«ПЕРСПЕКТИВЫ РАЗВИТИЯ МЕЖДУНАРОДНОГО КОММЕРЧЕСКОГО
АРБИТРАЖА В УЗБЕКИСТАНЕ»
Сборник международной научно-практической конференции
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Jennifer Ivers
Senior Associate, White & Case LLP, Washington DC, USA
https://doi.org/10.47689/978-9943-7818-6-3/iss1-pp26-29
PRACTICAL CONSIDERATIONS FOR INTERNATIONAL
ARBITRATION CLAIMS
Thank you, so much, and good afternoon, everyone. Thank you, in
particular, to the University of World Economy and Diplomacy. It is really an
honor to be here and to speak among this esteemed group of presenters today.
I was just in Uzbekistan a few weeks ago for the very successful Tashkent
International Investment Forum and unfortunately, I could not join you in person
today, but I do hope to return to Uzbekistan soon and to meet with many of you.
Today I’d like to add perspective as a practitioner who is working in the
international arbitration field on a daily basis, both on the claimant side and on
the respondent side. With that, I’d like to share my screen. You should see a
PowerPoint presentation.
Specifically, today, I’ll provide an overview of key considerations that
potential claimants may consider prior to bringing an arbitration claim, whether
in commercial or investment arbitration. I’m going to through each of these seven
key considerations in detail: jurisdiction, merits, qualitative considerations,
duration, costs, quantum, and recovery.
First, though, why is such a careful analysis important? In June of last year,
the British Institute of International and Comparative Law, together with the law
firm Allen & Overy, published an empirical study of over 400 investor-state cases
that have been heard under the ICSID, UNCITRAL, and other arbitration rules. The
study found that investors succeeded in only 44% of the investment claims that
were analyzed in the study; 24% of the claims, in contrast, were dismissed on
jurisdictional grounds, while 30% were dismissed on the merits. So, it’s quite
important when you’re a claimant bringing a claim, to make sure that you cover
all your bases and make sure that you’re bringing as strong of a claim as possible.
The first consideration is jurisdiction. And as you just saw, nearly a quarter
of all investment claims were dismissed on jurisdictional grounds. Now, as we all
know, consent is the fundamental pillar and basis of any arbitration. When you
are considering an arbitration claim, first you need to identify the agreement to
arbitrate. In commercial arbitration, that’s going to be a contract. For an
investment claim, you may have a contract, but you also may have a bilateral
treaty, a multilateral treaty, or an investment law.
Another important factor, depending on the basis for your claim, is who are
the parties. On the claimant side, you may have several companies within the
corporate chain, and if those companies are domiciled in different countries, then
«ПЕРСПЕКТИВЫ РАЗВИТИЯ МЕЖДУНАРОДНОГО КОММЕРЧЕСКОГО
АРБИТРАЖА В УЗБЕКИСТАНЕ»
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you may be able to take advantage of different bilateral or multilateral investment
treaties. And some of those treaties may have more favorable provisions for the
investor than others. Then on the respondent side, who is the respondent? There
also may be multiple entities that could be held liable, again all dependent on the
legal basis for your claim.
Finally, you also need to consider whether the investor has complied with
any jurisdictional requirements as set forth in the relevant contract or treaty that
is the basis for your claim. These may include, for example, a notice period prior
to filing the request. They may include a nationality requirement for an
investment claim. They may include a legality clause.
As I noted earlier, nearly one-third of investment claims were dismissed on
the merits. So that’s the second key consideration. Your legal team of course is
going to spend a lot of time going into analysis of the merits of the case. And one
key element of that is how strong are your facts. Do the facts support your theory
of liability? Do you have multiple theories? You may have multiple grounds for
liability. Another element: what is the status of the law on the key issues of your
claim? For example, are there any novel issues that inject an element of
uncertainty? And finally, even if you have a strong merit claim, could the
respondent raise an affirmative defense that may defeat your claim overall?
This brings us to qualitative factors. These of course are intertwined with
the merits, and I’ve included just a few of these on the slide here. One
consideration is whether the claimant is able to present a compelling storyline to
the tribunal. As the claimant, you want to represent yourself as the good guy.
You’ve done everything right. In contrast, the respondent in the claim, whether
commercial or investment, what have you, has done wrong. And this is because
tribunal members are human. They want to hear the story. They want to, you
know, subconsciously root for one side or the other perhaps. You want to try to
get them to do so in favor of your client.
Another consideration that goes to the merits is the credibility of any
individual claimant or any witnesses who will be supporting your claim. This is
particularly true if your case is more dependent on testimonial evidence, as
compared to documentary evidence. And speaking of documentary evidence in
bringing a claim, you also may want to consider what the evidence is or what it
could be. One important consideration is whether the claimant company risks
having to disclose certain confidential documents during, for example, the
document production phase of the arbitration. And if so, if that potentially could
affect other elements of the claimant’s business. It’s another factor to consider.
Finally, if you are bringing an investment arbitration, and depending on the
legal basis for your claim (the treaty, the contract, etc.), third parties such as NGOs
may seek to intervene or file third party submissions. Depending on your case,
that involvement might be positive for the claimant, but it also could be a negative
factor.
«ПЕРСПЕКТИВЫ РАЗВИТИЯ МЕЖДУНАРОДНОГО КОММЕРЧЕСКОГО
АРБИТРАЖА В УЗБЕКИСТАНЕ»
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Now, moving to the fourth consideration, the duration of the proceeding,
which Professor Sattorova also discussed in her presentation just now. In other
words, from the claimant’s perspective, how long is it going to take for you as the
claimant to obtain an award? One key factor here is whether the proceeding is
bifurcated. If the arbitration continues through both phases of the bifurcated
proceeding, that proceeding necessarily will be longer than if the proceeding was
heard all at once. According to the 2021 study of investment disputes by the
British Institute of International and Comparative Law that I mentioned earlier,
the mean duration of investment arbitration is 4.4 years and the median duration
is 3.8 years. Again, this study is focused on investment arbitration, where the
awards generally tend to be more readily available than in commercial
arbitration, where they often are highly confidential.
The fifth consideration is cost. We have heard about this from several other
panelists earlier today. From a very practical perspective, from a practitioner’
perspective, this is a crucial factor for any claimant and really for any party in an
arbitration. In order to bring the claim, the claimant must be able to provide funds
to pay the legal fees, to pay the arbitration fees. In the alternative, the claimant
must be able to locate outside funding in order to bring its claim. And because
Mr. Bakhrom Rakhimov made such an informative presentation on such funding
earlier today, that I won’t go into detail here.
I’ve broken these costs down into two types. First – you have party costs.
These include the fees and expenses of your legal team, the fees and expenses of
any experts, the cost of travel and other expenses to a hearing venue, translations,
and a variety of other smaller costs will weigh in there as well. Party costs will of
course vary greatly depending on the size of the claim. The costs of a million-
dollar claim are going to be vastly different than that of a billion-dollar claim.
This study, here again, is looking at just the averages. Looking at the mean,
investors incurred party costs of approximately 6.4 million dollars and a median
of 3.8 million dollars.
The second type of cost is incurred by the both parties, generally, during the
course of the arbitration, and that includes the fees and expanses of the tribunal
members and the administrative costs that are paid to the institution. Here again,
these are the averages and they will of course vary greatly depending on the
amount in dispute. But, on average, the mean arbitration and tribunal costs
totaled almost 1 million dollars, while the median costs were approximately
740,000 dollars per dispute.
Balanced out against the cost of the arbitration is the amount of damages
that a claimant hopes to or may be able to obtain. Claimants may be able to work
with an expert prior to bringing a claim in order to obtain a preliminary
assessment of the potential damages and really weigh whether the costs of the
arbitration are worth the potential damages. In addition to the amount of the
damages claimed, any claimant must consider whether it has the requisite
«ПЕРСПЕКТИВЫ РАЗВИТИЯ МЕЖДУНАРОДНОГО КОММЕРЧЕСКОГО
АРБИТРАЖА В УЗБЕКИСТАНЕ»
Сборник международной научно-практической конференции
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documentary support. Does it have the financial and accounting records that are
used to evidence those damages? In addition, the claimant should consider
whether the respondent can raise any counterclaims. If so, the claimant’s claims
could be lowered even if they are entitled to recovery.
That brings us to the last consideration, which is the recovery of the claim.
If the claimant wins on the jurisdiction, and if the claimant wins on the merits, and
if the claimant also obtains an award of damages, can the claimant collect on that
award? And that’s another factor that you have to consider prior to bringing an
arbitration claim. There are several considerations here. One is whether the
respondent has the financial capacity to pay an award. Another is the likelihood
of the respondent complying voluntarily with an award rendered against it. And
then another consideration, which may apply at any stage of the arbitration (not
just at this stage at the end), is whether the respondent may be willing to settle.
These are all considerations in bringing a claim. It is certainly not an
exhaustive list, but from the practitioner’s perspective, these are all things to
consider when contemplating bringing a claim, either in international commercial
or investment arbitration.
I’m conscious of the time, and I just want to thank you all again for the
opportunity to speak. It has really been wonderful to hear all the other
presentations.
Thank you.
