The key to unlocking geo-political and commercial disputes

As the new Prime Minister, Liz Truss, made her way through the rain to take her place behind her lectern on the steps of Downing Street on Tuesday, the country waited with a tentative mix of interest and, for many, anxiety to hear what the new Prime Minister’s priorities for her premiership are.

Unsurprisingly, the top priorities were the economy and energy, followed by the NHS. There was no reference to the Northern Ireland Protocol (“NI Protocol”), but the White House has warned Liz Truss that UK-US trade talks could be jeopardised if her government undermines the post-Brexit arrangements for Northern Ireland.

At her first PMQs on Wednesday, Liz Truss told the House of Commons that her preference was to reach a negotiated solution with the EU to resolve the issues that the NI Protocol has caused with trade between the UK and Northern Ireland but warned “it does have to deliver the things we set out in the Northern Ireland Protocol Bill”.

NI Protocol and arbitration

If a negotiated solution cannot be reached, the UK-EU Withdrawal Agreement provides that the parties can refer the dispute to an independent arbitration panel.

Under Article 170 of the Withdrawal Agreement, if no mutually agreed solution has been reached within 3 months of consultation in the Joint Committee, either the UK or EU may request that an arbitration panel is established.

The arbitration panel is to be made up of 5 members. Each of the UK and EU may select 2 members from a list, compiled by the Joint Committee prior to the end of the transition period, of independent persons with particular legal expertise. Those members then appoint a chairperson.

Bespoke rules of procedure are annexed to the Withdrawal Agreement and the arbitration panel must notify its decision to the UK, EU and Joint Committee within 12 months of the arbitration panel being established.

Commercial arbitration

Since Brexit and the end of the transition period, there has been increased uncertainty around the international recognition of UK court judgments in Europe and the rest of the world. As a result, it has been even more important to talk to our clients about the dispute resolution clauses they include in their contracts.

Arbitration awards have the benefit (at least in principle) of being enforceable in 170 states (including the UK, USA, UAE and EU member states) under the New York Convention 1958. Arbitration proceedings also have the benefit of being confidential, and can be quicker and more flexible than litigating in court. For international clients contracting with parties from around the globe, it is worth considering whether to rely on international arbitration as a means of resolving any disputes which they may face.

International commercial arbitration clauses can refer parties to resolve their dispute either by ad hoc or institutional arbitration. Ad hoc arbitration is managed by the parties themselves who can either draw up their own rules, allow the arbitrator to do so, or adopt rules specifically written for ad hoc arbitration, such as the United Nations Commission on International Trade Law (UNCITRAL) rules. On the other hand, in choosing institutional arbitration, parties agree to conduct the arbitration under the procedural rules of a particular institution (for example, the International Court of Arbitration (the ICC), the London Court of International Arbitration (LCIA) and the Singapore International Arbitration Centre (SIAC)). Those rules set out, among other things, how parties choose an arbitrator, how the arbitrator’s fee is determined, how pleadings and hearings are dealt with and the powers of the arbitrator to make awards.

Our dedicated International Arbitration team is experienced in advising clients in relation to arbitrations for and against corporations and foreign states under the rules of the world’s leading arbitral institutions as well as ad hoc arbitration under the UNCITRAL rules. We represent clients from a range of sectors including: Energy, Oil & Gas, Banking and Finance and Shipping. Please get in touch if we can assist you in this area.

And as arbitration practitioners from across the world come to Edinburgh next week for the International Council of Commercial Arbitration (ICCA) 2022 congress, we look forward to catching up with friends new and old over the course of the event – please do get in touch if you will be in Edinburgh.