Legal Outlook Energy & Resources Disputes Episode 6

Appointing and educating your tribunal - transcript

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Transcript



Carloandrea Meacci:

Hi everyone. My name is Carloandrea Meacci. I am the head of the energy and infrastructure team in Italy, and I spend a lot of time and doing renewables work just to make an example, a couple of years ago, I closed renewables deals in Italy worth 3 billion euros, which made us by far the number one renewables law firm in Italy in terms of volumes, at least. Today is the fourth of a six part series of podcast on renewable energy disputes. It is a series in which we seek to hear from our renewables disputes colleagues the tips and tricks of renewables disputes. And in particular today I'm joined by Dyfan Owen who is a partner in our London office, and Luke Carbon who is a senior associate in our Sydney office. Both work in our international division and construction dispute teams and have magic and experience advising on this pitch in the enabled space. Welcome Dyfan and Luke, would you mind introducing yourselves and telling us a bit about your renewables [inaudible 00:01:11] practice?

Dyfan Owen:

Of course, why don't I go first Luke? So my name is Dyfan and I'm a partner in our London office. I've spent my whole career at Ashurst can barely believe it, but I actually did a vacation scheme at the end of the last century at Ashurst. I spent a few years in our Dubai office, but I returned to London a couple of years ago, but I still have a very strong connection with clients and our team in the middle east and I'm currently working with them on the number of large energy disputes and international arbitration team globally is also very busy on a range of renewables disputes. And I know that our listeners have already heard from some of them already about that. Luke, perhaps you could speak to some of those disputes too.

Luke Carbon:

Absolutely, thanks Dyfan and I must confess I'm not as old as you, but I do sit in the international arbitration and construction disputes teams with you and I was based in London for a couple of years there, but I've only recently returned to the Sydney office. In London I worked on some really interesting renewables disputes and they were mostly international arbitration's in relation to wind and energy from waste projects. Now that I'm back in Australia though, I'm still working on renewables disputes, but they're mostly in relation to large solar projects.

Carloandrea Meacci:

Thank you very much both, I know you've been working on some very exciting projects but for today we are going to be talking about chunking would be less exciting, which is the appointment of an arbitral tribunal. And I would really like to hear from you the tips and tricks of appointing an arbitral tribunal. So Luke, I don't know if you want to start and we give us some your thoughts on why the appointment of an arbitral tribunal is important in renewables disputes.

Luke Carbon:

Yes, of course. And I think on the last podcast, our colleague, Dan mentioned that the process for appointing an arbitral tribunal is seemingly innocuous. And I think the key word that Dan used there is probably "seemingly" because although it might seem straightforward, it really is important that an arbitral tribunal is appointed in the right way and that the parties pick the right arbitrators for them in their dispute. In terms of the process, it might not come as a surprise that how the tribunal is appointed depends on what the arbitration agreement says about the appointment, but whatever the arbitration agreement says or whatever the relevant institutional rules provide, it is important that the parties follow the agreed appointment process to the letter. And I say that because if they fail to do so, the arbitral award that is ultimately made through a long, expensive and hard fought process might be unenforceable on that note.

Luke Carbon:

There are very few grounds under the New York Convention, which is the international convention for the recognition enforcement of arbitral awards for a court refusing to enforce an award. However, one of the grounds is where the composition of the tribunal is not in accordance with the arbitration agreement between the parties and in Australia only last month, there was a high profile example of where the Australian courts refuse to enforce an award made by a tribunal in Qatar because the tribunal had not been appointed properly.

Dyfan Owen:

Luke, the example you gave there of the Qatari tribunal and the Australian courts refusing to enforce an award. I think it's quite an interesting one, isn't it?, because it's not a jurisdiction where enforcement is typically challenging or it's a jurisdiction where is particularly some arbitration friendly and that just highlights me the importance of ensuring that you're appointing a tribunal in accordance with the arbitration agreements. You know, there are a number of other jurisdictions where enforcement can be tricky and you can only imagine the difficulty you might have in some jurisdictions, my experience in the middle east for example, if you were to fail to adhere to the arbitration agreement when appointing your tribunals. So I think that's quite a good example of how key it is to get this right.

Luke Carbon:

Absolutely. And not withstanding that Australia is very much a pro arbitration jurisdiction. I think the court said in that case that the failure to appoint a tribunal in the right way meant that went to the very heart of the enforceability of the award.

Carloandrea Meacci:

Thanks both, that's actually been interesting. Now what about the arbitrators actually?

Luke Carbon:

In terms of the arbitrators themselves, who they are and what qualities they have will also be incredibly important in an arbitration that is particularly the case, I think in a renewables dispute where the arbitration might be dealing with new technology or a new regulatory regime. For example, I listened to some of the earlier podcasts in this series and a number of speakers have noted that one of the significant advantages of international arbitration over litigation is being able to appoint your own decision makers, but that probably only holds true if you choose the right tribunal for the job, your arbitrators are going to decide not only the outcome of the dispute, but also the procedure, the timing and other important aspects of how the dispute is going to be resolved. So parties need to think carefully about who their arbitrator or arbitrators will be and whether they are right for their arbitration.

Carloandrea Meacci:

Thank you Luke. I would actually like to dig a bit into some of the points that you made and particularly regarding the process for the appointment of the arbitrators. Is there anything that our listeners would need to know in relation to that?

Luke Carbon:

Dyfan do you want to take that one?

Dyfan Owen:

Sure, so as Luke said, the starting points is really the arbitration agreements itself, and that will provide some guidance in terms of the number of arbitrators to be appointed, how they are to be appointed. Is it by the parties themselves, or is it by the institutions. So that's the starting point. If it's a sole arbitrator, usually at arbitration agreements provided parties are to try and agree on the sole arbitrator, and failing that agreements, then there will ordinarily be a mechanism which between the parties and that will usually be that an institution will go ahead and make the appointments. I've been involved in a case recently actually where the parties, a party started at arbitration having essentially ignored that obligation to try agree upon an arbitrator, sole arbitrator. And that can certainly lead to arguments in an arbitration that has been commenced prematurely. So certainly worth reviewing the arbitration agreement carefully and making sure that you adhered with the obligations. If there's going to be three arbitrators, two are usually appointed by the parties and then neither of the two will appoint the presiding arbitrator or the institution will appoint the arbitrator.

Dyfan Owen:

If in some cases the arbitration agreement says nothing about the appointment of arbitrators, how many, et cetera, then the rules of the institutions do deal with that scenario. The default circumstance is usually that there will be a sole arbitrator. So just one, unless the institution decides that it would be more suitable to have three, but we do find it's more, it's preferable to set out your arbitration agreements the number of arbitrators so that you don't have to have a dispute as to whether the case is suitable for one or more than one. I think that just, it just highlights the importance of making sure that the arbitration agreement ticks off the appointment and number of arbitrators as it does other things such as the language, the seats of the arbitration, the arbitration rules, et cetera.

Carloandrea Meacci:

Thanks Dyfan that's interesting, but with specific reference to renewables. Is there anything specific or what you said apply, applies equally to renewables, same terms of tribunals and appointment trusts?

Dyfan Owen:

I think it's in the renewable space, the disputes tend to be large uncomplex. So if you think about the disputes on a solar project in delays to the construction of that project for example, that could be a dispute that's worth hundreds of millions of dollars, and it could include significant issues. And in that case, what we usually see and what we usually advise is that the parties provide for there to be three arbitrators and they use one of the leading sorts of institutions to, in respect of managing the arbitration. And that's because of the value and the complexity. And in my experience, the extra time and expense of having three arbitrators, as opposed to one is worthwhile in those sorts of cases, which of those types of disputes you usually see in the renewable space, where there can be issues around complexity of technology, for example, in terms of the arbitrators themselves.

Dyfan Owen:

Well, you see a range really of retired judges, senior lawyers or industry experts. And there are quite a few arbitrators who are developing a bit of a specialism for renewables disputes, which is obviously important. One of the things that the parties tend to forget is that the institution also has a role in appointment of arbitrators, so for example, in that default situation we were talking about or where parties can't reach an agreement on the arbitrators. And an example of that is that the LCIA keeps a database of arbitrators so that includes information to help them choose such as language skills and legal and industry experience. So it's worth bearing in mind the institution in question who they might appoint from and the lists and databases they may have of suitable arbitrators.

Carloandrea Meacci:

So the question is, can we agree upfront actually who would be the arbitrator or is it something that we need to agree later?

Dyfan Owen:

Yeah this is very tempting Carloandrea and I completely understand why projects lawyers, people who live and breathe the renewables sector have particular types of individuals in mind, who they think would be suitable to resolve these disputes. And what we occasionally see is that parties have try to identify specific individuals to act as arbitrators in their agreements. Now that can be tempting but in my view that's a mistake, because by the time the dispute arises that individual might be unavailable, they might be indisposed, they might even be dead. That could actually also just be unsuitable for the type of disputes. If you get an expert in the technology, an engineer and you think he would be a fantastic arbitrator, the dispute that arises might be quite a standard contractual interpretations of legal disputes. So I wouldn't recommend that particular individuals get included as potential as arbitrators in an arbitration agreements.

Dyfan Owen:

Now, the other possibility is that you set out in your arbitration agreement the characteristics or qualifications that an arbitrators should have. So someone who knows the industry or the particular types of projects, again, because of the difficulty of predicting the type of disputes, there is some risk associated with that. And I do think that if you just leave your agreements silent, that does give you more flexibility. You can always choose an arbitrator that has all those characteristics when the dispute arises. However, if you're going to include in your arbitration agreement some relevant qualifications for the arbitrator, then what I would say is, just be very clear, carefully word, that provision don't be too specific. Cause that might lead you to having a dispute where you can't find a qualified individual. And also don't be too vague because that could just make it very difficult to identify the type of person to appoint.

Carloandrea Meacci:

You know what I think it's a very good idea. We'll simply follow that advice for the next contract that I will draft. Going back to Luke, now this in terms of qualifications, but is there anything else beyond qualifications that we should take into account when appointing arbitrators in a renewables dispute?

Luke Carbon:

Sure. Well, I think there are quite a number of considerations that need to be taken into account. There are probably some key general ones that apply to all disputes and then a couple of specific points for renewables disputes that are worth mentioning. Firstly, an arbitrator's qualifications are very important. They might be legal qualifications. For example, whether they are from a civil or a common law background, or you might want an arbitrator who has commercial or technical background in the renewable sector, it really depends on what your dispute is about and what your arbitration might involve. But certainly in the renewable space, we are often looking for people who have experience in the sector so that they can get across the issues in dispute quickly. Second, you are always going to want to make sure that your arbitrator has the right experience because they need to run your arbitration properly and efficiently so that you end up with an enforceable award in the most painless way possible.

Luke Carbon:

Third, and this might seem obvious, but it's something that is often overlooked is whether your arbitrator is going to be available when you need them to be. What we sometimes see is arbitrators who are very busy and perhaps stretched a little too thin, and so when parties are trying to set hearing dates it becomes difficult to set a time in the diary, particularly when everyone is busy, the three arbitrators are busy, the legal teams are busy and the experts and witnesses are busy. Fourth, and perhaps most importantly in my view is if you're going to be nominating an arbitrator, then you should be a bit strategic about it. You should try and find out whether they are going to have a view or an approach to the arbitration in a way that suits your interests. For example, if a party has a strong case on the law, they might want to appoint an arbitrator who is this so-called black letter lawyer, rather than someone who is more likely to take a commercial approach.

Luke Carbon:

And what we usually do is take some time researching precentral arbitrators, we try and see whether they have any published judgments, awards, or papers that might shed some light on their views. And it's perfectly legitimate to interview arbitrators to try and get a sense of how they might approach your arbitration. Finally, if diversity is also a key consideration for us and increasingly many of our clients Ashurst is a signatory to the equal representation in arbitration pledge, which is a pledge to improve their representation of women in arbitration. And we will always consider whether there's any female arbitrators who might be suitable for an appointment, that's in any event consistent with many of our clients, equitable briefing policies. Similarly, our clients will sometimes want to know that we've considered whether any local arbitrators might be suitable rather than us just proposing the usual big names from the main arbitration hubs.

Dyfan Owen:

I think I would just add, in terms of appointments of arbitrators, often you have, as we've discussed a number of characteristics or qualifications that you would like your arbitrator to have, but it can be sometimes a bit like, buying a house, which says there will always be a bit of a compromise. So if you think about an example of a solar plant disputes in Jordan, governed by Jordanian law, but held in English language, you might not be straightforward to identify someone who has both the legal background that you would want, the global sorts of arbitration experience you might want, the technical expertise that you would like in terms of knowledge of the type of project, the type of technology, and you'll have to just balance those things and prioritize the requirements essentially as to what you think will be best in the particular situation in terms of the characteristics of the arbitrator. And also of course taking into account the fact, there will be an opportunity and then arbitration to educate the arbitrator through written submissions, through expert evidence, et cetera.

Carloandrea Meacci:

That's right. So so much [inaudible 00:18:32], but so after you've made your appointment how do you go about getting the key points across to the arbitrators?

Dyfan Owen:

Yeah, well that's quite a broad ranging question Carloandrea, and I think that's really the key function of the advocates in an arbitration itself. And what you can't do of course is wait until the end and the hearing to do and that starts from the very beginning through your written submissions, in explaining the technical elements, the legal elements of the case and as you know well, having explained projects to us on a number of occasions in the renewables disputes that is often extremely interesting, but can be quite technical and difficult to explain in a really persuasive way. So I think there, there's obviously a skill to it in terms of the written submissions itself, there are a couple of options in arbitrations in relation to the written documents. One option is to adopt a what's called a Memorial approach.

Dyfan Owen:

And that's where all your evidence is filed together with your written pleadings at the beginning. The second is a more sort of sequential one, which is more similar to English and I assume Australian type litigation where you have written pleadings and then at a later stage you put in your witness statements and expert reports. There are pros and cons for both, and it's interesting that arbitrators that may have the same tribunal, that may have the same issues will feel quite different depending on which approach is adopted, for the Memorial approach, where everything was front-loaded, that could be more efficient, parties have to put their cards on the table upfront, so there's maybe a bit less of an opportunity to be blindsided later. For the sequentials of PRIs pleadings approach the potential advantage of that is that you put in your written submissions and then your expert factual evidence comes later.

Dyfan Owen:

And that only really has to be on things that are in disputes. So there's a lot to think about just in those sorts of written pleadings stage, in terms of other tools to educate arbitral tribunals. One of the ones that historically was used to great effect was site visits and you know, how excited lawyers get when we get the opportunity to do a site visit and that's no different for arbitral tribunals, that's obviously and actually very valuable as well, gives you the opportunity to see what's been written on paper and brings it all into context if you're looking at a wind project and turbines and issues with turbines, then the ability to see those sorts of things just brings it all into color as it were. Obviously that's been very difficult over the last year or so, those have been very rare, those types of site visits. So, a lot more thought needs to be given to how you might present your case through demonstratives, pictures, presentations, and it's a real skill now for experts as well to be able to do that, to explain what's quite technically in quite simple terms. So there's a lot to think about there in terms of educating tribunals.

Carloandrea Meacci:

Thanks Dyfan and yes I agree, I want to decide to visit, but seriously, at this point in the podcast, we always ask our speakers for their best renewables dispute war story. Now can either of you share one with us today?

Luke Carbon:

Well, mine isn't so much a war story, but I thought I'd share an experience that I'm having right now on two arbitrations that I'm working on because I think it demonstrates the importance of the appointment of the arbitral tribunal and a number of the points that we've just been discussing. I'm working on two arbitrations at the moment, both the arbitration's under the ICC rules, both are renewable energy projects, both involve significant variation and extension of times claims and both involve a number of issues about the interpretation of the relevant contracts. One is in energy from vice project and the other is a solar project, but otherwise all things are essentially equal except for the tribunals. On the one hand, one tribunal is made up of a former judge and two senior barristers, and on the other hand, the other tribunal is a former law firm partner.

Luke Carbon:

And now an academic who's appointed as a sole arbitrator. Now all of them obviously very qualified individuals and they all have significant experience as arbitrators, but the approach that they are taking to the arbitrations is really different. The approach to the pleadings is different, the approach to document production is different and their availability and the approach to the timetables is different. Now I'm not necessarily saying that one approach is really wrong or right, but my clients and I are having very different experiences on the two arbitrations. And I think that goes to show how important it is to think about some of the issues that we discussed today upfront so that parties appointed the right tribunal for them in their arbitration. Dyfan do you have a better war story for us?

Dyfan Owen:

I'm not sure mine is a war story either, but it's maybe a recent experience which it actually is worth flagging cause maybe a bit more common than people might realize. So on a recent arbitration, we were feeling pretty confident after the final hearing and were eagerly awaiting the award and were then informed, and fortunately that the presiding arbitrator was coming to resign due to ill health so after the final hearing, but before the award was issued and that actually he was required to do that in quite a strange situation where there seemed to have been a dispute between members of the tribunals too, as to how the award should be produced and whether he would, he should be resigning or not at any, in any event he resigned. Now that night led to a number of challenges from our perspective, what happens in terms of the appointment of a new chairman, what happens in terms of the information to be provided to the individual?

Dyfan Owen:

To what extent do things have to be repeated? Is there going to need to be another hearing, what documents are provided to the new chairman? There was also a question in that case as to whether an extension will be provided so the tribunals surrender their award because it was in a jurisdiction where an award had to be produced within a certain period of time. Now all of those things needed to be considered against the context of ensuring that that award once issued would not be open to challenge. Now, actually the death or resignation of an arbitrator as much more client common than clients might expect. And I was looking at this and the figures from the ICC suggests that they face that issue with several arbitrators every year, the average age, perhaps going back to your diversity point earlier Luke, often arbitrators over 55, and the resignation or death of an arbitrator can have quite significant economic and procedural effect on the conduct of an arbitration, particularly as it was the case in my case where the hearings have begun not being completed. So, it's a situation we've come across a number of times in different ways, but there's not always one that's sort of envisaged at the beginning of an arbitration because it's difficult to predict.

Luke Carbon:

I know I said at the beginning of this podcast Owen that I wasn't as old as you, but even me in my career, I've had that experience as well with an arbitrator having to step aside.

Dyfan Owen:

Not that much younger than me, I don't think, can I also Carloandrea, would you mind if I just mentioned just one thing, which is maybe it says relevant, tangentially relevant, but it's a recent development in the arbitration world, which I think will be of interest to those in the renewable sector, particularly with projects in the middle east. So in late September Dubai through a decree abolished the DIFC-LCIA arbitration center and the Emirates maritime arbitration center, and it's looking to fold their operations into the Dubai international arbitration center so DIAC, as it's called now that the DIFC-LCIA is actually being increasingly popular in recent years including for renewables disputes. And so this is a development is certainly worth keeping an eye on, it creates some uncertainty in terms of those arbitrations that are ongoing and for contracts that provide for DIFC-LCIA arbitration. It seems to me that there's a risk that parties could seek to avoid or challenge awards in the future due to those uncertainties. So as I say, worth keeping an eye on for those in the renewable sector, particularly if they have arbitration provisions that provide for DIFC-LCIA and obviously to obtain advice if they've got any concerns.

Carloandrea Meacci:

Thank you very much both. That's all we have time for.

Dyfan Owen:

Thanks very much for having us, it was good to speak to you both.

Luke Carbon:

Thanks, both. Look forward to seeing you in person soon.

Carloandrea Meacci:

If any of our listeners who wish to get in touch with Dyfan, Luke or myself, our details are on the Ashurst website at the Asherst.com and if you'd like to learn more on our podcast where my partner, Anthony Skinner will be speaking to Rob Palmer and Lucy McKenzie about everything [inaudible 00:28:37] disputes, witnesses, experts and documents, how to get the best out of this, what challenges can arise and how to shoot them [inaudible 00:28:46], then look out for our matchbox test. Thank you very much for listening and goodbye for now.

Host:

If you enjoy Ashurst legal outlook, why not check out our other two podcasts series as well? Ashurst business agenda tackles the big strategic issues that business leaders face, and ESG matters at Ashurst, reveals how business leaders arising to mounting environmental, social, and governance challenges. You can listen and subscribe to business agenda and ESG matters wherever you get your podcasts.

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