1. arbitrability of disputes affected by economic sanctions by dr. yaraslau kryvoi
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The Arbitrability of Disputes Affected by Economic Sanctions Dr Yaraslau Kryvoi, MCIArb, LLM (Harvard) Associate Professor, University of West London Kuala Lumpur International Arbitration Week 9 May 2015
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Structure of the Presentation Types of sanctions Scope of sanctions Contractual provisions Arbitrability Applicable law Separability of arbitration agreement Examples of arbitrability from various
jurisdictions
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Types of Sanctions Companies from Iran, Crimea, Russia, Belarus,
etc; companies and individuals Various reasons - misappropriation of funds,
annexation of Crimea, support of the non-democratic regime, violation of the non-profiliration regime, human rights, etc
Serious consequences for breach - in 2014 Paribas has pleaded guilty in the US to two criminal charges and agreed to pay almost $9 billion to resolve accusations it violated U.S. sanctions against Sudan, Cuba and Iran
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Activities Covered by Sanctions
Sanctions may prohibits certain activities (doing business) or mandate certain conduct (freeze assets, report to the authorities)
For example, crediting with interest is allowed, otherwise need to apply for a special license, reporting obligations if there is an oence committed
US persons - arbitrators, law firms, oce in the US, when no right to provide any service of the institution to administer
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Broad Sanctions US prohibition prohibits applied to entities
"owned or controlled by a United States person and established or maintained outside of the United States" from knowingly engaging in any transaction, directly or indirectly, with the Government of Iran or any person subject to the jurisdiction of the Government of Iran, if that transaction would be prohibited if done by a US person or in the United States
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Contractual Provisions Contractual provisions may stipulate
who bears the risks of adverse administrative or other acts, define force majeur
Impossible to exclude by contract applicability of mandatory rules
The scope of the arbitration clause matters (all related disputes or disputes arising our of obligations under the contract)
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Arbitrability The question of whether specific classes of disputes
are barred from arbitration Article V(2)A of the NY Convention - subject matter of
the dierence is not capable of settlement by arbitration under the law of that country
Should the courts deny arbitrability simply because some mandatory rules of law (whether of national or supranational nature) might provide for non-arbitrability of of the dispute?
In most countries - first assert jurisdiction and then to examine the substance of the claim
If against fundamental principle of public policy - then non-arbitrable (narrow construction)
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Applicable Law Domestic, international and EU law Domestic law of the seat of arbitration, agreed
substantive law or law of the third country Laws of the third country: Article 7 of the Rome
Convention - law with which the situation has (a close connection); extraterritorial application (e.g. US sanctions on Iran) - wider discretion of tribunals to apply
Public international law (e.g. UN Security Council Resolutions)
Place of enforcement law
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UN Security Council Resolutions
United Nations Compensation Commission (UNCC): can corporate claimants pursue claims against losses associated with business activities that violated UN embargo against Iraq (1998)?
Non-compliance with the UN Security Council resolutions results in the inability of a transgressor to obtain compensation for damages associated with its misconduct
Nationals, not only states are bound by UN Resolutions
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Separability of Arbitration Agreement Premuim Bafta Producs Limited v Filling Shipping Co Fiona Trust & Holding Corporation v Privalov: "The
principle of separability... means that the invalidity or rescission of the main contract does not necessarily entail the invalidity or rescission of the arbitration agreement. The arbitration agreement must be treated as a distinct agreement and can be void or voidable only on grounds which relate directly to the arbitration agreement.
Gateway matters to be decided
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Differences between Jurisdictions
Balancing between policy favouring arbitration and public policy
La Compagnie Nationale Air France v Libian Arab Airlines (Canada)
Fincantieri-Cantieri v Ministry of Defence of Iraq (approaches in Italy, France, Switzerland)
Ministry of Defense of Iran v Cubic Defense Systems (Switzerland)
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Questions
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