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THE INTERNATIONAL LAW Q U A R T E R L Y a publicatioN of
THE INTERNATIONAL LAW
Q U A R T E R L Y
a publicatioN of the florida bar iNterNatioNal laW sectioN
www.floridabar.org  •  www.internationallawsection.org

In ThIs Issue:

Message from the Chair

3

International Arbitration in Australia

4

Florida Adopts UNCITRAL Model Law on International Commercial Arbitration to Further Bolster Miami’s Ability to Compete as a Viable Seat

7

The Better Approach to Deciding 28 U.S.C. §1782 Applications for U.S. Discovery in Private

Arbitrations Abroad

23

A View from Abroad: Corporate

Responsibility for International

Crimes?

31

The Evolution of International Arbitration in Latin America

34

Applications for Executive Council Members and Treasurer Sought

37

The Florida Bar Foundation: A Cause We Can Share

38

The Enforcement of Foreign Arbitral Awards in Brazil and

the Ratification of the New York

Convention

39

The Necessity Defense in Bilateral Investment Treaties:

Looking Forward

46

Production of Electronic Documents and Information:

New UK Practice Direction Targets Costs of Electronic Disclosure

54

Lost in Translation: American Juror Perceptions of Foreign Litigants

56

Unchartered Waters: The Kishenganga River Project

Dispute and Arbitration Under

the Indus Waters Treaty

57

The Application of the UNIDROIT 

Principles of International Commercial 

Contracts to International Commercial 

Arbitration as lex contractus

By Ludwina Klein, Warsaw

Introduction 

the uNidroit prin- ciples of international commercial contracts (“picc”), 1 prepared and published by the international insti- tute for the unifica- tion of private law

(“uNidroit”) in 1994 and revised in 2004, can be defined as “a non-legislative codification of the general part of the law of international

codification of the general part of the law of international L. Klein commercial contracts.” 2 according

L. Klein

commercial contracts.” 2 according to the guidelines contained in the com- ments to the preamble to the picc, the term “international” contracts should be interpreted broadly so as to exclude only those contracts with elements connected exclusively with one country and where no international aspect can be found. 3 the phrase “commercial” contracts, on the other hand, is not to be understood in opposition to “civil” contracts, where the former depends on the commercial

See “UNIDROIT,” page 10

From the Editor . . .

Miami, london, sydney, Warsaw, the hague, Montreal and los angeles; the geographic diversity of the authors selected for this special international litigation and arbitration edition of the International Law Quarterly is truly remarkable—and the articles themselves are even more impressive. on the heels of our highly successful “focus on china” edition, the ILQ cannot be accused of focusing solely on latin america. indeed, this journal is rapidly becoming required

reading for any truly international lawyer. in this issue alone, we cover areas from peter anagnostou’s analysis of australia’s newly amended international arbitration act, to omar ibrahem’s fascinating piece on the Kishenganga river arbitration between india and pakistan. in addition, polish lawyer ludwina Klein provides her excellent scholarship on the role of the uNidroit principles of international commercial contracts in resolving in-

continued, next page

The International Law Quarterly
The International Law Quarterly
The International Law Quarterly is prepared and published by the International Law Section of The
The International Law Quarterly is prepared
and published by the International Law
Section of The Florida Bar.
Edward M. Mullins, Miami
Chair
Nicolas Swerdloff, Miami
Chair-elect
Richard C. Lorenzo, Miami
Secretary
C. Ryan Reetz, Miami
Treasurer
Francisco Corrales, Weston
Immediate Past Chair
Mark R. Weiner, Tampa
CLE Chair
Clarissa A. Rodriguez, Maimi
CLE Vice-Chair
Alvin F. Lindsay, Miami
Editor-In-Chief
Angela Froelich, Tallahassee
Program Administrator
Lynn M. Brady, Tallahassee
Layout
Elizabeth Ortega
Media Contact, ECO Strategic Communications,
eco@ecostrats.com
Articles between 7 and 10 pages, double-
spaced, involving the various disciplines af-
fecting international law may be submitted on
computer disk with accompanying hard copy,
or via electronic format in Word (with the use
of endnotes, rather than footnotes.) Please
contact Alvin.Lindsay@hoganlovells.com for
submissions and for any questions you may
have concerning the Quarterly.
DeADLIne FOR nexT Issue
Is APRIL 15, 2011.

EDITOR’s NOTE

from page 1

ternational arbitral conflicts. british practitioners Neil Mirchandani and Matthew davis write on the uK’s new directive on the production of elec- tronically stored information. Jenelle lachuisa proposes a better approach for applying 28 u.s.c. 1782 to arbitra- tions abroad. and top trial consultant dr. philip K. anthony gives the sur- prising facts on biases of u.s. jurors to foreign litigants and tells how to prepare your foreign witnesses for testimony in u.s. courts. certainly latin america is not left out. in this issue, adam Gutin and britteny Keck write on Miami’s ability to compete as a viable seat of arbitra- tion given its competitive advantage in the latin american market. patrick Miller discusses the necessity defense as used by argentina in defending bilateral investment treaty arbitra- tion in the wake of its financial crisis. leonardo lima provides the definitive analysis of the enforcement of foreign

arbitral awards in brazil historically, and after ratification of the New York convention. and Judy angulo tracks the historic transformation of arbitra- tion in latin america from protection- ist to modern. in short, there is something here for everyone interested in internation- al litigation and arbitration, and we believe this publication will make ev- ery international lawyer a better one. on behalf of the international law section of the florida bar, our editors and leadership, i would like to extend my sincere thanks to those authors who contributed to make this edition another success. to everyone else, i would encourage you to think about what international expertise you could provide for an upcoming edition of the ILQ, and write an article! our fine publication has never been better and, with your active and continued support, we will achieve our goal of being the world’s best journal cover- ing all areas of international law.

Alvin F. Lindsay Editor-in-Chief Hogan Lovells US LLP

CLes in This Issue:

9th Annual International Litigation and Arbitration Conference (Audio CD)

Course no. 1260 (Page 30)

Florida Quebec Forum 2011

Course no. 1268 March 18-19, 2011 (Page 44)

New Frontiers in Arbitration

Course no. 1214 June 24, 2011 (Page 53)

The International Law Quarterly Message from the Chair World-class seminars and conferences have always been
The International Law Quarterly
The International Law Quarterly

Message from the Chair

World-class seminars and conferences have always been an important part of the section, and the 9th annual international litigation and arbitration conference held on 4 february at the Westin diplomat in hollywood, florida, got 2011 off to an impressive start. the conference featured speakers from around the globe—including a recently retired Justice of the eastern caribbean court of appeal—on cutting-edge topics and included the signing of a cooperative agreement with the state of parana (brazil) bar association. these events were preceded the night before by a superb cocktail reception at the Viceroy hotel’s club 50 and a special speakers’ dinner with a keynote address from a brazilian supreme court Justice. on behalf of the entire section, i want to give a special thanks to the ilac co-chairs Rafael Ribeiro and Arnie Lacayo, the 9th annual conference co-chairs santiago Cueto and Quinn smith, the confer- ence steering committee members, and each of the presenters at the conference for their hard work and a job well done. the 9th annual ilac built off of last year’s excellent event with strong attendance by a good cross-section of ils members and non-members, as well as lawyers from other states and countries. if you did not attend, turn to pages 28-29 to see what you missed and then to page 30 to order the audio cd. coming up quickly on the section’s conference calendar—this week, in fact— is the Florida Quebec  Forum 2011 (1268R). designed to further improve relationships between Quebec and florida, as well as in- form the public, the forum will optimize participation by attorneys, business people and other professionals. scheduled for 18 and 19 March at the fort lauderdale airport hilton hotel, the forum brings together law- yers from Quebec and florida, business people, bankers, accountants and financial institutions, with renown legal experts. the focus will be current issues involving business, immigration, taxes, real estate, mortgages, family law and insurance. register now or on-site. for details, see the brochure on pages 44-45. the ils ex- tends a special thanks to Lapierre Law Center, Desjardins Bank, Lucius smejda, Lex International  Law Firm, and Greenspoon Marder, P.A., for sponsoring this event! Next month the ils will be hosting a reception at the ABA sections of Litigation and Criminal Jus- tice 2011 Joint Annual Conference to be held 13-15 April at the fountainbleau resort on Miami beach. Go to americanbar.org for more information, and plan on joining us at this premier cle event for civil and criminal litigators. Make a vacation of it and stay at the fountainbleau through 22-24 April for the ABA’s  First Annual International Legal symposium on the World of Music, Film and Television. on 2 and 3 May 2011, an iba cross-border real estate conference will be held at the Mandarin oriental hotel in Miami, florida. the conference, entitled “Global Investments in Real Estate: Trends, Opportu- nities, and New Frontiers,” will include seven substantive panel sessions on topics such as “cross-border real estate investments: hot topics”; “distressed deals: turning problems into opportunities”; “shopping centers in a recovering Market”; and “real estate development: re-starting the engine.” the program will conclude with a session entitled, “preparing for a Major sporting event: real estate, legal and other is- sues arising from the olympics, as seen from rio.” after the real estate conference, stick around for the IBA  Leaders Conference and the second Conference of the Americas on 4-6 May at the same location. the latter is an opportunity for legal professionals from North america and south america to network, share information and identify issues, concerns and opportunities across the americas’ legal markets and jurisdic- tions. for details on these international bar association events, click on the “conferences” tab at ibanet.org. the section’s year winds up at the florida bar’s annual convention in June at the Gaylord palms resort & convention center in Kissimmee. as a bookend to february’s ilac, and continuing one of the themes of this edition of the ILQ, the section will be sponsoring a seminar on 24 June entitled “New Frontiers in  Arbitration” (1214R). for more information, see the cle brochure on page 53. finally, if you missed one of our webinars, you can still purchase cds for each, including the “bp deepwa- ter horizon,” “china (the New silk road),” and “cross-border e-discovery.” cds can be purchased online, by fax and by mail. please go to the florida bar’s website for complete order information. this is a great way to get caught up on important international legal issues at your convenience.

Edward M. Mullins Astigarraga Davis Mullins & Grossman, P.A.

The International Law Quarterly
The International Law Quarterly

International Arbitration in 

Australia

By Peter Anagnostou, sydney

Australia By Peter Anagnostou, sydney P. Anagnostou international arbi- tration in austra- lia is

P. Anagnostou

international arbi- tration in austra- lia is governed by the international arbitration act 1974 (cth) (“iaa”). on 6 July 2010, the International Arbitration Amend-

ment Act 2010 (cth) (“iaa amendment act”) received royal assent and passed into law. the intent of the iaa amendment act is to revise substantially the iaa in order to promote the use of arbitra- tion as a method of resolving disputes arising out of transnational contracts and increase the attractiveness of australia as a seat for international commercial arbitration. the iaa amendment act is com- plemented by other regulatory and government initiatives also intended to modernise the national and domes- tic arbitration laws 1 and to create an

international venue for the settlement of international disputes in sydney, australia. 2 the impetus behind the initial implementation of the iaa was to en- shrine the New York convention into australian legislation to ensure the recognition and enforcement of foreign arbitral awards. 3 thus, the iaa per- mitted parties to move an australian court for an order staying the proceed- ings so as to enable an international arbitration to proceed. further, it ensured the international enforcement of arbitration agreements and awards made in other states. the legislation was substantially amended in 1989 to incorporate the provisions of the united Nations commission on international trade law (“uNcitral”) Model law on in- ternational commercial arbitration. this amendment was widely praised

since australia was one of the first countries to adopt the Model law. Nevertheless, australia’s legal and judicial framework did not always create the ideal environment for international arbitration. a number of high-profile decisions gave rise to con- cerns about the australian judiciary’s approach to international arbitra- tion. 4 these deficiencies, coupled with the growth of the asia-pacific economy, have led to a strong push by the australian government to reform the current legislation in an effort to make australia a major centre for international arbitration in the asia- pacific region.

Purpose of the IAA 

Amendment Act of 2010

the new regime seeks to promote australia as both the seat and place of choice for international arbitrations as well as to provide parties with greater certainty regarding recogni- tion and enforcement in australia. on 25 November 2009, the attorney-General of australia, the honourable robert Mcclelland Mp, introduced into parliament proposed reforms for the iaa designed to “en- sure the act remains at the forefront of international arbitration practice.” the amendments to the iaa were seen by the attorney-General to be essential in order to “emphasise the importance of speed, fairness and cost-effectiveness in international arbitration, while clearly defining and limiting the role of the courts in international arbitration without compromising the important protec- tive function they exercise.” 5 in general terms, the aim of the iaa is “to facilitate international trade and commerce by encouraging the use of arbitration as a method of

resolving disputes.” 6 the impetus for such an overhaul of australian international and do- mestic arbitration legislation lies in the following key areas: (1) to clarify and update the application of the iaa by adding provisions from the 2006 revision of the uNcitral Model law on international commercial arbitration 1985; (2) to improve the overall operation of the iaa; (3) to provide greater guidance to the courts in interpreting the iaa; (4) to provide additional option provisions to assist the parties to a dispute; and (5) to clarify the circumstances in which a court may refuse to enforce a foreign award.

Key Amendments

the following so-called “Model law plus” 7 amendments of the iaa amendment act may be significant in the practice of international arbi- tration in australia. Notably, the amendments apply only to arbitration agreements entered into after 6 July 2010 unless the parties agree to adopt them.

Enforcement of foreign arbitra- tion awards. there are a wider range of options when enforcing ar- bitral awards in australia. a foreign arbitration award may be enforced in australia by a court of a state or territory or the federal court as if it were a judgment of that court. the iaa now provides an exhaustive list of the grounds that mirror those set out in the Model law and New York convention upon which the enforce- ment of an award can be challenged:

(1) the party challenging the award was under an incapacity; (2) the arbitration agreement was invalid; (3) no proper notice was given to the challenging party; (4) the dispute is

The International Law Quarterly
The International Law Quarterly

beyond the scope of the arbitration agreement; (5) the tribunal or process was or is inconsistent with the arbi- tration agreement; (6) the award is not yet binding on the parties; (7) the subject matter of the dispute is not capable of settlement by arbitration; and (8) the enforcement of the award would be contrary to public policy. the amendments to the iaa make it clear that the court does not have any discretion to refuse enforcement on any other ground.

Optional provisions. there is now a necessity expressly to “opt-in” or “opt- out” of the optional provisions of the iaa. unless parties agree to “opt-out,” they will have the following rights in arbitrations governed by the iaa: (1) a right to request that subpoenas be issued; 8 (2) a right to apply to a court for relief as a result of non-compliance with a subpoena; 9 (3) a right to seek security for costs; 10 and (4) a right to apply to a court for relief in the event that the respondent to an arbitration refuses to participate. similarly, un- less parties agree expressly to “opt-in”

to the provision, there will be no right for either party to apply to the court for an order for the disclosure of confi- dential material.

Impartiality of Arbitrator. there is now a higher threshold for challeng- ing the independence of an arbitrator. the iaa amendment act contains a long-awaited clarification of the op- eration of the Model law with respect to challenges to the appointment of an arbitrator. 11 the traditional “reasonable apprehension of bias” test has been replaced with a test based on whether there is a “real danger of bias” in order to protect arbitrators and the process from speculative chal- lenges. 12

Interim measures. the iaa has granted parties enhanced powers to obtain interim measures. parties to an international arbitration, taking place both in australia and overseas, can now ask the arbitral tribunal to order interim measures. except in limited circumstances, such an interim measure will be recognised

and enforced by australian courts, ir- respective of the country where it was issued. 13

Appeal. there is now limited scope to appeal or challenge an award. appeal- ing an award handed down by arbi- tration now requires both the consent of the parties and leave of the court.

Arbitration Agreements. there are new ways in which an arbitra- tion agreement may be formed. the definitions used in the iaa have been amended, whereby agreements in writing have been extended to cover electronic components, 14 in line with the Model law. 15 subject to the agreement being recorded in some form, the agreement will be valid and enforceable.

Model Law. significantly, if an arbitration agreement is interna- tional and the seat is in australia, the parties can no longer “opt-out” of the Model law and have a domestic arbitration with the right to apply for leave to appeal the award. 16

continued, next page

Aballí Milne Kalil, P.A. is a Miami legal boutique, now in its nineteenth year, which
Aballí Milne Kalil, P.A. is a Miami legal boutique, now in its nineteenth year, which

Aballí Milne Kalil, P.A. is a Miami legal boutique, now in its nineteenth year, which focuses its practice on international commercial litigation, international business transactions, tax and estate planning, and domestic real estate transactions. The firm’s attorneys are fluent in a number of languages including English, Spanish, Portuguese and French, and have connections with a strong network of capable lawyers across the United States, Europe, Latin America and the Far East.

www.aballi.com

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The International Law Quarterly

AUsTRALIA

from preceding page

the above reforms provide a more predictable framework for interna- tional arbitration in australia based on the Model law, with increased powers for arbitrators and the benefit of greater court assistance to the arbi- tral process if required. as noted, these transitional provi- sions of the iaa amendment act do not have retrospective effect, leaving agreements made prior to 6 July 2010 subject to the unamended iaa.

Conclusion 

in a speech to the australian centre for international commercial arbitration (“acica”) on 4 december 2009, the attorney General said that the “legislative reform is only part of what is required to build a truly aus- tralian brand of international com- mercial arbitration,” and that what is needed is “cultural reform as to how arbitration is conducted in australia.” he stressed the necessity to “invent a form of arbitration that is tailored to the needs of the parties—to the needs of business.” 17 this iaa amendment act rep- resents only part of the enormous change in the landscape of arbitra- tion in australia over the past thirty years. throughout the profession, the attitudes of the various courts and practitioners have evolved to embrace

arbitration as a legitimate mecha- nism for the resolution of disputes. this has been reflected in the estab- lishment of facilities for arbitration, such as the acica and the austra- lian international disputes centre (“aidc”). the iaa amendment act is a wel- come development to those partici- pating in international arbitrations with an australian seat and is sure to attract a good deal of attention from both the community of Model law countries and the users of interna- tional arbitration. as the demand of the asian economies to provide a neutral location for dispute resolution intensifies, australia has emerged as an efficient centre with enhanced sup- port of the australian courts.

Peter Anagnostou is the Chair of the New South Wales Young Lawyers In- ternational Law Committee. He is also

a member of the Australian Branch

of the International Law Association and the Australian Forum for Inter-

national Arbitration. He is currently

a Sydney-based construction lawyer

working in-house for one of Australia’s

largest construction firms.

Endnotes:

1 the recently introduced commercial arbitration act 2010 (NsW).

2 the australian international disputes

centre was officially opened by the austra- lian attorney-General robert Mcclelland and NsW state attorney General John hatzistergos on 10 aug. 2010.

3 the New York convention is “widely

recognised as the foundation instrument

of international arbitration.” uNcitral, “1958 - convention on the recognition and enforcement of foreign arbitral awards - the

‘New York’ convention,” uNictral website, viewed 25 Nov. 2010, http://www.uncitral.org/

uncitral/en/uncitral_texts/arbitration/NY-

convention.html.

4 Esso Austrl. Res. Ltd. v. Plowman, 128

a.l.r. 391 (1995) (regarding confidentiality), and Eisenwerk v. Australian Granites Ltd., 1 Qd. r. 461 (2001) ( regarding the role of the Model law in the case of an icc arbitration).

5 robert Mcclelland, austl. atty-Gen.,

address to the australian Maritime and

transport arbitration commission (10

July 2010), available at http://www.ag.gov. au/www/ministers/mcclelland.nsf/page/

speeches_2010_1July2010-addresstotheaus-

tralianMaritimeandtransportarbitrationco

mmission%28aMtac%29.

6 international arbitration amendment

bill 2009, (austl.) australian parliamen- tary library website, viewed 25 Nov. 2010,

http://www.aph.gov.au/library/pubs/bd/2009-

10/10bd163.htm.

7 these australian-made “Model law

plus” provisions were developed after a care- ful assessment of international jurisprudence on international arbitration and the austra- lian common law.

8 iaa §. 23.

9 iaa § 23a.

10 iaa § 27.

11 iaa § 28.

12 iaa § 18a.

13 iaa c. iV(a).

14 iaa § 3(1).

15 Model law art. 7, opt. 1.

16 iaa § 21.

17 robert Mcclelland, austl. atty-Gen.,

address to the australian centre for inter- national commercial arbitration (4 dec. 2009), available at http://www.ag.gov.au/

www/ministers/mcclelland.nsf/page/speech-

es_2009_fourthQuarter_4december2009-

internationalcommercialarbitrationinaus-

traliaMoreeffectiveandcertain

Ethics Questions?

Call The Florida Bar’s

eThICs hOTLIne

1/800/235-8619

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The International Law Quarterly

Florida Adopts UNCITRAL Model Law on 

International Commercial Arbitration to 

Further Bolster Miami’s Ability to

Compete as a Viable seat

By Adam Gutin & Brittney C. Keck, Palm Beach Gardens

speaking at a recent meeting of the Miami international arbitration society (“Mias”), renowned interna- tional arbitration expert Jan paulsson challenged Mias members to compete on behalf of Miami to host the pres- tigious international council for com- mercial arbitration (“icca”) congress

in the near future. 1 the challenge came immediately on the heels of the adoption by the florida legislature of

a statute 2 based on the uNcitral Model law on international com- mercial arbitration with amendments as adopted in 2006. Mr paulsson’s suggestion was a direct reference to the often-asked question—what should we do next to increase Miami’s viability as a venue for international

arbitration?

Miami offers an interesting case of

a city trying to compete with several

other urban centers around the world as a preferred venue for international arbitration proceedings. the adop-

tion of the uNcitral Model law

is not the first step in this effort but

merely the latest in a trend that has been developing over the past several decades. efforts can be traced back to at least the early 1980’s when several prominent members of the Miami business and legal commu- nity attempted to launch an inter- national arbitration institute called the international center of florida. 3 the institute lasted only a few years, later merging with the World trade center of florida and taking on a different purpose. but international commercial arbitration in Miami has continued to gain steam steadily. for example, as of the international chamber of commerce’s (“icc”) most recently published statistical report,

Miami was the seat of more arbitra- tions than any other u.s. city, with the exception of New York. 4 among other things, Miami-based practi- tioners are seeking to exploit their competitive advantage—geographic location and a high number of trained practitioners of latin american and caribbean descent, fluent in both english and spanish—to draw arbi- trations from latin america and the caribbean. 5 in adopting the Model law-based legislation, florida became the seventh u.s. state to do so, joining california, connecticut, illinois, loui- siana, texas and oregon. 6 the Model law became effective 1 July 2010. 7 its passage was the direct result of a concerted effort by members of the international law section of the florida bar, many of whom are also members of Mias. 8 the goal of the adoption of the Model law was to cre- ate a sense of security among parties and their counsel in selecting Miami as a forum for international arbitra- tion. 9 touting pro-business interests, the bill steadily gained bipartisan support and successfully navigated its way through the florida legislature. 10 Notwithstanding the recent legisla- tive victory, Miami’s progress has not been without obstacles. in response to the case of The Florida Bar v. Rapo- port 11 in 2003, members of the florida legal community pushed for strict rules governing the unauthorized practice of law. 12 the case involved an out-of-state lawyer soliciting clients in florida to represent them in securities arbitration cases held in florida. 13 rapoport claimed that the federal arbitration act (“faa”) preempted florida law and that he

was authorized to solicit and act for parties in federal securities matters under the faa. 14 the florida su- preme court held against rapoport and found him to have engaged in the unauthorized practice of law. 15 on the heels of Rapoport, the florida bar sought to implement amendments to the florida rules of professional conduct making it very difficult for attorneys not licensed in florida to represent clients in arbitrations in the state. 16 realizing the poten- tially devastating effect this proposed change in rules could have had on the practice of international arbitration in Miami, many international prac- titioners fought for several years to carve out an exception so that foreign attorneys could represent parties in international arbitrations. 17 conse- quently, the revised rules contain stricter requirements for out-of-state counsel representing parties in domestic arbitrations but do provide an exception for counsel representing parties in international arbitrations. 18 the question arises whether the adoption of the Model law upgrades Miami’s appeal all that much. after all, there are numerous other coun- tries which have adopted the Model law that are not at the top of the arbitration venue lists (e.g., bulgaria, cambodia, etc.). 19 however, as eduar- do palmer, the Miami-based attorney at the helm of the push to adopt the uNcitral Model law, has stated:

“this is a multi-faceted mosaic that [is being pieced] together to continue to build on Miami’s reputation as a leading city to conduct international arbitration proceedings.” 20

See “UNCITRAL,” next page

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UNCITRAL

from preceding page

this “mosaic” is a combination of the adopted laws discussed above, conferences, an engaged academic community, and of course, a support- ive legal community. since 2003, for example, the icc has been holding an annual conference, “international commercial arbitration in latin america: the icc perspective,” in Mi- ami. 21 similarly, since 2003, the inter- national centre for dispute resolu- tion has held an annual international arbitration conference in Miami. 22 in addition, an engaged academic community has benefited from the development of Miami as an inter- national arbitration venue. the law schools at florida international university (“fiu”) and the university of Miami (“uM”) both have interested students who are vested in education in international arbitration, at least based on their participation in the annual Willem c. Vis Moot in Vienna, austria. 23 both schools host Vis prac- tice moots in the spring of each year. 24 the fiu Vis practice Moot attracts schools from the united states, latin america, and europe. the uM annual moot is sponsored by the florida bar’s international law section and consists of all the florida law schools that participate in the Vis Moot. 25 also, in addition to the Vis Moot, uM students have begun participating in the Madrid Moot, a spanish-lan- guage moot focused on international commercial arbitration, 26 and fiu students have branched into interna- tional investment arbitration through the foreign direct investment Moot held in frankfurt. 27 further, both schools have begun to invest increas- ing time and effort in cultivating interest in international arbitration. uM has secured big names in the international arbitration community, such as Jan paulsson, president of the london court of arbitration, and Judith freedberg, former general counsel to the permanent court of ar- bitration, to head up the law school’s

new llM program in international arbitration. 28 spearheaded by profes- sors Manuel Goméz and M.c. Mirow, fiu has also created a Global studies initiative seeking to foster dialogue regarding international legal con- cerns by taking a more “grass roots” approach, forming partnerships with local law firms and holding conferenc- es such as the international arbitra- tion annual summit. the summit’s inaugural event took place in early March and gathered a number of key practitioners, policymakers and schol- ars from latin america and the u.s. 29 Moreover, fiu has launched a com- prehensive empirical study on the use of arbitration in latin america and is planning a series of other initiatives, both in investment and international commercial arbitration. 30 as discussed above, as of 2008, icc statistics reported that Miami is currently behind only New York as an icc arbitration venue in the united states. 31 concurrently, the demand for arbitrations where one or both of the parties are from latin america is drastically increasing. 32 parties from both latin america and abroad have long been hesitant to entrust dis- putes arising from their investments and commercial transactions to local court litigation in latin america for a variety of reasons. 33 currently, based on the available statistics, there ap- pears to be a large, untapped market from latin america and the carib- bean participating in icc arbitrations upon which Miami has yet to draw fully. 34 Given the combination of this increase in demand for arbitration, the hesitance to entrust disputes to local litigation in south america, and florida’s recent adoption of the Model law, the Miami legal commu- nity is continually positioning itself to compete better as the venue of choice for international arbitrations stem- ming from places south of the united states.

Adam Gutin obtained his Juris Doctor from the Florida International University College of Law in May of 2010. He also has a Master of Busi- ness Administration, Bachelor of

Science in Finance, and a Bachelor of Arts in English from the University of Florida. Adam would like to thank Professor Manuel Goméz, Eduardo Palmer, Burton Landy, Brittney Keck, his family, and friends at the Interna- tional Law Section of The Florida Bar for their support.

Brittney C. Keck obtained her Juris Doctor from the Florida International University College of Law in May of 2010. She also has a Bachelor of Arts in Political Science from the Univer- sity of Central Florida. Brittney would also like to thank Professor Manuel Goméz, Eduardo Palmer, Burton Landy, Adam Gutin, her family, and friends at the International Law Sec- tion of The Florida Bar.

Endnotes:

1 for more information on Mias, see

http://www.miamiinternationalarbitration.

com.

2

2010 fla. laws ch. 2010-60.

3

andres oppenheimer, New Arbitration

Institute Isn’t First on the Block, MiaMi Her- ald, feb. 20, 1984.

4 2008 Statistical Report, 20 iCC intl Ct. arb. bull. 12 (2009).

5 See Miami international arbitration

society, Miami: An International Arbitra- tion Center for the Americas and Beyond,

http://miamiinternationalarbitration.com/en/ miami-as-a-center-for-arbitration.html (last visited June 30, 2010) (“Miami is also a[n

international]

of first-class bilingual and multilingual pro-

fessionals

convenient and far less expensive location to host international arbitration proceedings re- lating to disputes arising in the americas.”).

6 uNcitral.org, uNcitral Model law

on international commercial arbitration, as adopted by the u.N. commission on inter- national trade law (21 June 1985) http:// www.uncitral.org/uncitral/en/uncitral_texts/

arbitration/1985Model_arbitration_status.

html (last visited June 24, 2010) [hereinafter Model law].

7 2010 fla. laws ch. 2010-60.

8 florida bar international law section,

Minutes of the Mid-year executive council Meeting, Jan. 16, 2009, http://international- lawsection.org.

9 Julie Kay, Miami ramps up efforts to be

the seat of international arbitration, S. Fla b u S. J., dec. 4, 2009.

10 See susannah a. Nesmith, Law would

let Florida adopt U.N. arbitration model, apr.

29, 2010, http://www.dailybusinessreview. com/Web_blog_stories/2010/april/u.N arbi-

city with a large workforce

in addition, Miami is a more

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The International Law Quarterly

tration.html.

11 TFB v. Rapoport, 845 so. 2d 874 (fla.

2003).

12 http://arias-us.org/index.cfm?a=11.

13 TFB v. Rapoport, 845 so. 2d at 875.

14 Id. at 876.

15 Id. at 878.

16 See In re Amends. to R. Reg. Fla. Bar

and Fla. Rules of Jud. Admin., 907 so. 2d 1138, 1139 (fla. 2005).

17 See Matthew haggman, Court Limits

Out-Of-State Attorneys, MiaMi Herald, May 13, 2005. also, for a discussion of how various u.s. jurisdictions have dealt with the issue of the unauthorized practice of law in regard to arbitration, see david M. spector & Jessica romero, Arbitration and The Unauthorized Practice of Law, 13 ariaS 16-19 (1st Q. 2006).

18 r. reg. Fla. bar 1.3.11 (d), (e).

19 See Model law, supra note 1.

20 Kay, supra note 9.

21 icc, ICC Conference spotlights arbitra-

tion in Latin America, oct. 19, 2007, http:// www.iccwbo.com/id16810/index.html; see also Miami international arbitration society, Thriving Infrastructure Geared Toward In- ternational Arbitration, http://miamiinterna-

tionalarbitration.com/en/miami-as-a-center-

for-arbitration/infrastructure.html.

22 am. arb. assoc., icdr, AAA Construc-

tion Division to Hold Miami Conference,

http://www.adr.org/sp.asp?id=37444.

23 for general information on the Moot,

see the annual Willem c. Vis international commercial arbitration Moot, http://www. cisg.law.pace.edu/vis.html. for a list of the

participants in the Moot, including the uM and fiu teams, see seventeenth annual Willem c. Vis international commercial ar- bitration Moot 2009-2010 registered teams,

http://www.cisg.law.pace.edu/cisg/moot/par-

ticipants17.html#uni.

24 See fiu, http://calendar.fiu.edu/main/

events/view/2010/02/06/1935; see also M.i.a.s. blog, http://miamiinternationalarbi-

tration.com/blog/2009/11/florida-bar-vis-pre-

moot-call-for-arbitrators/.

25 See fiu, http://calendar.fiu.edu/main/

events/view/2010/02/06/1935; see also

M.i.a.s. blog, http://miamiinternationalarbi-

tration.com/blog/2009/11/florida-bar-vis-pre-

moot-call-for-arbitrators/.

26

MootMadrid, http://www.mootmadrid.

es/.

27

foreign direct investment international

Moot competition, http://www.fdimoot.org/.

28 for director of professional programs

Judith freedberg’s full biography, see uni- versity of M.iami school of law, http://www. law.miami.edu/facadmin/admin/jfreedberg. php.

29 fiu, Global legal studies initia-

tive, http://law.lawnet.fiu.edu/index.

php?option=com_content&task=view&id=461

&itemid=838.

30 fiu, Global legal studies initia-

tive, http://law.lawnet.fiu.edu/index.

php?option=com_content&task=view&id=461

&itemid=838.

31 2008 Statistical Report, 20 iCC intl Ct.

arb. bull. 7, 12 (2009).

32 See generally Jonathan hamilton & Mi-

chael roche, Survey of Trends in Latin Amer- ican Arbitration, intl diSputeS Q. (summer 2009), available at http://www.whitecase.com/ idq/summer_2009_1a/ (discussing the growth of icc commercial arbitrations in a variety of countries in latin america); see also, ar- noldo Wald, The Development of Arbitration in the Brazilian Court (2006-2009), arb. rev.

oF tHe aMeriCaS (2010), available at http://

www.globalarbitrationreview.com/reviews/21/

sections/79/chapters/819/brazil/ (discuss- ing the increased rate of arbitration growth specifically in brazil).

33 See generally Nigel blackaby & sylvia

Noury, International Arbitration in Latin America, latin lawyer rev. (2006), available at http://www.freshfields.com/publications/ pdfs/2006/llreviewarbitration.pdf (describ- ing parties’ hesitance to participate in local court litigation in latin american because of risks including: unfamiliarity with local procedures; partiality; corruption; unenforce- ability of the judgment outside of the local district; delay; and appeals).

34 See generally 2008 Statistical Report, 20

iCC intl Ct. arb. bull. 7, 12 (2009).

Astigarraga Davis is a boutique law firm with a practice focused on commercial litigation, arbitration

Astigarraga Davis is a boutique law firm with a practice focused on commercial litigation, arbitration and other business disputes. Our clients include primarily multinational companies, financial institutions and substantial public and non-public companies. We have an extensive international practice, our lawyers having handled business disputes emanating from virtually every country in Latin America, Mexico, the United States and Canada. Our commercial litigation strengths include international litigation, international arbitration, financial services litigation including creditors' rights, bankruptcy, and class actions as well as the recovery of assets for defrauded institutions.

www.astidavis.com

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UNIDROIT

from page 1

character of the transaction or the “merchant” status of the parties. the term “commercial” is instead intended to exclude “consumer” contracts from the scope of application of the picc, as such contracts may be subject to special restrictions in some legal systems. the picc do not define “con- sumer” contracts but recommend nar- row interpretation so that the term “commercial” contract can be given the broadest possible meaning. 4 sixteen years after the promulga- tion of the first version of the picc and six years after their amendment, there is no doubt as to the significance of the picc in the practice of inter- national commercial contracts. they have received much attention in the literature, as well as in the practice of national courts and arbitral tribunals. the general approval of the picc is reflected in the extensive uNileX database 5 comprising the relevant bibliography and case law. the value of the picc has been approved in at least three contexts. first, as contem- plated in the preamble, they “serve as a model for national and interna- tional legislators.” 6 second, they are widely used in drafting and negotiat- ing cross-border contracts. 7 finally, they are referred to in the process of settling disputes arising from inter- national transactions. in this context, because of their non-binding charac- ter, the picc are relevant predomi- nantly in international arbitration. 8 the role of the picc in resolving arbitral conflicts is perhaps the most controversial and therefore subject to ongoing debate. 9 the aim of this article is to assess the extent to which the picc can con- tribute to international commercial arbitration, despite their non-binding character. in so doing, we will first identify various contexts in which the picc may apply. the analysis of their use in international commercial ar- bitration will be limited to one of the spheres of their applicability, namely

their role as lex contractus, with a focus on the drafters’ intent expressed in the preamble, as well as an exami- nation of different ways in which the picc have been used in arbitration practice in this context. We will also assess whether the practical use of the picc in international commer- cial arbitration corresponds with the purpose intended by the drafters. the following section examines the character and the scope of the picc. the next section discusses their ap- plication as lex contractus chosen by the parties or arbitrators. the final section is devoted to the problem of qualifying the picc as trade usages and the possibility of their application in this context. little attention will be given to matters relating to the appli- cation of the picc to state contracts or the challenge and enforcement of arbitral awards based on the picc. other interesting aspects of the picc, such as the application of the picc to arbitration agreements themselves or the substantive content of the picc and its quality, are also beyond the scope of this article.

1. The Character and the 

scope of the PICC 

The PICC as a set of General 

Rules for International 

Commercial Contracts 

the picc were designed as a neutral set of rules of international contract law to be used “throughout the world irrespective of the legal tra- ditions and the economic and political conditions of the countries in which they are to be applied.” 10 the intent of the authors was to create a system of rules that would be a restatement of the law of international commer- cial contracts reflecting the concepts present in the majority of national law systems and that, therefore, could become widely accepted. 11 the drafters wanted to assimilate various rules from both civil and common law systems. at the same time, their am- bition was to provide solutions best- suited for use in commercial transac- tions of international character, and in certain cases preference was given

to rules that are not yet common to

the majority of legal systems but that facilitate the overriding purpose best. 12 thus, the picc are not simply restatements of the most widely ac- cepted trade practices and usages. at the same time, it is worth noting that the description of the picc as

a set of “general rules” 13 does not do

them justice. Many of the provisions are far from being abstract and in fact contain very precise rules that easily can be used by contracting parties, as well as by arbitrators in their decision making. on the other hand, in order

to provide greater flexibility and allow adaptation to changing circumstanc- es, many of the provisions contain integrated safety mechanisms, such as the “unless the circumstances indi- cate otherwise” clause, leaving some discretion to the arbitrators in their application. 14 the picc—through “privatiza- tion”—represent a new, modern approach to the unification of in- ternational-trade law. 15 traditional instruments, such as international conventions or model laws, have been replaced by a non-binding, “soft law” instrument adopted by an intergov- ernmental organization. Moreover, the fact that they do not have the force of law may make them even more at- tractive. 16 first, they were written by independent experts, academics and practitioners who specialize in com- parative contract law and, therefore, arguably have a better understanding of the subject than officials delegated by national governments to participate in drafting international conventions.

a second advantage of the picc over

traditional legal tools is greater flex- ibility and adaptability to changing business realities in cross-border trade practice, with the possibility of amend- ment without the need for complicated procedures similar to those required by international conventions and “hard” law instruments. finally, unlike most international law instruments, the picc do not apply automatically but are based on consensus. that is to say, their application is based on voluntary acceptance by the parties or arbitrators and depends on whether

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they prove to be useful in the circum- stances of the particular transaction. on the other hand, the consensual character of the picc can at the same time potentially limit the number of cases in which they come into force. the other aspect worth mentioning is that the picc, as a non-binding in- strument, cannot be applied as a law governing the merits of the dispute by national courts that are obliged to apply the law.

1.2 The scope of 

Regulation 

the picc are not limited to any particular type of contract. they begin with the preamble, contain- ing guidelines on the scope of ap- plication, followed by some “general provisions.” 17 the picc originally contained 120 articles covering areas such as formation and validity of the contract, interpretation and content, performance and non-performance, as well as remedies for non-performance. since the original picc generally worked well in practice, most of the 2004 revisions related to comments and illustrations, and only one “black letter” rule was amended. further modifications reflected the need for adjustment of the picc to the needs of rapidly developing electronic com- merce. 18 the current edition includes five additional chapters dealing with authority of agents, third-party rights, set-off, assignment of rights, transfer of obligations, assignment of contracts, and limitation periods. the novelty of the current version is that it moves out of the traditional scope of contract law and now also covers tri-partite relationships (e.g., agency or assignment) as well as some topics traditionally governed by mandatory rules, such as limita- tion periods. this has raised doubts about the compatibility of the above- mentioned changes with the soft-law character of the picc. 19 the main concern is the position of third par- ties, who should not be bound by any rules without their consent. there are still areas that the picc do not cover, such as the transfer of

property by sale. Moreover, there are other aspects of transactions, such as capacity to contract, corporate powers, prescription or statutory interest— aspects not regulated by the picc— that are traditionally governed by domestic law. this implies the need for application of additional rules (in most of cases, domestic law) to supple- ment the picc.

1.3 The Applicability of the 

PICC – General Remarks 

the scope of the picc is set out in the preamble which, in paragraphs two through six, indicates a num- ber of possible situations in which they apply. examination of these provisions results in the conclusion that the picc work in three gen- eral contexts: as law governing the contract (lex contractus); as a means of interpreting and supplementing ap- plicable domestic law; or as a means of interpreting and supplementing international uniform law instru- ments. in the last two cases, the picc are used as an equivalent to lex fori. according to the preamble, the picc can become the law governing the contract in several ways. ideally, the parties expressly decided that their contract be governed by the picc exclusively or in conjunction with domestic law. other situations arise when the parties referred to “general principles of law, the lex mercatoria or the like,” or where they did not make any choice as to the governing law. in these circum- stances, the power to decide whether or not to apply the picc is vested in the arbitrators. this distinction is reflected in the preamble, providing that the picc “shall” apply when the parties have chosen them to govern the contract, but they “may” apply in the other cases. the possibility of applying the picc as lex contractus in the absence of any choice of law by the parties arose through the 2004 revisions. the changes were introduced to reflect ar- bitral practice. the drafters took into account the fact that, even though arbitrators will usually apply a par-

ticular domestic law, they may still wish to refer to the picc in situations where it is apparent that the parties wanted to exclude application of any domestic law or where the contract has connections to many countries, none of which predominates. 20 the second context in which the picc can be a useful legal tool is when they are applied as a means of interpreting applicable domestic law. this provision is also a result of the 2004 edition. in the original version of the picc their supplementing role in this regard was limited to situations “when it proved impossible to identify the relevant rule of the applicable law.” 21 this amendment was another response to general practice of arbi- tral tribunals. 22 finally, the last important area of the picc’s application is interpret- ing and supplementing international uniform law. in this regard, the most significant seems to be the role of the picc with respect to the united Nations convention on contracts for the international sale of Goods (“cisG”). 23 the number of interna- tional law instruments that are being interpreted with the use of the picc is growing constantly, thanks to the official recommendations of interna- tional organizations. 24 here, it is important to stress that the provisions of the preamble regu- lating the scope of the picc were only guidelines for those in international trade, as well as judges or arbitrators, setting forth general areas in which the picc can prove to be a useful legal tool. the situations set forth therein do not constitute an exhaus- tive list of the contexts in which the picc can be applied. 25 there are other possibilities for bringing them to the arbitration proceedings; for ex- ample, through incorporation as con- tractual provisions or use as a means of contract interpretation. the former possibility is the consequence of the parties’ freedom of contract. they can decide to subject their agreement to a particular domestic law and at the same time incorporate the picc into their contract, either by simply

See “UNIDROIT,” next page

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copying their provisions or through reference. 26 in such a case, the picc will become a part of contractual provisions and will need to be applied within the applicable domestic law, the mandatory provisions of which will prevail over the contractual terms. the use of the picc to interpret contracts is closely connected to their role as an equivalent of lex contrac- tus and therefore will be discussed in more detail in a later section. also worth mentioning when dis- cussing the applicability of the picc are the prerequisites as to the “inter- national” and “commercial” character of the contracts. this has already been discussed 27 and is repeated here only to underline that despite the above-mentioned requirements, the picc can apply to all contracts, international as well as domestic, regardless of their commercial or non- commercial (consumer) character. 28 this is based on the permissive char- acter of the preamble, as well as the express recommendations contained in the comments. 29 on the other hand,

many national legal systems regulate domestic and international arbitra- tion differently. consequently, they impose more restrictions on the par- ties’ freedom of choice of applicable lex contractus in the domestic cases and limit it to the commercial con- tracts. 30

2. The PICC as lex 

contractus

2.1 Arbitrators’ Freedom to 

Determine the Law Governing 

the Merits of the Dispute 

the first point that needs to be made when discussing the role of the picc as lex contractus in interna- tional commercial arbitration is that this form of dispute resolution is far better suited for the use of soft-law instruments than traditional litiga- tion in domestic courts. therefore, the picc recommend combining the choice of law made in their favor with an arbitration clause. 31 this is justified given the benefits to arbitrators from a concrete refer- ence to rules governing the merits of any dispute. their decision is not subject to any lex fori, which would prevent them from applying soft-law instruments. instead they have lex arbitri; that is, the law governing the

procedural aspects of the interna- tional commercial arbitration in the country in which the arbitral proceed- ings take place. the vast majority of modern arbitration laws and rules allow the arbitral tribunal to enforce not only choice-of-law clauses made in favor of a particular domestic law, but also those referring to the “rules of law.” 32 unquestionably, the latter also encompasses soft-law instruments like the picc. 33 similarly, nobody today questions the parties’ right to exercise their autonomy by choosing a body of rules other than domestic law or international law instruments. 34 the position of the arbitrators is different when no valid choice of law was made and that determination depends largely on the applicable lex arbitri and the arbitration rules chosen as well as the form of the arbi- tration (institutional versus ad hoc). this subject will be discussed in more detail later in this section. 35 if a dispute is brought before a do- mestic court, the choice of law clause designating the picc as lex contrac- tus probably would not be enforce- able. Judges are bound to apply their domestic law that in most cases does not allow for the application (as lex contractus) of a body of rules other than the particular national law sys-

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tem, even with an express choice-of- law clause. 36 in such a situation, the parties’ reference to the rules of law will be treated as mere incorporation of contractual provisions that serve to supplement domestic law determined with rules of private international law. 37 the choice of the picc as lex contractus, by parties or arbitrators, can in practice cause difficulties. the first potential problem may occur if the picc prove to be in contraven- tion of the mandatory rules of the otherwise applicable law. in that situation, even though the picc will exclude application of that domestic law, in the vast majority of cases the provisions of the former (also manda- tory) will not be able to override the mandatory provisions of the latter. 38 the mandatory rules that should be taken into account would be not only those of the domestic law of the seat of the arbitration, but also those contained in the domestic law of the country in which the enforcement will be sought. 39 other complications can be caused by the choice of the picc excluding the application of some of the provi- sions classified by them as mandatory. the picc do not constitute a com- plete system of rules regulating all aspects of international commercial contracts. therefore, in some cases it will be necessary to determine the other system law to govern what is not covered. the arbitral tribunal facing this problem will most likely decide to apply a particular domestic law that has the strongest connec- tion with the transaction. the parties not wishing to have their agreement governed by any domestic law are advised to decide to incorporate the entire picc as governing transna- tional law. 40

2.2 Reference to the PICC 

by the Parties 

2.2.1 Express Choice of Law 

the parties’ right to agree on the law governing their contract is one of the aspects of the rule of “party au- tonomy” currently present in the vast

majority of national legal systems. in the context of arbitrators’ freedom to determine the law governing the

merits of the dispute, a clause indicat- ing the picc as lex contractus will, as

a rule, constitute a valid choice of law

and will be enforced by the arbitral tribunal. 41 this is true also when one or both of the contracting par- ties are states or intergovernmental organizations. 42 the best approach is to include the choice-of-law clause in the contract, but the parties are also free to agree on the application of the picc at a later stage, even after the dispute has arisen and the request for arbitration has been filed. the parties can subject their agreement exclusively to the picc or refer to them in conjunction with a domestic law. in the latter case, they can decide that their reference should be treated as cumulative, alternative or exclusive. depending on which is chosen, the arbitral tribunal will have to base its decision on both of the sys- tems of rules, on either of them, or on one of them, depending on the subject

of the dispute. 43 the relevant clauses to this effect can be found in the foot- notes to the preamble. 44 in addition, many modern model contracts pre- pared by international organizations, such as the international chamber of commerce (“icc”) or the interna- tional trade centre uNctad/Wto, contain reference to the picc as lex contractus to be applied exclusively or in conjunction with a domestic law. 45

if parties do not determine the scope

of application of the chosen bodies of rules, and in the event of conflict be- tween them, the decision as to which should prevail will be left to the ar- bitrators. in most cases, however, the mandatory provisions of the chosen domestic law will override the picc. 46 in this context, the most reasonable practice seems to be combining the choice of the picc with another body of rules (e.g., domestic law), given the need for covering the areas not regulated by the former. alternatively, the parties may decide to refer to the picc as a part of lex mercatoria. this last solution would allow the parties to avoid the application of any domes-

tic law. cases where the parties referred to the picc are still relatively rare, even though arbitral tribunals have so far treated their choice as lex contractus very favorably. 47 there are sixteen awards reported, rendered in institu- tional as well as ad hoc arbitration, where the picc were applied pursu- ant to an express choice of the par- ties. in some cases, parties referred exclusively to the picc 48 whereas in others, they were applied in conjunc- tion with other rules such as terms of the agreement, equity or domestic law. 49 Notably, in only three of these cases did parties make an express choice in favor of the picc in their contract. 50 of course, a larger number of such contracts no doubt exist but have not given rise to any dispute yet, and thus are not reported. this thesis seems to be confirmed by the results of two inquiries carried out in 1996 and 1999 by uNidroit and the centre for transnational law (ceN- tral), respectively, in which about 25% of respondents (lawyers, in-house counsel, business people and arbitra- tors) admitted referring to the picc as to lex contractus at least once. None of the awards decided accord- ing to the picc chosen by the parties as governing law has been reported to have been set aside on the ground of conflict with mandatory rules or public policy. 51

2.2.2 Implied Choice of 

Law

as has been suggested, a good practice in the area of cross-border transactions is to insert the choice- of-law clause in the contract during its formation. in some cases, however, parties prefer not to determine the applicable lex contractus in their agreement, but that does not neces- sarily imply that a decision in this regard has not been made. this can occur when the parties are unsure how to express their preferences or when the crafting of such a clause is considered too time consuming or even unnecessary in the “honeymoon”

See “UNIDROIT,” next page

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period of negotiation. in these circum- stances, the arbitrators may decide that the parties’ choice has been made implicitly (tacit choice of law). the approach of the arbitral tri- bunals to the tacit choice varies from case to case. possible indicators of the parties’ will as to the law governing their agreement are the language of the contract, use of specific terms, currency, the choice of the place of performance or the circumstances of the conclusion and execution of the contract. 52 the more these factors show connection with a particular domestic law or other set of rules, the more probable that the arbitrators will be willing to apply them. this approach is also expressed in many private international law instru- ments, requiring that the choice must be “clearly demonstrated by the terms of the contract or the circumstances of the case.” 53 according to some theo-

ries, there are two conditions that must be fulfilled in order to establish parties’ tacit choice. first, it needs to be proved that they were aware of the problem of the choice of applicable law and, second, that it was their mu- tual intention to solve this problem. 54 the analysis of arbitral awards shows that the arbitrators will refer to the picc pursuant to the interpre- tation of parties’ tacit choice where they believe the parties wished to have their agreement governed by some “neutral rules.” examples can be parties’ reference to the principle of “natural justice” 55 or “fairness.” 56 this approach is reasonable and is prefer- able in such cases than referring to vague concepts of the lex mercatoria or general principles of law. 57

2.2.3 Negative Choice of 

Law

in certain cases, parties to inter- national commercial transactions, instead of designating the particular lex contractus, may agree (expressly or impliedly) on the rules that they

do not want to govern their contract. this situation is usually described as negative choice of law. 58 depending on the preferences of the parties, the negative choice can have one of three forms. first, the parties may exclude the application of some of the domestic laws that have connection with the contract and at the same time allow for the possibility of the application of those remain- ing. the second possibility involves elimination of all laws connected with the contract. finally, the parties may choose to derogate from all national legal systems, even those that do not have any connections with the con- tract. in some cases, this effect also can be achieved by the choice of the international law. 59 in certain exceptional circum- stances, silence in the contract as to the applicable law can have the same result. 60 in this situation, the arbitrators’ approach will depend on the results of analysis of some back- ground information. in particular, it will be necessary to establish whether the absence of the choice-of-law clause

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The Brazil-Canada Chamber of Commerce (BCCC) is a business association whose primary objective is to

The Brazil-Canada Chamber of Commerce (BCCC) is a business association whose primary objective is to promote, foster and facilitate stronger commercial relations and bilateral business opportunities between Canada and Brazil. Established in 1973, the Chamber plays a vital role in keeping Canadian companies and individuals informed of the latest political and economic developments in Brazil. BCCC members represent a wide variety of business sectors, individuals and government agencies from across Canada that encourage and support closer commercial and economic ties between Canada and Brazil. The principal activities of the Chamber include the organization of conferences, seminars and luncheons which present individual speakers and groups to Canadian audiences in order to disseminate information on Brazil and provide networking opportunities.

www.brazcan.org

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was a mere omission or rather an intentional act resulting from the impossibility of reaching compromise. the tendency to interpret silence in the contract as a negative choice of law is characteristic of disputes involving state parties. 61 in arbitral practice, the negative choice of law is usually seen as the reference to transnational rules. 62 thus, it is not surprising that, in practice, arbitrators facing the prob- lem of negative choice often decided to refer also to the picc. the main arguments in favor of their applica- tion are that the picc represent the “principles generally applicable in international commerce” 63 that “seem to be a faithful transposition of rules admitted to be applicable to inter- national contracts between traders engaged in international trade” 64 and that they “have earned a wide accep- tance and international consensus in the international business commu- nity.” 65

2.3 Reference to the PICC 

by the Arbitrators 

2.3.1 Incorporation as a Part of 

Transnational Law 

the parties’ choice, express or im- plied, positive or negative, is not the only situation in which the picc can become the applicable lex contractus. as will be demonstrated, in the vast majority of cases, the picc become relevant in this context thanks to a decision of the arbitrators, particular- ly where the parties subjected their contract to transnational rules. in order to establish whether the picc can be considered an expres- sion of the transnational law, it is first necessary to determine the meaning of the latter. the picc as a whole are not composed exclusively of rules that can be qualified as “generally recognized principles of law and trade usages.” 66 on the other hand, the ex- pression “transnational law” can also be defined in broader terms so as to include “all rules and principles other than those by a particular domestic law.” 67 if the preference is given to the second approach, then the picc

could potentially be regarded a part of transnational law. the next problem arises in the context of the introduction to the 1994 edition, in which the drafters expressly state that even though the picc, for the most part, reflect widely accepted concepts, they “also embody what are perceived to be the best solutions, even if still not yet gener- ally adopted.” 68 With this language, the authors seem to suggest that the picc as a whole cannot be treated as an expression of the lex mercatoria or commonly accepted general prin- ciples. the question remains, then, what is the significance of paragraph three of the preamble that provides for the application of the picc when the parties have agreed that their contract be governed by “general prin- ciples of law, the lex mercatoria or the like”? the answer seems to be in the comment to that paragraph, where the authors advise that the picc can be used “to determine the content” of the above-mentioned systems of rules. the foregoing implies that the picc are not to be considered a “codifica- tion” of general principles of law, the lex mercatoria, etc., but to the extent to which they correspond to the com- monly accepted standards, they can be a useful tool in ascertaining the content of the transnational rules. 69 in this context, their role is to over- come, or at least reduce, the uncer- tainty created by the vague concepts forming transnational law by creating a source of rules expressed in a much more precise way. the analysis of the arbitral awards available in the uNileX database reveals that the picc frequently have been used in the context of transna- tional law. these cases can be classi- fied into three groups. first, there are cases where the tri- bunal applied the picc as an expres- sion of the lex mercatoria 70 or “general principles of law” 71 referred to in the contract. the wording of the choice- of-law clauses differed from case to case; however, arbitral tribunals did not hesitate to apply the picc in this context even where the relevant rules were described as “natural justice,” 72

“general principles of equity,” 73 or even “anglo-saxon principles of law.” 74 second, are cases where the arbitrators applied the picc in the absence of parties’ choice of law or alongside the law chosen. 75 in some of these awards, the arbitrators went so far as to say that the picc are an expression of “international prac- tices” 76 and “the central component of the general rules and principles regarding international contrac- tual obligations,” 77 or even that they “contain in essence a restatement of those ‘principes directeurs’ that have enjoyed universal acceptance and, moreover, are at the heart of those most fundamental notions which have consistently been applied in arbitral practice.” 78 certainly, in some cases arbitrators were clearly more cautious and de- scribed the picc as “useful source[s] for establishing general rules for international commercial contracts,” 79 or expressed the view that the use of the picc in the context of transna- tional law is limited, and they can be considered a part of the lex mercato- ria only inasmuch as they constitute “a faithful transposition of the rules which business people involved in international trade recognize as ap- plicable to international contracts.” 80 there are also remarkable awards where the picc were applied not as an expression of, but as an alternative to, the vague concepts of lex merca- toria, the nature and scope of which are uncertain. 81 this may suggest the possibility that the picc will at some point take over the function of at least some of the concepts within the trans- national law. finally, in some cases arbitral tribunals simply refused to apply the picc as an expression of transna- tional law because “at present there is no necessary connection between the individual principles and the rules of the lex mercatoria.” 82 Most of these awards, however, relate to the appli- cation of the picc as a trade usage, which will be discussed further below. the domestic courts tend to treat

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favorably the arbitral awards refer- ring to the picc as to the expression of the transnational rules and uphold their validity in the cases where the arbitrators were not acting as amia- bles compositeurs, or mediators. 83

2.3.2 Absence of Any 

Choice of Law by the 

Parties 

there can be various reasons behind the absence of any valid choice of law. first, even though it may seem unbelievable, in certain cases parties do not think about the choice of law at all or do not consider this aspect important enough to waste any time on it. the other possibility is that the silence in the contract is to be interpreted as intent to exclude the application of certain or all national law systems. this is the previously discussed “negative choice of law” situation. 84 the absence of any validly chosen lex contractus can also result from the designation of two or more national law systems. the parties can decide on the “split choice of law” (dépeçage), but they have to state explicitly which aspects of the transaction are gov- erned by each of them. if, however, the choice-of-law clause refers to two or more systems of law without specify- ing their scope of application, it will not be valid. in certain circumstances, the arbitrators can also interpret such a clause as a negative choice of law. 85 finally, it is possible that there was absolutely no consensus as to the applicable law and therefore it needs to be determined by the arbitrators according to the relevant arbitration law or rules. if that is the case, it is still advisable first to ask the parties about their preferences with regard to the applicable law. even if they did not find this aspect important during the negotiation and drafting of the contract, they may be interested in determining it in the context of the

already existing dispute. otherwise, the award could be challenged on the ground of the parties’ fundamental right to present their case. 86 the procedures to be followed by arbitrators in determining the appli- cable law are regulated by the lex ar- bitri of the seat of arbitration and the arbitration rules, if any. the solutions adopted by arbitration laws and rules can be divided into two categories; namely, those allowing for the direct choice of law and those requiring the arbitral tribunal to make an indirect choice with the use of the rules of private international law. traditionally, in order to estab- lish the law applicable to the merits, arbitrators were required to apply the rules of private international law (usually those in the seat of the arbitration). this indirect method (voie indirecte) is still preferred by the uNcitral Model law, which provides that “failing any designation by the parties, the arbitral tribunal shall apply the law determined by the conflict of laws rules which it considers applicable.” 87 consequently, many domestic arbitration laws that adopted the Model law followed this approach. 88 the method of direct determina- tion of the law applicable to the merits (voie directe) has been adopted by the majority of arbitration rules 89 and a number of modern arbitration laws. 90 Moreover, most of them favor the unlimited version of voie directe and allow the arbitrators to apply the “rules of law that they determine to be appropriate.” 91 there are, however, some texts that require the arbitra- tors to apply the rules of law “with which the case has the closest con- nection” 92 or even limit their choice to the domestic law “with which the subject-matter of the proceedings is most closely connected.” 93 the above implies the conclusion that most of the domestic arbitra- tion laws impose restrictions on the arbitrators’ freedom to determine the lex contractus and deprive them of the possibility of applying other rules of law and, therefore, the picc. in contrast, the same cannot be said

with regard to the arbitration rules, the majority of which allow the arbitrators to apply the most appro- priate rules of law. in this context, it is important to remember that in the cases where the parties decide on the administered form of arbitra- tion, the rules of the chosen institu- tion will override provisions of the applicable lex arbitri regulating the same issues. 94 the situation will be otherwise only if the latter have the status of mandatory rules. therefore, in practice, the limitations contained in the arbitration law of the seat will affect the arbitrators’ freedom pri- marily in the case of ad hoc arbitra- tions or where they have the status of mandatory provisions that cannot be excluded by any arbitration rules. 95 Given that in most cases arbitra- tors will be expected to apply the “rules of law that they determine ap- propriate,” the meaning of this term is important. specifically, under what circumstances will the picc be the most “appropriate” lex contractus? the drafters of the picc chose a cautious approach. in the comments, they recommend that arbitral tribu- nals facing the absence of the choice of law should turn first to the domes- tic law and apply it unless inappropri- ate for the resolution of the particular conflict. 96 on the other hand, given the extent of discretion left to the arbitrators by most arbitration rules, there is no reason why arbitrators should always look for the solution first in the domestic law. therefore, arbitrators should give as much at- tention to the rules of transnational law as to the relevant domestic laws. 97 Moreover, it could also be argued that rules of law such as the picc “meet the expectations of the parties” better. 98 the choice of arbitration is usually motivated by the wish to have the dispute resolved by a neutral forum. therefore, arbitrators should, by reference to neutral rules, comple- ment the decision of the parties to submit their case to arbitration. 99 the picc are not only neutral, but also pass the test of appropriateness in terms of their sophistication and ad- vancement of the adopted solutions. 100

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in practice, on several occasions arbitral tribunals applied the picc as “rules of law considered to be most ap- propriate” before this possibility was expressly provided for in the picc. 101 the most notable is the award ren- dered by arbitration institute of the stockholm chamber of commerce where the arbitral tribunal defined the picc as rules that “have wide recognition and set out principles that in the tribunal’s opinion offer[] a pro- tection for contracting parties that ad- equately reflects the basic principles of commercial relations in most if not all developed countries.” 102 in most of these cases, the arbitral tribunal followed the approach recommended by the picc and, before referring to them, considered the possibility of basing its decision on one of the oth- erwise applicable domestic laws. importantly, application of the picc as lex contractus by arbitra- tors in the absence of parties’ choice of law does not, in most of the cases, constitute a ground for the refusal of recognition and enforcement of such award. 103

2.3.3 Arbitrators 

Empowered to Decide Ex 

Aequo et Bono

in the practice of international commercial arbitration there are situations in which the arbitrators’ duty to apply the law or rules of law is waived. this can occur when they have been authorized to act as ami- able compositeurs or decide ex aequo et bono, and it is subject to two condi- tions. first, the applicable lex arbitri have to provide for such possibility. the majority of modern arbitra- tion laws and rules expressly allow the parties to empower the arbitral tribunal to decide on the basis of fair- ness, equity and justice. 104 the second requirement, expressly provided for in most of the above-mentioned laws and rules, is that these powers have to be vested in the arbitrators by virtue of parties’ express consent. the extent to which arbitrators acting as amiable compositeurs can depart from any domestic laws and

rules of law varies from case to case and depends on the provisions of the applicable lex arbitri. 105 there is also no agreement as to whether compe- tence to decide ex aequo et bono enti- tles the arbitral tribunal to disregard the express terms of the contract. the most appropriate approach seems to be that the arbitrators should at least not attempt to rewrite the text of the agreement. 106 regardless of these limitations, the arbitral tribunal is expected to reach a solution that, given all circumstances of the case, seems fair and just. at the same time, the mere fact that arbitrators are not bound by any rules does not imply that they cannot look for the solu- tion in the rules expressed in soft-law instruments. therefore, the picc can be a useful tool in this context, obvi- ously to the extent to which arbitra- tors consider them to be the equitable principles suitable to the decision ex aequo et bono. 107 the arbitral tribu- nal’s decision will not be based on the provisions of the picc; instead, they will be used to confirm that the chosen solution is just and fair. in spite of the fact that the cases where arbitrators are authorized to act as amiable compositeurs are relatively rare, several do exist where the arbitral tribunal decided to refer to the picc. 108

3. Incorporation of the 

Principles as Trade Usages 

trade usages can be defined as “prevailing practices established among parties to a contract or ac- tors in the same industry.” 109 in the context of international commercial arbitration, they can become relevant in two ways. first, as much as other concepts within the transnational law (general principles or lex mercatoria), they can be applied as lex contrac- tus instead of otherwise applicable domestic law. this can be the case where the parties decided to subject their relationship exclusively to terms of their agreement supplemented by relevant usages of trade. the second opportunity for the application of widely accepted practices is created

by the provisions of numerous arbi- tration laws and arbitration rules that oblige the arbitrators to take into account the relevant trade usages or customs. 110 similarly, some interna- tional conventions provide that the arbitrators should always refer to the relevant trade usages. 111 there is no certainty as to whether the picc and other similar soft-law instruments can be treated as an ex- pression of trade usages. 112 the prob- lem with making such qualification is twofold. the first issue concerns their status as a set of legal rules, which seems disqualifying from the outset. on the other hand, the term “trade usages” also could be given a broader meaning so as to include not only practices but also systems of rules, as long as they facilitate the needs of the cross-border trade. 113 the second difficulty is caused by the fact that, as discussed in the context of the lex mercatoria and general principles of law, not all of the provisions of the picc reflect widely accepted concepts. thus, the most appropriate view seems to be that the picc cannot be regarded a codification of trade us- ages, but the relevance of its particu- lar provisions in this context should be assessed on a case-by-case basis. 114 this approach is reflected in the practice of international commercial arbitration. there is a trend to qualify the picc as trade usages, especially where the arbitral tribunal is re- quired to take the latter into account according to the relevant arbitration laws, 115 rules 116 or international uni- form law instruments. 117 the argu- ments in favor of the application of the picc in this context range from cautious statements that they con- stitute “an accurate representation, although incomplete, of the usages of international trade” 118 to submis- sions clearly confirming their status of “codified trade usages.” 119 there are also awards where reference to the picc as the “usages of international trade” was made without detailed justification. 120 on some rare occasions, arbitra-

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tors refuse to apply the picc as trade usages on the grounds that the “recourse to the picc is not purely and simply the same as recourse to an actually existing international commercial usage,” 121 and they “do not generally reflect trade usages.” 122

Conclusion

the picc may be and have been applied as lex contractus in several ways that can be grouped in two categories. the first comprises cases where the picc have been chosen by the parties at the time of the execu- tion of the contract or at a later stage, even after the dispute has arisen. the second is when the picc are invoked by arbitrators despite the lack of

reference to them by the parties. the preamble, underlying the consensual character of the picc, can be viewed as the expression of the intent of the drafters as to the preferred way of ap- plication. an analysis of the arbitral awards reveals that practice seems to reduce these expectations. only rarely do parties to international contracts choose to have their agree- ment governed by the picc. arguably, if not for arbitrators, who tend to ap- ply the picc as lex contractus where the parties have referred to the lex mercatoria, “general principles of law” or other concepts of transnational law, use of the picc in this context would be minimal. this trend, however, does not extend to cases where there is no choice of the applicable law or rules of law at all. in such cases, arbitra- tors will refer to the picc only if they conclude that the parties have made a negative choice resulting in the exclu- sion of any domestic law.

the above conclusions, revealing that the picc in most of the cases are applied by the arbitrators on their own initiative rather than pursuant to the parties’ decision, could cause doubts as to their soft-law charac- ter. on the other hand, it cannot be forgotten that unlike the hard-law instruments, the picc do not apply automatically and become relevant only if they prove to be the most ap- propriate rules of law in light of the circumstances of the particular case. regardless, the picc contribute to international commercial arbitration by providing a neutral set of rules that address the needs of the cross- border transactions. thus, the picc can increase effectiveness of inter- national dispute resolution. finally, the significance of the picc is even greater thanks to the extensive uNi- leX database that makes them easily accessible by both contracting parties and arbitrators.

uNi- leX database that makes them easily accessible by both contracting parties and arbitrators. page 18
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Ludwina Klein is a junior associate at Salans in Warsaw, Poland. She has an LL.M in international corporate and commercial law from the Uni- versity of York (U.K.) and a Master of Laws from the University of Wroclaw (Poland). Ms. Klein is a member of the Chartered Institute of Arbitrators (CIArb), the LCIA Young Internation- al Arbitration Group ( YIAG), and the ICC Young Arbitrators Forum (YAF). She speaks Polish, English, Italian and German.

Endnotes:

1 int’l inst. for the unification of private law [uNidroit], Unidroit Principles of Interational Commercial Contracts (2004),

available at http://www.unidroit.org/english/

principles/contracts/principles2004/integral-

versionprinciples/ [hereinafter picc].

2 Michael Joachim bonell, Towards a

Legislative Codification of the UNIDROIT Principles?, u.l.r. 233, 233 (2007).

3 picc, supra note 1, preamble cmt. 1,

available at http://www.unilex.info/dynasite.

cfm?dssid=2377&dsmid=13637&x=1.

4 Id. cmt. 2.

5 uNileX, available at http://www.uni- lex.info/.

6 picc, supra note 1, preamble para. 7;

see also Michael Joachim bonell, UNIDROIT Principles 2004 – The New Edition of the Principles of International Commercial Con- tracts adopted by the International Institute for the Unification of Private Law, u.l.r. 5, 7

(2004).

7 bonell, supra note 6, para. 8.

8 Michael Joachim bonell and tommaso

Monfeli, Rassegna giurisprudenziale sui Principi UNIDROIT dei Contratti Commer- ciali Internazionali, 15 dir. CoMM. intl 169, 170 (2001); Matthias scherer, The Use of the UNIDROIT Principles in International Ar- bitration, in CoMMentary on tHe unidroit

prinCipleS oF international CoMMerCial

ContraCtS (piCC) 81,82 (stefan Vogenauer and Jan Kleinheisterkamp eds., 2009).

9 See, e.g., Klaus peter berger, Interna-

tional Arbitral Practice and the UNIDROIT Principles of International Commercial Con- tracts, 46 a M. J. o F C o M p. l. 129-150 (1998); fabio bortolotti, The UNIDROIT Principles and the Arbitral Tribunals, u.l.r. 141-152 (2000); alejandro M. Garro, The Contribution of the UNIDROIT Principles to the Advance- ment of International Commercial Arbitra- tion, t ul. J. i ntl & C o M p. l. 93-128 (2000); emmanuel Jolivet, The UNIDROIT Prin- ciples in ICC Arbitration, iCC intl Ct. arb. bull.: SpeCial SuppleMent 2005: unidroit

prinCipleS: new developMentS and appliCa-

tionS 65-72 (2005) [hereinafter iCC intl Ct.

arb. bull.: SpeCial SuppleMent 2005]; ole

lando, Assessing the Role of the UNIDROIT

Principles in the Harmonization of Arbitra- tion Law, t ul. J. i ntl & C o M p. l. 129-44

(1995).

10 int’l inst. for the unification of private

law [uNidroit], Unidroit Principles of Interational Commercial Contracts, introduc-

tion para. 9 (1994), available at http://www.

jus.uio.no/lm/unidroit.international.commer-

cial.contracts.principles.1994.commented/

[hereinafter picc 1994].

11 Id. para. 8.

12 Id. See also bortolotti, supra note 9, at

143; Julian d.M. lew, loukas a. Mistelis, stefan M. Kröll, Comparative International Commercial Arbitration, Klu. law intl 463 (2003); loukas Mistels, The UNIDROIT Principles Applied as “Most Appropriate Rule of Law” in a Swedish Arbitral Award, 8 u.l.r 631, 633 (2003).

13 picc, supra note 1, preamble para. 3.

14 See, e.g., id., at art. 1.12(2) and (3), art.

2.1.8, art. 6.1.2, art. 6.1.4.

15 berger, supra note 9, at 130.

16 bonell, supra note 2, at 3.

17 freedom of contract; no form required;

binding character of contract; mandatory rules; exclusion or modification by the par- ties; interpretation and supplementation of the principles; good faith and fair dealing; inconsistent behavior; usages and practices; notice; definitions; computation of time set by parties.

18 picc, supra note 1, introduction para 3;

bonell, supra note 6, at 19.

19 bonell, supra note 6, at 29.

20 picc, supra note 1, preamble cmt. 4(c).

21 picc 1994, supra note 10, preamble

para. 4.

22 bonell, supra note 6, at 20.

23 u.N. convention on contracts for the

international sale of Goods, 11 apr. 1980, available at http://www.uncitral.org/uncitral/

en/uncitral_texts/sale_goods/1980cisG.html.

24 formal endorsement of the picc by the

uNcitral; Model contracts prepared by icc and itc uNctad/Wto.

25 francesco paolo traisci, Principi

UNIDROIT, lex mercatoria e diritto del commercio internazionale: note a margine di un lodo arbitrale, 2 dir. CoMM intl 474, 479

(1999).

26 lauro da Gama e. souza Jr., The

UNIDROIT Principles of International Com- mercial Contracts and Their Applicability in the MERCASOUR Countries, 36 revue JuridiQue tHéMiS 375, 400 (2002).

27 See supra p. 2.

28 lew, supra note 12, at 463.

29 Garro, supra note 9 at 98; picc, supra

note 1, preamble cmt.3.

30 uNcitral Model law on international

commercial arbitration applies only to inter- national commercial arbitration. similarly,

many countries made reservations under the New York convention that they will apply it

only to disputes arising out of legal relation- ships that are considered commercial under the domestic law; see, e.g., argentina, china, denmark, poland or the u.s.

31

picc, supra note 1, preamble cmt. para

2.

32

See art. 28(1) of uNicitral Model

law; art. 42(1) of icsid convention; art. 1496 of french code of civil procedure; art. 17(1) of icc rules. but, §1051(2) of German code of civil procedure obliges the tribunal to apply the “law” unless expressly empow- ered by the parties to act otherwise; see also art. 33(1) of uNcitral rules and § 46(3) of english arbitration act, which do not allow for the application of the “rules of law” in any case.

33 berger, supra note 9, at 147; nigel

blaCKaby et. al., redFern and Hunter on international arbitration 222 (2009); lando,

supra note 9, at 135; see also § 1-302 cmt. 2 of the u.s. uniform commercial code. cmt. 2 to § 1-302, which, since the revision in 2001, contains express reference to the picc.

34 friedrich blase, Proposing a New Road

Map for an Old Minefield. The Determina- tion of the Rules Governing the Substance of the Dispute in International Commercial Arbitration, 20 J. i ntl a rb. 267, 267 (2003); françois dessemontet, Use of the UNIDROIT Principles to Interpret and Supplement Do- mestic Law, iCC intl Ct. arb. bull.: SpeCial SuppleMent (2002) 39, 40; pierre lalive, The UNIDROIT Principles as lex contractus, With or Without an Explicit or Tacit Choice of Law:

an Arbitrator’s Perspective, iCC intl Ct. arb. bull.: SpeCial SuppleMent (2002) 77, 79; det- lev f.Vagts, Arbitration and the UNIDROIT Principles 270 (1998), <http://www.cisg.law. pace.edu/cisg/biblio/vagts.html> (accessed 6 aug. 2010); see also the center for trans- national law’s list of principles, rules and standards of the lex Mercatoria.

35 See supra pp. 22-23.

36 See, e.g., art. 3.1 of the regulation (ec)

No. 593/2008 of the european parliament and of the council of 17 June 2008 on the law applicable to contractual obligations (rome i); however, the inter-american con- vention on the law applicable to interna- tional contracts 1994 in art. 9(2) and art. 10 allows the application of rules of law and thus is deemed to allow the application of the principles.

37 roberta peleggi, L’applicazione dei

Principi Unidroit en vole directe alla luce di un recente lodo della Corte Arbitrale della Camera di Commercio, dir. CoMM intl 483,

496 (2004).

38 picc, supra note 1, art. 1.4; bortolotti,

supra note 9, at 145-147. But see the icsid convention, which does not contain such limitation.

39 scherer, supra note 8, at 84.

40 lando, supra note 9, at 133. this ap-

proach was followed in icc case No. 11018, where the parties agreed their dispute would

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be resolved according to “lex mercatoria as expressed by the uNidroit principles.”

41 See, e.g., art. 1054(2) of dutch code of

civil procedure; art 182 of swiss law on pri- vate international law; art. 834(1) of italian code of civil procedure; § 46(1) of english arbitration act 1996.

42 Karl-heinz böckstiegel, The Application

of the UNIDROIT Principles to Contracts Involving States or Intergovernmental Orga- nizations, iCC intl Ct. arb. bull.: SpeCial SuppleMent (2002) 51, 52.

43 scherer, supra note 8, at 86.

44 “this contract shall be governed by the

uNidroit principles (2004) [except as to

articles

erned by the uNidroit principles (2004)

]”; “this contract shall be gov-

[except as to articles

], supplemented

when necessary by the law of [jurisdiction X].”

45 See, e.g., art. 14 of the Model contract

for the international commercial sale of perishable Goods issued by the itc uNc- tad/Wto in 1999 and art. 12 of icc Model international franchising contract (icc publication No. 557, 2000).

46 See supra note 39.

47 the cases where the arbitral tribunal

refused to apply are very rare; see, e.g., icc award No. 9419 of september 1998, available at http://www.unilex.info, where the arbitral tribunal found that “they cannot constitute a normative body in themselves that can be considered as an applicable supranational law to replace a national law, at least as long as the arbitrator is required to identify the applicable law by choosing the rule of conflict that he considers most appropriate.”

48 See, e.g., icc award No. 8331 of dec.

1996, available at http://www.unilex.info.

49 See award of 21 april 1997 rendered

in ad hoc arbitration in paris; award No. a-1795/51 of dec. 1996 of camera arbitrale Nazionale ed internazionale di Milano; award No. 116 of 20 Jan. 1997 of the inter- national arbitration court of the chamber of commerce and industry of the russian fed- eration; all available at http://www.unilex. info.

50 icc award No. 11880 of 2004; award

of 30 Nov. 2006 of centro de arbitraje de México (caM); award of 2009 of permanent court of arbitration (number unknown); all available at http://www.unilex.info.

51 Markiyan Kliuchkovskyi, Applicability

of UNIDROIT Principles of International Commercial Contracts in Courts and Arbitra- tion Tribunals, 1 diSp. reSol. intl 199, 202

(2007).

52 lalive, supra note 35, at 81.

53 art. 3(1) of regulation rome i, supra

note 37; see also art 116 § 2, of swiss law on private international law.

54 lalive, supra note 35, at 81.

55 See icc first partial award No. 7110

of June 1995, available at http://www.unilex.

info, where the arbitral tribunal came to

conclusion that “the general legal rules and principles, enjoying wide international con- sensus, applicable in international contrac-

tual obligations

by the uNidroit principles.” the arbitral tribunal considered the picc “to be the central component of the general rules and principles regarding international contrac- tual obligations and enjoying wide interna- tional consensus.”

56 icc award No. 9474 of feb.1999, avail-

able at http://www.unilex.info.

57 fabrizio Marrella, Choice of Law

in Third-Millennium Arbitrations: The Relevance of the UNIDROIT Principles of

International Commercial Contracts, 36 v and. J. t ran S natl l. 1137, 1155 (2003); but see lalive, supra note 5, at 81, who suggests that the arbitrators should be more cau- tious when assuming the tacit choice of the principles. similarly, Marc blessing, Choice of Substantive Law in International Arbitration

are primarily reflected

14 J. i ntl a rb. 39, 43 (1993) points out the

problem of imposing on the parties’ inten-

tions, which in fact they did not have.

58 the concept of negative choice has been

accepted by the majority of commentators; see, e.g., scherer, supra note 8, at 92; lalive, supra note 5, at 82; e. allan farnsworth, The Role of the UNIDROIT Principles in International Commercial Arbitration: A U.S.

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Perspective on Their Aims and Application,

iCC intl Ct. arb. bull.: SpeCial SuppleMent

(2002) 21, 24; pierre Mayer, The Role of the UNIDROIT Principles in ICC Arbitration Practice, iCC intl Ct. arb. bull.: SpeCial SuppleMent (2002) 105, 110; blessing, supra note 58, at 44; Marrella, supra note 58, at 1156; but see also berger, supra note 9, at 144, who notices that this concept is sur- rounded by a lot of skepticism, and horacio Grigera Naón, Closing Remarks iCC intl Ct.

.arb. bull.: SpeCial SuppleMent (2002), who

underlines that express or implicit indica- tions that each party wished to avoid the application of the national law of the other party are not sufficient to establish a nega- tive choice of law. he points out that “other decisive concurring factors must be present, such as the parties’ desire to have a neutral decision for their case.”

59 icc first partial award No. 12111 of

7 Jan. 2003, available at http://www.unilex. info, where the reference to “international law” as the law governing the contract was interpreted as the reference to the general principles of law and the lex mercatoria and, as a result, the uNidroit principles were applied.

60 picc, supra note 1, preamble cmt.

4(c); berger, supra note 9, at 146; piero bernardini, International Arbitration and A-National Rules of Law, 15 iCC intl Ct. arb .bull. 58, 65 (2004); icc award No.

7375 of 5 June 1996, available at http://www.

unilex.info, where silence in the contract was interpreted by arbitral tribunal as exclu- sion of the domestic law of both parties; icc award No. 15089 of 15 sept. 2008, available at http://www.unilex.info, where silence was interpreted as a negative choice with regard to the parties’ respective domestic laws and no objective connecting factor in favor of any particular domestic law.

61 blessing, supra note 58, at 44; Marella,

supra note 58, at 1156; Mayer, supra note 59, at 111; scherer, supra note 8, at 93.

62 this was the approach of the arbitral

tribunal in Primary Coal v. Compania Va- lenciana de Cementos Portland (icc partial award No. 5953) 1 sept. 1988, available at http://www.unilex.info); lalive, supra note 35, at 82-83; Mistelis, supra note 12, at 637-639; scherer, supra note 8, at 92.

63 icc award No. 5835 of June 1996, avail-

able at http://www.unilex.info.

64 icc award No. 10422 of 2001, available

at http://www.unilex.info, the contract refer- ring to “a neutral legislation as agreed by the parties,” in the absence of parties’ agreement the tribunal applied “rules and principles generally recognized in international trade (lex mercatoria) and in particular the uNidroit principles.”

65 icc 7375, supra note 61.

66 Michael Joachim bonell, The

UNIDROIT Principles and Transnational Law, u.l.r. 199, 199 (2000).

67 Id.

68 picc 1994, supra note 10, para. 8.

69 blackaby, supra note 36, at 219; bonell,

supra note 67, at 205; Garro, supra note 9, at 113; Julian d.M. lew, The UNIDROIT Prin- ciples as Lex Contractus Chosen by the Par- ties and Without an Explicit Choice-of-Law Clause: The Perspective of Counsel, iCC intl

Ct. arb. bull: SpeCial SuppleMent (2002)

85,88; scherer, supra note 8, at 88; traisci, supra note 26, at 486; views as to whether the picc can be regarded as an expression of “the general principles of law, the lex mer- catoria or the like” vary across the countries; for detailed analysis, see Michael Joachim bonell, UNIDROIT Principles: A Signifi- cant Recognition by a United States District Court, u.l.r. 651, 651-53 (1999); but see, Michael Joachim bonell, A “Global” Arbitra- tion Decided on the Basis of the UNIDROIT Principles: In re Andersen Consulting Busi- ness Unit Member Firms v. Arthur Andersen Business Unit Member Firms and Andersen Worldwide Société Coopérative, 17 arb. intl 249, 251 (2001), where the author suggests that the award in the Arthur Andersen case proves that the arbitral tribunal did consider the picc to be “a codification of international principles of contract law.”

70 award No. 11/2001 of 5 Nov. 2002

of international arbitration court at the chamber of commerce and industry of the russian federation; award of 30 april 2001 rendered in ad hoc arbitration in san José (costa rica); icc 10422, supra note 65; both available at http://www.unilex.info.

71 Eureko B.V. v Republic of Pol. (award of

19 aug. 2005 rendered in ad hoc arbitration in brussels); icc partial award No. 13012 of 2004; icc award No. 9797 of 28 July 2000; icc 9474, supra note 57; award rendered in ad hoc arbitration in New York (date un- known); icc award No. 8264 of april 1997, where the arbitral tribunal concluded that

the picc “embody

throughout the world in legal systems and the practice of international contracts”; all available at http://www.unilex.info.

72 icc 7110, supra note 56.

73 icc 9797, supra note 72.

74 lccia award of 1995, available at

http://www.unilex.info.

75 icc 13012, supra note 72; icc award

No. 11926 of 2003; icc 10422, supra note 65;

award No. 117/1999 of 2001 of arbitration institute of the stockholm chamber of com- merce; icc award No. 10114 of March 2000; icc partial award No. 9875 of Jan. 1999; icc award No. 8261 of 27 sept. 1996; icc award No. 8540 of 4 sept. 1996, available at http://www.unilex.info.

76 icc 10114, supra note 76.

77 icc 7110, supra note 63, where the

arbitral tribunal gave five reasons for its submission.

78 See icc 9797, supra note 72, at 6.

rules largely accepted

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79 icc 8540, supra note 76.

80 icc 10422, supra note 65; see also icc

7375, supra note 61, where the tribunal decided to “take into account the uNidroit principles, as far as they can be considered to reflect generally accepted principles and rules.”

81 icc award No. 11575 of 2003 and icc

award No.11265 of 2003, both available at

http://www.unilex.info.

82 icc award No. 9029 of March 1998,

available at http://www.unilex.info.

83 Kliuchkovskyi, supra note 52, at 205.

84 See supra pp. 17-18.

85 scherer, supra note 8, at 94.

86 See art. 34(2)(a)(iv) uNcitral Model

law.; it is also a ground for non-enforcement under art. V(1)(b) of the New York conven-

tion.

87

art. 28(2) of uNcitral Model law,

as amended in 2006; see also art. Vii of the european convention on international com-

mercial arbitration.

88 See, e.g., § 46(3) of english arbitration

act 1996.

89 See art. 28(1) of aaa icdr; art. 19(1)

of icc rules; art. 22(3) of lcia; art. 24(1) of scc rules; art. 59(1) of Wipo rules. But see also, art. 33(1) of uNcitral rules, art. 16(1) of Vienna rules and § 23 of dis rules, which all require the arbitral tribunal to ap- ply the “law.”

90 See art. 1496 of french code of civil

procedure; art. 1051(2) of German code of civil procedure; art. 187(1) of swiss law on private international law.

91 See e.g., art

24(1) of scc rules.

92 art. 187 of swiss law on private inter-

national law.

93 See § 1051(2) of German code of civil

procedure; similar requirement can be found in art. 834 of italian code of civil procedure.

94 lew, supra note 12, at 28; but see, alan

redFern & Martin Hunter, international

CoMMerCial arbitration 179 (2d ed., london, sweet & Maxwell 1991), who submit that the arbitration rules cannot override the applicable lex arbitri and the scope of their application depends on the extent of freedom provided for in the latter.

95 But see, bernardini, supra note 61, at

65, who submits that this is always the case.

96 picc, supra note 1, preamble cmt. 4(c).

97 Marella, supra note 58, at 1156; Miste-

lis, supra note 12, at 638.

17(1) of icc rules; art.

98 Yves derains, The Role of the

UNIDROIT Principles in International Com- mercial Arbitration: a European Perspective,

iCC intl Ct. arb. bull.: SpeCial SuppleMent

(2002) 9, 14; Marrella, supra note 58, at 1156; but scherer, supra note 8, at 91, expresses scepticism because this goes further than the drafters intended.

99 Garro, supra note 9, at 120.

100 Mistelis, supra note 12, at 638.

101 See recent icc 15089, supra note 61,

where the principles were defined as “an in- ternational re-statement (or pre-statement) of modern contract law in its most authori- tative form, well-known in international arbitration practice and endorsed by the united Nations commission on international trade law (uNcitral)”; see also award of 29 March 2005 of institute of the stockholm chamber of commerce and icc 112, supra note 82, available at http://www.unilex.info.

102 arbitration institute of the stockholm

chamber of commerce, supra note 76; see

also, the commentary in Mistelis, supra note

12.

103

scherer, supra note 8, at 104 and 108;

this is the approach in austria, switzerland and france; see, e.g., oGh 18 Nov. 1982 (8 ob 520/82), (1984) Xi Yb comm. arb. 159 and cass civ 22 oct. 1991 (89-21528), (1992) rev. arb. 457; but in Germany such choice would

be a ground for setting the award aside; see supra note 94.

104 art. Vii (2) of the european convention;

art. 42(3) of icsid; art. 28(3) of uNcit- ral Model law; art. 187(2) of swiss law on private international law; § 45(1)(b) of english arbitration act 1996; art.1497 of french code of civil procedure; §1051(3) of German code of civil procedure; art. 822 of italian code of civil procedure; art. 17(3) of icc rules; § 23(3) of dis rules. But see, e.g., russian federation law on international commercial arbitration, art .28.

105 scherer, supra note 8, at 103, suggests

that this is true also with regard to the mandatory provisions; however, the right approach seems that even where acting as amiable compositeurs, the arbitrators are still bound by the mandatory rules of the otherwise applicable law; see, Gary b. born, International Commercial Arbitration 2241

(Klu. law intl 2009).

106 born, supra note 106.

107 Id. at 2240; lalive, supra note 35, at 82.

108 See award of 24 feb. 2001 of arbitral

tribunal of the city of panama; award of 10 dec. 1997 rendered in ad hoc arbitration in buenos aires; award of camera arbitrale Nazionale ed internazionale di Milano, supra note 50; icc award No. 8874 of dec. 1996; all available at http://www.unilex.info.

109 scherer, supra note 8, at 89.

110 See art. 17(2) of icc rules; art. 33(3)

of uNcitral rules; art. 28(4) of uNici-

tral Model law, art. 834 of italian civil procedure code; art. 1054 the Netherlands arbitration act 1986 but not english arbitra- tion act; for the analysis of the distinction between the meaning of “trade usages” and “customs,” see Jovilet, supra note 9, at 71.

111 See, e.g., art.Vii (1) of the european

convention and art. 9(2) of the cisG.

112 See James otis rodner, The Applicable

Interest Rate in International Arbitration (UNIDROIT Principles, Article 7.4.9), iCC intl Ct. arb. bull. 43 (2004), who submits that the principles are a part of “interna- tional practices and usages”; but Marrella, supra note 58, at 53, says that it is uncertain, and scherer, supra note 8, at 89, says that the answer to this question should definitely be negative.

113 fabio bortolotti, Reference to the

UNIDROIT Principles in Contract Practice

and Model Contracts, icc intl Ct. arb.

bull.: SpeCial SuppleMent (2005) 57, 60.

114 scherer, supra note 8, at 90.

115 See award t-9/07of 23 Jan. 2008 of

foreign trade court of arbitration attached to the serbian chamber of commerce, available at http://www.unilex.info, where the picc were applied as an expression of trade usages on the basis of art. Vii(1) of the european convention as well as art. 50(4) of serbian law on arbitration of 2006.

116 See icc awards No. 10022 of oct. 2000

and icc award No. 9593 of dec. 1998, both available at http://www.unilex.info, where the picc were taken into account on the basis of art. 17 of icc rules.

117 See awards 229/1996 of 5 June 1997 and

302/1997 of 27 July 1999 of international arbitration court at the chamber of com- merce and industry of the russian federa- tion, where the picc were applied on the basis of art. 9(2) of the cisG as “reflection of international trade usages.”

118 icc award No. 9479 of 1999, available

at http://www.unilex.info.

119 icc award No. 10021 of 2000; see also

award in ad hoc arbitration in buenos aires, supra note 109, where the arbitral tribunal ruled that the picc constituted “usages of international trade reflecting the solutions of different legal systems and of international contract practice,” and award of 4 dec. 1996 in ad hoc arbitration in rome, where the picc were described as a “parameter of the principles and usages of international trade”; all available at http://www.unilex.info.

120 icc award No. 11051 of July 2001; icc

award No. 9479 of feb. 1999; icc award No. 8502 of Nov. 1996; all available at http:// www.unilex.info.

121 icc award No. 8873 of July 1997; see

also, icc 9029, supra note 83.

122 icc award No. 11256 of 2003, available

at http://www.unilex.info.

The International Law Quarterly
The International Law Quarterly

The Better Approach to Deciding 28 U.s.C. 

§1782 Applications for U.s. Discovery in 

Private Arbitrations Abroad

By Jenelle E. La Chuisa, Miami

By Jenelle E. La Chuisa, Miami J. La Chuisa 28 u.s.c. § 1782 authorizes u.s. district

J. La Chuisa

28 u.s.c. § 1782 authorizes u.s. district courts to aid foreign litigants and “international and foreign tribunals” in seeking evidence from witnesses located within the

u.s. in particular, 28 u.s.c. § 1782 provides:

the district court of the district in which a person resides or is found may order him to give his testimony or statement or to produce a document or other thing for use  in a proceeding in a foreign or 

the

order may be made pursuant to a letter rogatory issued, or request made, by a foreign or international tribunal or upon the application of any interested person and may direct that the testimony or statement be given, or the document or other thing be produced, before a person appointed by the

international 

28. u.s.c. § 1782(a) (emphasis added). 1 the scope and meaning of “foreign or international tribunal” has generated significant debate with respect to what adjudicative bodies qualify as “tribu- nals” for purposes of 1782 applications for discovery. indeed, the question of whether a private arbitral panel con- stitutes a “tribunal” remains unsettled and hangs in the balance today. in 2004, the u.s. supreme court in Intel Corp. v. Advanced Micro Devices, Inc., 542 u.s. 241, 246-47 (2004), suggested that the term “foreign and international tribunal” was broad enough to encompass “administra- tive and quasi-judicial proceedings,” including intel’s antitrust complaint

filed with the commission of euro- pean communities. Id. at 258. spe- cifically, the supreme court found that when congress amended section 1782 in 1964, substituting the words “a proceeding in a foreign or interna- tional tribunal” for the previous “any judicial proceeding,” it did so in order to “provid[e] the possibility of u.s. judicial assistance in connection with [administrative and quasi-judicial pro- ceedings abroad].” Id. at 258 (citing s. rep. No. 1580, at 7-8, u.s. code cong. & admin. News 1964, pp. 3782, 3788). the supreme court went on to hold that the european commission was, in fact, a section 1782 “tribunal” because it acted as a “first-instance decision- maker” with authority to “determine liability and impose penalties, disposi- tions that [would] remain final unless overturned by the european courts.” Id. at 258 (relying on 255, n.9). since the supreme court’s 2004 decision in Intel, there has been considerable disagreement among lower courts (even within the same circuit) as to whether the definition of “foreign tribunal” under section 1782 is broad enough to include private arbitral tribunals. 2 While grappling with this question, most courts have afforded leeway to “state-sponsored” arbitration (such as those convened pursuant to bilateral investment treaties) as meeting the definition of “foreign tribunal,” 3 while courts remain heavily divided on the issue of whether private panels fall within the scope of 1782.

A “slim Majority” of Federal  Courts Have Held That  Private Arbitrations are 

subject to 1782 Discovery

a recent district court decision on

the issue of whether a private arbitral tribunal is a “foreign or international tribunal” observed that “[s]ince the Intel decision, a slim majority of federal courts have followed a simi- lar reasoning [to the Intel court’s] to conclude that private arbitrations fall within the scope of section 1782.” OJSC Ukrnafta v. Carpatsky Petro- leum Corp., 2009 Wl 2877156 *3 (d. conn. aug. 27, 2009). for instance, in In re Roz Trading Ltd., 469 f. supp. 2d 1221 (N.d. Ga. 2006), the court concluded that: “a finding that an arbitral panel located in austria 4 is a ‘tribunal’ within the meaning of §1782(a) is consistent with the reasoning in Intel. although Intel did not expressly hold arbitral bodies to be ‘tribunals,’ it quoted approvingly language that included ‘arbitral tribunals’ within the term’s meaning in §1782(a).” Id. at 1224-25; see, e.g., In re Hallmark Cap. Corp., 534 f. supp. 2d 951, 957 (d. Minn. 2007) (arbitral panel is “tribunal” for the purposes of section 1782); In re Application of Babcock Borsig AG, 583 f. supp. 2d 233, 240 (d. Mass. 2008) (same); OJSC Ukrnafta v. Carpatsky Petroleum Corp., 2009 Wl 2877156 (d. conn. aug. 27, 2009) (same). in validating the private arbitra- tion as a “foreign tribunal,” the Roz court noted that “[w]here a body makes adjudicative decisions respon- sive to a complaint and reviewable in court, it falls within the widely accepted definition of ‘tribunal,’ the reasoning of Intel, and the scope of § 1782(a), regardless of whether the body is governmental or private.” Roz Trading, 469 f. supp. 2d 1221, 1228. taking a similar approach, in april 2010, the southern district of

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28 U.s.C. §1782

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florida held that a private arbitration under england’s arbitration act was

a “tribunal” and subject to section

1782. in In re Winning (HK) Shipping Co., Ltd., 2010 Wl 1796579 (s.d. fla.

2010, apr. 30, 2010), the court noted that Intel “suggests that courts should examine the nature of the arbitral body at issue to determine whether

it functions as a ‘foreign tribunal’ for

purposes of section 1782.” Id. at * 7 (emphasis added). the court therefore applied the “functional analysis test” 5 to the arbitral tribunal to be convened in england 6 and concluded that the anticipated proceedings fell within the scope of section 1782. Id. at * 7-8. specifically, the Winning (HK) Shipping court held that the arbi- tration likely to occur between the parties involved a “foreign tribunal” because it arose pursuant to a clause in a private agreement between two purely private parties; the arbitrators in the anticipated arbitration would be able to collect evidence and issue a decision on the merits of the dispute; and because, to the extent applicable, the arbitration act 1996 (of england) or the rules of the london Maritime arbitrators association would provide sufficient reviewability, permitting judicial challenges to awards under certain circumstances. Id. at * 8-10.

A Minority of Courts Have 

Conversely Held That 

Private Arbitrations are 

not “Foreign Tribunals” 

oddly, just a few weeks following the southern district of florida’s ruling in Winning (HK) Shipping, in Dockeray v. Carnival Corp., 2010 Wl 2813803 (s.d. fla., May 11, 2010), the southern district of florida declined to retain jurisdiction to compel 1782 discovery in connection with a private arbitration to be convened under the rules of the american arbitration association and the international centre for dispute resolution, calling

into question whether private arbitra- tions are even subject to 1782:

[e]ven assuming, in light of Intel Corp. v. Advanced Micro Devices, Inc., 542 u.s. 241(2004), that 28 u.s.c. § 1782 applies to private arbitrations, but see Republic of Kaz. v. Biedermann Int’l, 168 f.3d 880 (5th cir. 1999) (“[W]e conclude that the term ‘foreign and international tribunals’ in § 1782 was not intended to authorize resort to united states federal courts to assist discovery in private international arbitrations. the provision was enlarged to further comity among nations, not to complicate and undermine the salutary device of private international arbitration.”); Nat’l Broad. Co. v. Bear Stearns & Co., 165 f.3d 184, 191 (2d cir. 1999) (“[o]ur conclusion, based upon an analysis of the text and legislative history of § 1782, [is] that congress did not intend for that statute to apply to an arbitral body established by private parties.”), the court declines to “retain jurisdiction,” assuming it needs to, to compel carnival to produce testimony and documents here. (citations omitted).).

Dockeray, 2010 Wl 2813803, * 10, n.4 (court compelled arbitration of claims against carnival brought by cruise line operator). Dockeray’s obvious conflict with Winning (HK) Shipping is indicative of the current divide among u.s. fed- eral courts, and even within the same court. indeed, other courts, including the Middle district of florida in In re Operadora DB Mexico, S.A., 2009 Wl 2423138 (M.d. fla. aug. 4, 2009), have held that section 1782 does not apply to permit evidence gathering in aid of private international arbitra- tion. in Operadora, the district court rejected a section 1782 application in aid of arbitration proceedings before the international chamber of com- merce (“icc”), distinguishing Intel on the basis that it did not involve a private international arbitration, and that congress’ intent on this issue was, in its view, ambiguous. Id. at *6,

9.

according to the court in Opera- dora, “judicial reviewability” of the european commission’s ultimate disposition of the matter was key to the supreme court’s rationale permit- ting the section 1782 application in Intel. Id. at *10. applying the review process for decisions of the icc panel on the facts before it, the Operadora court noted:

icc rules dictate that the icc panel must submit its proposed award to the icc court, whose review is limited to “lay[ing] down modifications as to the form of the award.” the icc court “may also draw [the icc panel’s] attention to points of substance,” but must do so “without affecting the [icc panel’s] liberty of decision.” the icc rules [noted the Operadora court] do not provide for any review by a state- sponsored tribunal.

Id. at *10. the Operadora court appears to have focused its analysis largely on reviewability, which is but one part of the analysis conducted in Intel and other post-Intel decisions. a similar result was reached in In re Arbitration between Norfolk S. Corp. and Ace Bermuda Ltd., 626 f. supp. 2d 882 (N.d. ill. 2009), where the court ruled that a private icc arbitration in london, england, was not entitled to judicial assistance under section 1782 because it is not a “foreign or international tribunal.” See id. at 886. the court reasoned that although it was congress’ intent to expand the scope of 1782, Intel did not specifically include private arbitral bodies within the definition of “tribunal.” See id. at 885. rather, the court took the position that section 1782 covers only “state sponsored” arbitration, such as arbitral proceed- ings before uNcitral pursuant to bilateral investment treaties, while admittedly relying on pre-Intel cases and similar rulings by a minority of courts. See id. at 884, 886. the Norfolk court likewise found that the “narrow circumstances” for review of an arbitral award did not “allow

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The International Law Quarterly

for judicial review of the merits of the parties’ dispute,” such that the arbitral panel at issue did not “fall within the definition the supreme court embraced in its Intel dictum.” Id. at 886 (appeal dismissed following

settlement). Yet, the fifth circuit recently held that, even in the wake of Intel, a private swiss arbitration panel, con- vened under uNcitral arbitration rules, was not a “tribunal” within the meaning of section 1782. See El Paso Corp. v. Comisión Ejecutiva Hidroeléc- trica del Río Lempa, 341 fed. appx. 31 (5th cir. 2009) (citing Republic of Kazakhstan v. Biedermann Int’l,

168 f. 3d 880 (5th cir. 1999) (pri-

vate arbitration in stockholm was

not a “tribunal”); but see In re Veiga,

2010 Wl 4225564 (d.d.c., oct. 20,

2010) (arbitral tribunal established pursuant to uNcitral rules was a “foreign tribunal”) (citing In re Oxus Gold PLC, 2006 Wl 2927615 *6 (d.N.J., oct. 11, 2006) (1782 discovery permitted in bit arbitration); and In re Chevron Corp., 709 f. supp. 2d 283

(s.d. N.Y. 2010) (same). 7

Permitting 1782 

Applications in Private 

Arbitrations Will Promote 

International Arbitration 

Among U.s. Companies 

Doing Business Abroad

While some federal courts have cited public policy reasons, including that u.s.-based discovery is contrary

to the efficiency sought in internation- al arbitration, for declining to permit

1782 discovery in private arbitral

proceedings, 8 such reasoning would appear to ignore the district court’s discretion to decide 1782 applica- tions, even assuming the arbitration proceeding in question is a “foreign tribunal.” for instance, even after concluding that an icc arbitration was in fact a

“foreign tribunal,” the district court In re Babcock Borsig AG, 583 f. supp. 2d

233 (d. Mass. 2008) declined to permit

1782 discovery:

section 1782 does not require a

district court “to grant a § 1782(a) discovery application simply because it has the authority to do so.” Intel at 264. the supreme court in Intel identified two general factors that district courts should consider when determining whether an application brought under § 1782(a) should be granted:

(1) whether the person from whom discovery is sought is a participant

in the foreign proceedings, and (2)

the nature of the foreign tribunal, the character of the proceedings underway abroad, and the receptivity of the foreign tribunal

to judicial assistance. Id. at 264-65.

a district court may also consider

“whether the § 1782(a) request conceals an attempt to circumvent

foreign proof-gathering restrictions

or

other policies of a foreign country

or

the united states.” Id. at 265.

Babcock, 583 f. supp. 2d 233, 240- 241. “the district court may also deny or narrow a discovery request that is

unduly intrusive or burdensome.” Id. at n.6 (citing Intel, 542 u.s. 241, 265). although the first factor (whether a person from whom discovery is sought is a participant in the foreign proceedings) is the most compelling reason for a court to grant a 1782 application, the other considerations are far more discretionary, leaving the court with some room for flexibility in its analysis. the court in Babcock therefore denied the 1782 application, stating:

“the apparent bad blood between the parties, coupled with the fact that [the applicant] had not taken any formal steps toward initiating

arbitration

ering [the] misconduct almost two years ago, are grounds for exercising restraint before ordering discovery in this setting.” Babcock, 583 f. supp. 233, 242. the supreme court in Intel also recognized the court’s discretion to permit or condition discovery as ap- propriate, in support of its decision to expand the reach of 1782. See Intel, 542 u.s. 241, 260-61 (“§1782(a) leaves the issuance of an appropriate order

after allegedly discov-

to the discretion of the court which, in proper cases, may refuse to issue an order or may impose conditions it deems desirable”) (citing s.rep. No. 1580, at 7, u.s.code cong. & admin. News 1964, pp. 3782, 3788). Given the court’s discretion to decline 1782 discovery (particularly when the Intel discretionary fac- tors are not satisfied), as well as the arbitration panel’s ability to define the scope of discovery, the better ap- proach, as stated in In re Hallmark Cap. Corp., 534 f. supp. 2d 951, 956-57 (d. Minn. 2007) is for district courts to analyze 1782 applications on a case-by-case basis to determine the need for and appropriateness of the discovery sought in each particular instance:

[t]his court believes that the better approach to this issue is to reject any inflexible rule that would categorically exclude all private arbitrations from the definition of “tribunal.” rather, a district court should consider whatever arguments might exist in a particular case against extending section 1782 to arbitration bodies as part of its exercise of discretion in deciding whether to grant the

even if the district court would permit the discovery, nothing prohib- its the arbitration body from never- theless conditioning its acceptance of the evidence as it sees fit, or even re- fusing to allow the resulting evidence to be introduced or admitted. Id. at 957 (citing Intel, 542 u.s. 241,

262).

such an approach would permit parties to a private international arbi- tration to, at a minimum, seek the dis- covery they deem necessary to prove their respective claims and defenses, while at the same time still empower- ing the arbitral tribunal to regulate the scope and extent of discovery, as well as the admission of evidence at the final hearing. Moreover, parties who wish to opt out of discovery in the u.s. may expressly stipulate in their arbitration agreement that section 1782 applications are prohibited. o r,

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28 U.s.C. §1782

from preceding page

conversely, parties who jointly wish

to avail themselves of such discovery

can agree in advance to the use of 1782 discovery proceedings in the u.s.

similarly, a private arbitration tribu- nal may determine that in order to adjudicate the parties’ claims fully, it requires evidence in the u.s. that is otherwise outside of its jurisdiction.

a more flexible approach to decid-

ing 1782 applications would permit the court to consider the arbitration tribunal’s need for evidence in the u.s., rather than simply denying the request on the grounds that the pro-

ceeding is not “foreign tribunal” and is thus ineligible for 1782 evidence. providing a more accommodating method for determining 1782 requests in connection with private arbitra- tions, rather than attempting to fashion a bright-line rule, might also have the effect of quelling some reluc- tance on the part of u.s. practitioners and corporations to arbitration of international disputes, given the fear that international arbitration permits little or no discovery. contrary to the arguments that permitting 1782 discovery in private arbitrations will open the floodgates

to discovery disputes in the u.s.,

making section 1782 available to all private arbitral proceedings similarly could incentivize more companies engaged in international transac- tions to consider arbitration as a more

appealing alternative to litigation, potentially reducing the number of international lawsuits on the federal court dockets. until the eleventh circuit or the u.s. supreme court weighs in on the issue, the split of authority in this circuit, as well as among the federal circuits, presents uncertainty and considerable challenges to the international lawyer when advising clients on the risks of litigation versus arbitration, or when developing case strategies without knowing the avail- ability of discovery in the u.s.

Jenelle E. La Chuisa is an attorney at Astigarraga Davis, where she focus- es her practice on international com- mercial arbitration and litigation. She has extensive experience representing multi-national companies in a variety of commercial contract disputes.

Endnotes:

1 courts have construed the statutory

language of 28 u.s.c. § 1782 to require the following basic jurisdictional elements prior to its application:

(1) the request must be made by a foreign or international tribunal, or by any interested person; (2) the request must seek evidence, whether it be the testimony or statement of a person or the production of a document or other thing; (3) the evidence must be for use in a proceeding in a foreign or international tribunal; and (4) the person from whom dis- covery is sought must reside or be found in the district of the district court ruling on the application for assistance.

In re Clerici, 481 f. 3d 1324, 1331-32 (11th cir. 2007); see also Intel Corp. v. Advanced Micro Devices, Inc., 542 u.s. 241, 246-47

(2004).

2 prior to Intel, the second circuit had

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held that a private arbitration before the international chamber of commerce was not a tribunal for purposes of section 1782, find- ing that “when congress in 1964 enacted the modern version of § 1782, it intended to cover governmental or intergovernmental arbitral tribunals and conventional courts and other state-sponsored adjudicatory bodies,” not private parties before a private organization, such as the icc in paris. Nat’l Broad. Co. v. Bear Stearns & Co., 165 f.3d 184, 190 (2d cir. 1999). Not long after, the fifth circuit in Republic of Kazakhstan v. Biedermann Int’l, 168 f. 3d 880 (5th cir. 1999), similarly held that a private arbitration in stockholm was not a “tribunal” within the meaning of section 1782, citing public policy reasons. “arbitration is intended as a speedy, economi- cal, and effective means of dispute resolution. the course of the litigation before us sug- gests that arbitration’s principal advantages may be destroyed if the parties succumb to fighting over burdensome discovery requests far from the place of arbitration.” Id. at 883.

3 See, e.g., In re Oxus Gold PLC, 2006

Wl 2927615 * 6 (d. N.J. 2006, oct. 11, 2006) (1782 discovery permitted when the arbitral proceedings were “authorized by the sovereign states of the united Kingdom and the Kyrgyzstan republic for the purpose of adjudicating disputes under the bilateral investment treaty”); see also In re Chevron Corp., 709 f. supp. 2d 283 (s.d. N.Y. 2010) (uNcitral investment arbitration panel seated in ecuador, and established by an international treaty between the u.s. and ecuador, is a “foreign tribunal.”).

4 the commercial tribunal at issue was

before the international arbitral centre of the austrian federal economic chamber in Vienna.

5 the court adopted this test from the

Middle district of florida’s decision in In re Operadora DB, S.A., 2009 Wl 2423138 (M.d. fla. aug. 4, 2009).

6 the tribunal was to be convened under

the rules of the london Maritime arbitrators association.

7 Notably, the Chevron case currently is

on appeal before the second circuit, where the court, on 16 November 2010, denied a motion to stay the lower court’s order requir- ing a deposition and document production, choosing instead to set an expedited briefing schedule and oral argument on the matter. In re Chevron, case No.: 10-1966 (2d cir. 2010).

8 See, e.g., Operadora DB Mexico, 2009

Wl 2423138 (“empowering arbitrators or, worse, the parties, in private international disputes to seek ancillary discovery through the federal courts does not benefit the arbi- tration process. arbitration is intended as a speedy, economical, and effective means of dispute resolution.”) (citing Biedermann Int’l, 168 f. 3d 880, 883, supra, note 3).

The International Law Quarterly
The International Law Quarterly
The International Law Quarterly page 27 Winter 2011
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Section

The International Law Quarterly Section Rafael Ribeiro, Ministro João Otávio Noronha (speaker), Luis Claudio Ferreira

Rafael Ribeiro, Ministro João Otávio Noronha (speaker), Luis Claudio Ferreira (sponsor), Fernando Serec (speaker and sponsor), Elizabeth Leonhardt (speaker), Quinn Smith (vice chair of conference).

Leonhardt (speaker), Quinn Smith (vice chair of conference). Section Chair Edward M. Mullins with Gary Davidson,

Section Chair Edward M. Mullins with Gary Davidson, member of the Section’s Executive Council (R).

Davidson, member of the Section’s Executive Council (R). (L-R): Neil Klein (speaker), Henk Milne (speaker and

(L-R): Neil Klein (speaker), Henk Milne (speaker and sponsor), Eduardo Palmer.

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The International Law Quarterly

Scene

9th AnnuAl InternAtIonAl lItIgAtIon And ArbItrAtIon

ConferenCe

Westin Diplomat hollywood, Florida February 4, 2011

Westin Diplomat hollywood, Florida February 4, 2011 (L - R): Raphael Ribeiro,Quinn Smith (ILAC Program Vice

(L - R): Raphael Ribeiro,Quinn Smith (ILAC Program Vice Chair ), Ministro João Otávio Noronha, Ed Davis (Past Section Chair), Ed Mullins (Section Chair), Fernando Serec, and Luis Claudio Ferreira.

(Section Chair), Fernando Serec, and Luis Claudio Ferreira. Ed Mullins and Mauricio Gomm Santos (Brazil Foreign

Ed Mullins and Mauricio Gomm Santos (Brazil Foreign Legal Consultant) sign a cooperative agreement between the International Law Section and the Parana Bar Association of Brazil at the Conference.

and the Parana Bar Association of Brazil at the Conference. ILAC Program Chair Santiago A. Cueto,

ILAC Program Chair Santiago A. Cueto, Giselle Cueto, and Sean Santini.

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The Florida Bar Continuing Legal education Committee and the International Law section present

9th Annual International Litigation and Arbitration Conference

COuRse CLAssIFICATIOn: InTeRMeDIATe LeVeL

Audio CD (Recorded Friday, February 4, 2011)

LeVeL Audio CD ( Recorded Friday, February 4, 2011) Course no. 1260C CLE AuDIO CD ORDeRs
LeVeL Audio CD ( Recorded Friday, February 4, 2011) Course no. 1260C CLE AuDIO CD ORDeRs

Course no. 1260C

CLE
CLE
( Recorded Friday, February 4, 2011) Course no. 1260C CLE AuDIO CD ORDeRs The audio CD

AuDIO CD ORDeRs

The audio CD for the 9th International Litigation and Arbitration Conference includes all litigation and arbitration sessions for a total of 9 hours of CLE credit. Topics include: privacy and censorship; judge’s panel on international receivership litigation; hot topics on international litigation; managing international arbitration or arbitrator; your client has been sued in the U.S., now what?; hot topics in international arbitration; extraterritorial application of U.S. laws; and an international arbitration case study: The Ecuador v. Chevron case.

Friday - February 4, 2011

9:30 a.m. – 10:30 a.m. PLenARY sessIOn:

Privacy/Censorship (Blackberry cases, China, etc.) Moderator: Edward M. Mullins, Astigarraga Davis Mullins & Grossman P.A., Miami

Panelists:

Richard Ovelmen, Jorden Burt L.L.P., Miami Thomas R. Julin, Hunton & Williams, Miami

10:30 a.m. – 10:45 a.m.

10:45 a.m. – 11:45 a.m. BReAkOuTs sessIOns:

hot Topics in International Litigation Moderator: Carlos F. Concepción, Concepción Martinez & Bellido, Miami

Managing International Arbitration/ Arbitrators Moderator: C. Ryan Reetz, Squire, Sanders & Dempsey L.L.P., Miami

Break

12:00 noon – 1:15 p.m. Luncheon (included in registration fee)

1:30 p.m. – 2:30 p.m. BReAkOuTs sessIOns:

Your Client has Been sued in the us – now What? Moderator: Martin Kenny

hot Topics in International Arbitration Moderator: Richard C. Lorenzo, Hogan & Hartson L.L.P., Miami

2:30 p.m. – 2:45 p.m.

2:45 p.m. – 3:45 p.m. BReAkOuTs sessIOns:

extraterritorial Application of u.s. Laws Moderator: Nick Swerdloff, Hughes Hubbard & Reed, Miami

International Arbitration Case study:

The ecuador vs. Chevron Case Moderator: Sergio A. Pagliery, Sergio A. Pagliery P.A., Miami

Break

4:00 p.m. – 5:00 p.m. PLenARY sessIOn:

Judge’s Panel: International Aspects to Receivership Litigation Moderator: Edward H. Davis, Jr., Astigarraga Davis Mullins & Grossman P.A., Miami

5:00 p.m. – 7:00 p.m. Reception (included in registration fee)

CLE CREDITS

CLeR PROGRAM

(Max. Credit: 9.5 hours)

General: 9.5 hours Ethics: 0.0 hours

CeRTIFICATIOn PROGRAM

(Max. Credit: 9.5 hours)

Civil Trial: 4.5 hours International Law: 9.5

COuRse MATeRIAL

(1260M)

AuDIO CD

(1260C)

Cost $60 plus tax

(includes electronic course material) $400 plus tax (section member) $445 plus tax (non-section member)

(Certification/CLER credit is not awarded for the purchase of the course book only.)

To order the audio CD or course material, go to FLORIDABAR.ORG/CLe and search by course

To order the audio CD or course material, go to FLORIDABAR.ORG/CLe and search by course number 1260R.

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The International Law Quarterly

A View from Abroad:

Corporate Responsibility for

International Crimes?

By Neil Fishman, The Hague

since relocating to the Nether- lands, my colleagues have often asked the question: as a florida lawyer, what are you doing in the hague? during my moments of weakness (which usually occur when it is in- tensely cold and rainy in the Neth- erlands but perfect beach weather in south florida), i have asked myself the same question. aside from the weather—which nevertheless provides some of the world’s most beautiful tulips—the hague (the “city of peace and Jus- tice”) has much to offer an interna- tional lawyer. it is home to over 130 international institutes and agencies and hosts more than 300 internation- al businesses. it is the headquarters of several international organizations and u.N. organs such as the inter- national court of Justice (icJ), the international criminal tribunal for the former Yugoslavia (ictY), the international criminal court (icc), the organisation for the prohibition of chemical Weapons (opcW) and europol. it also possesses numerous research centers and academic insti- tutions, such as the hague academy of international law, the tMc asser instituut, the clingendael institute, the institute of social studies and the Grotius centre for international legal studies, that focus on interna- tional law. for this reason, the hague is often referred to as the de facto judicial capital of the united Nations. in 2009, i moved to the hague to earn an ll.M. in public international law at leiden university, which is the oldest university in the Nether- lands and a research leader in public international law. during my year of study, i attended hearings at the icJ and the icc, as well as the criminal

trials of charles taylor at the special court for sierra leone (scsl) and radovan Karadži at the ictY. i also attended a variety of conferences and symposia on issues of public interna- tional law. one common theme in the hague this past year has been the need to develop more robust criminal liability for corporations implicated in inter- national crimes and human-rights abuses. it should be recalled that the creation of the ad hoc tribunals (the ictY and the international criminal tribunal for rwanda) raised the level of consciousness in the legal commu- nity and the general public about the need to prosecute those responsible for international crimes including war crimes, crimes against humanity and genocide. the prosecutors at these tribunals have typically focused their attention on political and military leaders. a recent example of the global at- tention generated by such trials took place last summer in the hague in the scsl case against charles taylor, the former president of liberia who was charged with eleven counts of crimes against humanity and war crimes for his alleged involvement in the sierra leone civil war during 1996 to 2002. on 5 august 2010, the prosecution called as a witness super- model Naomi campbell, who testified that associates of taylor provided her with uncut diamonds after a charity dinner with the former warlord and other dignitaries in south africa. the prosecution sought Ms. campbell’s testimony to prove that taylor was not truthful during his testimony in front of the scsl. 1 the intense media scrutiny of Ms. campbell’s involve- ment with taylor and her subsequent

testimony at the tribunal underscores the public peril for those who, per- haps unwittingly, associate with those accused of international crimes. While Ms. campbell’s contact with taylor was brief and perhaps unin- tended, others purposefully embraced

the chance to profit from relationships with political leaders such as taylor. one example is Guus Kouwenhoven,

a dutch businessman who forged

a close relationship with taylor’s

political regime to profit from a poorly

regulated liberian timber sector, which was heavily exploited during liberia’s civil war. Mr. Kouwenhoven is currently being prosecuted in dutch national courts for a variety of criminal offenses including complic- ity in the commission of war crimes and the violation of a united Nations arms embargo. 2 in 2009, i served as a legal consultant for the truth & reconciliation com- mission for liberia (trc) and assist-

ed in drafting the section of its final report related to economic crimes committed during the liberian civil war. the trc final report succinctly described the destructive relationship between liberian government and

business:

successive governments, including the taylor regime, established a massive patronage system with domestic and foreign-owned corporations in several critical economic sectors, such as timber, mining and telecommunications, and granted illegal benefits to the corporations in exchange for financial and military support. corporations and private individuals engaged in a continued, next page

The International Law Quarterly
The International Law Quarterly

REsPONsIBILITy

from preceding page

host of illegal and anti-competitive activities such as tax evasion, bribery, looting, forced displacement of civilians, money laundering, arms smuggling, and illegal price fixing. 3

such experiences have motivated international efforts to increase criminal liability for corporate actors that are involved in international crimes and human rights abuses. one recent event was the confer- ence, “corporate liability for pillag- ing Natural resources,” which was co-sponsored by the open society Justice initiative and several other institutions at the peace palace in the hague on 29 october 2010. the purpose of the conference was to introduce to the legal community a recently published manual, Corporate War Crimes. the manual is intended to “act as a catalyst for reinvigorat-

ing [the] prosecution of the war crime of pillage and to bring accountability to companies that illegally trade in conflict commodities.” 4 the conference brought together judges and lawyers from leading international tribunals and institutions. it also featured an address by luis Moreno ocampo, the icc prosecutor, on the future prospects of international criminal liability for corporate actors. While political leaders are increas- ingly being held individually respon- sible for international crimes under international criminal law, there is significantly less case law in inter- national or national courts that has held corporations and their officials responsible for international crimes. Nevertheless, the tide appears to be turning. legal scholars now fre- quently acknowledge that the illegal exploitation of natural resources pro- vides the financing for deadly conflict. consequently, there is also increased recognition of the importance of holding responsible those businesses

that contribute to the commission of international crimes. the legal content of pillage is well established under international law. under international humanitarian law, pillage has been prohibited since the hague regulations of 1907. 5 it was also reaffirmed as a war crime by the 1949 Geneva conventions and the 1977 additional protocol ii, which governs non-international armed con- flicts. the ad hoc tribunals included pillage as a criminal offense under their jurisdiction. further, the statute of the icc provides that pillage is a crime under its jurisdiction. although the united states is not a party to the icc statute, as of 12 october 2010, 114 nations have ratified it. under the complementarity system established by the statute, these state parties are obligated to criminalize pillage in their domestic legislation. as evidenced by the German code, however, not all will define pillage in the same way. 6 because pillage is an international crime, some states

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have gone so far as to provide their courts with universal jurisdiction for prosecuting alleged offenders. 7 such domestic legislation expands the emerging transnational “web of liability” for corporate actors involved in international crimes. 8 according to the icc elements of crimes, pillage is evidenced by the following legal requirements:

(a) the perpetrator appropriated

certain property;

(b) the perpetrator intended to

deprive the owner of the property and to appropriate it for private personal use;

(c) the appropriation was with-

out the consent of the owner;

(d) the conduct took place in the

context of and was associated with an international or non-interna- tional armed conflict; and

(e) the perpetrator was aware of

factual circumstances that estab- lished the existence of an armed conflict. 9

the Corporate War Crimes Manual succinctly analyzes many of the icc elements, including the armed-conflict requirement, the ownership of natu- ral resources, exceptions, consent, and the required mental elements for the crime of pillage and jurisdiction. the conclusion to be drawn from the manual is that there is a substantial body of international and national case law that has outlined the con- tours of the war crime of pillage. consequently, prosecutors and human rights advocates may find generous legal support—if they choose to pur- sue legal action—against corporations that are implicated in pillage. of course, it also should be noted that the war crime of pillage is only one manner in which a corporate actor may incur criminal liability for involvement in international crimes. international criminal law has al- ready established aiding and abetting, for example, as a form of responsibil- ity. aiding and abetting is considered the “practical assistance, encourage- ment or moral support which has a substantial effect on the perpetration

of the [international] crime.” 10 the aider and abettor is also required to have both knowledge that his or her acts assist in the commission of the perpetrator’s crime 11 and an aware- ness of the essential elements of the crime committed by the principal perpetrator. 12 consequently, corporate actors that knowingly provide assis- tance that substantially aids the com- mission of international crimes may also be exposed to criminal liability under the legal concept of aiding and abetting in both international courts and certain national jurisdictions. of course, one would expect the vast majority of corporations to be mo- tivated to avoid the negative publicity and other effects of being associated with those who commit international crimes. Nevertheless, there is a need to increase the business community’s awareness of legal developments in international criminal law. for inter- national lawyers who advise corpora- tions, the developments in the hague with respect to corporate criminal liability certainly merit attention.

Neil Fishman, LL.M. (Leiden), J.D. (Florida International), previously served as a legal consultant for the Truth & Reconciliation Commission for Liberia (TRC) and the program coordinator of the Center for Interna- tional Law & Justice at Florida A&M University College of Law. He is cur- rently a legal intern in the Chambers of the International Criminal Tribu- nal for the former Yugoslavia (ICTY). He may be contacted at neilfishman@ gmail.com. The views expressed in this article are those of the author

alone and do not necessarily reflect the views of the TRC, ICTY or the United Nations in general.

Endnotes:

1 Prosecutor v. Charles Taylor, case No.

scsl-03-01-t, prosecution Motion for the issuance of a subpoena to Naomi campbell, 20 May 2010, para. 13.

2 See Dutch Supreme Court quashes

Court of Appeal decision in Guus K. case, the hague Justice portal, april 20, 2010, http:// www.haguejusticeportal.net/ecache/ def/11/630.tGfuZz1ftg.html; for an analy- sis of the lower court’s decision, see larissa van den herik, The Difficulties of Exercising Extraterritorial Criminal Jurisdiction: The

Acquittal of a Dutch Businessman for Crimes Committed in Liberia, 9 intl. CriM. l. rev. 211-26 (2009).

3 truth and reconciliation commission

for liberia, dec. 3, 2009, Final Report, vol. iii, para. 4.

4 James stewart, Corporate War Crime,

open soc’y inst., oct. 2010, available at

http://www.soros.org/initiatives/justice/focus/

anticorruption/articles_publications/publica-

tions/pillage-manual-20101025.

5 Id. at 11.

6 Id. at 14, citing to the German code of crimes against international law.

7 Id. a