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Mino Han
Peter & Kim, Seoul
minohan@peterandkim.com

 

Report on a session by the Arbitration Committee at the 2019 IBA Annual Conference in Seoul

Monday 23 September 2019

 

Session chair

Ndanga Kamau Ndanga Kamau Law, The Hague

 

Panellists

Chiann Bao Arbitration Chambers, Hong Kong

Bernard Hanotiau Hanotiau & van den Berg, Brussels

Marianne Kecsmar PKM Avocats, Paris

Kap-You (Kevin) Kim Bae Kim & Lee LLC, Seoul

Justice Nigel Mutuna Supreme Court of Zambia

 

This session was divided into four sections:

• sharing anecdotes: cases of where parties did not do their job right;

• different approaches in arbitration – inquisitorial versus adversarial;

• what should an arbitrator do if the case isn’t properly pleaded – practical tips and advice.

• questions and answers.

Sharing anecdotes – cases of where parties don’t do their job right

Bernard Hanotiau started this session by sharing his experience of an arbitration in which he was sitting as presiding arbitrator along with two co-arbitrators of Swiss and English legal backgrounds respectively.

The governing law of the underlying contract was Swiss law. The Swiss arbitrator was of the view (on the basis of iura novit curia) that basing the decision on a legal point which none of the parties addressed was not proper, and that the arbitrators ought to put the legal point to the parties for their consideration. The English arbitrator and Hanotiau were against that idea. Eventually, the Swiss arbitrator did reveal the legal point for the parties’ consideration, and a result the arbitration had to start again at the post-hearing brief stage.

Marianne Kecsmar shared her experience of a case concerning a wrongful termination claim, where she was sitting as an arbitrator in a tribunal of three. The contract in question was poorly drafted, and upon spotting a legal point that the parties had not touched on in their first round submissions, she brought this up with the tribunal. They discussed this matter and agreed to wait until filing of the next second round submissions. However, even up to the hearing, no party relied on this provision, and so there was another discussion in the tribunal whether to mention this point. Eventually, she posed a question on this point to the parties.

Justice Mutuna narrated another example where the subject contract was specific and clear that in the event of a breach, the remedy for that would be specific performance. However, only damages were sought in that case. He and the tribunal members decided not to suggest to the party that it ought to correct its claim – eventually the tribunal dismissed that claim.

Kap-You Kim then shared his experience when he served as arbitrator in a case where the governing law of the contract was New York law. Although the counsel representing the two parties were from major law firms, it seemed to him that both parties were missing a significant legal argument. In his view, unless the parties had a chance to rectify their argument, the tribunal would arrive at a wrong legal conclusion. The tribunal, however, decided not to inform counsel on this issue. During deliberation, the views of the tribunal members were divided on how to deal with the poorly argued points. Kim said that this was the only occasion he delivered a dissenting opinion.

Chiann Bao described a jurisdictional hearing she sat on as an arbitrator, and the question concerned was whether a certain software was customisable or not. Depending on whether the tribunal ruled affirmatively on this question, the governing law would become the laws of the Philippines. If not, the governing law would be the laws of New York. It was however not clear from the contract what was meant by ‘customisable’. As this term appeared to be a ‘term of art’, Ms Bao said she tried to find a definition of this language under the laws of the Philippines.

Different approaches in arbitration – inquisitorial versus adversarial

Hanotiau introduced the second section by explaining the concepts ‘inquisitorial approach’ and ‘adversarial approach’. The former is where the judge had more control, whereas the latter would allow the judge less control and rather leave the judge to play a passive role. The latter approach would also grant the parties a free choice in deciding which arguments to present.

On that basis, the distinction between these two could be meaningful in criminal proceedings, but not necessarily in civil proceedings. For instance, according to Hanotiau, civil proceedings are not inquisitorial in the true sense of the word. Rather, they would be all limited to arguments set forth by the parties - and in that sense, were adversarial. The background of the arbitrator would not determine which approach ought to be adopted in arbitration. In some cases, he has seen lawyers from a common law background being more of an interventionist than a lawyer from a civil law background would have been. For example, he was involved in a case where the co-arbitrator, an English QC, kept asking questions throughout the proceedings.

Bao largely agreed with Hanotiau and added that in arbitration, in contrast to litigation, more of an international approach was being adopted. This therefore means that the legal background of the arbitrators would not determine the style or approach taken in arbitration.

Kecsmar agreed with Hanotiau on the point that in domestic courts, the distinction between ‘inquisitorial’ and ‘adversarial’ are more blurred than one might think. She confirmed that these two approaches would be more different in criminal proceedings, but not in a civil proceedings. Based on her experience, French courts tend not to ask many questions, and thus were not ‘inquisitorial.’ She concluded that the legal background and training of an arbitrator was not what decides the style of an arbitration; rather, the philosophy adopted by arbitrators was more important.

Kim stated that Korean contract law had roots in German law. However, civil procedure law followed many features from the common law world. Since many Korean legal practitioners had studied abroad in the US, this often influenced the way they look at civil procedure law. Kim said that it is not important whether an arbitrator was trained in a civil law or a common law country; rather, what would be more decisive is whether an arbitrator took an international approach (or ‘cosmopolitan approach’) or a more domestic/local approach (‘imperial approach’).

What should an arbitrator do if the case is not properly pleaded – practical tips and advice

Hanotiau gave another anecdote in which a party forgot to raise a time-bar argument. While Hanotiau tried to bring this to counsel’s attention in a diplomatic manner, counsel did not understand the point made, and the tribunal eventually had to dismiss the case. According to Hanotiau, this was the right approach, as any other approach would risk violating party equality and due process.

Kecsmar took a similar approach in a case where the tribunal tried helping counsel by putting a question to them, which unfortunately was never answered by the party. The tribunal had to work with the arguments pleaded in the case.

Justice Mutuna emphasised that the finality of an award does not only require enforceability, but also requires bringing closure to the parties’ dispute. He explained that in Zambia, a judge, being the master of procedure, would not violate party equality if the judge were to assist a party in expanding its submissions, if necessary.

Kim shared three points. First, in one of his experiences sitting as arbitrator he found that many similar issues were resolved when the parties’ legal experts participated in an interactive discussion upon the invitation of the tribunal. During this process, the experts would give their view on the description of a legal concept offered by the tribunal, and this often reduced the distance between the experts’ position on issues.

Second, Kim found that involvement of legal experts at an early stage, even at a case management conference, could be useful to sort through issues in advance. Third, Kim introduced the so-called ‘Gangnam principles’ inspired from how (domestic) arbitration was conducted in Korea, where the tribunal would convene an intermediate hearing. At this hearing, the tribunal, the parties, and counsel would discuss the case without restriction. The tribunal would not treat this discussion as having any evidentiary implications, and hence these discussions were not recorded. This would allow the tribunal to see what the real issues of the case were, and which of these issues were in dispute by the parties and why.

Bao added to Kim’s last suggestion that a ‘Kaplan opening’, or conducting a mock arbitration, could offer tools with which deficiencies of an arbitration could be rectified early on.

Questions and answers

After the floor was opened, a number of participants gave their comments. Some of them are as follows.

A participant disagreed with Hanotiau that the principle of equality and due process was violated if a tribunal helped a weak party to progress its case.

Another participant pointed out that assisting a party with arguments such as time-bar and intervening where there was a breach of mandatory law (for instance, where corruption was apparent at first blush) should be distinguished.

A participant asked whether foreign law should be treated as a matter of fact or as a matter of law. He also asked what one would do if a legal point that was not addressed by counsel would relate to an anti-trust issue. Lastly, he asked whether it would be fair to make the parties pay counsel for wrongful conduct.

Another participant asked whether the process of fact-finding and choosing the method of evaluating facts is dependent on the arbitrator’s legal background.

 

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