds on which arbitral awards can be
challenged with respect to their recognition or enforcement, it was left to discussion whether
annulment of arbitral awards is limited to such grounds. (80) Grounds for annulment can be found both
P52 in legislation as well as case law dealing with a broad spectrum of issues, e.g., introduction of new
claims, (81) failure to comply with agreed procedures by the tribunal, (82) public policy (ordre public),
(83) procedural public policy, (84) fraud (perjured testimony or fabricated evidence). (85) A recent
example is the Swiss Federal Supreme Court's decision of 6 October 2009 annulling an ICC award in
the highly publicized case of Thales v. Frontier AG thirteen years after the arbitral tribunal rendered its
award. (86) The Swiss Federal Supreme Court relied on a decision by a French magistrate who found
that one witness had misled the arbitral tribunal and was guilty of procedural fraud. This case is only
one piece of the more complex Taiwanese frigates case involving Thales and Taiwan which began in
1989 when France authorized the export of new warships (Frigates F-3000) to Taiwan. On 29 April
2010, another ICC arbitral tribunal ordered Thales to pay Taiwan USD 830 million for using agents to
secure this contract. (87) The bribery allegations against Thales first surfaced in 1993, after the body
of the Taiwanese officer who had worked on the purchase of naval weapons was found floating off the
coast of Taiwan. (88) Needless to say that if procedural fraud qualifies as sufficient grounds for the
annulment of an arbitral award, (89) the murder of witnesses to prevent them from testifying should
also constitute a very strong argument in annulling an award which was secured by arbitration Taliban
methods. (90)
P53 Similar considerations might have prompted the Ontario Court of Appeal to consider whether alleged
death threats against witnesses could be raised as a defence to enforcement proceedings in Canada
for an arbitral award rendered (by default) in Russia. In a ruling of 7 April 2010, the court reversed a
judgment enforcing two arbitral awards rendered under the auspices of Russia's international
arbitration institution MKAS. The Court of Appeal found that the lower court had erred in refusing to
consider and decide on the issue of death threats allegedly made by the Russian company's chief
executive against the director of the Canadian party. (91)
[5] Conclusion
While counsel can never effectively hinder its opponent from employing guerrilla tactics, there is
meanwhile a range of options and remedies to deal with such tactics at the outset, throughout and at
the conclusion of the arbitral proceedings. Again, it would be illusionary to believe that with any of
these options an unscrupulous guerrilla would be hindered from trying to obstruct or derail the
proceedings. However, if the guerrilla is forced to pay a hefty price for such behaviour – including the
dismissal of its case – this might be an efficient deterrent. What is most important is to create
awareness within the arbitral tribunal, arbitral institutions, bar associations, regulatory authorities and,
if need be, judicial authorities of unacceptable tactics sometimes occurring (increasingly too often)
behind the scenes of international arbitration.
References
1) See Günther J. Horvath, Stephan Wilske, Harry Nettlau & Niamh Leinwather, ‘Categories of
Guerrilla Tactics’, Chapter 1, Section §1.02.
2) See Stephan Wilske, Preventing/Employing ‘Guerrilla Tactics' in Arbitration and Litigation: Are
There Technically Legal ‘Guerrilla-Like’ Practices that May Be Used in Arbitration/Litigation?
(speaker notes), 7 TDM (November 2010).
3) David P. Roney, The Advocate's Response to Guerrilla Tactics in International Arbitration:
Practical Approaches and Guidance on Selected Issues, 7 TDM 1–3 (November 2010).
4) Such possibilities are not restricted to arbitrators, whose discretion to act is not the focus of this
chapter; see Chapter II.1.c and Mallory Silberman, Arbitrator's Deliberations – The Quest for a
Majority Opinion, Global Arb. Rev. (15 Nov. 2010).
8
5) See, e.g., Stephan Wilske & Alex Lo, Austrian Yearbook on International Arbitration 2012
(Klausegger et al. eds., Manz, C.H. Beck, Stämpfli, 3, 13-15) (warning that translation
inconsistencies can provide a recalcitrant respondent with a great opportunity to delay and
possibly even obstruct the arbitral proceedings); see also Stephan Wilske & Claudia Krapfl,
Pathological Designation of Arbitration Institutions: Two Recent Decisions on a Contract
Drafter's Nightmare, 9 Int'l Arb. L. Rev. 80 (June 2006) (‘… and imprecisely or falsely designated
arbitration institution in an arbitration clause might delay and prolong the arbitration proceedings,
because the respondent might initiate a preliminary dispute regarding the validity of the arbitration
clause. The respondent might see the opportunity to delay and possible put an end to the
proceedings by claiming invalidity of the arbitration clause and thereby challenging the jurisdiction
of the arbitral tribunal.’).
6) See, e.g., Stephan Wilske, Stefan Rützel & Todd J. Fox, International Business Transactions:
Standard Forms and Documents, Suppl. 58 (Dennis Campbell & Reinhard Proksch eds.,
January 2013), Clause 10 dealing with ‘Agreed Consequences on Non-Compliance with
Procedural Rules’ (ibid. Chapter 50 B-41 and 42 and commentary in Chapter 50 A-12-13
explaining that ‘[a]lthough arbitral tribunals have the discretion to consider bad or wasteful
behavior of the parties and their counsel during the proceedings and take such behavior into
account, to better assure efficiency the parties can narrow the scope of discretion by specifying
that certain behavior will be sanctioned by cost apportionment.’).
7) See, e.g., Art. 37(5) of the 2012 ICC Arbitration Rules (‘… the arbitral tribunal may take into
account such circumstances as it considers relevant, including the extent to which each party has
conducted the arbitration in an expeditious and cost-effective manner.’); see also Techniques for
Controlling Time and Costs in Arbitration, Report from the ICC Commission on Arbitration, ICC
Publication No. 843 (August 2007), para. 85 (‘The allocation of costs can provide a useful tool to
encourage efficient behaviour and discourage unreasonable behaviour.’); for an example of a
cost sanction in ICC arbitration, see Stephan Wilske, Cost Sanctions in the Event of
Unreasonable Exercise or Abuse of Procedural Rights – A Way to Control Costs in
International Arbitration?!, SchiedsVZ 188 (2006).
8) See, e.g., Carolyn B. Lamm, Chiara Giorgetti & Hansel T. Pham, Yearbook on International
Investment Law and Policy, 275 (Karl P. Sauvant ed., Oxford University Press 2010) concluding
that ‘the growing number of participants in the system, the ensuing conflicts related to counsel's
ethics, the imbalance of differing domestic rules, and the unavailability of general and
comprehensive rules to address ethical conflicts make the issue of the creation of an ICSID Code
of Ethics for Counsel ripe for serious consideration by the ICSID community’ (ibid. 289).
9) See Doak Bishop & Margrete Stevens, International Code of Ethics for Lawyers Practicing
Before International Arbitral Tribunals, presented at the ICCA Conference (26 May 2010),
<http://www.arbitration-
icca.org/media/0/12763302939400/stevens_bishop_draft_code_of_ethics_in_ia.pdf>, 18 Nov.
2010.
10) See, e.g., the IBA Survey asking practitioners whether a standardized approach to ethical issues
is needed and, if so, how it might best be achieved (IBA Arbitration Committee – Counsel Ethics
in International Arbitration Survey, <http://www.surveygizmo.com/s3/331908/IBA-Arbitration-
Committee-Counsel-Ethics-in-International-Arbitration-Survey>, 18 Nov. 2010.
11) Sebastian Perry, IBA approves guidelines on party representation, Global Arbitration Review,
May 29, 2013 quoting James Freeman (Allen & Overy, London) (who suggests that, in due
course, these guidelines ‘may acquire the force of “soft law”, like the IBA guidelines on conflicts of
interest’.).
12) See, e.g., the Debevoise & Plimpton LLP, Protocol to Promote Efficiency in International
Arbitration, <http://www.debevoise.com/files/News/2cd13af2-2530-40de-808a-
a903f5813bad/Presentation/NewsAttachment/79302949-69b6-49eb-9a75-
a9ebf1675572/DebevoiseProtocolToPromoteEfficiencyinInternationalArbitration.pdf>, 7 Aug.
2012; see also Catherine M. Amirfar & Claudio D. Salas, United States – How Summary
Adjudication Can Promote Fairness and Efficiency in International Arbitration, IBA Arb. Newsl.
77-79 (September 2010) (whereby this protocol is not directly aimed at preventing guerrilla tactics
but serves the same purpose).
13) Günther Horvath, How May Commercial Arbitral Tribunals Cope With and Sanction Guerrilla
Tactics of the Parties/Their Counsel? 7 TDM 11, 14 (November 2010).
14) Günther Horvath, Austrian Yearbook on International Arbitration 2011, 304–305 (Klausegger et
al. eds., Manz, C.H. Beck, Stämpfli 2011); Benson Cyrus, Can Professional Ethics Wait? The
Need for Transparency in International Arbitration, 3 Disp. Resol. Int'l 88-94 (IBA 2009).
15) Edna Sussman, All's Fair in Love and War – Or Is It? The Call for Ethical Standards for Counsel
in International Arbitration, 7 TDM 1, 4 (November 2010).
16) Barbara Steindl, Procedural Tactics of the Guerrilla Nature & Suggestions for Counsel How to
Counter & Employ (From the Perspective of Counsel before Commercial Tribunals), 7 TDM 1,
20 (November 2010).
17) Günther Horvath, How May Commercial Arbitral Tribunals Cope With and Sanction Guerrilla
Tactics of the Parties/Their Counsel? 7 TDM 1, 5 (November 2010).
18) Susan L. Karamanian, Overstating the ‘Americanization’ of International Arbitration: Lessons
from ICSID, 19 Ohio St J. on Disp. Res. 11 (2003).
19) Gary B. Born, International Commercial Arbitration, 1828–1830 (Kluwer Law International 2009).
9
20) Irene Welser & Giovanni De Berti, Austrian Yearbook on International Arbitration 2010, 90
(Klausegger et al. eds., Manz, C.H. Beck, Stämpfli 2010).
21) Stephan Wilske, Reflections on the International Practice of Law, Liber Amicorum for the 35th
Anniversary of Bär & Karrer, 257, 259 (N.P. Vogt ed., Helbing & Lichtenhahn 2004); see also
Laurence Shore, Three Evidentiary Problems in International Arbitration: Producing the
Adverse Document, Listening to the Document That Does Not Speak for Itself, and Seeing the
Witness Through Her Witness Statement, SchiedsVZ 76 (2004).
22) See Libananco Holdings Co. Limited v. Turkey, Decision on Preliminary Issues, 23 Jun. 2008, at
paras. 82 et seq.
23) See Barbara Steindl, Procedural Tactics of the Guerrilla Nature & Suggestions for Counsel How
to Counter & Employ (From the Perspective of Counsel before Commercial Tribunals), 7 TDM
5 (November 2010); IBA Rules on the Taking of Evidence at p. 12.
24) See among others IBA Rules on the Taking of Evidence, Arts. 4(7), 4(8) and Gary B. Born,
International Commercial Arbitration, 1843–1846 (Kluwer Law International 2009).
25) See Stephan Wilske & Martin Raible, The Future of Investment Arbitration, 249, 269 (Catherine
A. Rogers & Roger P. Alford eds., Oxford University Press 2009); Stephan Wilske, Austrian
Yearbook on International Arbitration 2011, 315, 323–324 (Klausegger et al. eds., Manz, C.H.
Beck, Stämpfli 2011) both with further references.
26) See Libananco Holdings Co. Limited v. Turkey, ICSID Case No. ARB/06/8 (Decision on
Preliminary Issues, 23 Jun. 2008), para. 74 (‘These are allegations which, supported as they were
(…) by prima facie documentary evidence, the Tribunal was bound to treat with the utmost
seriousness. It called upon Turkey to state without delay whether it acknowledged the authenticity
of the Court orders [relating to interception of the e-mail communication of Libananco's counsel in
this arbitration] produced by Libananco and, if so, on what basis Claimant's counsel had been
included in the request put to the Court by the Public Prosecutor to grant the interception orders.’).
27) Caratube International Oil Company LLP v. Kazakhstan, ICSID Case no. ARB/08/12.
28) See Tom Toulson, Tribunal Affirms Immunity Powers in Kazakh Feud Case, Global Arbitration
Review, 5 Nov. 2010.
29) Adem Dogan v. Turkmenistan, ICSID Case no. ARB/09/9.
30) Adem Dogan v. Turkmenistan, ICSID Case no. ARB/09/9, Procedural Order dated 4 Mar. 2011.
31) Art. 26.3 of the UNCITRAL Rules; Art. 28.2 of the ICC Rules; Art. 25.3 of the LCIA Rules; Art. 26.3
of the Swiss Rules.
32) David P. Roney, The Advocate's Response to Guerrilla Tactics in International Arbitration:
Practical Approaches and Guidance on Selected Issues, ICC Austria Conference (Vienna, 12–
13 Nov. 2010), 7 TDM 3 (November 2010).
33) See, e.g., Karel Daele, Challenge and Disqualification of Arbitrators in International Arbitration,
para. 2-094 (Kluwer Law International 2012).
34) Catherine A. Rogers, The Leading Arbitrator's Guide to International Arbitration, at 643, 644
(2nd ed., Newman et al. eds., Juris Publishing, Inc. 2008).
35) Stephan Wilske, Austrian Yearbook on International Arbitration 2011, 315, 316 (Klausegger et
al. eds., Manz, C.H. Beck, Stämpfli 2011).
36) See Marc D. Veit, Security for Costs in International Arbitration – Some Comments to
Procedural Order No. 14 of 27 November 2002, 23 ASA Bull. 116–118 (2005).
37) Stephan Wilske, Austrian Yearbook on International Arbitration 2011, 315, 326–327
(Klausegger et al. eds., Manz, C.H. Beck, Stämpfli, 2011); Abba Kolo, Witness Intimidation,
Tampering and Other Related Abuses of Process in Investment Arbitration: Possible
Remedies Available to the Arbitral Tribunal, 26 Arb. Int'l 43, 73–79 (2010); see infra Section [4]
[b].
38) Jan Paulsson, Standards of Conduct for Counsel in International Arbitration, 3 Am. Rev. Int'l Arb.
214, 215(1992); Peter C. Thomas, Disqualifying Lawyers In Arbitrations: Do The Arbitrators
Play Any Proper Role? 1 Am. Rev. Int'l Arb.562 (1990).
39) Hrvatska Elektroprivreda, d.d. v. Republic of Slovenia, ICSID Case no. ARB/05/24 (Tribunal's
Ruling regarding the participation of David Mildon QC in further stages of the proceedings, 6 May
2008).
40) Rompetrol Group N.V. v. Romania, ICSID Case no. ARB/06/3 (Decision of the Tribunal on the
participation of a counsel, 14 Jan. 2010).
41) Hans Smit, Delinquent Arbitrators and Arbitration Counsel, 22 Am. Rev. Int'l Arb 43, 46 (2009).
42) David J. Branson, An ICSID Tribunal Applies Supranational Legal Norms to Banish Counsel
from the Proceeding, A Note on Hrvatska Elektroprivreda v. Republic of Slovenia, 25 Arb. Int'l
615 (2009).
43) Hrvatska Elektroprivreda, d.d. v. Republic of Slovenia, ICSID Case no. ARB/05/24 (Tribunal's
Ruling regarding the participation of David Mildon QC in further stages of the proceedings, 6 May
2008), para. 33.
44) Rompetrol Group N.V. v. Romania, ICSID Case no. ARB/06/3 (Decision of the Tribunal on the
Participation of a Counsel, 14 Jan. 2010), para. 25 (see also para. 16: ‘A power on the part of a
judicial tribunal of any kind to exercise a control over the representation of the parties in
proceedings before it is by definition a weighty instrument, the more so if the proposition is that
the control ought to be exercised by excluding or overriding a party's own choice.’).
45) Ibid. at para. 25; see also Elizabeth Whitsitt, ICSID Tribunal Affirms Power to Exclude Counsel,
But Declines to Do So, 6 Inv. Treaty News (February 2010).
10
46) See Jan Paulsson, International Arbitration is Not Arbitration, 1 Stockholm Int'l Arb. Rev.(2008:2)
(‘… arbitration is an alternative to courts, but international arbitration is a monopoly – and that
makes it a different creature.’).
47) Gary B. Born, International Commercial Arbitration, 2323 (Kluwer Law International 2009) (‘A
tribunal should also have the power to ‘disqualify’ counsel for persistent and grave abuses.').
48) See, e.g. in the context of the Algier Accords establishing the Iran-US Claims Tribunal, which can
authorize payment from a bank account at its disposal.
49) Exceptions can be found in section 1041(2) German ZPO, Art. 183 (2) Swiss PIL or section 42(1)
EAA (peremptory order). See also Julian D.M. Lew, Loukas A. Mistelis & Stefan M. Kroell,
Comparative International Commercial Arbitration, 610 et seq. (Kluwer Law International 2003).
50) Stephan Wilske & Todd J. Fox, Austrian Yearbook on International Arbitration 2011, 383–418
(Klausegger et al. eds., Manz, C.H. Beck, Stämpfli 2009).
51) See Hanns-Christian Salger, ‘The Role of Bar Associations’, Chapter 4, Section §4.01.
52) See Richard Kreindler, ‘The Role of State Courts in Assisting Arbitral Tribunals Confronted with
Guerrilla Tactics', Chapter 2, Section §2.05 (highlighting difficulties in national courts assisting
arbitral tribunals confronted with guerrilla tactics).
53) See, e.g., American Bar Association, ABA Model Rules of Professional Responsibility, R.
8.5(a) (providing: ‘A lawyer admitted to practice in this jurisdiction is subject to the disciplinary
authority of this jurisdiction, regardless of where the lawyer's conduct occurs').
54) See Jan Paulsson, Universal Arbitration–What We Gain, What We Lose (The Chartered
Institute of Arbitrators Alexander Lecture, London, November 29, 2012, Arbitration 79 (2013):
185, 193 (‘Arbitrants naturally want to know whether administering institutions have any
meaningful way to hold arbitrators accountable. … What are the sanctions, if any–
disaccreditation, forfeiture of fees, suspension of eligibility?’). Quite obviously, such expectations
relating to sanctions for non-compliance are not limited to arbitrators but also to other participants
in an international arbitration (such as counsel).
55) See Hagit Elul, ‘Experiences from the Common Law System’, Chapter 3, Section §3.02[A].
56) The following examples are taken from US court practice, but their basic message should also
apply for misconduct in international arbitration cases: Mark Fass, Prominent Attorney Charged
With Witness Tampering Faces Heated Cross-Examination, N.Y.L.J., 6 Aug. 2009 (reporting
about the trial in the prosecution of Robert Simels, a prominent Manhattan defence attorney
charged with plotting with a client to threaten and bribe witnesses to prevent them from testifying);
Mark Fass, Accused of Threatening Witnesses, Attorney Takes the Stand to Explain ‘Kill’
Phrasing, N.Y.L.J., 5 Aug. 2009; Mark Fass, N.Y. Defense Attorney's Trial Begins in Witness-
Tampering Case, N.Y.L.J., 28 Jul.2009; Leigh Jones, Sanctions Sustained against Crowell &
Moring Partner, Nat'lL.J., 15Jun. 2009 (‘… the appeals panel found that Ginsberg's conduct was
‘egregious' and included overzealous litigation tactics and factual inaccuracies.’).
57) Techniques for Controlling Time and Costs in Arbitration, Report from the ICC Commission on
Arbitration, ICC Publication No. 843, para. 85 (August 2009). See also Gary B. Born,
International Commercial Arbitration, 2499–2500 (2009) (‘Where one of the parties was
uncooperative or inefficient, it was less likely to recover its costs (or its full costs') with reference to
various ICC Cases, e.g. Final Award in ICC Case No. 4629, XVIII Y.B. Comm. Arb. 11 (1993);
Final Award in ICC Case No. 6527, XVIII Y.B. Comm. Arb. 44, 53 (1993); Final Award in ICC
Case No. 7006, XVIII Y.B. Comm. Arb. 58, 67 (1993); Award in ICC Case No. 8486, XXIVa Y.B.
Comm. Arb. 162, 172 (1999); Final Award in ICC Cases Nos. 6515 and 6516, XXIVa Y.B.
Comm. Arb. 80, 139 (1999). The origin of costs from ‘reckless or abusive requests or delaying
tactics' was seen as a criterion for the decision regarding costs in the Final Award in ICC Case
No. 11670, 22 ASA Bull. 333 (2004). See also Julian D.M. Lew, Loukas A. Mistelis & Stefan M.
Kroell, Comparative International Commercial Arbitration, 654, para. 24-82(2003) (reporting an
‘emerging trend’ in allocating costs by taking into account the parties' attitude during the
proceedings); Nigel Blackaby et al., Redfern and Hunter on International Arbitration, 548, para.
9.97 (5th ed., 2009) (‘Indeed, a costs order is one of the few means at a tribunal's disposal to
discourage, and in appropriate circumstances to punish, a party's wasteful procedural tactics
during an arbitration.’).
58) For one convincing exercise of such discretion see the ICC arbitral tribunal in Case no.
13209/DK/RCH which is described in Stephan Wilske, Cost Sanctions in the Event of
Unreasonable Exercise or Abuse of Procedural Rights – A Way to Control Costs in
International Arbitration?!, SchiedsVZ 188-191 (2006).
59) Andrew Clarke, International Arbitration: Current Corporate Concerns, 20ICC Int'l Ct. Arb. Bull.
41, 49 (2009).
11
60) Mark Kantor, Money Column: Costs as Sanction ‘Okay’ Say Three Separate US Courts, Global
Arb. Rev., 2 Sep. 2009 (referring to a US 2nd Cir. decision from April 2009, ReliaStar Life
Insurance Company of New York v. EMC National Life Company (2009 WL 941173, 9 Apr.
2009), Rhonda Enterprises S.A. v. Projector S.A. (2009 WL 290537 (SDNY, 6 Feb. 2009)) and
Bak, et al. v. MCL Financial Group, Inc., 170 Cal. App. 4th 118, 88 Cal. Rptr. 3d 800 (Cal. App.
4th Dist. as modified on denial of rehearing, 25 Feb. 2009); see also Clemens Kochinke, Claudia
Krapfl & Stephan Wilske, Neuere Entscheidungen zur Schiedsgerichtsbarkeit in der US-
amerikanischen Rechtsprechung (Frühjahr 2010), 2 DAJV Newsl. 50, 52–53 (2010) (discussing
the same three decisions and their impact on ‘arbitration guerrilla tactics'); see also Claudia T.
Salomon & J.P. Duffy, Keep an Eye on the End Game: Enforcement, N.Y.L.J., 12 Apr. 2010;
Matthew Jossen, Sanctions for Frivolous Appeal of Arbitral Award: DMA International, Inc. v.
Qwest Communications International, 3 N.Y. Disp. Resol. Law. 77 (Spring 2010); Jordan Nodel,
In ReliaStar the Second Circuit Confirms That Arbitrators Have Inherent Authority to Sanction,
2 N.Y. Disp. Resol. Law. 30 (Fall 2009).
61) Lisa Salkovitz Kohn, Can Sanctions Repair Arbitration's “Broken Promises”? 11 ABA Conflict
Mgmt.4 (Spring 2007).
62) For one particular example of an ongoing battle see Laurence Shore, Michael Young & Stephan
Wilske, Multi-Jurisdictional Battle Against Swiss Arbitral Award – A Comment on Karaha Bodas
Company v. Pertamina (5th Cir. 23 March 2004), J. Int'l Disp. Res. 114 (2004).
63) Tom Toulson, Texas Firm to Pay for Frustrating Arbitration, Global Arb. Rev., 19 Mar. 2010; see
also Charles Toutant, Fed-Up Judge Fines Lackadaisical Firm $500 a Day for Late Filing of
Briefs, New Jersey L.J., 24 Sep. 2010 (‘A track record of tardiness in filing Social Security
appellate briefs earned a law firm a standing, $500-a-day sanction from a federal judge for
documents submitted late without good cause.’).
64) Prospect Capital Corp. et al. v. Enmon, Slip Copy, 2010 WL 907956 (S.D.N.Y. 9 Mar. 2010).
65) Ibid. at *8.
66) Prospect Capital Corp. et al. v. Enmon, Slip Copy, 2010 WL 2594633 (S.D.N.Y. 23 Jun. 2010).
67) Prospect Capital Corp. et al. v. Enmon, Slip Copy, 2010 WL 907956 (S.D.N.Y. 9 Mar. 2010) at
*6 (quoting Schlaifer Nance & Co., Inc. v. Estate of Warhol, 194 F.3d 323, 337 (2d Cir. 1999).
68) Ibid. at *6 (quoting Patsy's Brand, Inc. v. I.O.B. Realty, Inc., No. 98 Civ. 10175, 2002 WL 59434
(JSM), at *10 (S.D.N.Y. 16 Jan. 2002)).
69) See, e.g., section 43.1 sentence 2 of the DIS Arbitration Rules which stipulate: ‘Persons acting on
behalf of any person involved in the arbitral proceedings shall be obligated to maintain
confidentiality.’
70) Libananco Holdings Co. Limited v. Turkey, ICSID Case no. ARB/06/8 (Decision on Preliminary
Issues, 23 Jun. 2008), para. 78.
71) Linda Bak v. MCL Financial Group, Inc., 88 Cal. Rptr. 3d 800, 804 (Cal. Ct. App. 2009) (‘We
conclude that, by voluntarily appearing for defendants in the arbitration proceedings, which
included conducting prehearing discovery, and in responding to plaintiffs' claim some of the
documents they produced were privileged material, objector subjected himself to jurisdiction of
the arbitration panel and was subject to its rulings.’); see also Bruce E. Meyerson, Does an
Arbitrator Have the Power to Grant Sanctions? 14 ABA Conflict MGMT.1, 11–12 (Summer 2010)
(concluding that courts grant deference to the exercise of arbitral power to impose sanctions and
that as a consequence ‘if arbitrators choose to exercise their power to impose sanctions, their
rulings will most likely be affirmed’ (ibid. at 11); but see Gary B. Born, International Commercial
Arbitration, 2316 (2009) (‘Most tribunals conclude, however, that they lack the authority to
discipline or impose sanctions on legal counsel (as opposed to parties) who engage in
misconduct.’) and 2323 (‘Alternatively, although a tribunal may not otherwise sanction a lawyer,
counsel's misconduct may subject him/her to disciplinary sanctions before his/her local court or
bar association. In serious cases, a tribunal may pass along a report of the alleged misconduct to
the appropriate bar association, legal regulatory authority, or local law enforcement officers.’).
See also Mark Kantor, Money Column: Positive Software Redux – Attorney Ethics and
Sanctions This Time, Global Arb. Rev., 21 Oct. 2010, reporting that in overturning a lower court
that imposed a USD 10,000 sanction on one attorney in an arbitration, the Fifth Circuit held that
the District Court did not have inherent authority to assess sanctions against counsel for
misconduct in the arbitration, but only for misconduct with respect to that court's own orders and
jurisdictions.
72) Stephan Wilske, Austrian Yearbook on International Arbitration 2011, 315, 326–327
(Klausegger et al. eds., Manz, C.H. Beck, Stämpfli, 2011); Abba Kolo, Witness Intimidation,
Tampering and Other Related Abuses of Process in Investment Arbitration: Possible
Remedies Available to the Arbitral Tribunal, 26 Arb. Int'l 43, 73–79 (2010).
73) Wilske ibid.
12
74) It has been internationally recognized that even in criminal proceedings an accused may lose his
constitutional right to be present at his trial if he continually misbehaves and interrupts the court
proceedings. See Illinois v. Allen, 397 US 337 (1970) (US Supreme Ct.); Regina v. Lee Kun
[1916] 1 K.B. 337 (UK); Stephanos Stavros,The Guarantees for Accused Persons under Article
6 of the European Convention on Human Rights: An Analysis of the Application of the
Conventions and a Comparison with Other Instruments, 200–201 (Martinus Nijhoff Publishers,
1993); Wolfgang Peukert, Europäische Menschenrechtskonvention – EMRK-Kommentar 205,
para. 160 (3rd ed., Jochen Abr. Frowein & Wolfgang Peukert eds., 2009); Hans-Heiner Kühne, 1
Internationaler Kommentar zur Europäischen Menschenrechtskonvention, para. 385 (Heribert
Golsong et al. eds., 2009); Georg Dahm & Rüdiger Wolfrum, 1 Völkerrecht, 1022 (Jost Delbrück
ed., 2d ed. 2002).
75) Stephan Wilske, Austrian Yearbook on International Arbitration 2011, 315, 327 (Klausegger et
al. eds., Manz, C.H. Beck, Stämpfli 2011); Abba Kolo, ibid.
76) Libananco Holdings Co. Limited v. Turkey, ICSID Case no. ARB/06/8 (Decision on Preliminary
Issues, 23 Jun. 2008), para. 73.
77) Ibid. at para. 72.
78) See Abba Kolo, Witness Intimidation, Tampering and Other Related Abuses of Process in
Investment Arbitration: Possible Remedies Available to the Arbitral Tribunal, 26 Arb. Int'l 43, 84
(2010) (‘This suggests that the tribunal did not rule out the possibility of granting the remedy of
summary judgment, as one of the possible remedies it might consider if any party is found to be in
serious violation of rules of procedure such as those alleged in the instant case.’). See also
International Longshore and Warehouse Union Ship and Dock Foremen, Local 514 v. Fraser
Surrey Docks Limited and Colin Taylor, Q.C., 2007 BCSC 1532 (‘[66] I have already reviewed
the factual findings made by the Arbitrator. His analysis and findings of fact, which led to his
conclusion that the Union intimidated the critical witness, which, in turn, led to his decision that the
Union had abused the process are clearly set out in his award (…). It cannot be said that his
award is not in accord with reason or was clearly irrational. [67] Having concluded that the
Arbitrator's findings of fact ought not to be disturbed on judicial review, it remains to consider the
Arbitrator's choice of remedy. He decided that the appropriate remedy was to dismiss the
grievance without a hearing on its merits. … [72] I agree that the denial of a hearing may in some
circumstances amount to a denial of natural justice. But here, the Arbitrator conducted a fair and
full hearing concerning the employer's application for dismissal of the grievance. He found the
facts supported the employer's position. He then addressed the question of remedy. He heard all
the evidence and concluded that, in light of the Union's conduct, the employer's ability to defend
the grievance had been irreparably harmed (…). [75] … I conclude that the Arbitrator's choice of
remedy did not deny the petitioner natural justice … the Arbitrator's decision is entitled to
considerable deference and his choice of remedial remedies should be reviewed on a
reasonableness, or patent unreasonableness standard.’).
79) Alison Ross, Libananco saga at an end, Global Arbitration Review, 23 May 2013 quoting Veijo
Heiskanen (‘Given the Uzans' repeated manipulation of treaty tribunals through abusive claims
and forged documents, at great cost to the Turkish taxpayer, any future claims may now be thrown
out on a summary basis.’).
80) Gary B. Born, International Commercial Arbitration, 2553–2556 (Kluwer Law International 2009).
81) Christian Hausmaninger, Zivilprozeßgesetze, § 597, 54 (2d ed., Hans Walter Fasching &
Andreas Konecny eds., Manz 2007): Under § 597(2) of the Austrian ZPO, the arbitral tribunal has
broad discretion regarding belated amendments, unless the parties have agreed otherwise;
Emmanuel Gaillard & John Savage (eds.), Fouchard Gaillard Goldman on International
Commercial Arbitration, 1218, 1222 (Kluwer Law International 1999).
82) English Arbitration Act, 1996, §§2(1), 33, 68(2)(c); Judgment of 22 Jun. 2005, 2005 SchiedsVZ
308, 309 (Oberlandesgericht Munich); Pacol Ltd v. Joint Stock Co. Rossakhar [1999] 2 All E.R.
(Comm.) 778 (Q.B.).
83) In case of bribery: Judgment of 30 Sep. 1993, European Gas Turbines SA v. Westman
International Ltd, XX Y.B. Comm. Arb. 198 (Paris Cour d'appel) (1995).
84) E.g., English Arbitration Act, 1996, 68(2)(g); Netherlands Code of Civil Procedure, Art. 1065(1)
(e); Franz Schwarz & Helmut Ortner, Austrian Arbitration Yearbook 2008, 133 (Klausegger et al.
eds., Manz, C.H. Beck, Stämpfli 2008); E. Gaillard & J. Savage (eds.), Fouchard Gaillard
Goldman on International Commercial Arbitration, 1652-1660 (Kluwer Law International 1999).
85) See, e.g., English Arbitration Act, 1996, §68(2)(g); Belgian Judicial Code, Art. 1704(3)(a);
Australian International Arbitration Act, §19; 1966 European Uniform Law on Arbitration, Art.
25(2); Judgment of 28 Feb. 1990, 9 Ob A 38/90, RZ 1992/63 (Austrian Oberster Gerichtshof).
86) Swiss Federal Supreme Court, Decision 4A596/2008 of 6 Oct. 2009, 28 ASA Bull. 318 (2010);
an English translation will be published in the Swiss International Arbitration Law Reports (see
also case summary by Matthias Scherer in 28 ASA Bull. 266 (2010).
87) Kyriaki Karadelis, Taiwan Wins Damages in Frigates Case, Global Arb. Rev., 5 May 2010.
88) Ibid.
89) It is common knowledge and most recently re-demonstrated by Felix Dasser that a challenge of
an arbitral award in Switzerland ‘is extremely likely to be dismissed within a short period of time’,
Felix Dasser, International Arbitration and Setting Aside Proceedings in Switzerland – An
Updated Statistical Analysis, 28 ASA Bull. 82, 99 (2010).
13
90) See also Christopher Lau, Taming the Gorilla (sic) – May Award Setting Aside or Annulment
Proceedings Help Limit the Employment of Guerrilla Tactics? paper presented at the ICC
Austria Conference on 12 and 13 Nov. 2010 in Vienna on ‘A Fine Line: How to Counter – and
Employ Guerrilla Tactics in International Arbitration & Litigation’, 7 TDM (November 2010) (‘So an
award obtained by a party found to have engaged in spying, wiretapping, threats of violence,
stalking, blackmailing or kidnapping is likely to be set aside for having violated natural justice
and/or public policy.’ [footnotes omitted]).
91) Court of Appeal for Ontario, Znamensky Selekcionno-Gibridny Center LLC v. Donaldson
International Livestock Ltd., Docket No. C51225 (Decision of 29 Apr. 2010) (para. 11: ‘First, the
doctrine of issue estoppel did not apply to preclude the application judge from considering the
alleged death threats.”; para. 16: “The second error made in refusing to consider the appellant's
evidence of the alleged death threats is this. … In the circumstances of this case – where the
issue of the alleged death threats has never been decided on the merits and where that
undecided issue goes to the heart of the appellant's ability to participate in the arbitration – the
application of issue estoppel would have worked an injustice.’); See also Sebastian Perry, Pig
Breeder Wins Appeal over Russian ‘Death Threats’, Global Arb. Rev. (12 May 2010).
14
Chapter 2, §2.02: The Perspective of Arbitral Institutions:
Author Upping the Arsenal – Using the ICC Rules to Counteract
Victoria Orlowski Guerilla Tactics
Victoria Orlowski
Publication §2.02 The Perspective of Arbitral Institutions: Upping the Arsenal – Using
Guerrilla Tactics in International the ICC Rules to Counteract Guerilla Tactics
Arbitration
Victoria R. Orlowski
Biblographic reference [A] Introduction

The International Court of Arbitration of the International Chamber of Commerce (ICC Court) and
Victoria Orlowski, 'Chapter 2, arbitrators acting under its Rules now have a reinforced arsenal of arms in the fight against guerrilla
§2.02: The Perspective of Arbitral
tactics. The 2012 Rules of Arbitration of the International Chamber of Commerce (2012 Rules)
Institutions: Upping the Arsenal –P54
encourage an active approach to case management to combat undue delays and excessive costs by
Using the ICC Rules to
obliging parties and arbitrators to conduct arbitrations efficiently.
Counteract Guerilla Tactics', in
Günther J. Horvath and Stephan The ICC Court distinguishes itself from other arbitral institutions by taking a particularly robust
Wilske (eds), Guerrilla Tactics in approach to monitoring the arbitrations pending under its Rules. A case management team of the ICC
International Arbitration, Court's Secretariat (Secretariat) follows each arbitration's progress by taking all possible steps within
International Arbitration Law the limits of the Rules to ensure that arbitral tribunals are constituted properly and are responsive,
Library, Volume 28 (© Kluwer monitoring correspondence, responding to questions from counsel, parties and arbitrators, inviting the
Law International; Kluwer Law ICC Court to take decisions, monitoring the financial aspect, and analysing draft Awards. (92) The
International 2013) pp. 54 - 69 case management team assigned to each arbitration will generally have some sort of connection to
the arbitration – through the language, applicable law, place of arbitration or nationalities of the parties
– which enables effective communication regarding the progress of the arbitration. In Paris, Hong
Kong, and soon in New York – case management teams will be spread over three time zones – thus
limiting delays and providing more efficient assistance to parties and arbitrators. Case management
teams observe the various strategic tactics that may occur and do what they can to prevent tactical
manoeuvres from transforming into more mischievous devices. The Secretariat's management and
the ICC Court, particulary its President, actively assist the case management teams in these
endeavours.
However, an institution can only act within the boundaries of the powers established in its rules and
granted to it by the parties' agreement. (93) While an institution's rules often contain a margin for
creativity and the power necessary to assist parties and arbitrators, there are certain constraints to
what institutions can do. To protect the integrity of the arbitral process, arbitral institutions cannot take
sides, (94) even when it appears that one side may be doing its utmost to derail the proceedings. The
ICC Court and its Secretariat are not on the front lines, and the boundaries of what they can do are
explored below in the context of the ICC Rules.
P55
[B] From the Trenches
Due to the sensitivity of characterizing certain acts as bordering on or perhaps constituting guerrilla
tactics, the case numbers and certain non-essential details of the arbitrations discussed below have
been omitted.
[1] The Escapades of a Disgruntled Claimant
The article credited with coining the term ‘arbitration guerrillas or terrorists' used the term to describe
respondents. However, such tactics are not used exclusively by respondents. (95) Claimants can and
do use the same tactics, as illustrated by an ICC arbitration that began in August 2004. The arbitrators
and parties were from the same Middle Eastern country, the place of arbitration was Amman, Jordan
and Jordanian law applied to the merits of the parties' dispute. The Arbitral Tribunal rendered a Partial
Award in January 2006, finding, contrary to Claimant's assertions, that it had jurisdiction over
Respondent's counterclaims. The case progressed, albeit slowly, as the Arbitral Tribunal conducted
more than thirty hearings.
In June 2009, things started to go awry, when Claimant's counsel withdrew from a hearing and filed a
challenge against the Chairman and the co-arbitrator nominated by Respondent and alternatively
requested that the ICC Court replace them. (96) Claimant based its challenge and request for
replacement on the delays that had occurred, the extensions of time that the ICC Court had granted for
rendering the Final Award and on an alleged failure of those arbitrators to disclose that they were
acting as arbitrators in an unrelated arbitration in which counsel for Respondent was also allegedly an
arbitrator. Respondent asked the ICC Court to reject the challenge, indicating (1) its counsel acted as
a co-arbitrator in an unrelated local arbitration case with the Chairman, which had been disclosed to
the parties, (2) its counsel had never acted as an arbitrator with the co-arbitrator nominated by
Respondent, and (3) Claimant had not, to date, complained of the procedure followed by the Arbitral
Tribunal.
15
The ICC Court rejected the challenge and decided not to initiate replacement proceedings. However,
the President of the ICC Court asked the Arbitral Tribunal to keep the ICC Court apprised of the
P56 progress of the case and indicated that the ICC Court would be reluctant to grant additional
extensions of time for rendering the Final Award in the absence of exceptional circumstances.
Subsequently, the Arbitral Tribunal asked for four extensions of time for rendering the Final Award,
specifically for: (1) concluding the cross-examination of the expert, (2) dealing with the twenty-five box
files of exhibits that were submitted in relation to the expert, (3) filing of post-hearing briefs, and (4)
celebrating various religious holidays. The ICC Court granted such extensions and the Arbitral
Tribunal promised to submit the Final Award by the end of December 2009. As the case management
team in charge of the case did not receive a draft Award, it escalated the issue to the Deputy
Secretary General. The Deputy Secretary General wrote the Arbitral Tribunal for an update as to when
it would submit the draft Final Award and reminded them of the ICC Court's power to remove
arbitrators.
His letter had a domino effect, as each member of the Arbitral Tribunal tendered his resignation in
turn. The co-arbitrator confirmed upon Claimant's nomination cited the Arbitral Tribunal's inability to
agree on a single issue after four long deliberation meetings and his refusal to accept further delay as
the reasons for his resignation. The Chairman pointed to Claimant's attitude and his difficult
professional relationship with the co-arbitrator confirmed upon Claimant's nomination, who had
allegedly refused to meet or cooperate with the other two members of the Arbitral Tribunal. The co-
arbitrator nominated by Respondent indicated that the Chairman had acted in a professional manner,
and that the other co-arbitrator had presented a document of uncertain origin to them that purported to
decide the case without legal reasoning or substantiation.
In the course of receiving comments from the parties, Claimant indicated that it would drop its pleas
that the time limit for rendering the Final Award had expired if the ICC Court replaced all three
members of the Arbitral Tribunal. Claimant offered to pay all expenses associated with such
replacement. At Respondent's request, the Secretary General of the ICC Court (Secretary General)
produced a certificate certifying that the ICC Court had the power to grant time extensions for
rendering the Final Award and stating when the ICC Court had granted such extensions.
Using its discretion under Article 12(1) of the 1998 Rules, the ICC Court rejected the co-arbitrators'
resignations, accepted the Chairman's resignation and indicated that it was taking urgent steps
towards appointing a new Chairman. Less than ten days later, just as the ICC Court was about to
appoint a new Chairman, the co-arbitrator nominated by Claimant re-tendered his resignation. This
time, he cited his health.
The next day, Claimant informed the Secretariat that it had applied to the Jordanian Courts to
terminate the proceedings and requested the withdrawal of the arbitration. Three days later,
Respondent indicated that Claimant had obtained a judgment terminating the proceedings
(Termination Judgment). (97) Respondent indicated that it intended to contest the Termination
P57 Judgment and objected to the withdrawal of the arbitration. As the parties did not agree on the
withdrawal of the arbitration, the Secretariat confirmed that the case was pending. Respondent
indicated that it was granted permission to contest the Termination Judgment and would inform the
Secretariat of the outcome of its application. The arbitration went into abeyance.
About one month later new counsel appeared for Claimant, producing a power of attorney limited to
discussing the delays in rendering the Final Award. This counsel proposed to meet with the President
of the ICC Court, again, indicating Claimant's willingness to go forward with the arbitration if the ICC
Court removed the co-arbitrators so that the case could start with three new arbitrators. The
Secretariat wrote to the parties informing them of this development and indicating that no
communication would take place as to the conduct and merits of the arbitration without the
participation of representatives from both sides. Respondent declined to participate in such a
meeting. As such, the Secretariat indicated that no such meeting would take place. The co-arbitrator
nominated by Claimant then, apparently having recovered from his health problems, asked to be
‘reinstated’ as a co-arbitrator.
Seven months later, the Secretariat learned that Respondent's appeal had failed, and the Termination
Judgment had become final. Claimant requested the withdrawal of the arbitration and Respondent did
not object.
This arbitration illustrates the diversity of tactics that are used to try to derail proceedings –
challenges, (98) requests for the replacement of arbitrators, resignations of party-nominated
arbitrators, efforts to break-down communications between members of the arbitral tribunal, attempts
to influence or pressure the institution or other arbitrators and resort to national courts. As judiciously
described by the editors of this book, Günther J. Horvath and Stephan Wilske:
[i]n the quest for a comprehensive and precise definition of “Guerrilla Tactics”, it soon transpires that a
single definition of the term does not exist; rather, the term comprises a myriad of strategies, ranging
from blatantly illegal, inappropriate and unethical conduct to merely questionable “eye-brow raising”
behaviour. (99)
When deciding what course of action to take, the ICC Court and its Secretariat strive to balance the
P58 potential effectiveness of the solution against the impact it may have on the proceedings. For this
reason, the ICC Court and Secretariat employ campaigns of escalated correspondence, beginning
with the case management team, moving up through the Secretariat's management to the President of
the ICC Court. This policy also explains why the ICC Court often considers replacing the President of
16
the Arbitral Tribunal only, (100) rather than all three members of an Arbitral Tribunal, in the hope that
such decision may unblock the proceedings, be more cost-effective – by preserving the collective
knowledge of the arbitral tribunal – and maintain the balance of the case. The ICC Court also tries to
give arbitral tribunals a final chance to produce awards before commencing replacement procedures.
(101)
To forestall potential problems, parties should be aware of the laws at the place of arbitration and how
they may be interpreted by local courts. In the case above, the Arbitral Tribunal could have discussed
the provisions of the law at the place of arbitration regarding the timeliness of the arbitration with the
parties and could have included a provision addressing such requirement in the Terms of Reference.
Although the pattern that unfolded in this arbitration was exceptional, the Secretariat sometimes
receives letters indicating that a party does not agree to the extensions granted by the ICC Court,
which the party later uses to challenge the Award. Faced with a challenge to an ICC Award on that
basis in 2011, the Cour d'Appel de Paris in Maschinenfabrik Möllers v. Al Khaleei Sugar Company,
found that Article 24 of the 1998 Rules empowered the ICC Court to extend the time limit for rendering
the Final Award and relied on the record of such extensions in the Final Award and in a certificate, like
the above-mentioned one, to find that the ICC Court had granted such extensions. Satisfied that the
Rules empowered the Court to extend the time limit for rendering the Final Award and that the ICC
Court had done so, the Cour d'Appel upheld the Award. (102)
The delays in this arbitration may have been caused by the Arbitral Tribunal's desire to afford the
parties every opportunity to present their positions. (103) Unfortunately, if that was the case, it
prevented the Arbitral Tribunal from getting to the point of rendering a Final Award. The 2012 Rules
encourage arbitral tribunals to manage arbitrations actively – requiring them to hold at least one case
management conference and encouraging them to consider the case management techniques
contained in Appendix IV to the Rules. (104) In discussing these techniques with the parties and
P59 establishing a procedural timetable, arbitral tribunals should remember that Article 22(4) of the 2012
Rules, like its predecessor, (105) only requires arbitral tribunals to provide the parties with a
reasonable opportunity to present their respective cases. (106) Although the meaning of ‘reasonable’
may differ in the context of each case, (107) it does not amount to a requirement of parties being
granted an inexhaustible opportunity to present their cases. (108)
Recent decisions by the Hong Kong courts concerning an ICC Award suggest that arbitral tribunals
should feel confident managing the proceedings and reasonably limiting the parties' opportunities to
present their cases. Three procedural grounds gave rise to a challenge to the Final Award, specifically
the Arbitral Tribunal: (1) allowed Claimant to serve expert evidence of foreign law one working day
before the evidentiary hearing, thereby allegedly violating the procedure agreed by the parties; (2)
refused to admit three foreign law authorities Respondent sought to rely on; and (3) allegedly denied
Respondent an opportunity to present its case by refusing to allow it to respond to Claimant's
submissions on the relevance of Hong Kong and New York law.
In Pacific China Holdings Ltd (In Liq) v. Grand Pacific Holdings Ltd, the Hong Kong Court of Appeals
overturned the lower Court's decision to set aside the Final Award, which had focused on Respondent
having been deprived of its right to present its case and the Arbitral Tribunal not following the
procedure that had been agreed with the parties. In overturning that decision, the Hong Kong Court of
Appeals found that the lower court had substituted its own judgment for that of the arbitrators, and that:
‘A party who has had a reasonable opportunity to present its case would rarely be able to establish
that he has been denied due process'. (109) On 23 July 2012, the Hong Kong Court of Appeals went
further by awarding costs to Grand Pacific Holding Ltd. on an indemnity basis, noting that this policy
will remind parties that challenges of arbitral awards are not ‘worth a go’ in the absence of exceptional
P60 circumstances. (110) The 2010 amendments to the United Nations Commission on International
Trade Law (UNCITRAL) Arbitration Rules reflect a trend towards the reasonableness standard
enunciated in the ICC Rules. (111)
Considering this reasonableness standard, if an arbitral tribunal suspects that a party or one of its
members may be attempting to disrupt the proceedings, the arbitral tribunal should close the
proceedings at the earliest possible opportunity. (112) Closing the proceedings empowers the arbitral
tribunal to reject submissions, evidence or arguments that are made in the absence of its
authorization. (113) More significantly, if an arbitrator resigns or is challenged at a late stage and the
arbitral tribunal has closed the proceedings, the ICC Court can consider allowing the arbitration to go
forward with a truncated tribunal. (114) If appropriate, a truncated arbitral tribunal can save the time
and costs associated with reconstituting an arbitral tribunal.
[2] The Game-Stopping Injunction
An arbitration that commenced in 2011 illustrates a different form of state court intervention. The
parties and the Arbitral Tribunal signed the Terms of Reference in late November 2011. In the Terms
of Reference, the parties expressly waived ‘any procedural objections they may have with respect to
known events, including the appointment of the Tribunal’.
On the second day of the merits hearing, Respondents withdrew from the hearing and filed a
challenge against the Chairman and the co-arbitrator confirmed upon Claimant's nomination.
Respondents based their challenge on the co-arbitrator's alleged bias and lack of independence,
which they claimed was demonstrated by his having asked leading questions during the cross-
examination of witnesses. As for the Chairman, they based their challenge on his nationality, alleging
that he was a national of a country that supported sanctions against the country where Respondents
were located and as such was unable to objectively examine their jurisdictional challenge or
17
objections regarding Claimant's witnesses.
The next day, the co-arbitrator confirmed upon Respondents' joint nomination resigned. He expressed
his regret and apologized for the inconvenience. The remaining arbitrators continued with the hearing
in his and Respondents' absence. Respondents then added this as a ground for their challenge.
Claimant questioned Respondents' motivation and argued that the ICC Court should reject the
resignation and challenges.
P61 The ICC Court accepted the resignation (115) and rejected Respondents' challenges. The ICC Court
invited Respondents to nominate jointly a replacement arbitrator. Instead, Respondents went to the
courts at the place of arbitration and successfully obtained an ex parte interim injunction against the
Chairman and the remaining co-arbitrator; which purported to restrain them from acting as arbitrators
and ‘from continuing the said arbitral proceedings until further Order if at all’. (116)
Claimant expressed its desire to go forward with the arbitration. The ICC Court appointed a
replacement arbitrator who shared a common legal background with Respondents, but who neither
resided at the place of arbitration nor where Respondents were located. After inviting the parties'
comments, the newly constituted Arbitral Tribunal, with two of its members subject to an injunction at
the place of arbitration, had to decide whether and how to continue the arbitration, including whether to
repeat prior proceedings. (117)
In the past when a party has expressed its willingness to continue with an arbitration, the ICC Court
has taken steps to assist. The ICC Court, as in the case described above, has accepted resignations
tendered by arbitrators who were threatened – physically, through lawsuits or by other means – or who
were otherwise uncomfortable continuing with the arbitration. The ICC Court also has initiated the
replacement of arbitrators who were unable to fulfil their duties. For example, in 2000, the ICC Court
replaced a co-arbitrator confirmed upon Claimant's nomination because he indicated that he was
unable to act due to the injunction Claimant had obtained from the Indian courts. The injunction
purported to prohibit the parties and arbitrators from continuing the arbitration pending the outcome of
proceedings before the Bombay High Court in relation to a Partial Award rendered by the majority of
the Arbitral Tribunal. The co-arbitrator resided in India and the place of arbitration was London. The
remaining arbitrators did not consider themselves bound by the injunction. The ICC Court had done
the same in similar circumstances where the place of arbitration was Paris and the Delhi High Court
had issued an injunction purporting to prevent the arbitration from moving forward. In another case,
after the ICC Court had rejected two challenges of the entire Arbitral Tribunal, Respondent obtained
an injunction from the courts at the place of arbitration, Buenos Aires. Despite the injunction purporting
to extend to the ICC Court and its Secretariat, the ICC Court replaced both co-arbitrators, who were
located in Buenos Aires and had indicated that they were unable to continue with their functions.
P62 The ICC Court has also helped allow arbitrators faced with injunctions purporting to prevent the
arbitration from advancing to move forward to do so. In one such case, after the ICC Court rejected a
challenge against the Arbitral Tribunal, the Arbitral Tribunal indicated that it felt it owed a duty to the
parties to ensure that their agreement to submit disputes to international arbitration was rendered
effective, even where that duty created a conflict with an order of the courts at the place of arbitration,
which had issued an injunction to prevent the arbitration from moving forward. The Arbitral Tribunal
indicated that its duty continued to exist even if any award it rendered may be set aside by the courts
at the place of arbitration.
When local courts get involved, there is no one-fits-all solution. What may be effective in a particular
arbitration often depends on where the court that issues the injunction is located, specifically whether it
is at the place of arbitration or elsewhere, what the injunction entails, the location of the arbitrators and
whether they or the parties wish to continue with the arbitration. The 2012 ICC Rules empower an
arbitral tribunal to adopt such procedural measures as it considers appropriate, provided that the
arbitral tribunal consults the parties and that such measures are not contrary to any agreement of the
parties. They also oblige the parties to comply with the arbitral tribunal's orders. (118) As such, an
arbitral tribunal willing to advance an arbitration can rely on the 2012 Rules to support its decision to
go forward with the case. In exercising such power, arbitral tribunals have granted: (1) injunctions,
including ordering parties to pay their share of the advance on costs, (2) anti-suit injunctions against
parallel cases that violated the arbitration agreement, and (3) security for claims or costs. (119) In a
recent case, an Arbitral Tribunal decided that Respondent had breached the arbitration agreement by
filing parallel proceedings before local courts and ordered Respondent to pay Claimant its costs
incurred in relation to such proceedings and any damages that such courts may order Claimant to pay.
[3] The Chairman Who Lost His Composure
Sometimes repetitive tactics take their toll, as they did in an arbitration that began in 2009. Three days
after the Secretary General confirmed the party-nominated co-arbitrators, Claimant filed a challenge
against the co-arbitrator confirmed upon Respondent's nomination. Claimant alleged that as he had
initially appeared in the case as Respondent's legal representative he was not and could not remain
independent and that he lacked knowledge of the applicable law. Before the ICC Court decided the
challenge, Respondent followed suit and filed a challenge against the co-arbitrator confirmed upon
Claimant's nomination alleging that she had not been following the correspondence between the
parties, lacked knowledge of the subject-matter of the dispute and had made negative comments
about her fellow co-arbitrator. The ICC Court rejected both challenges and appointed the Chairman.
P63 Thirteen months later, an incident occurred during the Arbitral Tribunal's deliberations. The co-
arbitrator confirmed upon Respondent's nomination added the following passage (which he alleged
had been directed at him) to the notes taken by the Chairman's assistant and sent them to the parties:
18
The Chairman: (brandishing his finger and talking in a threatening and extremely loudly [sic] tone);
Now listen to me, it is not important what you say, I do not care F[******] what you say a bit, F[******]
what the others say, and the F[******] evidences you mentioned, I care what I say and YOU SHOULD
LISTEN TO ME, o.k….!!!!!? what you say is not important; it is me who will decide on the case, your
f[******] opinion is not important at all…!!!
Respondent filed a challenge against the Chairman, alleging (1) he had lost his ‘legitimacy and
legality’, by refusing to hear the position of the co-arbitrator confirmed upon Respondent's nomination
or to take certain evidence into account, (2) the Arbitral Tribunal was not working cohesively and (3)
the process had turned into the Chairman's ‘stand-up show’. In a rare decision, (120) the ICC Court
rejected the challenge and initiated replacement proceedings against the Chairman. In doing so, it
invited the parties' comments about the replacement of the Chairman. In the meantime, Claimant filed
a challenge against the co-arbitrator confirmed upon Respondent's nomination alleging that he had
repeatedly violated the secrecy and confidentiality of the Arbitral Tribunal's deliberations. After
receiving the parties' comments, the ICC Court decided to replace the Chairman, directly appointed a
new Chairman and rejected the challenge against the co-arbitrator nominated by Respondent.
Following the ICC Court's decision, the Secretary General wrote to the co-arbitrator confirmed upon
Respondent's nomination expressing the ICC Court's position that although it rejected the challenge
against him, it was troubled by his having breached the confidentiality of the Arbitral Tribunal's
deliberations. The Secretary General reminded him that it is fundamental to the trust and confidence
which parties have in the arbitral process that arbitrators maintain the confidentiality of all their
deliberations, even if they become difficult. The Secretary General requested written assurance that
he would respect such principles in the future.
Five days later, the co-arbitrator confirmed upon Claimant's nomination tendered her resignation,
indicating that she did not agree with the ICC Court's decisions to replace the Chairman and reject the
challenge against her fellow co-arbitrator. She argued that her fellow co-arbitrator had violated the
confidentiality of the deliberations, that there was no guarantee of his impartiality and that his
P64 behaviour prevented her from fulfilling her functions. Her resignation prompted Respondent to file a
challenge against her, indicating that it doubted her impartiality due to her resignation and failure to
report the Chairman's conduct at the hearing to the ICC Court. This then prompted Claimant to file
another challenge against the co-arbitrator confirmed upon Respondent's nomination, alleging that it
could be denied its right to due and fair process if he remained as a co-arbitrator in the absence of
the arbitrator that it had nominated.
The ICC Court rejected both challenges and refused the tender of resignation. The reconstituted
Arbitral Tribunal exercised its power under Article 12(4) of the 1998 Rules and decided not to repeat
the proceedings. The ICC Court received the draft Final Award, by majority, and the dissenting
opinion of the co-arbitrator confirmed upon Respondent's nomination about a year later. Respondent
filed an application for interpretation or correction of the Final Award, which the majority of the Arbitral
Tribunal rejected.
In this arbitration, the ICC Court was put in the difficult position of deciding whether to replace the
Chairman who lost his composure or the co-arbitrator who breached the confidentiality of the
proceedings and who the other arbitrators claimed was the catalyst in the break-down of the
communications between the members of the Arbitral Tribunal. The ICC Court considered the
potential risk to any Award that may have been rendered and attempted to salvage the arbitration by
removing the Chairman only and maintaining the balance of both co-arbitrators who had been in the
arbitration since it commenced. This case illustrates Michael Hwang's maxim that tribunals should
practice defensive arbitration, particularly that arbitral tribunals need to mind their language – not only
in their interactions with the parties, but also between their members. (121)
Arbitrators should be aware that the ICC Court may take their conduct into consideration when
deciding whether to confirm or appoint them in future arbitrations. Under the Rules, nominees chosen
by the parties must be confirmed by the Secretary General or by the ICC Court before they become
arbitrators. The ICC Court has discretion as to whether to confirm arbitrators – even if they make no
disclosure regarding their independence or impartiality. (122) One recent example when the ICC
Court exercised its discretion not to confirm an arbitrator who had not made any disclosures as to his
independence or impartiality occurred when co-arbitrators nominated a President whom the ICC
Court had removed in a previous arbitration due to his failure to conduct the arbitration in a timely
manner. In the previous case, eighteen months had elapsed since the hearing and the nominated
President, who was the Sole Arbitrator, was unable to satisfy the ICC Court that he would be able to
P65 produce an Award after having repeatedly asked for extensions during the eighteen months following
the hearing. The ICC Court considered that neither the parties nor the co-arbitrators had the
knowledge it had regarding the nominee's past performance.
When appointing arbitrators, the ICC Court only appoints candidates that it considers suitable.
Recently, the ICC Court decided not to appoint a candidate proposed by one of the ICC's National
Committees when it was aware of the candidate having impeded a previous arbitration from going
forward in a timely manner, by, among other things, withholding his dissenting opinion to delay the
approval and notification of the Award, disclosing details regarding the content of the Arbitral
Tribunal's deliberations, and failing to communicate with his fellow arbitrators, who had voiced their
concerns regarding his impartiality.
[4] Witness Intimidation – A Change of Scenery
19
Intimidation sometimes threatens to go beyond verbal. In a high-profile arbitration that began in 2008
and involved a state entity as Respondent, as the hearing approached Claimant asked the Arbitral
Tribunal to change the venue of the hearing from the city stipulated in the arbitration agreement, which
was where Respondent was located, to the city where Claimant was located. Claimant argued that the
change of venue was necessary to ensure the safety and security of its witnesses and to preserve the
integrity of the arbitral process.
Specifically, Claimant indicated that influential governmental figures had implicated its officers in a
high-level political scandal, accused its CEO of criminal offences related to the contract that formed
the basis for the arbitration, detained and questioned him, searched his home and seized certain
documents. Claimant alleged that its CEO would face arrest and prosecution if he travelled to the
place of arbitration. Claimant also argued that it would not have a reasonable opportunity to present its
case if the hearing was held at the place of arbitration, due to the necessity of having its CEO and
witnesses testify. Claimant relied on Article 14(2) of the 1998 Rules, which provides that ‘[t]he arbitral
tribunal may, after consultation with the parties, conduct hearings and meetings at any location it
considers appropriate unless otherwise agreed by the parties'.
Respondent argued that the hearing should be held at the place of arbitration and that Claimant's
CEO could give testimony by video-conference. Respondent also argued that the Arbitral Tribunal did
not have jurisdiction to decide that the hearing would be held somewhere other than the place of
arbitration due to the specific wording of the arbitration clause, which provided that ‘the arbitration
shall be conducted in [the place of arbitration]’.
The Arbitral Tribunal decided that it had the power to decide that the hearing would take place
somewhere other than the place of arbitration. It found that the language of the arbitration clause did
not preclude it from taking such a decision, particularly because in the Terms of Reference the parties
had agreed that the parties' agreement on the legal place of arbitration did not preclude the Arbitral
Tribunal from meeting with the parties and witnesses at any other place, or from conducting hearings
P66 or meetings at any location the Arbitral Tribunal considered appropriate unless otherwise agreed by
the parties. The Arbitral Tribunal found that the Terms of Reference were a binding agreement.
Furthermore, there was evidence of past intimidation and a likelihood of intimidation or other
‘inappropriate pressure’ being exerted on Claimant's witnesses if the hearing was held at the place of
arbitration. The Arbitral Tribunal balanced that finding against the costs and convenience associated
with each of its options – conducting the arbitration at two different locations or moving the place
where the hearings would be conducted. In consideration of all of the facts of the case and to preserve
the integrity of the arbitral process and give the parties a reasonable opportunity to present their
cases, the Arbitral Tribunal changed the hearing venue.
In an arbitration that began in 2003, the Arbitral Tribunal took a different approach. In early 2005,
Claimant learned that a federal prosecutor where Respondent was located, which was also the place
of arbitration, brought criminal proceedings against one of Claimant's key witnesses. Claimant asked
the Arbitral Tribunal for assistance in obtaining documents relating to those proceedings, but the
Arbitral Tribunal found that there was no proof that such proceedings related to the subject-matter of
the arbitration and declined to make such an order. However, in its order denying such relief, the
Arbitral Tribunal made it clear that it would not accept witness intimidation, would enquire with each
witness whether such pressure existed, and if it found that it did, would assume that such pressure had
been exerted because that witness's testimony was credible. The Arbitral Tribunal also indicated that
it would be willing to take measures to ensure that the case went forward in the absence of external or
inappropriate pressure being exerted on the witnesses, and ordered the parties' counsel to observe
high ethical standards regarding the treatment of witnesses and to encourage the parties to do the
same.
In its Final Award, the Arbitral Tribunal took a particularly strong stance about witness intimidation
when deciding on costs. It began by taking note of the arbitration clause, which provided, in relevant
part, that ‘[t]he costs of arbitration shall be divided between both parties in equal parts'. However, as
both sides asked the Arbitral Tribunal for an order that the other side bear the costs of arbitration, the
Arbitral Tribunal considered that the parties' requests empowered it to allocate costs. The Arbitral
Tribunal found that during the arbitration Respondent – specifying that it was referring to the party itself
rather than to its counsel – improperly prompted criminal proceedings against Claimant's key witness.
The Arbitral Tribunal found that, contrary to Respondent's assurances, evidence had come to light that
suggested that the prosecution of Claimant's witness related solely to the arbitration. The Arbitral
Tribunal indicated that it deplored Respondent's conduct, and considered that:
Within its wide ranging administrative powers and leadership in this procedure, it [was] entitled to –
and it must – maintain the basic and healthy practices related to the arbitration, and penalize the
abuses which may impact one of the parties regarding the procedure, abuses which increase the
costs of arbitration and produce unnecessary delays in the procedure. (123)
P67 Despite Respondent's success on the merits, which resulted in the dismissal of Claimant's claims, the
Arbitral Tribunal decided that Respondent must bear the costs of arbitration as fixed by the ICC Court
and each side must bear its own legal and other costs. In taking its decision, the Arbitral Tribunal
referred to previous decisions on costs taken by arbitral tribunals in ICC arbitrations where a party's
behaviour was considered in allocating costs and to various other procedural problems Respondent's
conduct prompted throughout the arbitration.
The 2012 ICC Rules support, and indeed encourage, the Arbitral Tribunal's approach. They specify
that in making decisions on costs, arbitral tribunals may take into account ‘such circumstances' as
20
they consider relevant, including ‘the extent to which each party has conducted the arbitration in an
expeditious and cost-effective manner’. (124) Arbitral tribunals should, if and when appropriate,
remind parties of their power to allocate costs and specify what they will take into account.
Parties seeking to agree on provisions as to the allocation of costs may wish to consider including
specific language permitting the arbitral tribunal to take the parties' conduct into consideration to
discourage dilatory or more malevolent conduct. While a party's success on the merits may be a valid
and prevalent consideration, clauses that limit the arbitral tribunal's power to consider other factors
may do little to discourage misconduct and result in the parties contracting out of a potentially
beneficial provision in the 2012 Rules.
Jacques Werner has argued that ‘[i]t should be up to the arbitral institutions to take up the questions of
protection of witnesses. Maintaining the integrity of the arbitral process they manage belongs to their
“raison d’être”’. (125) Dr Werner does not propose how arbitral institutions should do so. The
arbitrations described above show effective and well thought out use of the Arbitral Tribunals' powers
under the ICC Rules. In most cases, the arbitral tribunal will be better placed than an arbitral institution
to take actions to protect witnesses because it is on the front lines and better able to exercise the
flexibility necessary to do so.
However, the protection of witnesses, like other ethical questions raised by the arbitrations described
above, deserves further consideration. The ICC's Commission on Arbitration drafts and revises the
various ICC rules for dispute resolution, produces reports and guidelines on legal, procedural and
practical aspects of dispute resolution and proposes new policies and tools for the conduct of dispute
resolution. Its Report on Techniques for Controlling Time and Costs in Arbitration was a precursor to
many of the changes in the 2012 Rules. The issue of guerrilla tactics in international arbitration and the
often delicate issues raised thereby would be an apt topic for the ICC Commission on Arbitration to
consider.
P68
[C] Conclusion
The efforts of arbitral institutions, particularly one like the ICC Court that handles a large volume of
cases, serve as lessons; of effective strategies of combating campaigns that go beyond tactical, of
clues to look out for along the way, and of what not to do and where not to do it. This combat against
guerrilla tactics will continue, now with better armed institutions and arbitrators, but requires a joint
effort to figure out the most effective way to deal with the myriad of tactics that may be employed. As
the late Margaret Thatcher aptly observed, ‘[y]ou may have to fight a battle more than once to win it’.
References
92) For a detailed description of the workings of the ICC Court and its Secretariat, see Jennifer
Kirby, ‘The ICC Court: A Behind-the-Scenes Look’, ICC International Court of Arbitration
Bulletin 16, No. 2 (2005): 9.
93) The ICC Court does not accept changes that go against the key principles laid down in its Rules.
For example, the ICC Court has declined to administer arbitrations where the parties' arbitration
agreement provided for arbitration under the ICC Rules, but purported to exclude the scrutiny
process for Awards and the confirmation process for arbitrators. See Samsung Electronics Co
Ltd v. Monsieur Michael Jaffe, administrator/liquidator of Qimonda AG, Tribunal de Grande
Instance de Paris, ord. de. référé. 10-50604, 22 January 2010 (The decision found that due to
the fundamental changes to the ICC Rules and the ICC Court's decision not to accept such
changes, the parties had agreed to an ad hoc arbitration with the ICC Court as appointing
authority).
94) A survey taken in 2010 found that the most important factor for parties in choosing an arbitral
institution is neutrality/internationalism (66%), followed by reputation and recognition (56%).
White & Case and Queen Mary University of London, ‘2010 International Arbitration Survey:
Choices in International Arbitration’ (2010): 21.
95) See Michael Hwang, ‘Why is There Still Resistance to Arbitration in Asia, in Global Reflections
on International Law, Commerce and Dispute Resolution’ in Liber Amicorum in Honour of
Robert Briner, ed. Gerald Aksen et al. eds. (Paris: ICC Publishing S.A. 2005), 401–411
(defining arbitration terrorists or guerrillas as ‘Respondents who are not interested in playing the
game by the Rules, usually because they have a bad case. They will try and exploit the
procedural rules for their own advantage, seeking to delay the hearing and (if they get any
opportunity) ultimately to derail the arbitration so it becomes abortive or ineffective’). Stephan
Wilske credits Michael Hwang for the first use of the term ‘arbitration guerrillas', Austrian
Yearbook on International Arbitration 2011 (eds. Klausegger et al. eds., (Vienna: Manz, C.H.
Beck, Stämpfli, 2011)), 315, 323–324.
96) For information concerning the difference between challenges and replacements under the
Rules, see Jason Fry, Simon Greenberg & Francesca Mazza, The Secretariat's Guide to ICC
Arbitration (Paris: International Chamber of Commerce 2012): 170–188.
21
97) Accordingly to an unofficial translation of Art. 31 of the 2001 Arbitration Act Art. 37:
(a) The arbitral tribunal shall render the final award ending the entire dispute within the period
of time as agreed upon by the two parties; failing such agreement, the award shall be
rendered within twelve months as of the date of commencing the proceedings. In all cases,
the tribunal may extend such period, provided that the extension shall not exceed six
months unless the two parties have agreed on a period of time exceeding that period.
(b) If the arbitral award has not been rendered within the period of time as provided for in
paragraph (a) of this Art., either party may apply to the president of the competent court to
give an order setting another one period or more (for rendering the award) or terminating
the arbitral proceedings. In the latter case, either party may bring an action before the court
that originally has jurisdiction over the dispute.
For a discussion of this provision, see Abdul Hamid El-Ahdab, Jalal El-Ahdab, Arbitration with
the Arab Countries 3rd ed., (The Hague: Kluwer, 2011), 284–285. For a discussion of untimely
Arbitral Awards in other countries, see, Samuel Estreicher & Steven Bennett, ‘Untimely
Arbitration Awards', New York Law Journal 235, 28 Mar. 2006.
98) For a discussion of challenges in ICC cases and when they can be considered to be tactical,
see S. Greenberg, ‘Tackling Guerrilla Challenges Against Arbitrators: Institutional
Perspective’, Transnational Dispute Management, 7 (November 2010).
99) See Günther J. Horvath, Stephan Wilske, Harry Nettlau & Niamh Leinwather, ‘Categories of
Guerrilla Tactics’, Chapter 1, Section §1.02[A].
100) The English text of the 1998 Rules uses the term ‘chairman’ (see Art. 9(5)) and the 2012 Rules
use the term ‘president’ (see Art. 13(5)).
101) See Art. 15(2) of the 2012 ICC Rules, formerly Art. 12(2) of the 1998 Rules.
102) See, e.g., Société Maschinenfabrik Möllers GmbH v. Société Al Khaleei Sugar Company
LLC, Cour d'appel de Paris (Pôle 1 - Ch. 1), 12 May 2011.
103) See Mark Beeley & Sarah Stockley, ‘Spare the Rod and Spoil the Party: How Procedurally
Robust Should a Tribunal Be?’ Arbitration, The International Journal of Arbitraiton Mediation
and Dispute Management 75, no. 3 (2009): 349-359.
104) For a discussion of this new Appendix IV, see Mads Bryde Andersen, Anders Ryssdal & Stefan
Lindskog, ‘Achieving Efficiency in International Arbitration: Some Strategic Suggestions for
Arbitral Tribunals in ICC Proceedings’, ICC International Court of Arbitration Bulletin 22, no. 2
(2011): 5.
105) See Art. 15(3) of the 1998 Rules.
106) See Yves Derains & Eric Schwartz, A Guide to the ICC Rules of Arbitration, (The Hague:
Kluwer 2d ed.), 229 (pointing to the significance of the limitation imposed by the use of the word
‘reasonable’ in Art. 15(2) of the 1998 ICC Rules).
107) For example, in 2012 the ICC Court decided not to approve a draft Final Award in part because
it was not clear that the Sole Arbitrator had granted Respondents a reasonable time period to
file their pleadings. Respondents responded periodically to correspondence indicating that they
did not speak the language of the arbitration and did not know how to respond. At the request of
one Claimant, the Sole Arbitrator reduced the time that had been granted to Respondents to file
their main pleading down to less than one week. The ICC Court decided not to approve the draft
Final Award and suggested that the Sole Arbitrator reopen the proceedings and grant
Respondents additional time to file their pleadings. The Sole Arbitrator did so.
108) See Beeley & Stockley at 358 (suggesting that where the term ‘reasonable opportunity’ is used,
‘a tribunal should feel even more confident adopting a fair, but strict, enforcement of the rules and
procedural orders etc.’).
109) Pacific China Holdings Ltd (In Liq) v. Grand Pacific Holdings Ltd [2012] HKEC 645 (Court of
Appeal) at 105.
110) Pacific China Holdings Ltd (In Liq) v. Grand Pacific Holdings Ltd [2012] 2012] HKCU 971
(Hong Kong Court of Appeals) CACV 136/2011. In an oral judgment of 19 Feb. 2013, the Hong
Kong Court confirmed its decision to reinstate the Award. See C. Spalton, ‘Hong Kong Ruling
Brings Certainty on Set-Aside’, Global Arb. Rev. (20 Feb. 2013).
111) This change means that the UNCITRAL Arbitration Rules differ from the UNCITRAL Model Law
on International Commercial Arbitration, which provides that each party shall be given a ‘full
opportunity’ to present its case (see Art. 18). See T: H. Webster, Handbook of UNCITRAL
Arbitration: Commentary, Precedents and Materials for UNCITRAL Based Arbitration Rules
(London: Sweet & Maxwell, 2010), 272–273 (‘In approving the [2010 UNCITRAL] Rules, the
Commission inserted reference to a “reasonable” opportunity to underline the fact that the
requirement is not absolute’).
112) See Art. 27 of the 2012 Rules and Art. 22 of the 1998 Rules.
113) See Art. 15(5) of the 2012 Rules and Art. 12(5) of the 1998 Rules.
114) For a discussion of Art. 15 of the 2012 Rules, see Jason Fry, Simon Greenberg & Francesca
Mazza, The Secretariat's Guide to ICC Arbitration, 192–194.
115) The ICC Court rarely decides not to accept arbitrators' resignations. Between 2007 and 2011,
the ICC Court decided not to accept 4% of resignations, accepting 96% of 152 resignations
tendered by arbitrators. See Jason Fry, Simon Greenberg & Francesca Mazza, The
Secretariat's Guide to ICC Arbitration, 180–183.
22
116) The relevant arbitration act purports to adopt, with modifications, the Model Law on International
Commercial Arbitration adopted by the UNCITRAL on 21 Jun. 1985 for both domestic and
international arbitration.
117) See Art. 15(4) of the 2012 Rules, or Art. 12(4) of the 1998 Rules, which both provide, in relevant
part that: ‘Once reconstituted, and after having invited the parties to comment, the arbitral tribunal
shall determine if and to what extent prior proceedings shall be repeated before the reconstituted
arbitral tribunal.’
119) See Art. 28 of the 2012 Rules, Art. 23 of the 1998 Rules, ‘Special Supplement on Interim,
Conservatory and Emergency Measures in ICC Arbitration’, ICC International Court of
Arbitration Bulletin 22 (2011).
120) Anne Marie Whitesell, ‘Independence in ICC Arbitration: ICC Court Practice concerning the
Appointment, Confirmation, Challenge and Replacement of Arbitrators', ICC International
Court of Arbitration Bulletin Special Supplement Independence of Arbitrators (2007): 33–35
(‘Parties occasionally file both a challenge and a request for the arbitrator's replacement…Since
1998, the Court has decided in only one case to refuse a challenge and replace an arbitrator. In
that case, the respondent challenged an arbitrator for lack of impartiality following the rendering
of an interim award. It was then discovered that the arbitrator was extremely ill. The Court
decided to replace the arbitrator under Article 12(2), considering that he was prevented from
fulfilling his functions. Despite the Court's decision, the respondent refused to withdraw its
challenge. The Court therefore decided to refuse the challenge’).
121) M. Hwang, ‘Why is There Still Resistance to Arbitration in Asia, in Global Reflections on
International Law, Commerce and Dispute Resolution’, 403–404.
122) A. M.Whitesell, ‘Independence in ICC Arbitration: ICC Court Practice concerning the
Appointment, Confirmation, Challenge and Replacement of Arbitrators', 21–22. See Art. 13 of
the 2012 Rules (‘In confirming or appointing arbitrators, the Court shall consider the prospective
arbitrator's … availability and ability to conduct the arbitration in accordance with the Rules'.) and
Art. 9 of the 1998 Rules.
123) The original text was in Spanish.
125) J. Werner, ‘The Goff Lecture 2011: The Case for Better, and Better Armed Arbitrators', The
Journal of World Investment and Trade, 13 (2012): 1014–47.
23
Chapter 2, §2.03: Particularities when Dealing with State
Author Entities
Noah Rubins Noah Rubins
§2.03 Particularities when Dealing with State Entities

Publication Noah Rubins
Guerrilla Tactics in International
Arbitration [A] Introduction
It is often in the context of arbitration involving governments and state-owned companies that
arbitration practitioners first encounter the litigation practices broadly referred to as ‘guerrilla tactics'.
Biblographic reference In a sense, this is unsurprising: in the lion's share of cases in which states are implicated, they appear
Noah Rubins, 'Chapter 2, §2.03: as respondents and there is normally rather little motivation for the claimant to prolong, deflect or
Particularities when Dealing with disrupt the arbitration process. Moreover, the police powers inherent to all governments add a
State Entities', in Günther J. dimension to such tactics that is generally unknown in purely private disputes. Where the other parties
Horvath and Stephan Wilske or the arbitral tribunal itself falls in some way within the scope of the state's coercive reach, a multitude
(eds), Guerrilla Tactics in of tools can be brought to bear by way of national courts, law enforcement agencies, tax authorities
International Arbitration, and other municipal institutions.
International Arbitration Law This is not to suggest that the conduct of states is consistently more egregious than that of private
Library, Volume 28 (© Kluwer parties in arbitration proceedings. However, the reality of government entities frequently creates the
Law International; Kluwer Law impulse (conveyed to and implemented by counsel) to slow and even to obstruct, rather than to move
International 2013) pp. 69 - 93 directly to a final adjudication. Public governance is by definition bureaucratic and diffuse – even when
filtered through the structure of an ostensibly independent state-owned company. A negative decision
implies for bureaucrats disfavour and possibly retribution from above, a risk better postponed if
possible. In any event, the decision-making process of the state is rarely monolithic, with even the
most basic strategic choices often subjected to multiple layers of oversight and the conflicting views of
various stakeholders with divergent political interests. Many arbitrators recognize these limitations,
demonstrating more tolerance for extension requests and other tactics where a state party is
concerned.
P69
[B] Negotiation of Contract Terms
Government entities often enjoy a particularly strong negotiating position in the drafting a concession
and other state contracts even prior to the appearance of any dispute on the horizon.
In particular, where a contract relates to the development of scarce natural resources, foreign
companies are in sufficient competition with one another that states are in a position to impose
restrictions on a range of contracting options that in purely commercial relationships would be
adopted as a matter of course to limit the parties' exposure to risk. There is nothing unusual in the
state seeking advantage from such an enhanced bargaining position, but the foreign contracting party
should be aware of the consequences of its acquiescence to government demands. (126)
The most important issue in this regard is the identity of the signatory entity or entities from the
government's side. Increasingly, governments put forward separate legal entities, including state-
owned companies, to bear exclusive responsibility for performance (and breach) of contracts with
foreign corporations. While this practice has certain advantages in terms of efficiency and
minimization of bureaucratic barriers to operations, it is frequently the case that other entities,
including organs of the state, are substantially implicated in the project, and the state's cooperation
and facilitation is an essential element of success. Moreover, where the financial resources of the
signing entity are wholly dependant on allocations from the state, the absence of the government itself
from the contract documentation can be particularly fraught with risk.
In a number of prominent cases, the absence of the state's signature from contracts with state-owned
companies has led to protracted litigation. This was particularly the case where the government took
steps after the dispute arose to reorganize or even liquidate the signatory entity. (127) After decades
of discussion and debate surrounding the seminal Dow Chemical case, (128) most national legal
P70 systems today remain restrictive with respect to the inclusion of non-signatories in the arbitration
process, and still more reticent to permit the attachment of assets not belonging directly to the
judgment debtor. (129)
In Bridas, an Argentine energy company concluded an agreement with the national oil and gas
company of Turkmenistan to develop natural gas there. After disputes arose, Bridas commenced two
parallel ICC arbitrations, one for each exploration area, against Turkmenistan and Turkmenneft.
Turkmenistan subsequently liquidated the state-owned company and abolished the Ministry of Oil and
Gas, adopting a law dictating that all proceeds from oil and gas exports were to be directed to a
special fund that would be immune from seizure. Ultimately, Bridas prevailed in both arbitrations, but
with a twist: in one case, the arbitrators upheld jurisdiction only over Turkmenneft, while in the other the
tribunal issued an award of USD 495 million against both the company and Turkmenistan itself. (130)
Nearly seven years of litigation followed in US courts, as Bridas sought to enforce the award against
the only possible payor, the state. Ultimately, the Fifth Circuit confirmed the award against
24
Turkmenistan, having found Turkmenneft to have served as the state's alter ego. (131)
In Itera v. Georgia, (132) disputes arose out of a transaction to restructure debts owed by Georgian
state-owned companies to a foreign energy company. The debt was to be repaid on a consolidated
basis through a new state-owned company, Sistema. Payment was secured by a surety issued by the
Georgian Ministry of Energy. When Sistema failed to pay, Itera commenced arbitration against the
Ministry and the state. Meanwhile, a court in Tbilisi ruled that the Ministry had not been authorized to
issue such guarantees as a matter of Georgian law, and voided Itera's contracts. (133) While the
dispute was ultimately settled, this was not before Itera had launched and pursued three separate
arbitrations for several years, one under the debt contract and two pursuant to applicable investment
protection treaties.
In Dallah v. Pakistan, (134) a Saudi Arabian company that provided services for pilgrims travelling to
Muslim holy sites concluded a memorandum of understanding with the Pakistani Government to build
housing. Dallah then contracted with Awami Trust, a body associated with the President of Pakistan.
The state itself did not sign, although the agreement referred to a government guarantee. The project
stalled after a change of government in Pakistan, and Awami was dissolved. In the ICC arbitration that
P71 ensued, the tribunal assumed jurisdiction over Pakistan and awarded Dallah about USD 20 million.
Pakistan opposed enforcement before the English courts and annulled the award in Paris. The Paris
Court of Appeal upheld the award, concluding that Pakistan had ‘behaved as if the Contract was its
own … the creation of the Trust was purely formal and that [the Government] was in fact the true
Pakistani party …’. The UK Supreme Court disagreed. It noted in particular that the transaction had
evolved from a planned agreement with Pakistan to a final contract with the Trust, and that the state's
main role in the project had been to guarantee the Trust's loan obligations. On this basis, the Supreme
Court declined to confirm the ICC award for enforcement in England.
Another area of contract drafting that state entities frequently seek to turn to their advantage is the
arbitration clause itself. There is only limited concern that negotiating tactics will lead to an
unenforceable or ‘pathological’ clause. This is not normally a goal of state entities and their legal
advisors (internal and external); any lack of clarity or risk of invalidity can normally be eliminated in the
exchange of drafts using cogent explanations for the need to modify the contractual text. (135) Rather,
states frequently seek the consent of foreign counterparties to an arbitral seat within their territory. This
often comes as a ‘compromise’ variant after an initial proposal that disputes be resolved in the state's
own courts. Some government entities insist that a domestic (from their point of view) seat is a
mandatory legal requirement; in some instances, this is actually true.
The impact of choosing an arbitral seat is potentially momentous in any circumstances. (136) Where
one party is a governmental entity or the state itself, the importance of the legal place of the
proceeding is greatly magnified. As described in some of the later subsections of this chapter, a
range of disruptive tactics are both facilitated and legalized by this one central pre-dispute selection of
the parties. In particular, the judicial arm of the state gains broad supervisory jurisdiction over the
arbitral process – perfectly legitimate within the framework of the New York Convention. This very
direct power can be exploited during a dispute resolution process (on the assumption, by no means
universally salient, that the judiciary lacks independence from other state bodies) to obtain anti-suit
injunctions, coercive interim relief, or even orders detaining or otherwise interfering with witnesses,
experts, counsel or arbitrators.
No less important is the influence of the courts at the place of arbitration upon the enforceability of an
P72 eventual award. Only these courts have authority to nullify an arbitral award, and this pursuant to their
own law on the subject (unfettered by international commitments such as the New York Convention).
Most national arbitration statutes provide for the possibility of nullification on public policy grounds,
and while the majority of jurisdictions consider only international public policy to be relevant in this
context, courts in some countries have been less than consistent in this regard. As a result, selection
of an arbitral situs within the territory of a state whose interests are directly at stake in a contract can
transform the arbitration process into a lose-lose proposition: either the state will prevail on the merits,
or an award imposing liability on the state may be set aside as violating public policy. (137)
The impact of the arbitral seat can also be less direct, though no less disruptive. Some jurisdictions
continue to impose rather unusual restrictions on arbitration proceedings taking place there. For
example, the national oil company of Nigeria has taken the position that only Nigerian-qualified
attorneys may provide legal services in Nigeria, and that this applies to counsel in arbitration. (138)
While this would seem unlikely to lead arbitral tribunals to disqualify foreign litigants' international
counsel, this could be the result. In any event, should the Nigerian courts adopt this rather unorthodox
position, the continued participation in arbitration proceedings by foreign counsel could lead to
sanctions for the lawyers in question and possible requests for the annulment of the award for breach
of mandatory Nigerian law norms.
[C] Default of the State Respondent

The problem of the defaulting respondent is one that has troubled arbitration practitioners and
commentators for many decades. On the one hand, a respondent in arbitration cannot be permitted to
defeat its own consent to arbitration by refusing to participate. On the other hand, where the
respondent has not taken active part, how can the tribunal, or an enforcing national court for that
matter, be sure that basic norms of due process have been observed? (139) In the words of the
P73 International Court of Justice, one party's failure to participate in the arbitral confrontation ‘obviously
has a negative impact on the sound administration of justice’. (140)
25
These questions come into still sharper focus in the context of arbitration against states. Where an
award can potentially bind not just a single commercial entity but an entire nation, there may be
additional concerns in deciding a case without a full account of the facts – or a full-scale adversarial
test of the claimant's legal arguments. This may be still more so where the state measures in question
regulate the environment, human health or other matters of ‘public interest’. (141) In light of these
concerns, default by a respondent state can lead to significant disruption and delay, (142) as
arbitrators either seek repeatedly to draw the respondent into the proceeding, request that claimants
provide additional information as necessary to fill the evidentiary record, or themselves engage in
(inevitably inefficient) fact investigation.
International commercial arbitration rules tend to treat defaulting respondents rather severely, at least
on their face. The ICC Rules, for example, state simply that ‘[i]f any of the parties refuses or fails to
take part in the arbitration or any stage thereof, the arbitration shall proceed notwithstanding such
refusal or failure’. (143) The International Centre for Dispute Resolution (ICDR) Rules, meanwhile,
could be seen to preclude sua sponte consideration by a tribunal of jurisdictional issues, which must
be raised by a party no later than the filing of the statement of defence. (144) In this sense, commercial
arbitration adopts the burden of proof as recognized in many domestic law systems. Where one party
has raised a fact, and provided sufficient evidence to prove that fact prima facie, the burden of proof
shifts to the opposing side. If the fact remains uncontroverted by the opposing party, it is accepted by
the decision-maker as irrevocably established, without any need for further, independent
corroboration.
Nevertheless, in some contexts of heightened public interest, arbitrators and commentators have
posited the existence of a duty on the part of an arbitral tribunal to conduct fact investigations and
construct legal arguments ex officio, in order to prevent injustice on a broader societal level from
occurring. In particular, where there are signs of fraud, money laundering, bribery or similar activity,
P74 some have wondered whether the arbitrators ought to seek evidence from independent sources, even
if the respondent does not pursue such allegations. (145)
The ICSID Rules take a different approach to defaulting respondents and questions of proof,
apparently recognizing the frequency with which respondent states fail to appear. Article 42 sets out a
specific procedure for circumstances of a defaulting respondent, such that the tribunal must examine
its jurisdiction sua sponte, as well as decide for itself ‘whether the submissions made are well
founded in fact and in law’. (146) Article 45 further establishes that ‘[f]ailure of a party to appear or to
present his case shall not be deemed an admission of the other party's assertions'. (147) Thus,
although the ICSID system does not permit an absent respondent to prevent the case from being
heard, it does not allow the tribunal to accept the claimant's version of reality as fact, either. An ICSID
tribunal's obligation to act ex officio is particularly intense with regard to jurisdiction, where it appears
compelled to build a case in the absent respondent's stead. (148)
These provisions were analysed and applied in Goetz v. Burundi, (149) where the respondent
selected an arbitrator, but did not appear at the initial hearing – ostensibly because an embargo
prevented its lawyers from making the trip to Paris. Later, Burundi failed to submit any written
pleadings or appear at the merits hearing, although the tribunal granted a number of extensions of
time.
The Goetz case raises echoes of the venerable Libyan oil concession cases, where several
arbitrators were disturbed by Libya's absence and resolved to fill in for the respondent state in
critically reviewing the claimant's case. One of the best known of the resulting awards came in the BP
v. Libya case, based upon the breach of a concession agreement. There Judge Gunnar Lagergren
struggled with these issues in assessing the claims before him:
The jurisdiction of the Tribunal … and the law applicable to the proceedings necessarily confine its
task to a consideration of the claims and submissions formulated by the Claimant, and the Award
therefore rules exclusively on them.
The facts deemed relevant and taken as established by the Tribunal have been gathered from
evidence produced by the Claimant alone. With respect to certain facts the Tribunal has sought and
received from the Claimant the submission of additional documentary evidence and explanations. The
Tribunal deeply regrets the absence of further elucidation on the part of the Respondent.
With respect to the analysis of facts and their legal implications the Tribunal has had the benefit of
argument presented by the Claimant alone. However, the Tribunal has felt both entitled and compelled
P75 to undertake an independent examination of the legal issues deemed relevant by it, and to engage in
considerable legal research going beyond the confines of the materials relied upon by the Claimant.
The conclusions in the Award therefore are based on a broader consideration of the issues than that
permitted by the format of the Claimant's argument in support of its claims. Thus, the Tribunal to the
greatest extent possible has endeavoured to eliminate any inherent adverse effects for the
Respondent of its decision not to appear as a party in the proceedings. (150)
[D] Constitution of the Arbitral Tribunal

Since the selection of arbitrators is one of the most vital moments in any arbitration, institutions and
arbitrators are careful to safeguard all parties' rights, even at the expense of expeditiousness.
Respondents therefore often use the tribunal constitution process to achieve delay and disruption.
The situation is no different with state parties, and is sometimes compounded by the respondent
state's initial failure to take active part in the proceedings. Since the participation of the respondent is
26
an important (although by no means essential) element of creating an enforceable arbitration award,
institutions are hesitant to appoint arbitrators absent the involvement of a party, particularly where
some additional patience or cajoling may bring the defaulting entity into the arbitral fold.
Naturally, all arbitral rules (including those imposed by most national arbitration statutes in the
absence of any contractual selection of rules) set deadlines beyond which the tribunal will be
constituted. However, it is quite common for state parties to wait until nearly the final day before the
elapse of the deadline to choose an arbitrator, and then to request an extension of time to make the
selection. Sometimes such a request will be justified by the state's need to engage counsel, despite a
number of weeks having already elapsed since the request for arbitration was served. This
justification is commonly deployed in part because it is somewhat credible; in many jurisdictions, the
government is compelled by public procurement legislation to hire external counsel only after a formal
tender process has been carried out. Such a process can take months to conduct according to
procedural requirements. This fact of governmental life cannot excuse the violation of procedural
deadlines to which the state entity has agreed in advance; but as noted, institutions and arbitrators
tend to grant moderate extensions to the extent that it ensures full-fledged participation of the state
party in the arbitration going forward.
An additional aspect of the tribunal constitution process that has been the subject of disruption tactics
by states is the challenge of arbitrators. Given that (whether formally or informally) the challenge of an
arbitrator will often result in the suspension of the arbitration proceedings, such a step can be an
P76 effective tool to gain time and to increase the claimant's costs. (151) In arbitration between
commercial parties, challenges have become a standard tactic. (152) However, the range of available
grounds for challenge is broader for states than for private parties. The multitude of public and quasi-
public entities in most government structures increases the likelihood of prior professional dealings or
oppositions between an arbitrator and some facet of the state. There is also the possibility that an
arbitrator might have written or spoken publicly about the political, legal or commercial situation
prevailing in the respondent state, giving rise to a challenge (if the statement is sufficiently negative) of
partiality. In 2012, Judge Charles Brower was quoted in a legal publication shortly after his
appointment to an investment treaty panel adjudicating claims against Ecuador. In relation to the
recent withdrawal from ICSID of Ecuador and Venezuela, Judge Brower commented that ‘[a]fter a
certain point, no one will invest without having something to rely on’. (153) Ecuador subsequently
challenged him on grounds that this statement reflected bias. The Permanent Court of Arbitration,
which had been entrusted by the parties with the adjudication of Ecuador's challenge, agreed, and
Judge Brower was removed from the tribunal. (154)
It is essential to any arbitration system to ensure effective recourse where reasonable doubts exist as
to the impartiality and independence of an arbitrator. In some cases, however, respondent states and
state-owned entities appear to use the timing and frequency of challenges to delay or obstruct. When
comparing the arbitral rules most commonly employed in investor-state disputes, it would seem at first
that the ICSID Rules are designed to discourage frivolous challenges, and by consequence to reduce
frequency and disruption from such petitions. While nearly all commercial arbitration rules, including
the Stockholm Chamber of Commerce ( SCC) and UNCITRAL Rules, mandate the removal of an
P77 arbitrator where reasonable doubts exist as to the individual's independence or impartiality, (155) the
ICSID Rules refer to a ‘manifest lack’ of arbitrator qualifications – including impartiality.
In practice, however, there does not appear to be a significant difference in the application of
challenge standards. At the same time, the ICSID Rules to some degree facilitate strategic conduct in
the challenge of arbitrators. While the UNCITRAL Rules expressly require that any request to remove
an arbitrator be raised within fifteen days after the relevant circumstances became known to the
challenging party, (156) the ICSID Rules stipulate only that a challenge must be brought ‘promptly’.
(157) More importantly, both the ICSID and Additional Facility Rules call for the suspension of
proceedings while the challenge is adjudicated. (158) The issue of how the arbitration will be affected
by the challenge of an arbitrator in most other leading rules systems is left to the discretion of the
arbitral tribunal. (159) Under these more flexible rule systems, the tribunal (or at least the arbitrators
who are not subject to challenge) can take account of all the circumstances, including the prima facie
merits of the petition, before deciding the extent to which existing procedural deadlines should remain
in place.
From the perspective of efficiency, a full suspension – as mandated within the ICSID system – is
particularly questionable where the tribunal's active involvement will not be required before the
pending challenge is adjudicated. For example, if the respondent state requests the removal of an
arbitrator one month before its statement of defence is due, it is difficult to explain why it should not be
required to observe that deadline. In most cases, the written submissions of the parties will be
scheduled over the six to twelve months to come. In most cases, the tribunal's role is limited to
reviewing these pleadings in anticipation of an oral hearing. Knowing that the applicable ICSID rules
call for non-discretionary suspension of the proceedings (resulting in an automatic extension of the
impending deadline by weeks or even months), the temptation of the respondent to challenge the
arbitrator – even if the chances of success are very small – may be irresistible. The likelihood of
strategic conduct is still greater due to ICSID's vague deadline for advancing a challenge, noted
above. It is far easier for a party to choose the most advantageous moment in the established
calendar to freeze the existing deadlines when the timeliness of the motion will be decided according
to a ‘promptness' standard, rather than the fifteen-day limit imposed under the UNCITRAL Rules.
Indeed, this may be one factor explaining the prevalence of arbitrator challenges in investor-state
arbitration.
P78
27
P78
[E] Jurisdictional Objections
It is not normally improper for a respondent to contest the jurisdiction of an arbitral tribunal. Arbitration
can only proceed with the consent of all parties, and it is not unusual for claimants to overreach in
launching arbitration – either to escape the jurisdiction of otherwise competent courts perceived to be
hostile, or to reach a pocket deeper than that of the most obvious counterparty. (160) In this context,
jurisdictional objections are only natural, all the more so where consent is purportedly contained in an
investment treaty, the jurisdictional provisions of which may be ambiguous and more convoluted than
the arbitration clause of a contract.
At the same time, jurisdictional objections have become ubiquitous in arbitration against states.
Indeed, unlike in contract arbitration, it is almost unheard of that a state would simply accept
jurisdiction. (161) Some states have advanced the same objections repeatedly in similar arbitrations,
ignoring seriatum decisions strongly suggesting that their arguments will be futile. Argentina, for
example, faced with dozens of claims arising out of its economic crisis of the early 2000s, raised as a
matter of course the argument that foreign shareholders in Argentine companies have no standing to
sue under investment treaties in their own right. Even after a dozen tribunals rejected this position, the
government maintained the contention in case after case, thus increasing the cost and complexity of
the arbitration proceedings in which it was taking part.
The explanation of the proliferation of jurisdictional objections appears threefold. First, adjudication by
an arbitral tribunal is viewed as a matter of sovereignty and public policy, requiring as a matter of
principle that the state advance all possible objections, even those unlikely to succeed or relating only
to a small portion of the claims presented. Second, the pre-conditions for jurisdiction under investment
treaties are often multifarious, complex, and subject to contrary decisions by prior arbitral tribunals,
creating differing perceptions about the likelihood that a particular objection will lead to dismissal of
claims. (162)
But perhaps most significant is the third reason that the presentation of jurisdictional objections has
often been followed by suspension of proceedings on the merits. Given that separate proceedings on
preliminary issues can easily add from eighteen months to two years to the overall adjudication of
claims, the strategic advantage for the respondent state can be irresistible. (163) Nearly all arbitral
P79 rules accord to the tribunal authority to ‘bifurcate’ proceedings in this manner, in the interests of judicial
efficiency. There is also broad consensus that bifurcation should only be ordered to the extent it is
likely to advance the interests of economy and judicial efficiency. This can only be the case if
preliminary issues are both readily untangled from the merits and entail a substantial probability that
the arbitration will end, obviating the need to reach the substance of the parties' dispute. (164)
The ICSID Rules as originally drafted contributed to an early predilection for bifurcation in investment
treaty arbitration. Article 29 provided that jurisdictional objections could be raised at any time until the
submission of the Counter-Memorial, and that the interposition of such an objection would lead
automatically to the suspension of proceedings on the merits. (165) When the ICSID Rules were
revised in 2006, one of the less-discussed modifications was the re-drafting of the provision on
objections to jurisdiction:
(1) Any objection that the dispute is not within the jurisdiction of the Centre or, for other reasons, is not
within the competence of the Commission shall be made as early as possible. A party shall file the
objection with the Secretary-General no later than in its first written statement or at the first hearing if
that occurs earlier, unless the facts on which the objection is based are unknown to the party at that
time.
(2) The Commission may on its own initiative consider, at any stage of the proceeding, whether the
dispute before it is within the jurisdiction of the Centre and within its own competence.
(3) Upon the formal raising of an objection, the proceeding on the merits shall be suspended. The
Commission shall obtain the views of the parties on the objection.
(4) The Commission may deal with the objection as a preliminary question or join it to the merits of the
dispute. If the Commission overrules the objection or joins it to the merits, it shall resume
consideration of the latter without delay.
(5) If the Commission decides that the dispute is not within the jurisdiction of the Centre or not within
its own competence, it shall close the proceeding and draw up a report to that effect, in which it shall
state its reasons. (166)
Nevertheless, the prevalence of bifurcation requests persists, as does the tendency of tribunals
(whether operating under the ICSID Rules or otherwise) to satisfy them.
P80 The lack of strict time limitations in some arbitration rules for the presentation of jurisdictional
objections compounds the problem of protracted, open-ended and unpredictable briefing schedules.
A state can gain substantial tactical advantage from the absence of any baseline requirement that
jurisdictional objections be presented before the Counter-Memorial. (167) The respondent can use
nearly all of the time allocated under the schedule for a defence on the merits, and then shortly before
the deadline submit an objection to jurisdiction with a request to bifurcate. The state can be confident
that the timetable will be suspended while the tribunal decides the bifurcation issue. This accords in
the process additional time to the respondent to prepare its case on the merits and delaying the final
adjudication of the dispute.
[F] Scheduling
28
While no comprehensive studies have been carried out (and it is unlikely that they could be reliably
undertaken), it seems an anecdotal fact that arbitration involving states (whether based on contract or
treaty) takes longer on average than purely commercial dispute resolution. This would seem to be the
case even considering only the official timetables initially established by the relevant tribunals, and not
the subsequent extensions and suspensions that may result from subsequent party conduct. (168) A
standard schedule for written submissions in private arbitration calls for three months for each side to
make an initial pleading (statement of claim and statement of defence), and two months each for
sequential replies (reply and rejoinder). Such a ten-month written phase appears to be increasingly
uncommon in investor-state disputes.
To the extent that this has become the case, it is difficult to find a basis for it in any applicable rules.
Few of the leading rules provide even a default schedule for the submission of evidence and
argument. Rather, they establish the broad discretion of the tribunal to set a schedule in light of the
circumstances and the need to accord the parties full and equal opportunity to present their positions.
(169) One prominent exception is the LCIA Rules, which are almost never used in investment treaty
arbitration. The LCIA Rules establish a base schedule, which can be altered at the discretion of the
P81 arbitrators of Statement of Case, Statement of Defence and Statement Reply, each separated by a
period of thirty days. (170)
Despite the proliferation of international rules and guidelines on various aspects of arbitration
procedure, (171) the fundamental issue of scheduling remains without guideposts. As noted, there is a
lack of even statistical data confirming the practice of international tribunals operating under various
procedural rules, that might provide some guidance of accepted norms.
Deprived of any concrete landmarks, the preliminary scheduling conferences that precede the
tribunal's issuance of its Procedural Order No. 1 have been transformed in many public-private
disputes into an unrestrained horse-trade. States' intent on extending the arbitration process are
incentivized to ask for deadlines well in excess of the norm in purely commercial disputes; requests of
up to one year for the submission of a Statement of Defence are not unknown. As a result, claimants
may feel compelled to ask for exceedingly short time periods, anticipating (often correctly) that the
tribunal will ultimately adopt an anti-Solomonic solution and will ‘split the baby’ between the deadlines
proposed. (172)
During this exercise, states and their counsel frequently deploy a range of government-specific
arguments to justify longer time periods than would be the case in a proceeding involving only private
parties. Generally, it is often asserted quite simply that the bureaucratic decision-making process
renders speedy approval of submissions prepared by counsel impossible, or (perhaps more
convincingly) that the resource constraints and internal structures of governments make it more difficult
to assess factual allegations and collect responsive evidence than is the case for private parties.
(173) While such practical limitations may affect the operation of state entities in many situations, they
are more difficult to accept as justifications for delay in current circumstances, where states and their
companies are almost invariably represented in arbitration by sophisticated international counsel, who
dispose of ample resources to review and reply to the claimant's submissions.
P82 Hearings are also increasingly difficult to schedule, particularly in cases involving state parties. The
high-profile and high-stakes nature of many such arbitrations mean that the arbitrators selected are
among the most in-demand and over-committed lawyers in the world. So even before the parties'
availability is taken into consideration, it is often difficult to block a one- or two-week hearing period
within a reasonable time after the close of written proceedings. Should counsel express lack of
availability, hearing dates can be pushed back by several months at a stroke. Such a tactic is often
effective, because there is really no means by which a tribunal can verify that counsel is actually unable
to participate at a particular time. Nor need counsel dissimulate: it is sufficient to interpret ‘availability’
as meaning the availability of every member of a five- to ten-member counsel team. Hearing
scheduling can be further complicated where a state respondent insists also that multiple members of
its ‘in-house’ government lawyer team be able to attend, in addition to numerous outside counsel.
From the claimant's perspective, the problems of expeditious scheduling are still more irksome where
the respondent state has refused to pay the advance on costs to the arbitral institution or tribunal.
Advances on costs in investment treaty cases can be substantial, as they are normally designed to
keep the tribunal in funds throughout the written phase. In some cases, particularly where jurisdictional
objections have been raised (which, as noted elsewhere, is a nearly ubiquitous circumstance), the
respondent state will ignore the request to pay one-half of the advance. Under nearly all arbitration
rules, the claimant is then forced to pay the entire advance, or risk the dismissal of the case. This in
itself is a ‘guerrilla tactic’ of sorts, in the sense that a claimant who is under financial stress (ostensibly
due to the respondent's wrongful conduct) may be compelled in this way to abandon the arbitration
altogether. In any event, the double burden on the claimant can divert scarce resources at the outset of
the case that would otherwise have been used to develop the affirmative case. With respect to
scheduling, it would appear particularly difficult for the respondent to insist upon a lengthy, and
therefore costly, briefing schedule where it refuses to bear a share of the costs of that proceeding.
[G] Document Production

The mandatory production of documents has become a fixture in international arbitration practice,
including arbitration involving state parties. The procurement of evidence, even in accordance with the
relatively modest standards of the International Bar Association's Rules on the Taking of Evidence in
International Arbitration, (174) can be burdensome for the producing party and its counsel. (175) Files
must be searched, responsive documents identified, objections to overbroad or misdirected requests
29
must be formulated.
P83 With respect to the involvement of state parties in international arbitration, the preparation and
presentation of document requests poses no particular risks of guerrilla tactics. Any party, state or
private, is equally likely to launch a ‘fishing expedition’ to delay the proceedings and to drain its
opponent of resources, distracting it from the preparation of its case. (176) The particular challenge in
arbitration involving state parties is that governments and their agencies comes on the opposite end,
where a private party opponent is in actual need of material information solely within the government's
control. In such cases, states are prone to minimal document disclosure in response to legitimate
discovery requests, converting the document production exercise into a one-way street for their
opponents.
Counsel are clearly under an ethical obligation to ensure the production of all documents responsive to
valid document requests, and there can be no general suggestion that counsel for states are in any
way less ethical than those representing private parties. (177) However, counsel for states are often
less able personally to verify the existence of material in their clients' files. It is relatively common
practice for lawyers in arbitration to be directly involved in the collection of documents for production,
sometimes physically reviewing files in the possession of their clients. This is more problematic where
documents are requested from a government ministry, where access – even to external counsel – may
be restricted (by law or by design).
Moreover, international practice in document production provides states with at least two useful
exceptions to production. First, documents need only be produced to the extent they are within the
‘possession and control’ of the producing party. Given that documents relevant to a dispute with a
state are often created and held by different departments, ministries, agencies, and state-owned
companies, governments often argue that, under their internal regulations, they do not have ‘control’
over divisions other than the one responsible for the arbitration. Second, documents that are classified
as secret by a government authority are generally excluded from compelled production in arbitration
proceedings. This rule is codified in the IBA Guidelines on the Taking of Evidence, in a formulation
broadened to include material of ‘special political or institutional sensitivity’, albeit limited by the
tribunal's consideration that such considerations are ‘compelling’. (178) The assertion of secrecy
P84 appears to be fully within the state's discretion, and the reasons for which such status was attributed to
documents is naturally difficult to verify.
Obviously, all applicable arbitration rules empower arbitrators to order the production of documents, to
the extent voluntary compliance with a reasonable request is not forthcoming. Article 43 of the ICSID
Convention gives tribunals that power. Under the ICSID Rules, the parties must comply with document
production orders, but if a party fails to cooperate, the rules state only that the tribunal ‘shall take
formal note of the failure of a party to comply with its obligations under this paragraph and of any
reasons given for such failure’. (179) By contrast, some other rules systems are more explicit about
the standard sanction for failure to comply with an order to produce documents: adverse inference.
The IBA Guidelines are sufficiently specific in this regard, providing that:
If a Party fails without satisfactory explanation to make available any other relevant evidence, including
testimony, sought by one Party to which the Party to whom the request was addressed has not
objected in due time or fails to make available any evidence, including testimony, ordered by the
Arbitral Tribunal to be produced, the Arbitral Tribunal may infer that such evidence would be adverse
to the interests of that Party. (180)
In practice, however, arbitrators appear rather reluctant expressly to sanction the failure to produce
documents with adverse inferences about the missing documents' contents. (181) Concern for due
process explains this tendency in part, magnified perhaps in the case of state parties who may be
more inclined than others to seek annulment or to block the enforcement of the award on the basis of
procedural defects.
P85
[H] Anti-Arbitration Injunctions
Courts can be a potent tool for all respondent parties intent on disrupting arbitral proceedings,
particularly where the courts are at the place of arbitration. While in theory court injunctions ordering
the suspension arbitral proceedings are available to all, in practice in many countries governmental
entities appear better able to obtain such orders. At the very least, the arguments often deployed by
states and state-owned companies in opposition to arbitration and restraining an arbitral institution
‘from proceeding to administer the case’. (182) Non-compliance with such injunctions may lead to
significant fines. States such as Pakistan, India and Indonesia are particularly well acquainted to use
such arsenal when it comes to arbitrations against state entities domiciled in India, Pakistan and
Indonesia, or relating to the interests of these states.
One of the most remarkable examples of such a tactic employed by a state entity came in the Karaha
Bodas case. There, shortly after USD 261 million ICC Award was confirmed for enforcement by a US
district court, the judgment creditor, the Indonesian state-owned oil company Pertamina, launched an
action in the Central District Court of Jakarta challenging the award and seeking to enjoin enforcement
worldwide. The Jakarta court granted the relief sought, barring Karaha Bodas from taking action to
implement the award and assessing a USD 500,000 penalty for each day of non-compliance. (183)
[I] Harassment of Witnesses, Representatives and Arbitrators

The state enjoys a particular position within its own territory (and occasionally outside it) with respect
to the application of force through police, military, judicial and other elements of its apparatus. Where
30
representatives of an opposing party in arbitration – or the arbitrators – find themselves within the
reach of the state's authorized use of violence, the disruptive impact can be dramatic. Particularly
vulnerable in this regard are fact witnesses, who are often nationals of the respondent state, and
whose safety and peaceful habitation there will generally be of higher priority than maintaining their
testimony in the arbitration.
In City Oriente, Ecuador initiated criminal proceedings against the claimant's senior executives in
relation to conduct closely related to the pending arbitration. The individuals in question were forced to
leave the country to avoid arrest. (184) The Tribunal considered the state's conduct to be a means to
coerce payment, and condemned Ecuador in an interim order. Such measures, the arbitrators
P86 reasoned, ‘would entail a violation of the principle that neither party may aggravate or extend the
dispute or take justice into their own hands'. (185)
At the same time, arbitral tribunals must take care to distinguish between arbitral sabotage and
legitimate law enforcement. In Libananco Holdings Co. v. Turkey, (186) the beneficial owner of the
claimant had been under criminal investigation for bank fraud long before the (largely unrelated)
arbitration began. The Turkish law enforcement authorities intercepted e-mail communications
pursuant to court authorization that included some messages between the suspect (as the claimant's
principal) and arbitration counsel. The claimant sought interim measures of protection from the
tribunal. Turkey objected, asserting an ‘entitlement to conduct investigation into crime, particularly
serious crime, within its jurisdiction’, which the suspect should not be permitted to undermine by
launching arbitration against the state. The tribunal discounted this position, citing the need to protect
‘basic procedural fairness, respect for confidentiality and legal privilege (and indeed for the
immunities accorded to parties, their counsel and witnesses) …’. (187) At the same time, the tribunal
recognized that an invasive order could work ‘severe prejudice’ against Turkey, and that it could
consider a wide range of remedies to rectify the situation. (188) It is notable that the case was
ultimately dismissed in its entirety on jurisdictional grounds, with a substantial award of costs against
the claimant – suggesting that the Turkish government's concern to pursue its Turkish backers in
relation to bank fraud was not a guerrilla tactic at all.
Quite separate from the issue of harassment is the practice of state retaliation, whereby the state or
government entities take steps on the ground to worsen the claimant's economic position further –
either as punishment for having undertaken to launch proceedings, or to convince the claimant to
discontinue the arbitration. (189) Ecuador has provided a number of unfortunate examples of this
practice. In Occidental, for example, disputes over tax and oil production rights led to a series of
P87 investment treaty arbitration proceedings. After the first had ended favourably for the claimant and
while a second was underway, the state issued a decree terminating Occidental's exploration and
production contract. (190) In City Oriente v. Ecuador, similarly, the respondent national oil company
sought court termination of the contract that formed the disputed bases of the pending arbitration. A
criminal complaint was later filed against the claimant, based on non-compliance with the tax
legislation at issue in the arbitration. In EnCana v. Ecuador, immediately after a hearing on jurisdiction
and without notice to the Tribunal, the Ecuadorian tax authorities froze bank accounts and took other
enforcement actions closely related to the VAT refunds that were at issue in the arbitration. (191)
Situations like these were once difficult to address through the arbitration tribunal. Traditionally,
arbitrators were frequently strict in their analysis of the pre-conditions for interim relief, and in particular
the need to identify a specific right of the requesting party that was in need of preservation. (192)
Indeed, the ICSID Convention directly incorporated this concept, in its provision on preliminary
measures: ‘the Tribunal may, if it considers that the circumstances so require, recommend any
provisional measures which should be taken to preserve the respective rights of either party’. (193)
Moreover, since retaliation often involves the actions of law enforcement and fiscal authorities, interim
relief aimed at stopping such conduct risks striking at the core of state sovereignty. Nevertheless, over
time tribunals – in particular those dealing with state parties – have come to recognize a right to
protection from the aggravation of the dispute by retaliation or otherwise. Thus, in City Oriente, the
Tribunal was unequivocal. As regards the administrative termination, it stated that all the disputes
between the parties should be settled in arbitration, and thus any such claim should be raised by the
respondents in the pending arbitration. On the criminal investigation matter the Tribunal observed that
although the state possessed ‘such undisputed right’, it nevertheless ‘should not be used as a means
to coactively secure payment of the amounts allegedly owed by [the claimant]’. On this basis, the
Tribunal requested the state to stay any such proceedings or actions. As regards the complaint file by
the state Attorney's General Office, the Tribunal also requested the state to take such necessary
measures so that this compliant was not being pursued or inquiries being made which could affect the
claimant or its employees. Most importantly in the context of the present Notes is that the Tribunal
P88 characterized such conduct of the state entity and the state against the claimant as ‘a pressuring
mechanism, aggravat[ing] and extend[ing] the dispute and, by itself, impair[ing] the rights which
Claimant seeks to protect through this arbitration’. (194) Essentially, in resolving the controversial
measures of the respondents the Tribunal was guided by the principle that neither party may
aggravate or extend the dispute or take justice into their own hands. (195)
At least one form of state interference is beyond even the power of arbitral tribunals and interim relief:
the harassment of the arbitrators themselves. Perhaps the most notorious and colourful physical
intervention in the arbitral process by a state came in Himpurna. (196) There, as recounted above,
Indonesia had obtained an injunction from its own courts to stop a Jakarta-seated arbitration. The
chairman of the tribunal disregarded the order to suspend the proceeding, and ordered that it would
continue in The Netherlands to protect participants from the draconian sanctions of the court. When
the arbitration came to a close, the arbitrators were to meet in The Hague to deliberate. Indonesian
31
agents intercepted the state's party-appointed arbitrator on arrival at the Amsterdam airport and
compelled him to return on the next flight to Jakarta. (197) Direct interference with arbitrators is rather
rare, however, and is of dubious utility to a respondent state. (198) Where an arbitrator is unwilling or
unable to participate in deliberations or sign an award, nearly all arbitration rules permit the remaining
arbitrators to issue the award in any event, and pressuring one arbitrator is an effective means of
P89 alienating those who remain. (199) Little was achieved by the kidnapping in Himpurna, as the tribunal
set out in a final decision the events that took place at Schipol Airport and issued a substantial award
against Indonesia. (200)
But in some jurisdictions, the award of a ‘truncated tribunal’ can be difficult to enforce – particularly
against a state-owned entity. This was the situation in First Investment Corp. of the Marshall Islands
v. Fujian Mawei Shipbuilding, Ltd. (201) There, claims against a Chinese state-owned company were
presented to an London Maritime Arbitration Association (LMAA) tribunal chaired by Martin Hunter.
After proceedings closed and the arbitrators had deliberated, a draft award was circulated. The
arbitrator appointed by the respondent responded with comments and a draft dissenting opinion. The
chairman proposed a further meeting of the tribunal to seek unanimity. Before the meeting could take
place, the Chinese authorities detained the potential dissenter. (202)
[J] Enforcement of Arbitral Awards

The prevalence of voluntary compliance with international awards is an often-cited advantage of
arbitration over litigation. (203) Since the New York Convention ensures relatively streamlined and
uniform enforcement of awards against the judgment debtor's assets in most major jurisdictions,
including those most likely to host the bank accounts and securities of cross-border businesses, a
voluntary compliance rate of about 90% – in the private sector – is unsurprising. (204) There is little
sense in recalcitrance when enforcement is inevitable, and prompt payment can lead to compromise
and discount. For states and state-owned companies, however, the calculus may be somewhat
different, and voluntary compliance therefore less universal.
Most importantly, sovereign immunity as codified in national legislation around the world will prevent
some types of state assets from execution. Unfortunately for judgment creditors, these asset
categories are those most commonly found outside the state's own jurisdiction: central bank funds,
P90 military hardware, diplomatic property, and the like. (205) Meanwhile, states rarely hold commercial
assets (i.e., those not subject to sovereign immunity in most jurisdictions) abroad in their own names.
More frequently, governments hold shares in corporate entities, formed either under their own law or in
offshore jurisdictions, which in turn are given title to commercial operating assets outside their
borders.
Perhaps the most notorious example of state resistance to the enforcement of an arbitral award was
the Noga debacle. The French company Noga concluded two agreements with the Russian
government for the supply of crude oil. The contracts provided for arbitration in the event of a dispute,
and a waiver by Russia of immunity from execution against its assets to enforce an eventual the
arbitral award. Russia terminated the oil supply, and Noga commenced two Stockholm Chamber of
Commerce arbitrations. The company prevailed, and received awards of more than USD 27 million.
Russia sought to nullify the awards in the Swedish courts, which upheld them. Noga then sought to
enforce the awards in France, having selected the most obvious – but least vulnerable – Russian
assets located there. Assets held in the bank accounts of the Russian Embassy in Paris were found to
be immune from seizure under French law as belonging to the Central Bank. Ships and airplanes
purportedly belonging to Russia were found in fact to belong to separate legal entities owned in turn by
the government. Recently, the Swiss Supreme Court considered another chapter of the Noga saga.
(206) In 2005, the Swiss authorities seized amounts held on account for the Russian Federation by the
International Air Transport Association (IATA) in Geneva. The Moscow Center for Automated Air
Traffic Control (MCATC) claimed the assets as its own, and the matter eventually came before the
Swiss Federal Tribunal. The Federal Tribunal dismissed the appeal, noting that the supervisory
board's finding was supported by the bylaws of the Center according to which the latter was a
‘corporate entity taking the legal form of a state company that is property of the Russian Federation’. It
was therefore clear that the Center was part of the Russian state. Hence, the Center's assets with
IATA could rightfully be seized as belonging to the Russian Federation. The Supreme Court followed
the lower court's view that the settlement agreement contained an immunity waiver from jurisdiction
and/or enforcement which the Supreme Court regarded as covering not only iure gestionis activity but
iure imperii as well.
In Sedelmayer v. Russian Federation, the German claimant obtained an investment treaty award of
several million dollars from an SCC tribunal against the Russian government. Russia challenged the
award at the arbitral seat in Sweden, while the claimant commenced enforcement proceedings in the
German courts. Mr Sedelmayer located assets belonging to Russia and unsuccessfully pursued
multiple claims. In the preliminary enforcement proceedings, Russia was prohibited from claiming
sovereign immunity because its signature to the BIT constituted an effective waiver. Thus, the award
P91 was enforceable under the New York Convention, but this waiver was held not to encompass immunity
against execution of the award. Sedelmayer filed suit to execute the award against claims that the
Russian government held against German airlines arising out of their use of German airspace. The
Higher Regional Court in Cologne denied execution, ruling that the ‘receivables' were immune
because they were intended for sovereign, not commercial, purposes. (207) Sedelmeyer brought
further proceedings in Berlin against VAT reimbursement claims due to the Russian embassy but of
no avail as these assets were deemed to be immune. Sedelmayer also attempted to attach the
property owned by Russia in Sweden and the rental payments generated from that property. (208) The
32
case was considered by the Swedish Supreme Court which decided that Russia could not claim state
immunity as a bar to the enforcement, because the Russian Federation was not using the building for
governmental purposes.
Within their own jurisdictions (where most of their assets are likely to be located), state entities are
often able further to complicate the enforcement of arbitral awards by invoking special status, national
security, public interest, and the like. Such assertions in Western Europe and North America are not
cognizable, as only international public policy is a recognizable ground for refusing enforcement under
the New York Convention. But in the Russian Federation, for example, the situation is somewhat
different. In Stena RoRo AB v. JSC Baltisky Zavod, (209) the defendant, a shipyard owned by the
Russian government, resisted enforcement of an arbitral award against it on grounds that it was ‘a
strategic enterprise, ensuring the interests of the state’. (210) The Court of First Instance accepted the
argument that national security was implicated and public policy at risk, and refused enforcement on
the basis of Article V(2)(b) of the New York Convention. The Court of Appeals disagreed, but
nevertheless refused to recognize the award on other grounds. (211)
[K] Conclusion
States and the companies they control have no monopoly on unorthodox tactics in international
arbitration. It is in the nature of an adversarial process that the party – whether public or private –
called to answer for its conduct before a neutral decision-maker will seek to delay the day of
reckoning, or cancel it altogether if possible. The annals of arbitration are replete with ‘guerrilla tactics'
pursued by commercial companies. But governments have a range of means at their disposal to
complicate, extend, delay and disrupt proceedings that far exceeds that of normal parties in
arbitration. Some of these means come with the territory of Statehood, such as the use of police
P92 powers and the invocation of sovereign immunity. Others arise from the margin of appreciation that
states (and sometimes their companies) appear to be accorded by arbitrators.
Tribunals have shown relatively little patience with interference of the former variety during the arbitral
process. They have developed a jurisprudence of interim relief to protect the status quo and neutralize
the advantages accorded to governments by virtue of their sovereign powers.
With respect to subtler interference – namely delay tactics, some revision of arbitral rules could be a
part of the solution. In particular, the ICSID and ICSID Facility Rules, so widely used in public-private
disputes, currently provide too much opportunity for extending unnecessarily the length of arbitral
proceedings (ICSID arbitrators need also to be incentivized to render their awards more quickly, but
that is a wholly distinct topic). Also of assistance in combating ‘guerrilla tactics' is a detailed set of
guidelines for the conduct of arbitration procedures involving state parties, and transnational ethical
rules to level the playing field between jurisdictions with respect to counsel behaviour and obligations
towards the arbitral tribunal and their opponents. In this regard, the recent release by the International
Bar Association of new guidelines for the conduct of counsel in international arbitration is a welcome
development. (212)
Rules cannot be made overly inflexible either, however, and will not eliminate the problems outlined
above. Ultimately, what is needed is arbitrators ‘[w]ho stand firm more often and resist the temptation
to dodge critical issues or hide behind burden of proof questions when certain tactics and strategies
are employed that go against the very spirit of international arbitration’. (213)
References
126) Formulation and Implementation of Foreign Investment Policies. Selected Key Issues, UNCTAD
ST/CTC/SER.B/10 (1992), p. 74.
127) National company (State X) v. European company (ICC Case No 7237), Partial Award, 1 June
1993, unpublished, at 8–9; ICC Case No 7245, 28 January 1994, Interim Award, p. 43, See
Eduardo Silva Romero, ‘Are States Liable for the Conduct of Their Instrumentalities?: ICC Case
Law’ in State Entities in International Arbitration, IAI Series on International Arbitration No 4
(Emmanuel Gaillard and Jennifer Younan eds 2008), p. 54.
128) Dow Chemical v. Isover Saint Gobain (ICC Case No 4131), Interim Award, 23 September
1982, 110 JDI 899; See generally, Jean-François Poudret & Sébastien Besson, Droit Comparé
de l'Arbitrage International 227 (2002); Bernard Hanotiau, Complex Arbitrations (2005); Charles
Jarrosson, ‘Conventions d'Arbitrage et Groupes de Sociétés”, in The Arbitration Agreement: Its
Multifold Critical Aspects (1994) ASA Bull., Special Series No 8, p. 209; Emmanuel Gaillard,
John Savage, Fouchard Gaillard Goldman on International Commercial Arbitration (ed 1999), p.
281; Noah Rubins, ‘Group of Companies Doctrine and the New York Convention’, in
Enforcement of Arbitration Agreements and International Arbitral Awards: The New York
Convention in Practice 449, 473 (E. Gaillard & D. Di Pietro eds, 2008).
129) Compagnie Noga D'importation et D'exportation S.A. v. the Russian Federation 361 F3d 676
(2d Cir 2004); Transaero, Inc. v. La Fuerza Aerea Boliviana 30 F3d 148, 153 (D.C.Cir1994);
Filus v. Lot Polish Airlines 819 F Supp 232, 236-37 (ED NY1993); Gvozdenovic v. United Air
Lines, Inc 933 F2d 1100, 1105 (2d Cir1991); Orion Shipping & Trading Co. v. E. States
Petroleum Corp. of Pan., S.A. 312 F2d 299, 301 (2d Cir 1963).
33
130) Bridas SAPIC and others v. Government of Turkmenistan and others (ICC Case No.
9058/FMS/KGA), First Partial Award, 25 June 1999.
131) Bridas SAPIC v. Government of Turkmenistan 447 F3d 411 (5th Cir 2006).
132) Itera International Energy LLC and Itera Group NV v. Georgia (ICSID Case No Arb/08/07),
Decision on Admissibility of Ancillary Claims, 4 December 2009.
133) The arbitration proceedings were eventually discontinued after the parties reached an amicable
settlement.
134) Dallah Real Estate & Tourism Holding Co v. Pakistan [2010] UKSC 46 and CA Paris, 17
February 2011, Gouvernement du Pakistan v. Société Dallah Real Estate & Tourism Holding
Co, Pôle 1 - Ch. 1, n° 09/28533.
135) The parties were unsuccessful in eliminating all ambiguity in Salini Costruttori S.p.A. v. Federal
Democratic Republic of Ethiopia, Addis Ababa Water and Sewerage Authority, ICC Case No.
10623/AER/ACS, Decision on Jurisdiction of 7 December 2001,
<http://italaw.com/documents/Salini_v._Ethiopia_Award.pdf>. There, a construction contract
called for arbitration under the ICC Rules ‘unless otherwise specified in the Contract’. The
Ethiopian government entity argued that there had been no agreement to ICC arbitration, but that
the parties instead intended disputes to be settled by arbitration pursuant to the Ethiopian
Arbitration Act. The Tribunal rejected this contention.
136) Noah Rubins, ‘The Arbitral Seat Is No Fiction: A Brief Reply to Tatsuya Nakamura's
Commentary’, 16(1) Mealey's Int'l Arb. Rep. 23 (2001); ‘The Importance of Choosing the Right
Place to Arbitrate An International Case’, in J. Moos (ed.), Private Investors Abroad – Problems
and Solutions in International Business 183 (1977).
137) The effect of such a nullification is likely to have a significant impact on the enforceability of the
award elsewhere. The New York Convention recognizes as a legitimate ground for the refusal to
recognize a foreign arbitral award. NY Convention, Art. V(2)(b). However, courts in some
jurisdictions have treated this exception as purely discretionary, and enforced arbitral awards
despite annulment at the place of arbitration. See Chromalloy Aeroservices Inc. v. Ministry of
Defence of the Republic of Egypt 939 F Supp 907 (D.D.C.1996); Cass Civ 1, 23 March 1994,
Société Hilmarton Ltd v. Société OTV, YCA, Vol XX (1995) 661; Baker Marine NIG LTD v.
Chevron NIG LTD, 191 F3d 194 (2d Cir 1999).
138) Interestingly, the International Bar Association posed the very question of national law restrictions
on foreigners' right to appear as counsel in a series of national arbitration law papers solicited
from leading local law firms. The Nigerian practitioners surveyed indicated no limitation on the
right to appear as counsel under local law. Olufunke Adekoya & David Emagun, Nigeria
Arbitration Guide – IBA Arbitration Committee (2011), pp 1-2. To the extent that Chinese law is
applicable, foreign counsel may be prohibited from appearing in arbitration seated in mainland
China. Peter Thorp & Huawei Sun, China Arbitration Guide – IBA Arbitration Committee (2011),
p. 2.
139) Noah Rubins, ‘Swembalt v. Latvia: The Dilemma of Default’, 2004(2) Stockholm Arb Rep. 119.
140) Military and paramilitary activities in and against Nicaragua (Nicaragua v. United States of
America), 1986 ICJ Rep. 23, at para. 27.
141) Within the national court context, solutions to the absent respondent dilemma are varied. The
ALI/UNIDROIT Draft Principles and Rules of Transnational Civil Procedure seek to find middle
ground between these competing interests. The Principles and Rules provide for the entry of
default judgment against a non-appearing party, with certain ‘safeguards' in place to preserve
basic fairness. ALI/UNIDROIT Draft Principles and Rules of Transnational Civil Procedure,
Council Draft No. 2 of 29 September 2003, Article 15.
142) Abba Kolo, ‘Witness intimidation, tampering and other related abuses of process in investment
arbitration: possible remedies available to the arbitral tribunal’ 2010 Arbitration International 46.
143) ICC Rules, Art. 6(3). Naturally, the ICC Court is charged with the important role of conducting a
prima facie investigation as to the existence of an arbitration agreement. Once an ICC tribunal
receives a file, it is empowered, but under by no means obliged, to ‘fill in’ an absent respondent's
side of the story. ICC Rules, Art. 20.
144) ICDR Rules, Art. 15(3).
145) See, e.g., Bernardo Cremades and David Cairns, ‘Transnational Policy in International Arbitral
Decision-Making: the Cases of Bribery, Money Laundering and Fraud’, Dossiers of the ICC
Institute of World Business Law – Money Laundering, Corruption and Fraud 65 (2003).
146) ICSID Rules, Art. 42(1) and (4).
147) ICSID Rules, Art. 45.
148) The ICSID approach to the problem is directly inspired by the ICJ Statute, Art. 53, which
provides: ‘1. Whenever one of the parties does not appear before the Court, or fails to defend its
case, the other party may call upon the Court to decide in favour of its claim. 2. The Court must,
before doing so, satisfy itself, not only that it has jurisdiction …, but also that the claim is well
founded in fact and law.’
149) Antoine Goetz, et al. v. Burundi, ICSID Case No. ARB/95/3, Award of 10 February 1999.
150) British Petroleum Co. Ltd. (Libya) v. Libya, Award on the Merits, 10 December 1973, 53 ILR
297 (1979).
34
151) Karel Daele, ‘Challenge and Disqualification of Arbitrators in International Arbitration’, 24
International Arbitration Law Library 102 (2012). See, e.g., Carnegie Minerals (Gambia) Ltd v.
Gambia, ICSID Case No. ARB/09/19, Decision on Challenge of 17 May 2011. There, Gambia
defaulted during the composition of the tribunal, and ICSID chose an arbitrator in its stead. Five
days later, Gambia made its first appearance, and demanded more time to instruct new counsel
and to appoint an arbitrator. The ICSID ultimately declined to revoke the appointment, but not
before ten additional months of litigation on the issue had passed. David Elward, ‘Gambia fails
to unseat Kalicki from ICSID panel’, Global Arbitration Review,10 June 2011.
152) Simon Greenberg, ‘Tackling guerrilla challenges against arbitrators: Institutional perspective’, 7
TDM 2010. According to a recent study, there has been a rise in the number of arbitrator
challenges. Charles B. Rosenberg, ‘Challenging arbitrators in investment treaty arbitration’, 27 J.
Int'l Arb 505 (2010).
153) Perenco Ecuador Limited v. Republic of Ecuador & Empresa Estatal Petroleos del Ecuador,
ICSID Case No. ARB/08/6, Decision on Disqualification of 8 December 2009.
154) The successful challenge in Perenco presents a relatively rare instance of arbitrator removal,
particularly in ICSID arbitration. This may be due to the fact that the ICSID Rules place the
adjudication of most arbitrator challenges in the hands of the remaining arbitrators on the
tribunal, rather than leaving the issue to the institution or appointing authority. Over the four
decades from 1972 to 2011, more than forty arbitrator challenges were advanced in ICSID
arbitration. Only one challenge resulted in the removal of an arbitrator (although in nearly 20% of
cases, the challenged arbitrator resigned voluntarily). Margaret Moses, ‘Reasoned Decisions in
Arbitrator Challenges', Loyola University Chicago School of Law Research Paper No. 2012-011,
20 July 2012. See also Rosenberg, at 512.
155) ICC Rules, Art. 15(1); SCC Rules, Art. 15(1); UNCITRAL Rules (2010), Art. 12(1); UNCITRAL
Rules (1976), Art. 10(1); See also Sam Luttrell, Bias Challenges in International Arbitration - The
Need for a ‘Real Danger’ Test (Kluwer Law International, 2009).
156) UNCITRAL Rules (2010), Art. 13(1), UNCITRAL Rules (1976), Art. 11(1). See also SCC Rules,
Art. 15(2) (establishing a deadline of 15 days to challenge an arbitrator after learning of the
circumstances in question, ‘[f]ailure by a party to challenge an arbitrator within the stipulated time
period constitutes a waiver of the right to make a challenge’); ICC Rules (2012), Art. 14(2)
(establishing a deadline of thirty days to challenge an arbitrator).
157) ICSID Rules, Art. 9(1).
158) ICSID Rules, Art. 9(6); ICSID Additional Facility Rules, Art. 15(7).
159) SCC Rules, Art. 15; UNCITRAL Rules (2010), Art. 13(4); ICC Rules (2012), Art. 14.
160) Noah Rubins, ‘Group of Companies Doctrine and the New York Convention’, in Enforcement of
Arbitration Agreements and International Arbitral Awards: The New York Convention in Practice
449, 473 (E.Gaillard & D. Di Pietro eds, 2008).
161) One of the few recent examples of such an arbitration was Parkerings Compagniet AS v.
Lithuania (ICSID Case No ARB/05/8), Award of 11 September 2007, para. 15.
162) Consider in this regard the debate with respect to the expansion of arbitral clauses in investment
treaties by application of most-favored-nation clauses. Both claimants and respondent states
could be forgiven for disagreeing as to whether pre-arbitration requirements in investment
treaties can be overridden in this way (Gas Natural, Maffezini) or cannot (Plama, Telnor). See
Noah Rubins, ‘MFN Clauses, Procedural Rights and a Return to the Treaty Text’, in Investment
Treaty Arbitration and International Law 216-224 (T.J. Grierson Weiler ed 2008).
163) In Itera v. Georgia, the claimants presented claims in their Memorial that were admittedly
broader in scope than those described in their Request for Arbitration. Although it was
undisputed that the ‘new’ claims were related to those covered by the notification, Georgia
objected to their adjudication by the same arbitral tribunal on grounds that only ‘ancillary’ claims
could be admitted to ICSID arbitration after proceedings had begun. This jurisdictional objection
was successful, ensuring that the resolution of the dispute would be longer and more costly, and
potentially subject to conflicting decisions on issues of fact and law by different tribunals. See
Itera International Energy LLC and Itera Group NV v. Georgia (ICSID Case No ARB/08/7)
Decision on Admissibility of Ancillary Claims, 4 December 2009.
164) Mondev International Ltd. v. United States of America (ICSID Case No ARB(AF)/99/2), Award,
11 October 2002, para. 26; Guaracachi America, Inc. and Rurelec PLC v. The Plurinational
State of Bolivia (UNCITRAL) PCA Case No 2011-17, Procedural Order No 9 of 23 November
2012; Guaracachi America, Inc. and Rurelec PLC v. The Plurinational State of Bolivia
(UNCITRAL) PCA Case No 2011-17, Procedural Order No 6 of 30 August 2012. See also Alan
Redfern & Martin Hunter, Law and Practice of International Commercial Arbitration 314-337
(1991).
165) Christoph Schreuer, Belated Jurisdictional Objections in ICSID Arbitration, in Liber Amicorum
Bernardo Cremades 1081 (W. Á. Fernández-Ballesteros, D. Arias eds., 2010).
166) ICSID Rules, Art. 29.
167) UNCITRAL Rules (2010), Art. 23(2) (‘A plea that the arbitral tribunal does not have jurisdiction
shall be raised no later than in the statement of defence or, with respect to a counterclaim or a
claim for the purpose of a set-off, in the reply to the counterclaim or to the claim for the purpose
of a set-off’); UNCITRAL Rules (1976), Art 21(3) (‘A plea that the arbitral tribunal does not have
jurisdiction shall be raised not later than in the statement of defence or, with respect to a counter-
claim, in the reply to the counter-claim’).
168) A recent survey found that the average ICSID arbitration took nearly two years (637 days) from
the constitution of the Tribunal to a hearing on the merits. Anthony Sinclair, ‘ICSID Arbitration:
How Long Does It Take?’ 4(5) GAR Journal (2009).
35
169) SCC Rules, Art. 24; ICC Rules, Arts. 22, 25; ICSID Arbitration Rules, Art. 31. However, note the
admonition of UNCITRAL Rules (2010), Art. 25, that ‘the periods of time fixed by the arbitral
tribunal for the communication of written statements (including the statement of claim and
statement of defence) should not exceed 45 days.’ This recommendation is rarely even cited in
UNCITRAL arbitration involving state parties, let alone observed.
170) LCIA Rules, Article 15. See also Peter Turner & Reza Mohtashami, A Guide to the LCIA
Arbitration Rules 103-108 (2009). The LCIA Rules also helpfully provide, in Article 14(1), that in
any event the tribunal shall ‘adopt procedures suitable to the circumstances of the arbitration,
avoiding unnecessary delay or expense, so as to provide a fair and efficient means for the final
resolution of the parties' dispute’ (emphasis added).
171) See, e.g., IBA Guidelines on Conflicts of Interest in International Arbitration; IBA Rules on the
Taking of Evidence in International Arbitration; ICC Report on Controlling Time and Costs in
Arbitration. The English professional arbitrators' association CIArb maintains a collection of
nearly twenty sets of guidelines for arbitrators' reference on a variety of topics.
<http://www.ciarb.org/resources/practice-guidelines-and-protocols/list-of-guidelines-and-
protocols/>.
172) It should be recalled that in the parable of King Solomon, who was asked to decide which of two
alleged mothers had the right to a child, the monarch never intended to cut the baby in two, nor
did he do so.
173) In one recent case in which the author was involved as counsel for the claimant, the respondent
state formally notified the tribunal (and apparently the tribunals in all other cases in which it was
respondent) that due to public protests taking place near the offices of their legal defence
bureau, they reserved the right to request postponement of scheduled submissions and
hearings.
174) Commentary on the New IBA Rules of Evidence, <http://www.zivilprozessordnung.ch/
uploads/Commentary_New_IBA_Rules_of_Evidence.pdf>.
175) See generally, Jarred Pinkston, ‘The Case for a Continental European Arbitral Institution to Limit
Document Production’, 2011 Austrian Ybk. Int'l. Arb. 87, 90-92.
176) James Carter, ‘Five Fundamental Things About Document Production, and a Question’, in
International Arbitration 2006: Back to Basics? 593 (Albert van den Berg ed., 2007). It is
increasingly common to find the document production process used to magnify more general
problems of scheduling written submissions and resulting delay in arbitration involving state
parties. States will not infrequently insist upon the interposition of a separate document
production ‘phase’ between the first and second rounds of written pleadings (and even two such
exercises, where jurisdiction is decided as a preliminary matter), resulting in a pause in the
arbitration of up to six months.
177) Many observers have noted, however, that the ethical standards in relation to document
production may differ widely between jurisdictions, and the content of applicable rules may be
rather unclear in international arbitration. See, e.g., Doak Bishop, ‘Ethics in International
Arbitration’, Keynote Speech given at ICCA in Rio de Janeiro, 23 May 2010,
<http://www.arbitration-icca.org/media/0/12763302233510/icca_rio_keynote_speech.pdf>, p. 2.
178) IBA Rules on the Taking of Evidence in International Arbitration, Art. 9(2) (‘The Arbitral Tribunal
shall, at the request of a Party or on its own motion, exclude from evidence or production any
Document, statement, oral testimony or inspection for any of the following reasons: … (f) grounds
of special political or institutional sensitivity (including evidence that has been classified as
secret by a government or a public international institution) that the Arbitral Tribunal determines
to be compelling’).
179) ICSID Arbitration Rules, Art. 34. The UNCITRAL Rules similarly provide in Article 24 that where
documents have not been produced in accordance with standing orders, the tribunal may decide
the case based on the evidence before it. However, the UNCITRAL Notes on Organizing Arbitral
Proceedings, which are not binding, provide specifically (at paragraph 48) that a tribunal may
draw adverse inferences from any failure to produce documents without adequate justification.
180) Art. 9(6).
181) Pierre Tercier & Tetiana Berscheda, ‘Document Production in Arbitration: A Civil Law
Viewpoint’, in The Search for Truth in Arbitration 77 (2011). A comprehensive survey of the
jurisprudence of the Iran-US Claims Tribunal revealed that adverse inferences were relatively
rare, despite Iran's frequent defiance of Tribunal orders to produce documents. The survey
suggested that the Tribunal followed a five-prong test, all elements of which were normally to be
satisfied before an adverse inference would be drawn. Jeremy Sharpe, ‘Drawing Adverse
Inference from the Non-Production of Documents', 22(4) Arb. Int'l 549, 550 (2006). See also
Simon Greenberg and Felix Lautenschlager, ‘Adverse Inferences in International Arbitration
Practice’, in International Arbitration and International Commercial Law 179 (Bergsten & Kroll,
eds. 2011) (presenting survey of ICC awards suggesting reluctance of arbitrators to draw
adverse inferences).
182) S. Greenberg, ‘Tackling guerrilla challenges against arbitrators: Institutional perspective’ (2010)
7 TDM, <www.transnational-dispute-management.com>.
183) Noah Rubins, ‘Enforcement and annulment of international arbitration awards in Indonesia’, 20
Am U Int'l Rev 382 (2005).
184) City Oriente v. Ecuador, ICSID Case ARB/06/21, Decision on Provisional Measures, 19
November 2007, para. 36.
36
185) Ibid. para. 62. In two recent ICSID cases, the Argentine government prevented the claimant's
witness from attending hearings by obtaining an injunction from an Argentine court on the basis
that ‘there had been contractual relations between the Government and [the witness] that made
his statement in this and other arbitrations inadmissible.’ Enron Corporation and Ponderosa
Assets, L.P. v. Argentine Republic, ICSID Case No. ARB/01/3, Award of 22 May 2007, para.
142; Sempra Energy International v. Argentine Republic, ICSID Case No. ARB/02/16, Award
of 28 September 2007, para. 156.
186) Libananco Holdings Co. v. Turkey, ICSID Case No ARB/06/8, Decision on Preliminary Issues,
23 June 2008. The author was counsel to Turkey in the arbitration.
187) Ibid. para. 78.
188) Ibid. para. 80.
189) Abba Kolo, ‘Witness intimidation, tampering and other related abuses of process in investment
arbitration: possible remedies available to the arbitral tribunal’, 2010 Arb. Int'l 47. Whether or not
such tactics are effective in changing claimants' conduct in pending arbitration proceedings, in
practice it is very likely that many claims are never brought in the first place for fear of state
retaliation. The author recalls discussions with Mexican companies contemplating NAFTA
claims against the United States involving discriminatory regulations, which on the merits
appeared extremely strong. In the end, the potential claimants decided not to initiate an
arbitration that was very likely to bring them substantial compensation, primarily for the reason
that they feared the US government would retaliate, further worsening their economic position in
an ongoing business.
190) Occidental v. Ecuador, ICSID Case ARB/06/11, Decision on Provisional Measures, 17 August
2007, paras. 15-17.
191) EnCana Corporation v. Republic of Ecuador, LCIA Case No. UN3481, Interim Award on
Request for Interim Measures of Protection of 31 January 2004, paras. 1, 2 and 6.
192) See, e.g., Emilio Agustín Maffezini v. Kingdom of Spain, ICSID Case No. ARB/97/7, Decision
on Request for Provisional Measures, 28 October 1999, para. 13 (‘rights must exist at the time
of the request [for interim measures], must not be hypothetical, nor are ones to be created in the
future’). It is largely on the basis of this approach that investment treaty tribunals have declined
every known request for security for costs.
193) ICSID Convention, Article 47. See generally Gabrielle Kaufmann-Kohler and Aurélia Antonietti,
‘Interim relief in International Investment Agreements', in Arbitration under International Investment
Agreements: An analysis of the Key Procedural, Jurisdictional and Substantive Issues 507
(Katia Yannaca-Small ed., 2010).
194) ICSID Case ARB/06/21, Decision on Provisional Measures of 19 November 2007, paras. 60-
69.
195) Ibid. paras. 55 and 57.
196) Himpurna California Energy Ltd. v. Republic of Indonesia, Interim Award of 26 September
1999 and Final Award of 16 October 1999, 25 Ybk Comm Arb 11 (2000). Albert Jan van den
Berg (ed), International Commercial Arbitration: Important Contemporary Questions 266 (2003);
Michael Goldhaber; ‘Arbitral terrorism’, 1 Transnational Dispute Management (2004),
<www.transnational-dispute-management.com>.
197) Himpurna California Energy Ltd. v. Republic of Indonesia, Interim Award of 26 September
1999, 25 Ybk Comm Arb 11 (2000), paras. 95-102. See also Thomas Walde, ‘Procedural
Challenges in Investment Arbitration under the Shadow of the Dual Role of the State:
Asymmetries and Tribunals' Duty to Ensure, Pro-actively, the Equality of Arms', 26(1) Arb Int'l 23
(2010); Constantine Partasides, ‘Solutions Offered by Transnational rules in Case of Interference
by the Courts of the Seat’, in Towards a Uniform Arbitration Law? IAI Series on International
Arbitration No 3, (Anne-Veronique Schlaepfer, Philippe Pinsolle & Louis Degos eds 2005).
States may also engage in impermissible direct contact with an arbitrator of its own nationality,
monitoring his communications with other arbitrators and pressing him to disclose deliberations.
Abba Kolo, ‘Witness intimidation, tampering and other related abuses of process in investment
arbitration: possible remedies available to the arbitral tribunal’, 27 Arbitration International 43, 49
(2010).
198) In one notorious episode at the Iran-US Claims Tribunal, 69-year-old Judge Mangard was
physically assaulted by Iranian co-arbitrators. Charles Brower and J Brueschke, Iran-United
States Claims Tribunal 169-171 (1998). In another incident, a state-owned entity allegedly
threatened the life of an arbitrator. The arbitrator remained on the tribunal and participated in the
issuance of a substantial award against the state party, but not after having purchased an
additional life insurance policy. Bernard Hanotiau, ‘Misdeeds, Wrongful Conduct and Illegality in
Arbitral Proceedings', Albert Jan van den Berg (ed), International Commercial Arbitration:
Important Contemporary Questions 265 (2003).
199) UNCITRAL Rules, Art. 14(2)(b); ICC Rules, Article 15(5); Stockholm Chamber of Commerce
Rules, Article 17(2); ICDR Rules, Article 11; LCIA Rules, Article 12. See generally Stephen
Schwebel, ‘The Validity of an Arbitral Award Rendered by a Truncated Tribunal’, Justice In
International Law: Further Selected Writings (2011) pp 1-21; Himpurna California Energy Ltd. v.
Republic of Indonesia, Final Award of October 16, 1999, 2000 Mealey's Int'l Arb. Rep A1, para.
67.
200) Himpurna California Energy Ltd. v. Republic of Indonesia, Final Award of 16 October 1999, 25
Ybk Comm Arb 11 (2000), para. 596.
201) 2012 WL 831536 (E.D. La. 12 March 2012).
37
202) www.internationallawoffice.com/newsletters/detail.aspx?g=d207afa3)>; China has also
interfered with its own arbitral institution by arresting its Secretary General in apparent retaliation
for an unfavourable award against a state-owned company. See W Ming, ‘The Strange Case of
Wang Shengchang’, 24 Arb Int'l 63 (2007); Jan Paulsson, ‘Enclaves of Justice’, 4 Transnational
Dispute Management (2007), <www.transnational-dispute-management.com>.
203) Karen Halverson Cross, ‘Arbitration as a Means of Resolving Sovereign Debt Disputes', 17(3)
Am Rev Int Arb 362-363 (2006); 2008 survey by Queen Mary University of London, ‘International
Arbitration: Corporate attitudes and practices', p. 8 at
<http://www.arbitrationonline.org/docs/IAstudy_2008.pdf>.
204) De Vries, ‘International Commercial Arbitration: A Contractual Substitute for National Courts', 57
Tul L Rev 42, 43 (1982); De Nuzillet, ‘Enforcement of Arbitration Awards', in R Goldscheider &
M. de Hass, Arbitration and the Licensing Process; Mirabito, ‘The United Nations Convention on
the Recognition and Enforcement of Foreign Arbitral Awards: The First Fourt Years', 1975 Ga J
Int Comp L 471, 485.
205) Craig Miles, ‘Sovereign Immunity’, in Enforcement of Arbitral Awards against Sovereigns 35
(Doak Bishop, ed. 2009).
206) Decision 7B.2/2007, 15 August 2007, Moscow Center for Automated Air Traffic Control v.
Commission de surveillance des offices des poursuites et des faillites du canton de Genève,
ASA Bull. 1/2008, 141-151.
207) Sedelmayer v. Russian Federation, BGH, 4 October 2005, VII ZB 9/05, 2006(1) ASA Bull 175.
208) Russian Federation v. Sedelmayer, Svea Court of Appeal, Case No. Ö 170-10), 1 July 2011.
209) Resolution of the Presidium of the Russian Supreme Arbitrazh Court, Case No. 9899/09,
Judgment of 13 September 2011, Case No. A56-60007/2008.
210) Ibid.
211) Resolution of the Federal Arbitrazh Court for the Northwest Circuit, Case No. A56-60007/2008,
Judgment of 24 April 2009.
212) IBA Guidelines on Party Representation in International Arbitration, 25 May 2013, found at
<http://www.ibanet.org/LPD/Dispute_Resolution_Section/Arbitration/Subcommittees.aspx>. The
new IBA Guidelines cover such topics as contact with arbitrators, submissions to the arbitral
tribunal, document disclosure, work with witnesses and experts, and remedies for misconduct.
213) Stephan Wilske, ‘Arbitration Guerrillas at the Gate – Preserving the Civility of Arbitral
Proceedings', in Austrian Ybk. Int'l Arbitration 315 (2011).
38
Chapter 2, §2.04: Sanctions Available for Arbitrators to Curtail
Author Guerrilla Tactics
Lucy Reed Lucy Reed
§2.04 Sanctions Available for Arbitrators to Curtail Guerrilla Tactics

Publication Lucy Reed
Guerrilla Tactics in International
Arbitration [A] Tools Available to the Arbitral Tribunal
[1] Introduction
Biblographic reference ‘In some respects, an international arbitration is like a ship. An arbitration may be said to be ‘owned’
by the parties, just as a ship is owned by ship-owners. But the ship is under the day-to-day command
Lucy Reed, 'Chapter 2, §2.04: of the captain, to whom the owner hands control. The owners may dismiss the captain if they wish and
P93
Sanctions Available for hire a replacement, but there will always be someone on board who is in command ….’. (214)
Arbitrators to Curtail Guerrilla
Tactics', in Günther J. Horvath To carry this analogy further, the party ship-owners select and instruct the counsel who sail the ship in
and Stephan Wilske (eds), the voyage of international arbitration. To carry the analogy even further, it is counsel who play the role
Guerrilla Tactics in International of guerrilla warrior sailors. The party ship-owners may tolerate, encourage or even whip their sailors
Arbitration, International into such tactics, for whatever commercial or tactical reasons, but it is counsel who are the warrior
Arbitration Law Library, Volume sailors.
28 (© Kluwer Law International; The prior section well illustrates that the primary focus must be on counsel, who always start and who
Kluwer Law International 2013) ideally cease guerrilla tactics, with more or less external suasion. The prior section exhaustively
pp. 93 - 102 covers the wide variety of tactics and control mechanisms for guerrilla tactics at all stages of
arbitration, from the perspective of parties and counsel and, to some anticipatory degree, from the
perspective of tribunals.
The more limited focus in this section is on, to stay with the navy analogy, the captain of the ship – the
chairperson or sole arbitrator – and the first-mate co-arbitrators. What can and should they do when
they expect and encounter guerrilla tactics in the arbitration before them? What tools do they have to
counter such tactics? When should they use those tools? When not? How strict can they be without
risking the arbitration equivalent of mutiny, namely a challenge?
Before proceeding, it is worth limiting the definition, or scope, of arbitration ‘guerrilla tactics' for
purposes of this section. Fortunately, few arbitrators encounter the extreme guerrilla tactics of, first,
criminal or near criminal acts or, second, patently unethical professional conduct. (215) When they do,
they must carefully consider their responsibility to report the first to national authorities and the second
to professional licensing authorities. For reasons including the confidentiality of international
commercial arbitration, this remains a grey area, deserving substantially more attention. (216)
In comparison, most arbitrators have encountered or no doubt will encounter what the editors (Horvath
and Wilske) describe as ‘ethically borderline sharp practices' and ‘rough riding’. (217) These are
more subtle for arbitrators to detect and more challenging to control. This section will focus on the
arbitrator's authority to combat these less severe categories of guerrilla tactics.
P94 It is important to raise another preliminary point: what is the source of that arbitral authority?
The tribunal in the high-profile ICSID case of Libananco v. Turkey, in dicta, stated that it had no ‘doubt
for a moment that, like any other international tribunal, it must be regarded as endowed with the
inherent powers required to preserve the integrity of its own process …’ and ‘the Tribunal would
express the principle as being that the parties have an obligation to arbitrate fairly and in good faith
and that an arbitral tribunal has the inherent jurisdiction to ensure that this obligation is complied with
…’ (218) In similar terms, the tribunal in Hrvatska v. Slovenia described ‘an inherent power [or a
tribunal] to take measures to preserve the integrity of its proceedings'. (219)
One can find the underpinnings for such inherent authority in the arbitrator's duty to act judiciously.
Arbitration laws and the leading institutional and ad hoc arbitration rules (which are selected by the
parties in the underlying arbitration agreement) require arbitrators to allow both parties to develop
their cases fully and equally, while also managing proceedings expeditiously. (220) The fulcrum
between procedural due process and efficiency is where one finds the tribunal's tools for countering
guerrilla tactics.
As a final introductory point, it is worth reciting the caveat that, just as there is no one guerrilla warfare
scenario in international arbitration, there is no one formula for an arbitral tribunal to use to counter
those tactics. Just as every case is different, every cast of ship-owners and sailors – parties and
counsel – is different, and must be handled differently. One thing that can be said without hesitation:
just when we as arbitrators think we have seen it all, we will see something new. But nonetheless,
there are several tried-and-true tools for arbitrators to try to forestall abusive tactics and, if they arise
nonetheless, to control them.
[2] General Tools for Arbitrators: Stage by Stage
39
In the author's experience, the single most important trait for an outstanding arbitrator is unwavering
attention. That means keen attention to everything that is happening in the hearing room and even just
outside the hearing room, and keen attention to every significant step in the administrative and written
proceedings leading up to the hearing. Such unwavering attention is also a critical tool, if not the most
critical tool, in managing guerrilla tactics by counsel.
P95 Such honed attention skills are part and parcel of the experience that allows an arbitrator to be an
effective counter-guerrilla. As Professor William Park has written: ‘Few anti-abuse mechanisms are
more effective than an experienced and capable arbitral tribunal.’ (221) And in the words of one of the
editors: ‘Arbitrators are the first line of ethical regulation in international arbitration and an experienced
tribunal is the most effective weapon against arbitration guerrillas.’ (222)
Unrelenting diligence allows arbitrators, in particular the chairperson or sole arbitrator: (a) to anticipate
and prevent guerrilla tactics; (b) to act quickly and decisively to stop them; and (c) in the worst-case
scenario, to sanction the tactics.
These stages bear breaking out for separate consideration.
[a] Anticipating and Preventing Guerrilla Tactics
Is it correct to say that guerrilla tactics (again, not of the criminal or grossly unethical variety) should
never be used in international arbitration proceedings? The author's view is ‘no’. As pointed out in the
editors' introduction, lively and even (moderately) aggressive advocacy is the norm in many legal
systems, especially common law jurisdictions, and has its proper place in international arbitration.
Lively advocacy, in varied styles, brings adrenalin and focus both to the page and to the hearing room.
It is a pleasure to watch, for example, two sets of United States trial lawyers or English QCs, or even
one of each, square off against each other.
Good arbitrators will recognize this acceptable situation from the very first submissions, and merely
keep a watchful eye out for dangerous escalation of tactics. If both sides are happy with equal or near-
equal levels of (non-abusive) advocacy styles, the tribunal is well-advised to stay silent. Imposition of a
different standard of ‘civility’ may seem an interference with due process, namely the right to make
one's case with familiar adversarial tactics.
Moving up the spectrum, good arbitrators will also recognize early – and even intuit – a mismatch
between the counsel teams, whether based on legal tradition, basic style, personality or strategically
malicious intent. In a hearing, client conduct – even body language – can also offer clues of trouble to
come.
In such situations, the chairperson or sole arbitrator should take action early to prevent guerrilla tactics
even before they start. How to do this depends on the anticipated severity of the tactics. Action should
be calibrated carefully. In mild cases, where counsel may be nothing more than over-exuberant, an
understated recitation of the parameters of acceptable behaviour will suffice. There is no better way to
test a lawyer's ‘guerrilla warfare inclinations' than (gently) to call him/her out early. If the lawyer is acting
(apparently) aggressively merely out of habit, the objectionable behaviour will quickly cease; if he/she
is determined to remain aggressive, and even become more aggressive, it will continue.
P96 In potentially more severe situations, the chairperson or sole arbitrator will need to interject
increasingly firm warnings. The inclusion of a ‘code of conduct’ section in an early procedural order –
such as propounded in the prior section – can also be effective. Depending on the circumstances, a
useful tool could be that proposed by Cyrus Benson, who suggests that arbitrators ask counsel for
each side to prepare checklists of their perceived duties, which serve to warn the chairperson or sole
arbitrator of areas of conflict and allow for the preparation of an early procedural order memorializing
shared standards. (223) Such a step can be important for the record, to protect the award from due
process challenges.
Having said this, such a procedural order should not be a template. In the author's experience (with
respect, contrary to the experience of other authors in this book), it is not helpful for a chairperson or
sole arbitrator always to include a standard ‘code of conduct’ in a procedural order or to use a
standard lecture to counsel on proper behaviour. If nothing else, it is simply too easy for determined
guerrilla warriors to ignore an obviously template code. Far more effective, if necessary, is for the
chairperson or sole arbitrator (in consultation with the co-arbitrators) to customize the conduct
guidelines to the behaviour anticipated from the individual counsel before him/her. This is not to say
that the arbitrator should over-personalize the message – ‘I can see, Mr X, that you are a rude and
ruthless person, and I will not have it’ – but instead address the problem in a clear and concrete way –
‘Mr X, we admire your background, but we have found that what are best practices for US defence
counsel do not work well in international arbitration with civil law opponents.’
For similar reasons, this author is not (yet) a proponent of a universal code of conduct or ethics for
international arbitration. The literature is indeed helpfully thought- and discussion-provoking. (224)
However, insofar as strategic procedural tactics (falling short of criminal or near criminal conduct or
grossly unethical conduct) are concerned, uniformity is an undesirable and unrealistic goal in
international arbitration. (225) As for the rest – the truly reprehensible behaviours identified by the
editors as the worst guerrilla tactics – experience shows that these are recognized as per se wrong
across legal traditions and respected by decent practitioners.
P97 In charting a bespoke code of conduct, the chairperson or sole arbitrator should be true to his/her
personal style in delivery – formal or informal, with or without humour, stern or friendly, with or without
anecdotes – but always absolutely clear and memorable. (226) Most important, as discussed below,
40
the individualized rules of conduct should include not only the parameters for acceptable behaviour but
also the consequences for not respecting those parameters.
[b] Stopping Guerrilla Tactics
Despite the best of intentions and preventive steps by the arbitrators, they may face guerrilla tactics by
counsel. Again, the question bears asking: do all aggressive tactics need to be stopped? Again, the
author's view is ‘no’. The arbitrator's reaction should depend on the stage of the proceedings and the
nature and severity of the tactics.
The earlier the chairperson or sole arbitrator observes actual sharp practice – in a shrill Notice of
Arbitration, in an unruly preliminary conference, in an overly aggressive first memorial – the quicker
and firmer his/her reaction should be. As noted above, this is not to say that an arbitral tribunal should
not let counsel exchange a few opening (light) blows to put down some markers before settling down.
But only an inexperienced arbitrator (or an experienced but inattentive arbitrator) will wait to act if one
side's behaviour crosses the line of propriety, in hopes that the situation will correct itself. An
immediate – if mild – correction should keep all but determined guerrilla warriors in line.
The chairperson or sole arbitrator can and should be balanced and neutral at this stage – ‘Let us
remind all counsel we expect civility at all times.’ If counsel continue to misbehave despite such
warnings or, worse, escalate to abusive tactics aimed at intimidating witnesses, attacking opposing
counsel or undermining the record, the arbitrator again must react quickly and even more firmly –
‘Unfortunately, we must repeat our request for courteous and fair behavior.’ – and possibly even
personally – ‘Ms. X, please observe the guidelines we set out earlier.’
Discipline of counsel in the hearing room, and especially on the record, is a sensitive matter. In the
author's experience, if mild and then sterner warnings do not serve to stop the objectionable
behaviour, it can prove effective for the chairperson or sole arbitrator to call a recess, meet privately
with counsel for both sides, and ‘read the riot act’ to both sides – making it clear that, if there is no
improvement, he/she will repeat the warnings in front of the offender's clients and on the record and, if
necessary, ultimately assess costs for the related disruption. This step, of course, will not be effective
if the offender is determined to stay the course with or without client instructions.
P98 In the author's experience, most counsel and parties appreciate this type of graduated discipline.
Indeed, it is not uncommon for counsel to desire such directions to convince their clients that they need
not be consistently aggressive.
The very worst tack for the tribunal to take is to tolerate an obnoxious advocate, again hoping that
allowing him/her to make one ranting objection or disobey one order or examine one witness roughly
will be the end of it; this is the ‘getting it out of their system’ approach. It does not take a psychologist
to know that this approach generally will only embolden the offender, and encourage (if not force)
counsel on the other side to match the abusive tactics.
In this vein, it is important for chairpersons and sole arbitrators to resist being worn down by the
bullying advocacy used by some (notorious) international arbitration counsel. All too often, the
chairperson gives up control out of sheer frustration. This is not fair to either side: The victim side for
obvious reasons, and the bullying side because the frustration with counsel tactics may colour
deliberations. As a matter of self-interest, if nothing else, arbitrators who let proceedings descend into
anarchy develop a negative reputation.
At some stage, either because one-sided ‘rough riding’ continues or counsel use seriously abusive
tactics – relentless frivolous objections, personal attacks, witness intimidation, misrepresentations –
the chairperson or sole arbitrator has to escalate to more powerful tools. One such tool is firm
procedural orders. In the author's view, tribunals far too rarely actually exclude a late-offered document
or a suddenly available rebuttal witness, or refuse to extend a ‘final’ extension of time.
Another tool is an interim measure for security for costs, for example to cover the extra time and effort
required for the opposing side to deal with that late document, last minute witness or further extension
of time. Interim measures for costs can also cover the impact of a party's refusal to follow a tribunal
order. The 2011 Hong Kong Arbitration Ordinance, for example, authorizes a tribunal to issue a
peremptory order to penalize a party that, without sufficient cause, fails to comply with an order or
direction of the tribunal. (227) It is the case that most international arbitration laws and rules require
‘exceptional circumstances' for such interim measures, but – fortunately – disobeying tribunal orders
or persistently disrupting proceedings still remain exceptional events.
Another possible tool – which could be called ‘indicative sanctions' – would be for the arbitrator,
provided he/she has previously announced the intention to award costs for misconduct, to begin
running a balance sheet of anticipated cost assessments against one or both sides, subject to
adjustment and inclusion in the final award. That such cost amounts would be merely indicative and not
binding is helpful: the primary purpose at this stage is not to punish but to deter ongoing abusive
tactics.
P99 [c] Sanctioning Guerrilla Tactics
When arbitrators prove unable to deter or stop guerrilla tactics, their ultimate tool is formal sanctions.
Sanctions are a last resort, and ultimately a poor resort because sanctions cannot retroactively correct
the harm done to the proceedings. An assessment of costs for abusive tactics in the final award, for
example, can only ever be roughly calculated to neutralize the disruption and prejudice caused by
those tactics.
41
The most common formal sanction remains such an allocation of costs in the final award, with either
the percentage of the allocation or specific amounts being – more or less, and usually less –
attributable to one or both parties' frivolous arguments or otherwise abusive tactics. Much has been
written about this, (228) although there are still few examples of cost awards against parties (whether
winning or losing) based on abusive conduct.
It stands to reason that arbitrators are most willing to impose formal sanctions when they have formal
authority to do so. The 2012 ICC Arbitration Rules contain such authority, albeit phrased as the
positive scenario:
In making decisions as to costs, the arbitral tribunal may take into account such circumstances as it
considers relevant, including the extent to which each party has conducted the arbitration in an
expeditious and cost-effective manner. (229)
Corporate counsel have led the demand for more proactive tribunal use of costs awards to improve
control of proceedings. This demand is aimed at overall arbitral efficiency, but it applies equally well to
the subcategory of inefficiency caused by abusive tactics. In the words of Andrew Clarke, awards
should ‘take much more account of the conduct of the parties and their attorneys and, if used properly,
would focus the parties' minds on the time and cost they are incurring at each stage’. (230)
According to the latest White & Case/Queen Mary International Arbitration Survey, an overwhelming
majority of respondents – who included corporate counsel and arbitrators, but primarily practitioners –
believe tribunals should take account of improper conduct by a party or its counsel when allocating
costs. (231) To quote the Survey: ‘This sends a strong message to arbitrators that they are expected
to penalise improper conduct when allocating costs.’ (232)
As emphasized above, the best methods to control guerrilla tactics are to prevent them in the first
place or, if they start, to stop them quickly and firmly. It follows that, should the tribunal have to use the
last resort of imposing formal sanctions, it should do so only after having given an appropriate
crescendo of warnings. Only clear communication of the consequences of continued abusive tactics –
P100 ultimately in the form of funds to be paid by the party responsible for those tactics – ensures
transparency of tribunal expectations. For the arbitrators to do otherwise could be to act, or appear to
act, arbitrarily and without due process. Of course, a tier of warnings is not necessary before formally
sanctioning criminal or grossly unethical conduct.
A focus of current discussion is whether and when a tribunal should sanction the offending counsel
directly, either by assessing costs against the instructing party in the final award explicitly pegged to
counsel conduct, by disqualifying counsel or by reporting the conduct to the lawyer's home licensing
authority. (233) This is a complex topic, raising issues of tribunal authority and discretion to exercise
authority. These questions are perhaps most complex in connection with disqualification of counsel,
given the rights granted to parties in major institutional rules to rely upon representatives of their
choice. (234)
In the author's experience, explicit criticism of counsel conduct in the final award – indeed, an early
and clear threat of such criticism in the award – is an effective sanction in and of itself. According to
one of the editors: ‘Thus, counsel should be extremely cautious when it comes to the public perception
of questionable conduct in international arbitration.’ (235)
[3] The Roles of Chairperson or Sole Arbitrator and Co-Arbitrators
This section has focussed on tribunal chairpersons and sole arbitrators, because they have the
primary responsibility and authority to prevent and control guerrilla tactics. The role of sole arbitrator
can be the most delicate, as he/she lacks the reinforcing influence of co-arbitrators.
Turning to the co-arbitrators, the emphasis belongs on the word ‘reinforcing’. It is critical that both
parties and counsel see a unified panel when it comes to confronting and combating guerrilla tactics.
This does not mean that the wing arbitrators cannot speak up for themselves when they witness a
tactic they consider objectionable. It does mean that the chairperson should strive early in the
proceedings to build consensus with the wings on the basic standards for acceptable behaviour, so all
three arbitrators will speak with one voice.
The chairperson, of course, has the additional responsibility to forestall and, if necessary, police
guerrilla warfare between the two co-arbitrators themselves. Such behaviour can be a ‘proxy war’ for
the parties or result from a genuine personality clash or ongoing disagreements. One thing is certain:
unchecked bickering between the two party-appointed arbitrators will fuel guerrilla tactics between the
parties and counsel.
As mentioned, the chairperson should early on set – and personally meet – high standards of
behaviour and serve as the cohesive force on the panel. Should the chairperson find a wing arbitrator
behaving badly – whether being inattentive, argumentative, impulsive or impatient – it is a given that
the chairperson should never rebuke another arbitrator in front of the parties.
P101 [4] Conclusion
Another way to consider the arbitrator role in combating guerrilla tactics is to step back from the
‘though shalls' and ‘though shall nots' and conjure an image of the ideal. When one envisions the
atmosphere in a hearing room that is most likely to preclude all but innocuous guerrilla tactics, one
immediately thinks of a room presided over by a man or woman who is keenly attentive, fair and
principled. Regardless of personal style – firmly courteous or courteously firm – his/her conduct leaves
no doubt as to his/her expectations for all participants in the proceedings. An exemplary arbitrator is
42
one who leads counsel and parties to want to comply with those expectations, voluntarily and equally.
In other words, the ideal chairperson or sole arbitrator is clearly in command, by actions and by
example. To return to the quote from Redfern & Hunter in the introduction to this section: ‘the ship [of
arbitration] is under the day-to-day command of the captain, to whom the owner hands control … and
there [should] always be someone on board who is in command.’ (236)
P102
References
214) Nigel Blackaby & Constantine Partasides with Alan Redfern & Martin Hunter, Redfern and
Hunter on International Arbitration, 5th ed. (Oxford: Oxford University Press, 2009) para. 6.04
(footnote omitted).
215) Sam Luttrell refers colorfully to the ‘Black Arts' of international arbitration in ‘Opportunities for
Australian Arbitration Practitioners in the “Global Financial Crisis”’, 75 Int'l Arb. Mediation &
Disp. Mgmt. 75 (2009): 415.
216) Blackaby & Partasides, International Arbitration, paras. 5.76 – 5.83. An ICC Working Group has
focused on the competing obligation of confidentiality. ICC Report of Working Group on Criminal
Law and Arbitration (Doc. 420/492).
217) Stephan Wilske, ‘Arbitration Guerrillas at the Gate – Preserving the Civility of Arbitral
Proceedings when the Going Gets (Extremely) Tough’, Austrian Yearbook on International
Arbitration, eds. Klausegger et al. (Manz, C.H. Beck, Stämpfli, 2011), 315–316. Günther J.
Horvath, ‘Guerrilla Tactics in Arbitration, an Ethical Battle: Is There Need for a Universal Code of
Ethics?’ Austrian Yearbook on International Arbitration, eds. Klausegger et al. (Manz, C.H.
Beck, Stämpfli, 2011), 297.
218) Libananco Holdings Co. Limited v. Republic of Turkey, ICSID Case No. ARB/06/8 (Decision
on Preliminary Issues, 23 June 2008) para. 78. The author served as co-counsel to the
Respondent Republic of Turkey.
219) Hrvatska Elektroprivreda. d.d. v. Republic of Slovenia, ICSID Case No. ARB/05/24 (Ruling
regarding the participation of David Mildon QC in further stages of the proceedings, 6 May
2008) para. 33.
220) For example, 2010 UNCITRAL Arbitration Rules, Article 17: ‘Subject to these Rules, the arbitral
tribunal may conduct the arbitration in such manner as it considers appropriate, provided that the
parties are treated with equality and that at an appropriate stage of the proceedings each party
is given a reasonable opportunity of presenting its case. The arbitral tribunal, in exercising its
discretion, shall conduct the proceedings so as to avoid unnecessary delay and expense and to
provide a fair and efficient process for resolving the parties' dispute.’
221) William W. Park, ‘Arbitration's Discontents: Of Elephants and Pornography’, Int'l Arb. 17, no. 3
(2001): 263, 272.
222) Horvath, Guerrilla Tactics, 303.
223) Cyrus Benson, ‘Can Professional Ethics Wait? The Need for Transparency in International
Arbitration’, Disp. Resol. Int'l 3, no. 1 (2009): 88–94. In similar vein, the author has suggested
that tribunals make more use at the preliminary hearing stage of checklists or questions
concerning counsel's intended methods to present fact and witness evidence, in order to reveal
different expectations between the two sides and avoid clashes at the hearing itself. Laurent
Lévy and Lucy Reed, ‘Managing Fact Evidence in International Arbitration’, ICCA Congress
series no. 13 (Kluwer Law International, 2007): 641-43.
224) For example, Catherine E. Rogers, ‘The Ethics of Advocacy in International Arbitration’, in The
Art of Advocacy in International Arbitration, eds. D. Bishop & E.G. Kehoe, 2d ed. (New York:
JurisNet 2010); Catherine E. Rogers, ‘Context and Institutional Structure in Attorney Regulations:
Considering an Enforcement Regime for International Arbitration’, Stan. J. Int'l L. 39 (2003): 58.
225) ‘Uniformity is certainly not in itself a goal: otherwise, one could imagine a computer programme
bringing all the answers to all the procedural questions without any need for human intervention.
Will the parties exchange messages through an ad hoc pre-existing website?’ Lévy and Reed,
Managing Fact Evidence, 639.
226) Marc Blessing describes various styles of chairpersons, ranging from a ‘friendly hôtelier’ to a
‘dictator’. Dr Blessing has used these terms in the arbitrator workshops sponsored by the World
Intellectual Property Organization; see also the summary of his remarks at the International
Commercial Arbitration Forum 99 held in Tokyo on 1 November 1999 on ‘The Role of Arbitrator
in International Commercial Arbitration’, JCA Newsletter 6 (March 2000),
<http://www.jcaa.or.jp/e/arbitration/newsletter/news6.html>, 5 October 2012.
227) Hong Kong Arbitration Ordinance (Cap. 609), § 53(3). The Ordinance is based on the
UNCITRAL Model Law, which does not include this sanction.
228) For example, Gary B. Born, International Commercial Arbitration (Alphen aan den Rijn: Wolters
Kluwer, 2009), 2498–2501; Blackaby & Partasides, International Arbitration, para. 9.97.
229) 2012 ICC Arbitration Rules, Art. 37(5).
230) Andrew Clarke, ‘International Arbitration: Current Corporate Concerns', 20 ICC Int'l Ct. Arb. Bull.
20 (2009): 49.
231) White & Case, Queen Mary University of London School of International Arbitration, 2012
International Arbitration Survey: Current and Preferred Practices in the Arbitral Process, 41.
43
232) Ibid.
233) See Born, International Commercial Arbitration, 2304–2324.
234) For example, 2010 UNCITRAL Rules, Art. 4.
235) Wilske, Arbitration Guerrillas, 330.
236) Blackaby & Partasides, International Arbitration, para. 6.04.
44
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HORVATH, Gunter - Countering Guerrilla Tactics

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Biblographic reference [A] Introduction

§2.03 Particularities when Dealing with State Entities

[C] Default of the State Respondent

[D] Constitution of the Arbitral Tribunal

[G] Document Production

[I] Harassment of Witnesses, Representatives and Arbitrators

[J] Enforcement of Arbitral Awards

§2.04 Sanctions Available for Arbitrators to Curtail Guerrilla Tactics

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