On 24 August 2011 the Austrian Supreme Court (Oberster Gerichtshof, OGH) addressed the procedures for the enforcement of foreign arbitral awards. Article IV (1)(a) of the New York Convention states that the party applying for recognition and enforcement shall, at the time of the application, supply the duly authenticated original award or a duly certified copy thereof.

In this case, the plaintiff filed a motion for enforcement of the arbitral award and submitted along with it a copy of the award certified by the sole arbitrator and notarized in London. Upholding its previous judgments in this regard, the Austrian Supreme Court stated that the procedure for a duly certified copy needs to comply with the procedural requirements of the country rendering the judgment, or of the country executing the decision. To be valid it is sufficient for an impartial official affiliated with an arbitral institution, in this case the sole arbitrator, to certify the copy. However the Austrian Supreme Court argued that although a duly certified copy does not require the same high standards as a duly authenticated copy, the official's signature has to be at least indirectly authenticated. This requirement might be explicitly regulated in the applicable arbitral rules [e.g. Art 27 (4) of the VIAC Arbitration Rules], or if not, then it is met if the applicable arbitral rules provide that the arbitral institution is responsible for serving the award and keeping the original award signed by the arbitrators [e.g. Art 28 (4) ICC Rules]. Therefore, the court found that the copy submitted with the motion to enforce the arbitral award was duly certified. Parties: unknown, case no: 3Ob65/11x, Austrian Supreme Court, Austria.

On 13 April 2011 the Austrian Supreme Court (Oberster Gerichtshof, OGH) addressed the grounds for the refusal to enforce arbitral awards listed in Article V (2)(b) of the New York Convention. According to article V, (2)(b), recognition and enforcement of an arbitral award may be refused if the competent authority of the country where recognition is sought finds that the recognition and enforcement of the award would be contrary to the public policy of that country.

In the case at hand, the plaintiff invoked the above mentioned ground to resist enforcement. According to the plaintiff it is contrary to the public policy of Austria that the arbitral award did not contain the signature of one of the three arbitrators, and that the arbitrators did not meet in person to deliberate their decision before the award was rendered.

The Austrian Supreme Court held that a missing signature of one of the three arbitrators does not constitute a breach of public policy if the reasons for the missing signature are noted in the award. According to the Austrian Law § 606 paragraph 2 of the Austrian Code of Civil Procedure (ZPO), in cases with more than one arbitrator, only the signature of the majority of the arbitrators is required, however, the reasons for the absence of the signature must be mentioned in the award. Most rules of arbitration procedure contain very similar provisions aiming to prevent the invalidity of the arbitral award in case of an arbitrator's physical absence or because of an arbitrator's obstructive behavior. Furthermore, the Austrian Supreme Court ruled that in this case there were no indications that the third arbitrator was factually excluded from the deliberation process. Therefore a missing signature as well as the failure to meet and deliberate in person before rendering an arbitral award is not considered contrary to the public policy of Austria. Parties: Joint Stock Company v. Limited Liability Company, case no: 3Ob154/10h, Austrian Supreme Court, Austria.

S and I, both Canadian companies with offices in Ontario, were parties to two contracts for separate shipments of sugar from Brazil to Ghana. The contracts contained similar but different arbitration clauses. The first contract stated that the dispute shall be submitted to arbitration and “[t]he place of arbitration shall be Paris, France or Zurich, Switzerland under [International Chamber of Commerce] Rules and Regulations.” The second contract stipulated that disputes “are to be resolved by the arbitrators designed [sic] by the refined sugar association as per their arbitration rules and English law is to apply […].” The second contract included a further term stating that it superseded all contracts entered into between S and I. In October 2007, S brought an action against I and its Chief Executive Officer after problems developed with respect to both contracts. The CEO was not a party to either arbitration agreement. Approximately three years later, I brought a motion seeking a stay of the action under Ontario's domestic arbitration statute in order to allow an arbitration to proceed.

In light of the differing arbitration clauses and the fact that the two contracts concerned the shipment of sugar from Brazil to Ghana, the Court requested the parties to address whether Ontario's domestic or international arbitration statute was applicable. The judge held that the disputes were not subject to the Ontario International Commercial Arbitration Act, R.S.O. 1990, c. 19 which implements the UNCITRAL Model Law on International Commercial Arbitration (“Model Law”). The Ontario International Commercial Arbitration Act applies to disputes within the international purview. The Court noted that although Article 1(3) of the Model Laws states that an “arbitration is international if […] any place where a substantial part of the obligations of the commercial relationship is to be performed […]” is situated outside the State in which the parties have their place of business, section 2 of the Ontario International Commercial Arbitration Act provides that “[d]espite article 1(3)(c) of the Model Law, an arbitration conducted in Ontario between parties that all have their place of business in Ontario is not international only because the parties have expressly agreed that the subject-matter of the arbitration agreement relates to more than one country.” Accordingly, the judge was satisfied that the disputes fell under the auspice of the Ontario Arbitration Act, 1991, S.O. 1991, c. 17 and proceeded to analyze the dispute in the context of the domestic arbitration statute. The court held that the three year delay in seeking a stay was fatal to that application. Parties: Star Tropical Import & Export Ltd. v. International Project Management Consortium Ltd & Paul Arun Singh, court file no: 07-CV 341686PD2, Ontario Superior Court of Justice, Canada.

S, a fast food restaurant franchisor based in the United States, and C, a franchisee, entered into a franchise agreement for the operation of a restaurant in Saskatchewan (the “Agreement”). The Agreement contained a provision whereby S could terminate the Agreement if C failed to operate the restaurant in accordance with the franchise Operations Manual. The Agreement further provided that Connecticut, United States was the place of arbitration. After S elected to terminate the Agreement, C submitted the issue to arbitration at the International Centre for Dispute Resolution in accordance with the Commercial Arbitration Rules of the American Arbitration Association. Prior to the hearing, C requested an adjournment of the hearing date for medical reasons. The arbitrator refused the adjournment and C participated by telephone. In his final award, the arbitrator determined that C breached the Agreement and S was within its contractual right to terminate the Agreement. C was ordered to pay the costs of the arbitration pursuant to the terms of the Agreement and, amongst other things, remove all trademarks and materials associated with S. C was further required to pay a penalty for each day he failed to comply with the terms of the award. Despite the award, and the arbitrator's determination that the Agreement was terminated, the parties continued to operate under the provisions of the Agreement. Following arbitration, S applied to have the award entered as a judgment of the Saskatchewan court pursuant to the International Commercial Arbitration Act, S.S. 1988-89, c. I-10.2, which adopts the UNCITRAL Model Law on International Commercial Arbitration (the “Model Law”). C opposed the application for, amongst other reasons, the arbitrator's failure to adjourn the hearing despite being informed of C's medical condition and allegations that enforcement of the award would be a breach of public policy because of its penal nature.

Pertaining to the former argument, Article 36(1)(a)(i) of the Model Law provides that recognition or enforcement of an arbitral award may be refused where a party to the arbitration was “under some incapacity”. However, the Court determined that C was not under incapacity as contemplated by the Model Law as the arbitrator heard and considered C's submissions, and C failed to prove that the arbitrator was provided with medical evidence illustrating incapacity.

In regard to C's public policy argument, C argued that recognition and enforcement of the arbitrator's award would amount to double recovery as the parties continued to operate under the terms of the Agreement following the award and S continued to profit from the ongoing operation of the restaurant. C argued that double recovery is contrary to Article 36(1)(b)(ii) of the Model Law. The Court agreed with C, noting that S continued to profit from the operations of the restaurant and there was no evidence that S would suffer any damage as a result of non-enforcement. Accordingly, the Court dismissed S's application to enforce the award. Parties: Subway Franchise Systems of Canada Ltd. v. Cora Laich, case no: Q.B.G. No. 482, Queen's Bench for Saskatchewan, Canada.

The claimant initiated judicial proceedings against the respondent seeking an order for payment (an injunction) for several invoices issued under a “Works Contract†that was entered between the parties in 2002. In its reply, the respondent argued, among other things, that the court should honor the arbitration agreement and refer the parties to arbitration.

The arbitration clause in question states that disputes relating to the interpretation, integration and performance of the contract would be submitted to a panel of four arbitrators composed of “on the side of the Employer, its lawyer and a member of the supervising team, and on the side of the Contractor, its lawyer and a member of the team responsible for the technical direction of the works.†In case the arbitrators fail to reach a solution “the tie will be solved through the intervention of a fifth arbitrator chosen by the agreement of the four, or, in case they cannot reach an agreement, the arbitrator is to be chosen by the [indication of the appointing entity].â€

Both the Court of First Instance and the Court of Appeal upheld the arbitration clause. The Supreme Court however decided that the clause was in breach of the Portuguese Constitution, and therefore, was null and void. The Supreme Court regarded the first tier in the dispute resolution clause as a conciliatory phase and not as an arbitration clause, and therefore, its reasoning only applied to the five member tribunal.

The Supreme Court started by noting that the current Voluntary Arbitration Law (“VALâ€) heeds little attention to the issue of independence and impartiality. It then made reference to some recent criticism of the VAL stating that the dominant trend is for the neutrality of arbitrators to become increasingly relevant. To illustrate this, the Supreme Court referred to an article from a proposal to amend the VAL under the previous government that did not go through (this bill has now been replaced with a different one, which is expected to be enacted shortly). It also referred to the project for a Deontological Code for Arbitrators prepared by the Portuguese Arbitration Association (Approved by the PAA's General Assembly on 12 March 2010), to the Recommendations on the independence and impartiality of arbitrators of the Spanish Arbitration Club, and to the IBA Guidelines on Conflicts of Interest in International Arbitration.

Recognizing that the current VAL has little, if any, support for the requirements of independence and impartiality of all members of arbitral tribunals as a sine qua non condition, the Supreme Court turned to the Constitution in search for “the normative basis to support the understanding that the requirements of impartiality and independence apply to all the members of the arbitral tribunal.â€

The Supreme Court referred in particular to the qualifications of arbitral tribunals in the Constitution and to the right to a fair trial, and concluded that the tribunal's functions are similar to the courts' ones as they both solve conflicts. The Court concluded that arbitral tribunals have to respect the independence and impartiality of all its members, and that the exigency of a fair trial would not be met if the arbitral proceeding would take place before a tribunal where some or all members would be deprived of essential guarantees of neutrality.

Reporter's comment:

Kompetenz-kompetenz is a fundamental principle in arbitration and its application is unquestionably accepted by Portuguese courts and scholars. However, it is well established that only when the nullity or inoperability of arbitration agreements is manifest and uncontroversial, courts may refrain from upholding such agreements.

In this case, we do not believe that the reasoning given by the Supreme Court is sufficiently compelling to meet the threshold. The rules and principles that apply to courts do not necessarily and in the same manner apply to arbitral tribunals because these are included in the “Tribunals†sub-chapter of the Constitution. In fact, a look at the Constitution is enough to identify a number of provisions that do not apply to arbitral tribunals.

This is understandable as many, if not most of the rules that apply to courts under the Constitution are intimately related with the fact that they administer justice in the name of the people, a fundamental distinction vis-à-vis arbitral tribunals. These two points alone should have compelled the Supreme Court to undertake a deeper analysis of the consequences, in terms of the applicable regime, of the different genesis of courts and arbitral tribunals.

Furthermore, the fact that the Court started its analysis by referring to the said evolution and not with a justification of how independence and impartiality are fundamental requirements stemming from the Constitution casts some doubts as to the conviction of the Supreme Court itself regarding the unconstitutionality invoked not to uphold the clause.

We also disagree with the Supreme Court's conclusion that there would be no fair trial, not least because ultimately the decision could be made by the fifth arbitrator alone. In this regard, we note that the fifth member, i.e. the Chairman of the tribunal, would be nominated either by the agreement of both parties or by a third party, and as such, the issue of lack of impartiality let alone independence would not apply to him. Moreover, the parties had equal influence in the formation of the tribunal. This is a fundamental distinction from the decision of the Constitutional Court that the Supreme Court quoted in support of its position, which concerned a mandatory (as opposed to voluntary) arbitral tribunal in which a public entity having a connection with one of the parties was entitled to appoint the Chairman alone.

It should be noted that most of the soft-law that the Supreme Court invoked – somewhat to the detriment to the VAL – did not even exist when the arbitration agreement was concluded.

Moreover, under the VAL there would be no manifest nullity. Instead, not only does the VAL (contrary to the current project of the new VAL) contain no provision requiring arbitrators to be independent and impartial, but it specifically states in its article 10 that the provisions of the Law of Civil Procedure regarding the challenge of judges shall be applicable to the challenge of arbitrators who have not been appointed by agreement of the parties. A contrario, arbitrators nominated by agreement of the parties are not subject to these provisions, and there was room to argue whether the party-appointed arbitrators in this case were not arbitrators nominated by agreement of the parties.

When drafting their agreement, the parties chose arbitration as a way for solving their disputes; therefore, for them to refer their dispute to judicial courts (the outcome of the Supreme Court's decision) seems an unfair and unnecessary frustration of their expectations upon entering the contract. Even declaring that the arbitration agreement was null in the part where it foresaw the appointment of arbitrators that were not independent from the parties, the Supreme Court could have applied the principle of favor arbitri and saved part of the arbitration agreement by reducing it to a one arbitrator tribunal.

In conclusion, while we agree with the Supreme Court that independence and impartiality of the arbitrators is an essential concern, taking into account the voluntary and private nature of arbitration, there has to be an indisputable reason to override the will of the parties and to prevent the arbitral tribunal from ruling on its own competence. Parties: unknown, case no: 170751/08.7YIPRT.L1.S1, Supreme Court of Justice, Portugal.

The dispute arose out of an agreement for the export of goods between a South Korean governmental foreign aid agency (the “Appellantâ€) and a South Korean company (the “Respondentâ€). The goods were exported for the purpose of foreign aid on behalf of the Appellant. The Respondent received payments for the goods from the Appellant and, during the term of the agreement, did not pay any value added tax (“VATâ€) but reported its tax-exemption status, which was accepted and acknowledged by the relevant tax authorities at the time. After the agreement was terminated, the Respondent was notified that the exports were not exempt from VAT payments. After paying VAT, the Respondent pursued arbitration proceedings in Korea against the Appellant contending that the Appellant was responsible for the VAT payments.

The Tribunal issued an award in favor of the Respondent, ordering the Appellant to pay a portion of the VAT and noting a number of factual findings: (i) the Respondent was the exporter; (ii) there was no express provision regarding which party carried the responsibility for the VAT; and (iii) the relevant tax authorities acknowledged that the Respondent was exempt from VAT payments.

The Appellant sought to set aside the award pursuant to Articles 32(2) and 36(2)(1)(d) of the Arbitration Act of Korea (“the Actâ€), arguing that the tribunal failed to properly provide reasons for its decision and that it conducted the arbitration proceedings contrary to the agreement of the Parties. Article 32(2) of the Act provides that “an award shall state the reasons upon which it is based unless the parties have agreed that no reasons are to be given….“ Article 36(2)(1)(d) of the Act provides that an award may be set aside if “the arbitral procedure were not in accordance with the agreement of the parties…†The Appellant further argued that the award should be set aside on public policy grounds, pursuant to Article 36(2)(2)(b) of the Act as the award differed from Supreme Court precedents in similar cases. Accordingly, the Appellant argued that enforcement of the award would be contrary to the good morals or public policy of Korea. The lower court rejected the Appellant's arguments and rejected the application to set aside the award.

In affirming the lower court's decision, the Supreme Court noted that an award may be set aside under Article 32(2) of the Act only in limited cases where: (i) the tribunal did not provide any reasoning whatsoever; (ii) the reasoning of the tribunal is so unclear that one cannot determine what issues of fact or law were relied upon by the tribunal; and/or (iii) the reasoning of the tribunal is contradictory. The court held that the fact that portions of an award were incomplete did not constitute a failure to provide reasoning for purposes of setting aside an arbitral award under Article 32(2). The Supreme Court further held that the award contained a general explanation of how the tribunal reached its findings and that the tribunal was allowed to rely upon equitable principles without reference to any specific statute or law. Article 32(2) of the Act did not require the tribunal to provide exact, detailed reasoning regarding the respective rights of the parties. The Supreme Court also found that the arbitral procedure was not contrary to the parties' agreement and as such, there was no valid basis to set aside the award pursuant to Article 36(2)(1)(d) of the Act. In relation to the Appellant's arguments on public policy, the Supreme Court affirmed the lower court's decision that enforcing the arbitral award would not violate the good morals or public policy of Korea. In particular, the Supreme Court held that the award did not violate the good morals or public policy of the Republic of Korea by simply differing from a Korean Supreme Court precedent dealing with similar facts and by applying a different interpretation of the law and the contract.

Although this case concerned the setting aside of a domestic arbitration award, the general principles set out in the Supreme Court's decision may also be relevant for international arbitration awards. Parties: Korea International Cooperation Agency v. HN Corporation, case no: 2007Da73918, Supreme Court, Korea.

The arbitration was conducted under the rules of the Spanish Arbitration Court and the seat of the arbitration was Madrid. The claimant challenged the Chairman of the arbitral tribunal when it discovered that the managing partner of the law firm representing the respondent (“Mr. A”) had worked as an intern with the Chairman. Since the Chairman had not disclosed this fact to the parties, the claimant asked the Chairman to explain and to disclose any other relationships he may have with the said managing partner and/or with the firm representing the respondent.

In his answer, the Chairman acknowledged that Mr. A had worked as an intern with him for two or three years and that the said internship lasted until 1980. The Chairman further indicated, inter alia, that (i) he had a good friendship with Mr. A and other members of the law firm representing the respondent; (ii) he was a member of the academic board of a school having the same name as the said law firm; (iii) his son-in-law worked in the mentioned law firm; and (iv) he had dedicated a book to the founder of the said law firm. The Chairman had not disclosed these relationships to the parties before he was requested to do so by the claimant.

The arbitral tribunal, including the Chairman, rejected the challenge made by the claimant and eventually issued the final award. Thereafter, the claimant sought to have the award set aside before the Madrid Court of Appeals (the “Court”).

Before the Court, the claimant firstly argued that the award was null since the claimant had been denied its right to an impartial and independent arbitrator. The Court noted that, pursuant to Section 17.3 of the Spanish Arbitration Act, an arbitrator may be challenged if the circumstances give rise to justifiable doubts as to his impartiality or independence. The Court affirmed that it was not necessary to prove that the arbitrator would in fact act without the requisite impartiality or independence, since it was sufficient to prove the existence of circumstances raising doubts in relation thereto.

In this case, the Court held that each of the circumstances disclosed by the Chairman, when considered individually, were not sufficient to challenge the arbitrator. However, the Court held that all those circumstances, when considered jointly, raise justifiable doubts as to the Chairman's independence and impartiality, since they proved a close and cooperative relationship between the Chairman and the law firm representing the respondent. Furthermore, the Court stated that these doubts became more of a concern because of the fact that the Chairman had failed to disclose, of his own accord, the extent of this relationship.

Secondly, the claimant argued that the award was null since the claimant had been denied its right to present evidence. The claimant stated that the arbitral tribunal had dismissed its request to enforce the production of certain documents, which were relevant to prove the claimant's case.

The Court found that the claimant's evidence was relevant, and therefore, the arbitral tribunal had breached Article 24.1 of the Spanish Arbitration Act, which establishes that each party shall be given a full opportunity to present its case.

Based on the above, the Court set aside the award on the basis of Article 17 of the Spanish Arbitration Act (the Claimant had been denied its right to have an independent and impartial judge), and Article 24.1 and 41.1 (f) of the Spanish Arbitration Act (the award was contrary to public policy since the claimant had been denied its right to present relevant evidence).

The claimant also argued that the challenged procedure was not conducted according to the law, since the Chairman should not have ruled on his own challenge. The Court held that, since Article 18.2 of the Spanish Arbitration Act stipulates that “all arbitrators shall decide on the challenge”, there was no legal basis for preventing the Chairman from so deciding. Parties: Delforca 2008, Sociedad de Valores, S.A. v. Banco Santander, S.A. case no: 3/2009, Madrid Court of Appeals, Spain.

X., a middle-distance runner, was suspended for two years as of November 2007 for breach of anti-doping rules. In 2010, the Z. Commission ordered the suspension for life X. on the ground that the athlete had refused to submit to anti-doping tests.

X. appealed this decision before the Court of Arbitration for Sports (CAS) and requested legal aid. A lawyer was appointed by the CAS for the defense of X.'s interest three months later. The CAS decided that the dispute would be treated by a sole arbitrator. The CAS held a hearing during which it heard the parties, witnesses, and experts. By award of 26 July 2011, the sole arbitrator dismissed X.'s appeal and confirmed the decision of the Commission.

X. filed a petition to set aside the award with the Swiss Federal Supreme Court. The Supreme Court dismissed the petition without having invited the Commission or the CAS to file comments. The Supreme Court held that, contrary to what the athlete alleged, X. had not been prevented from having her case heard by a three-member panel because she had not been assisted by a lawyer during the first three months of the proceedings. The Supreme Court noted that at the beginning of the hearing, X., assisted by her lawyer, had confirmed that she had no objection to the composition of the arbitral tribunal. The Supreme Court held that she would have had the opportunity to insist on a three-member tribunal at that moment so that she could not argue that her right to be heard had been violated.

X. also sought to have the award set aside on the ground that the Commission Z. was not an independent and impartial tribunal, and that Article R57(1) of the CAS Rules, according to which “the Panel shall have full power to review the fact and the lawâ€, did not allow the sole arbitrator to remedy such a serious breach. The Supreme Court held that X. should have relied on Article 190(2)(a) of the Swiss International Private Law Act (PILA) (irregular composition of the arbitral tribunal) and not on Article 190(2)(e) PILA (violation of procedural public policy), which is subsidiary. Relying on its case law, the Supreme Court moreover ruled that there was no reason why the CAS could not itself investigate a case, if not done before the previous body. The Supreme Court also reaffirmed that the constitutional requirement of a double-tiered judicial review was not part of procedural public policy in the sense of Article 190(2)(e) PILA. Taking into consideration X.'s difficult financial situation, the Supreme Court waived costs for the federal proceedings. Parties: unknown, case no: 4A_530/2011, Tribunal federal, Switzerland.

In 1992, Affymax and Ortho-McNeil-Janssen Pharmaceuticals (“Ortho”) began a joint venture to develop peptide compounds. The agreement established that disputes would be arbitrated. After an arbitration award in 2010 allocating ownership of certain patent families among the parties, Affymax moved in the United States District Court for the Northern District of Illinois to set aside the award.

The District Court vacated the award to the extent that the panel had allocated to Ortho certain foreign patents relating to a U.S. patent (the '078 patent) that it had held was invented by Ortho. The District Court found that the arbitrators had “manifestly disregarded the law” because they had not assessed the inventorship of the foreign patents separately from the related U.S. patent, a conclusion it based on the fact that the award did not include a discussion of the inventorship of the foreign patents. The parties appealed.

The United States Court of Appeals for the Seventh Circuit first decided that the dispute at issue was a contract dispute, not a patent dispute, and thus that jurisdiction was proper. It then held that “manifest disregard of the law,” under Seventh Circuit precedent, is limited to the unusual circumstance where the award directs the parties to violate the legal rights of third persons who did not consent to the arbitration. To the extent that other decisions have suggested that an award may be rejected for “manifest disregard” on other grounds, the Court held that the Supreme Court's decision in Hall Street Associates v. Mattel, precluded that interpretation, noting that the First, Fifth and Eighth Circuits had reached the same conclusion. The Court held that the arbitrators' failure to discuss foreign patents separately from domestic patents did not “manifestly disregard” the law, nor did it exceed arbitrators' powers, noting that arbitrators are not required to render opinions and are free to act summarily unless the parties' contract requires an opinion. Accordingly, the Court of Appeals reversed the District Court's judgment and remanded the case with instructions to confirm the award in full. Parties: Affymax, Inc. v. Ortho-McNeil-Janssen Pharmaceuticals, Inc. & Johnson & Johnson Pharmaceutical Research & Development, LLC, case no: 11-2070, United States Court of Appeals for the Seventh Circuit, United States.

Zuckerman Spaeder, LLP (“Zuckerman”) sued James A. Auffenberg for two unpaid legal bills related to Zuckerman's representation of Auffenberg in a criminal tax fraud case.

After removing the case to federal court, Auffenberg answered the complaint and counterclaimed for legal malpractice and violation of the District of Columbia Rules of Professional Conduct, arguing that the amount claimed exceeded an agreed-upon cap on fees. Zuckerman in turn filed an amended complaint adding a claim for relief quantum meruit. Before the hearing date, the parties participated in a mediation session that ended unsuccessfully. Auffenberg then unilaterally filed a petition with the Attorney-Client Arbitration Board and, on the same day, moved for a stay of proceedings under Section 3 of the Federal Arbitration Act. The district court denied Auffenberg's request, reasoning that Auffenberg had waived his right to seek arbitration by participating in the litigation and mediation. Auffenberg appealed.

The United States Court of Appeals for the District of Columbia Circuit affirmed. Noting that under Section 3, a party is entitled to a stay pending arbitration if, among other factors, he “is not in default in proceeding with such arbitration,” the Court held that a party is in default when he actively participates in litigation or otherwise acts in a manner at odds with an intent to arbitrate. The Court concluded that the test was properly one of forfeiture (whether a party has failed to timely assert a right) and not waiver (whether a party has intentionally relinquished a known right), as it had previously and inaccurately described it. The Court held that a party seeking to stay arbitration under Section 3 “who has not invoked the right to arbitrate at the first available opportunity, typically in filing his first responsive pleading or motion to dismiss, has presumptively forfeited that right.” However, a stay may still be granted if the party's delay did not prejudice his opponent or the court. The Court concluded that Auffenberg had failed to timely assert his right to arbitrate and engaged in litigation activity after filing his initial answer and counterclaim, which imposed substantial costs on Zuckerman and the district court, and thus the district court's denial of Auffenberg's request for a stay. Parties: Zuckerman Spaeder, LLP v. James A. Auffenberg, Jr., case no: 10-7041, United States Court of Appeals for the District of Columbia Circuit, United States.

Cape Flattery Limited (“Cape Flattery”) entered into an agreement with Titan Maritime (“Titan”), under which Titan agreed to salvage Cape Flattery's vessel, which had run aground on a submerged coral reef off Barbers Point in Oahu, Hawaii. The arbitration clause in the agreement stated that all disputes “arising under” the salvage agreement would be settled by arbitration in London, England, in accordance with the English Arbitration Act 1996. On August 8, 2008, the United States government informed Cape Flattery that it was liable for over $15 million in damage sustained to the reef.

On October 24, 2008, Cape Flattery sued Titan in the United States District Court for the District of Hawaii for indemnity and/or contribution, claiming that the damage to the reef was the result of Titan's gross negligence in removing the vessel. Titan moved to compel arbitration. The district court denied Titan's motion, holding that under federal arbitrability law, the dispute did not “arise under” the salvage agreement. Titan appealed.

On appeal, Titan argued that English law should govern the question of whether the dispute was arbitrable. The Court held that, although federal law applies to questions of arbitrability under the FAA, contracting parties may agreeing to apply another law. The Court of Appeals held, however, that because negotiating parties are unlikely to consider the question of what arbitrability law will apply to disputes, a higher level of intent than that required for interpreting arbitration agreements was appropriate. The Court adopted the “clear and unmistakable evidence” standard articulated in First Options of Chicago, Inc. v. Kaplan, 514 U.S. 938 (1995) for determining whether the parties had agreed to allow an arbitrator to decide questions of arbitrability. Applying this standard to the case, the Court concluded that the agreement was ambiguous as to whether English law applied to the arbitrability question and that the clear and unmistakable evidence standard therefore was not met. Applying federal arbitrability law, the Court determined that the dispute in question did not concern interpretation of any clause in the agreement, and therefore was not within the narrow “arising under” language of the agreement. The Court accordingly affirmed the district court's refusal to compel arbitration. Parties: Cape Flattery Limited v. Titan Maritime, LLC, case no: 09-15682, United States Court of Appeals for the Ninth Circuit, United States.

In May 2005, Laryssa Jock (“Jock”), representative of a class of female employees of defendant Sterling Jewelers Inc. (“Sterling”), took action against their employer for gender discrimination with respect to wages. They sought relief pursuant to a dispute resolution procedure in their employment contracts that provided a three step process culminating in arbitration pursuant to the rules of the American Arbitration Association (“AAA”).

In March 2008, after pursuing the first two steps of the dispute resolution process, plaintiffs filed a complaint with the AAA. The plaintiffs simultaneously filed a class action suit in the United States District Court for the Southern District of New York asserting claims under Title VII, the Equal Pay Act, and the Age Discrimination in Employment Act.

On June 18, 2008, the district court granted Sterling's motion to refer the matter to arbitration. At the initiation of the arbitral proceedings, the arbitrator was presented with the issue of whether the dispute resolution procedure outlined in plaintiffs' employment contracts permitted or prohibited class arbitration. The arbitrator found that the provision could not be construed to prohibit class arbitration and allowed the parties to move in district court to confirm or vacate that determination. The district court denied Sterling's motion to vacate finding the arbitrator had not exceeded her powers in deciding the issue. After the Supreme Court's decision in Stolt-Nielsonv. Animalfeeds International Corp., – U.S. -, 130 S.Ct. 1758, 176 L.Ed.2d 605 (2010), the district court reconsidered its prior order and vacated the arbitrator's award on the grounds that the arbitrator improperly decided class arbitration was permitted where the contractual provision was silent on the issue. Plaintiffs appealed.

The Court considered the issue of whether a district court has authority to vacate an arbitration award where it believes that the arbitrator improperly interpreted terms of an arbitration agreement. The Court held that it may not. The Court emphasized that the grounds for vacatur under the Federal Arbitration Act (“FAA”) are narrow and a party seeking vacatur must clear a “high hurdle” as a result of the federal policy in favor of arbitration. The Court found that the district court improperly concluded the vacatur analysis by focusing on whether the arbitrator correctly decided the question presented substituting its own legal analysis for that of the tribunal, rather than limiting its inquiry to whether the arbitrator had the authority to consider the question presented. Finding that there was a plausible basis for concluding that the arbitration agreement provided for class arbitration and citing the “colorable justification under Ohio law” for such an interpretation, the Court held that the arbitrator acted properly within the bounds of her authority and that her decision was not in manifest disregard of the law. The Court emphasized that its decision centered on the appropriate level of deference due when reviewing arbitral awards and noted in dicta that intervening changes in law have never, standing alone, provided a basis for vacatur. The Court distinguished Stolt-Nielson, which held that imposing class arbitration on parties whose arbitration clauses are ‘silent’ on that issue is inconsistent with the FAA, by interpreting “silent” to mean that both parties agreed that the arbitration clause did not provide an answer one way or the other on the issue. The Court found that the present dispute was dissimilar in that the parties disagreed as to whether their agreement to arbitrate implicitly provided for class arbitration. The Court further rejected Sterling's argument that the arbitration agreement was to be understood as “silent” on the issue because the arbitrator found that the arbitration agreement did not prohibit class arbitration (rather than finding that it permitted class arbitration) as unpersuasive. The dissent disagreed with the Court's interpretation of Stolt-Nielson's holding and argued that the absence of a clear grant of arbitration necessitated a denial of class arbitration. The Court reversed the district court judgment vacating the arbitration award and remanded with instructions to confirm the arbitration award. Parties: Laryssa Jock & Class of retail employees v. Sterling Jewelers, Inc., case no:10-3247-cv, United States Court of Appeals for the Second Circuit, United States.

A two-day conference that will encompass subjects as follows: “Selecting the Tribunal: Effective Competition for Revenue Among Arbitral Institutions and Their Respective Financial Conditions; Institutional Abuse of Arbitrators and Clients; Liabilities of Arbitrators; Consolidation of Arbitrations; Multiple Party Representative (e.g. “Class“) Actions and Preclusion of Claims of Non-Signatories/Kompetenz-Kompentenz/Update on Non-Joinder Authorities; Arb-Med, Med-Arb and Mediations “With Teeth“/Under What Circumstances do Parties Choose these Solutions and What Measures are Employed to Obtain Agreement to these Techniques?; Interviewing Arbitrators/Role of Party-Appointed Arbitrators/Role of Chair/Confidentiality of Panel Deliberations/Dissenting Opinions and China Noble Inc. v. Lei Kat Chang (Canada); International vs. Local Public Policy” – South America/Sharia/CIS/EC Competition Law/Money Laundering through the Award; What Weight Should be Given to the Annulment of an Award under the Lex Arbitri?/Independence of Annulling Court and Standards for Measuring It Monde Re and Application of Forum Non Conveniens Doctrine to Enforcement Proceedings; Civil Law/Common Law: Substantive Differences; Evidence Assembly; Transfer of Hearing Situs et.al.” For more information visit http://cils.org/2010/conferences/conference.php?ConferenceID=251 or contact Manuela Ines Wedam at manuela.wedam@cils.net or by phone at +43 662835399.

This event takes place on the occasion of the 20th anniversary of the German Institution of Arbitration (DIS). It discusses arbitration in the context of politics, economics and the state judicial system in the 21st century. Currently, presentations on the following subjects are foreseen: The DIS – yesterday, today and tomorrow; the relationship between arbitration and other methods of alternative dispute resolution; the relationship between arbitration and state courts; and the importance of arbitration in the political and economic environment of the 21st century. The event concludes with a gala dinner. For more information visit http://www.dis-arb.de/de/18/events/dis-frühjahrsveranstaltung-2012-bdquo;schiedsgerichtsbarkeit-im-umfeld-von-politik,-wirtschaft-und-gerichtsbarkeit-im-21-jahrhundert“-id107, or contact the institute at dis@dis-arb.de, or by phone+ 49 (0)221-28552-0 or by fax at + 49 (0)221-28552-222.

This is a half-day symposium preceding the LCIA European Users' Council Symposium. The aim of the symposium is to encourage active debate on key arbitration issues among the younger members of the arbitration community, the LCIA sponsors YIAG. To view the program and to register visit

http://www.lcia.org/Conferences/Conference_Schedule.aspx.

The symposium is designed to be interactive and to provide an opportunity for delegates to share news and views on developments in the field of international commercial arbitration and ADR. The LCIA will contact delegates before the symposium to request topics for discussion. To view the conference program and to register visit http://www.lcia.org/Conferences/Conference_Schedule.aspx.

The event is aTwo-day conference on the future direction of international arbitration in the United States. For more information visit http://arbitrateatlanta.org/events/.

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The author also surveys various forecasts about the possibilities in the future for international commercial arbitration.

When the U.S. Supreme Court interpreted the statute broadly, there was even more need for certainty. The authors seek to create certainty by suggesting limiting factors a court should first consider before compelling discovery.