The planned upgrade of Kluwer Arbitration Blog from 1 to 15 July 2025 aligns with broader trends in international arbitration’s digital transformation, as well as with Wolters Kluwer’s – the Blog’s publisher – comprehensive approach to integrating technology into international arbitration.

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This Decision was not taken in isolation. Rather, it builds on a series of prior rulings, set against the backdrop of a long-standing movement against intra-EU arbitration that has evolved over the years. This blog post will first discuss historical context and the European Union’s (“EU”) stance on intra-EU investor-state arbitration, followed by an in-depth analysis of the Decision and the implications it holds for the future of intra-EU investor-state arbitration.

Background

The Decision is part of a broader policy movement within the EU against intra-EU investor-state dispute settlement.  Already in the early 2000s, the EC had raised concerns that intra-EU BITs fragmented the market and created uneven conditions for investors. In the arbitration proceeding in Eureko v. Czech Republic (para. 177), the EC filed an amicus curiae brief where it observed that intra-EU BITs amount to an “anomaly within the EU internal market”.

Since the 2009 Lisbon Treaty, which granted the EU exclusive competence over foreign direct investment, the EC intensified efforts to terminate these BITs, including launching infringement proceedings and using state aid law to prevent the enforcement of arbitral awards (discussed here).  The EC further explored state aid law as a tool to prevent the enforcement of arbitral awards, resulting in the EC decision in Micula in 2015.

In 2018, the judgment in Achmea by the Court of Justice of the European Union (“CJEU”) followed, where the CJEU ruled that arbitration clauses in BITs between EU Member States are incompatible with EU law, since such clauses have an adverse effect on the autonomy of EU law. The CJEU concluded that investor-state arbitration clauses in intra-EU BITs violate Articles 267 and 344 of the Treaty on the Functioning of the European Union (“TFEU”) by removing EU law disputes from the EU judicial system. The CJEU later extended this reasoning in Komstroy to intra-EU arbitrations under the Energy Charter Treaty (“ECT”). In May 2020, 23 Member States signed an agreement to terminate intra-EU BITs, citing Achmea as the legal basis.

The Decision

On 17 April 2019, Spain notified the EC pursuant to Article 108(3) of the TFEU of the Award. The Award required Spain to compensate Antin for alterations to a renewable electricity support measure, which were found to violate the ECT. The EC considered that the award is null as the proceedings that resulted in the award lacked a legal basis, given that the ECT does not apply to intra-EU investor-state arbitrations. The EC concluded that, even disregarding this fact, the Award cannot have any effect and cannot be enforced due to being incompatible with EU law (Decision, para. 263).

The EC reinforced the position that intra-EU investor-State arbitration mechanisms arising from BITs and ECT are incompatible with EU law, as established earlier by the CJEU in cases such as Achmea, Komstroy, and by the EC in the Romatsa order (see posts on Achmea here, Komstroy here).

While these cases primarily addressed the legal invalidity of intra-EU arbitral proceedings due to the principle of autonomy of EU law, the Decision went a step further by examining the economic consequences of the resulting awards and their compatibility with the internal market. The Decision categorised the outcome of intra-EU investor-state arbitrations – the Award – as illegal state aid under Article 107(1) of the TFEU (Decision, para. 236).

Drawing insights from the Micula case, where the CJEU for the first time upheld the qualification of an intra-EU arbitral award as state aid (see post on Micula here), the EC emphasised that the State is inherently ‘involved’ if it pays the compensation stipulated in an arbitral award (Decision, para. 191). A decisive factor was that any implementation of the Award would directly involve an autonomous decision by the Spanish authorities and that Antin had no pre-existing right to payment; any payment would solely arise from the Award itself, amounting to new aid (Decision, para. 238-239). Hence, the Award and its implementation are considered to fulfil the conditions for classification as state aid within the meaning of Article 107(1) of the TFEU. The EC noted that such a measure is prohibited unless it can be deemed compatible with the internal market pursuant to Article 107(2) or Article 107(3) of the TFEU (Decision, para. 249-250).

Referring to settled case law of the CJEU, the EC highlighted that state aid that violates EU law cannot be declared compatible with the internal market (Decision, para. 254). The EC underscored that international agreements cannot modify the allocation of powers established by the treaties or undermine the autonomy of Union law (Decision, para. 255). The EC further considered that specific characteristics of the EU legal system ensure the consistency and uniformity of Union law, which could be compromised if Member States agree to remove disputes related to EU law from their own courts’ jurisdiction (Decision, para. 256).

Drawing on the Achmea and Komstroy judgments, the EC stated that Article 19 of the TEU and Articles 267 and 344 of the TFEU, as well as the overarching principle of the autonomy of the EU legal order, prohibit any provision in an international agreement that permits an investor from one Member State to initiate proceedings against another Member State party before an arbitral tribunal, whose jurisdiction that Member State has agreed to accept (Decision, para. 257). The EC subsequently concluded that the payment of the Award cannot be deemed compatible with the internal market as it violates EU law, specifically the said articles of the TEU and TFEU alongside the general principle of the autonomy of the EU legal order (Decision, para. 253 and 264).

The EC reiterated that the Award constitutes a selective advantage that distorts competition and affects trade between Member States (Decision, para. 232 and 235). By linking the lack of valid arbitration to the resulting selective financial benefit to Antin, the EC brought compensation awarded in an intra-EU investor-state arbitration within the scope of Article 107(1) TFEU.

Comment

The Decision builds on an array of landmark cases by the CJEU and the EC’s earlier decision in Micula. It represents a further step by EU institutions, further complicating the enforcement of awards rendered in intra-EU investor-state arbitrations.

In Micula, the EC ordered Romania to recover the payment of the award that had already been paid. In the Decision, the EC takes it a step further by ordering Spain to prevent implementation of the award by taking “all appropriate measures to prevent Antin (..) from seeking recognition, enforcement and execution of the award” (Decision, para. 284-285). The Decision, along with the Micula Decision, could have significant implications for awards in intra-EU investor-state arbitrations, as complying with such an award may now require the EC’s prior approval, which is likely to be withheld given the EC’s stance (also see).

Since Achmea, it has been evident that awards in intra-EU investor-state arbitrations could almost only be enforced if the seat of arbitration is outside the EU. In these cases, national courts can disregard Achmea and Komstroy and reject challenges to an intra-EU arbitral award, as the Swiss Supreme Court did in upholding EDF v. Spain award (discussed here).

However, the Decision could lead to situations where investors seeking to enforce an award outside the EU, despite non-EU national court judgements ordering enforcement of the award, will still be barred from enforcement. Member States might now nonetheless refrain from paying the award, as doing otherwise would amount to unlawful state aid. In this way, the Decision further enables the EU to extend the implications of Achmea and Komstroy beyond EU borders.

This creates tension between the obligation of the respondent States to comply with enforcement decisions of non-EU national courts of the parties to the New York Convention on the one hand, and the obligation to comply with EU law on the other hand. It remains to be seen how the EU Member States will reconcile these conflicting obligations.

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Although this decision has not been designated as a precedent by the Council of Justices of the Supreme People’s Court, the ruling—issued by a three-judge panel in one of Vietnam’s most important jurisdictions—is significant because it annulled an arbitral award. It is important to note that in Vietnam, decisions to set aside or uphold arbitral awards are final and binding, as they are not subject to appeal by the parties or challenge by the procuracy in a higher court. As such, this decision carries notable reference value, especially in the absence of other authoritative guidance on the issue.

This case also underscores the narrower conception of arbitrability under Vietnamese law. Vietnam’s arbitration law, the LCA, is influenced by the UNCITRAL Model Law but adopts a unique framework, emphasizing “commercial” in its title and thereby suggesting a narrower scope. Article 2 of the LCA expressly provides that only disputes arising from commercial activities, or those in which at least one party conducts commercial activities, and other legally arbitrable disputes, may be submitted to arbitration. Vietnam’s circumscribed approach to arbitration is also reflected in the fact that when Vietnam acceded to the Convention on the Recognition and Enforcement of Foreign Arbitral Awards, it made a reservation that the Convention shall be applied only to disputes arising out of commercial relationships.

Commercial Disputes Are Arbitrable Under Vietnamese Arbitration Law

Pursuant to Article 2 of the LCA, arbitral jurisdiction over commercial disputes is formally established as follows:

1. Disputes among parties which arise from commercial activities.
2. Disputes among parties at least one of whom conducts commercial activities.
3. Other disputes among parties which are stipulated by law to be settled by arbitration.

While the LCA does not define commercial activities, guidance can be taken from Article 3.1 of the Commercial Law 2005, which provides that “commercial activities” are defined as profit-generating actions, including the buying and selling of goods, the provision of services, investment, trade promotion, and other activities with the purpose of making a profit. Therefore, the types of disputes that one can expect to fall within the scope of Articles 2.1 and 2.2 of the LCA are disputes arising from contracts for the sale of goods, provision of services, distribution, construction, disputes between companies and their members, and disputes over apartment sale contracts between individuals and companies. As regards Article 2.3 of the LCA, some examples include Article 236.5 of Land Law 2024 of Vietnam, which allows arbitration to resolve land disputes, provided they arise from commercial activities related to land, and Article 194.2 of Law on Housing 2023 of Vietnam, which permits arbitration to resolve housing disputes.

Facts and Procedural History of Decision 35

On 16 December 2015, Company U1, along with Mr. T and Ms. Y, a married couple, signed a contract to participate in a multi-level marketing scheme, under which the couple jointly held distributor code number 41002284. Despite their divorce in 2016, Mr. T and Ms. Y continued to operate under this code. Due to a conflict between Ms. Y and Company U1, on 7 February 2020, Company U1, Mr. T, and Ms. Y signed an agreement to agree to terminate the distributor code 41002284. On the same date, Mr. T and Ms. Y signed an agreement on the distribution of commissions under the multi-level marketing contract No. 0107022020 (“Contract 2020”), whereby Ms. Y agreed to transfer the ownership of distributor code 41002284 to Mr. T so that he could continue operating. In return, Mr. T committed to paying Ms. Y 40% of the commissions arising from the new distributor code 41002584 issued by Company U1. Contract 2020 did not include an arbitration agreement between the parties. Subsequently, Company U1 issued a new distributor code, 41002584, to Mr. T, who inherited the entire distribution network from the previous code 41002284. From 7 February 2020 to 2023, pursuant to the agreement in Contract 2020, Mr. T paid Ms. Y commissions estimated at a total of VND 2,353,331,267. A dispute subsequently arose between Mr. T and Ms. Y, following which they signed an arbitration agreement to resolve their dispute at the Vietnam International Arbitration Centre (“VIAC”).

In the arbitration, Mr. T disputed the validity of Contract 2020 and sought the return of payments previously made to Ms. Y. The arbitral tribunal issued an award rejecting Mr. T’s claim. Notably, during the arbitral proceedings, Mr. T did not raise any objections regarding the tribunal’s jurisdiction. However, after the issuance of the award, Mr. T filed a petition with the Court to annul the arbitral award under Article 68.2(c) of the LCA, arguing that the dispute between Mr. T and Ms. Y concerned the division of marital assets during their marriage, as specified in Article 28.1 of the Civil Procedure Code 2015 (the “CPC”), and therefore fell under the jurisdiction of the Court, not arbitration. Specifically, Mr. T argued that the commission arose from the multi-level sales from the old code 41002284, which is the common property of the couple and therefore concerned the division of marital assets during their marriage.

The Court Found No Commercial Relationship Between Mr. T and Ms. Y, Classifying the Dispute as Civil and Thus Non-Arbitrable

To reach its conclusion, the Court began by analyzing the relationship between Company U1, Mr. T, and Ms. Y. It relied on the legal definition of “multi-level marketing activities” to determine that the relationship among the three parties constituted a commercial one.¹⁾Article 3.1 of Decree No. 40/2018/ND-CP, dated 12 March 2018, issued by the Government of Vietnam on the management of multi-level marketing activities, stipulates: “Multi-level marketing is a business activity that uses a network of participants with multiple levels and branches, where participants receive commissions, bonuses, and other economic benefits from their own business results and the results of others within the network.” The payments made by Company U1—such as commissions, bonuses, and other economic benefits—were deemed entitlements arising from the commercial activities under the company’s regulations. Accordingly, the Court stated that if the dispute was between Company U1 and either or both of Mr. T and Ms. Y, the dispute would fall within the realm of a commercial relationship.

The Court then considered Mr. T’s argument that Article 28.1 of the CPC applied on the basis that the dispute involved the division of marital assets during their marriage. It found that Contract 2020 and the disputed payments from Mr. T to Ms. Y concerned the allocation of commissions received under the new code registered in Mr. T’s name. Therefore, the dispute did not concern a division of common property during the marriage period. Accordingly, the Court rejected Mr. T’s argument. In this context, the Court also noted that Mr. T’s argument was inconsistent with Mr. T’s earlier voluntary submission of the dispute to VIAC. However, the Court did not specifically address the fact that Mr. T had not raised any jurisdictional objections during the arbitration.

Although the Court rejected Mr. T’s argument regarding Article 28.1 of the CPC, it nonetheless held that the dispute between Mr. T and Ms. Y was non-arbitrable. The Court determined that the relationship between Mr. T and Ms. Y was always of a civil and not commercial nature: prior to their divorce, they were a married couple; after their divorce, they simply became two independent individuals with no commercial ties between them. Accordingly, the dispute between them was a civil dispute. Pursuant to Article 1 of the CPC, only the Court had the jurisdiction to resolve such a dispute. Therefore, notwithstanding the parties’ agreement to resolve the dispute at the VIAC, the dispute did not arise from “commercial activities” within the scope of Article 2 of the LCA and was therefore non-arbitrable. Consequently, the parties’ arbitration agreement was invalid, and the Court set aside the arbitral award issued by the VIAC arbitral tribunal under Article 68.2(c) of the LCA.

However, one unresolved issue is whether Mr. T’s multi-level marketing activities—as distinct from Company U1’s—qualify as “commercial activities” under Article 3.1 of the Commercial Law 2005. If so, then under Article 2.2 of the LCA, Mr. T would count as one who “conducts commercial activities,” thereby placing the dispute within the scope of arbitration. The Court’s conclusion did not cite a specific clause under Article 2 of the LCA. It appeared to consider the nature of the dispute itself rather than focus on the status of the parties. Therefore, the Court seemed to implicitly view Article 2.2 as also requiring that the dispute be substantively connected to a commercial activity. That is, the dispute need not arise directly from such activity but must at least relate to it to fall within arbitral jurisdiction under Article 2.2.

Key Takeaways

Vietnamese arbitration law shares common ground with the legal frameworks of many jurisdictions, which exclude certain categories of disputes—namely, non-economic family matters, criminal cases, insolvency, and winding-up—from the scope of arbitration. However, it goes a step further by explicitly prohibiting arbitration in purely civil disputes between individuals that lack a commercial relationship.

Decision 35 is an important reminder that the presence of an arbitration agreement does not, in itself, guarantee that a dispute is arbitrable under Vietnamese law. The Court reaffirmed that the validity of such an agreement is contingent upon the dispute falling within the scope defined by Article 2 of the LCA in the first place. Specifically, only disputes arising from commercial activities or arising among parties at least one of whom conducts commercial activities or those otherwise expressly permitted by law to be resolved by arbitration, are considered arbitrable. If a dispute falls outside those categories, any prior arbitration agreement will be invalid regardless of the parties’ prior consent.

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This blog outlines key challenges in Tanzania’s arbitration framework and compares Tanzania’s approach with international best practices. It details recommended legislative amendments, highlights timing issues, lack of clarity with regard to the definition of “public policy”, and ambiguities that may delay enforcement. This post further discusses ways to strengthen procedural efficiency for greater clarity and effectiveness. In doing so it assesses and compares legal developments in jurisdictions, such as Kenya, England, Singapore, Switzerland, Germany and India, some of which have recently updated their arbitration frameworks, and can offer valuable insight into international best practice, which could be incorporated into Tanzania’s arbitration framework to rectify some of its challenges. Finally, this post concludes with a look at the path to legislative reform and the benefits of best practice alignment.

Key Challenges

This section assesses the practical timing constraints imposed by Tanzanian arbitration law, identifies procedural loopholes and interpretive gaps, particularly around public policy, that contribute to delays or uncertainty, and concludes with a comparative review of best practices from other jurisdictions that could enhance Tanzania’s arbitration landscape.

Timing

Regulation 4(10) of Arbitration (Rules of Procedure) Regulations, 2021 (the Regulations) provides in part that ‘unless specifically agreed upon by the parties, arbitration proceedings shall be completed within a period of not later than one hundred eighty days from the date of composition of the arbitral tribunal: Provided that, in special circumstances where the dispute is of a highly complex nature, the arbitral tribunal may extend the deadline upon notice to the parties’. While the 180-day limit under the Regulations aims to ensure expediency, it is still comparatively slower than jurisdictions like Kenya, where newly adopted institutional rules provide for an option for expedited proceedings.

A solution could be to incorporate a fast-track arbitration process, which would provide parties with a quicker resolution mechanism. ​This process is present in Kenya’s Arbitration Rules 2020, which govern how non-institutional (or non-administered) arbitrations are conducted in Kenya when the parties have agreed to use the rules of the Chartered Institute of Arbitrators (Kenya Branch). Kenya’s Arbitration Rules introduce an expedited arbitration procedure designed to resolve disputes within three months from the date of the status hearing or case management conference, provided that certain conditions are met. Parties can request the appointment of an arbitral tribunal along with a request for expedited proceedings. Tanzania’s Arbitration Regulations currently do not provide for a fast-track procedure.

The Act contains a limit prescribed by Item 21 of Part III of the Schedule to the Law of Limitation Act [Cap 89 R.E 2019] (the LLA). The registration of an arbitral award for subsequent recognition and enforcement is 60 days, significantly shorter than in other jurisdictions like the United Kingdom, which does not have a requirement to register, but only a time period for enforcing the award (six years).

This limited timeframe in the Act may pressure parties into premature action for recognition and enforcement rather than allowing time for amicable settlement negotiations. Further, obtaining a certified copy of the award, securing necessary approvals and preparing an enforcement application also takes considerable time, especially when parties are in different jurisdictions. A 60-day limit is impractical.

A similar approach to that adopted in the UK could be followed, whereby there is no restriction on when parties must ‘register’ the award, provided it is enforced within the prescribed six-year period.

There is also a notable inconsistency in the Act regarding the time limits set for challenging an arbitral award based on substantive jurisdiction (Section 74) and serious irregularity (Section 75). Section 77 explicitly sets a 28-day limit to challenge an award on the grounds of substantive jurisdiction. However, there is no specified time limit under the Act for challenging an award based on serious irregularity. In such cases, the LLA applies, providing a 60-day limit for bringing the challenge.

This discrepancy creates uncertainty and procedural inconsistency, as there is no apparent justification for why a jurisdictional challenge must be brought within 28 days while a challenge for serious irregularity benefits from a longer 60-day period.

To ensure clarity, a uniform 28-day period should be adopted, as in the English Arbitration Act 2025.

Public Policy

The Act currently lacks a defined interpretation of what amounts to “Public Policy”. While no explicit reason is given, this may be because the Act closely mirrored the English Arbitration Act 1996, which likewise did not provide a definition. Notably, no such definition is included in the recently enacted English Arbitration Act 2025. While the arbitration statutes in other common law jurisdictions like India, Kenya, England and Singapore acknowledge “public policy” as a ground for challenging arbitral awards, none provide a statutory definition. The interpretation is primarily shaped by judicial decisions within each jurisdiction.

However, the Indian Arbitration and Conciliation (Amendment) Act, 2015, provides an explanation to Sections 34(2)(b) and 48(2)(b) of the Indian Arbitration Act (which relate to enforcement of arbitration awards), similar to Sections 73 and 83 of the Tanzanian Arbitration Act. For example, a prior Kluwer Arbitration Blog post titled Deciding the Question of Applicability: Arbitration Amendment Act, 2015 – Kluwer Arbitration Blog explains the limits of the interpretation of public policy under the Indian Arbitration and Conciliation (Amendment) Act.

The Indian Arbitration and Conciliation (Amendment) Act narrows the scope of ‘public policy’ as a ground for challenging or refusing the enforcement of arbitral awards. An award is deemed to be in conflict with the public policy of India only if the making of the award was (1) induced or affected by fraud or corruption or was in violation of Section 75 or Section 81; (2) in contravention of the fundamental policy of Indian law; or (3) conflicts with the most basic notions of morality or justice. It is recommended that the Act adopt a similarly structured explanation of ‘public policy’ as seen in the Indian Arbitration and Conciliation (Amendment) Act, which would provide greater legal certainty.

Loopholes

In practice, the enforcement proceedings of an arbitral award in Tanzania are effectively stayed, albeit informally, by adjourning them upon the respondent filing a petition challenging the award, regardless of the petition’s merit. This loophole has been exploited through delay tactics and frivolous petitions, which are intended to hinder the enforcement of awards.

India’s 2021 Amendments introduced a condition under Section 36(3) ensuring that when a party challenges an arbitral award on the grounds of fraud or corruption, the court, upon being prima facie satisfied, must grant an unconditional stay on enforcement until the challenge is resolved. In Tanzania, similar measures would help prevent abuse of the system.

Jurisdiction

The Act currently allows for court challenges to arbitral jurisdiction and does not expressly restrict the re-litigation of issues already decided by the tribunal.​ Section 74(1) provides that ‘A party to arbitral proceedings may, upon notice to the other parties and the arbitral tribunal, apply to court- (a) challenging any award of the arbitral tribunal as to its substantive jurisdiction; or (b) for an order declaring an award made by the arbitral tribunal on the merits to be of no effect, in whole or in part, on grounds that the arbitral tribunal did not have substantive jurisdiction’.

Further, Section 46 (1) of the Act allows the parties to agree that the arbitral tribunal should have powers ‘to order on a provisional basis any relief which it would have powers to grant in a final award’. Where the parties do not agree to confer such powers on the arbitral tribunal, the arbitral tribunal ‘shall not have powers to grant a provisional award’.

It is also not provided how foreign arbitral tribunals can request the assistance of the court at the place where an interim order is sought to be enforced.

The English Arbitration Act 2025 simplifies the process for challenging arbitral awards under Section 67 on grounds of jurisdiction. Where a challenging party has participated in an arbitration in which the tribunal ruled on a jurisdictional objection, that party will be unable to raise any new grounds or evidence at court, and any evidence already heard by the tribunal will generally not be reheard (unless the court makes a ruling to the contrary). Tanzania could refer to the new English Arbitration Act for guidance in simplifying the arbitration process.

Further, with regard to including a provision as to how foreign arbitral tribunals could request the assistance of the court to enforce an interim order, this could be amended by adopting similar wording to Article 185a(1) of the Swiss Federal Act on Private International Law (PILA), which provides that foreign arbitral tribunals and foreign parties can also request the assistance of the state court at the place where an interim or conservatory measure is to be enforced. introducing a similar provision in the Act would provide legal certainty regarding the enforceability of interim measures issued in foreign arbitrations, thereby enhancing Tanzania’s reputation as an arbitration-friendly jurisdiction.

Enforcement

The Act does not provide a provision for ex parte enforcement of an award. Without this provision, enforcement could be delayed significantly, allowing the opposing party to dissipate assets or otherwise evade compliance before a court decision is made.

Tanzania could adopt similar provisions to the German Arbitration Law 98 – Book 10 of its Code of Civil Procedure (Zivilprozessordnung – ZPO), which provides that the presiding judge may grant ex parte enforcement of an arbitral award or provisional measure, limited to protective measures, while allowing the opposing party to prevent enforcement by providing security.

Best Practice Proposals

There are numerous further provisions in the arbitration frameworks of other jurisdictions that may be considered to support Tanzania in modernising its arbitration framework, namely:

• The International Arbitration (Amendment) Act 2020 in Singapore introduced Sections 12(1)(j) and 12A(2), empowering courts and arbitral tribunals to enforce confidentiality obligations agreed upon in writing, ensuring confidentiality agreements are legally enforceable.
• The English Arbitration Act 2025 introduced a continuous duty of disclosure, requiring arbitrators to disclose circumstances raising doubts about impartiality. The Act also expanded arbitrator immunity to include resignations and removal costs, encouraging experienced professionals to accept appointment as arbitrators with more confidence . The Act also allows for summary disposal of claims with no real prospect of success, expediting proceedings and reducing costs. The Act also clarifies that the law of the seat governs arbitration agreements by default when no choice is made.
• Nigeria’s Arbitration and Mediation Act 2023 provides for emergency arbitrators for urgent interim relief.
• The 2020 Arbitration Rules in Kenya and Nigeria enable consolidation of arbitrations involving the same parties, promoting efficiency, and the Kenya Rules allow for virtual and hybrid hearings.

All of these provisions would assist in ensuring Tanzania’s Arbitration Act is on par with global best practice, providing more clarity and efficiency for investors.

Final Word

A review of the Act, which aims to address the challenges in commercial dispute resolution and enhance the efficiency of arbitration, is a welcome development. We are keen to see whether our thoughts on any of the proposed amendments outlined above are aligned with the submissions made by other stakeholders, and whether the LRC will take these thoughts into account as they deliberate on reforming the Act to align it with global best practice.

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The dispute centred on the UK and Scottish governments’ ban on sandeel fishing in UK waters, which the EU claimed disproportionately affected its fishing industry, especially in Denmark.

Both sides have claimed the Tribunal’s recent ruling as a victory. The UK government’s decision was found to have been based on the best scientific advice and not to have been discriminatory, and the decision to ban fishing in Scottish waters was found to be proportionate in the context of the TCA. However, the ban in English waters was not found to be proportionate. The EU has indicated that it expects the UK to take further measures to bring itself into compliance with the ruling.

The case is of interest for the following reasons, which are discussed further in the remainder of this blog post:

• Political context of the case: The ruling came shortly before an important EU-UK summit held on 19 May 2025, at which a further agreement between the EU and the UK on trade and cooperation was struck.
• Functioning of the TCA’s dispute resolution mechanism: The case provided an initial insight into how the TCA’s dispute resolution mechanism operates. The fact that the Tribunal permitted submissions from a number of amicus curiae parties is particularly noteworthy.
• Precedent value of the case: The case potentially sets a precedent for further EU challenges to other areas in which the UK has diverged from EU law in the realm of environmental protection since Brexit.

Dispute and the Parties’ Positions

Sandeels are small fish found in large numbers in UK waters and are essential prey for certain seabird species, including puffins and arctic terns. In an attempt to stem declining seabird populations, the UK and Scottish governments banned fishing for sandeels in March 2024. Before the ban, EU vessels, particularly from Denmark, had held almost all quotas for sandeel fishing within the UK.

Following the failure of consultations on the ban’s impact under Article 723 of the TCA, the EU initiated dispute proceedings under Article 739. An arbitration tribunal was formed in November 2024 under the aegis of the Hague-based Permanent Court of Arbitration (“PCA”) and chaired by Dr. Penelope Jane Ridings (joined by Professor Hélène Ruiz Fabri and Justice David Unterhalter).

The case, representing the first full hearing under the TCA’s dispute resolution mechanism, was heard at the PCA from 28 to 31 January 2025. Submissions were made by the UK government, the EU Commission, and amicus curiae participants.

The EU’s submission argued that the ban violated the TCA’s provisions on joint management and sharing of fish stocks, claiming it was disproportionate, discriminatory against EU vessels, and not based on the best available scientific advice. The UK countered, citing scientific evidence for the ban and emphasising its right to regulate for environmental protection under the TCA.

Findings of the Tribunal

The Tribunal’s decision was issued on 28 April 2025 and published on 2 May 2025.

Its findings were mixed, with both sides claiming victory.

In favour of the UK’s position, the Tribunal found that the fishing ban was based on the best available scientific advice and was not discriminatory. It found the ban in Scottish waters proportionate and compliant with the UK’s obligations under the TCA.

However, the Tribunal also ruled that the ban in English waters was disproportionate and breached the UK’s obligation to allow EU vessels access to its fishing waters. Specifically, the Tribunal maintained that:

“the prohibition of fishing for sandeel in English waters is inconsistent with the United Kingdom’s obligations under Article 496(1) of the Trade and Cooperation Agreement, read together with Article 494(3)(f) of the Trade and Cooperation Agreement, on the grounds that there was a failure to have regard to the principle of applying a proportionate measure” (para. 747(i) of the ruling).

The UK praised the ruling for upholding the Scottish ban and stated that it did not interpret the ruling as requiring a reversal of the closure of English waters. Nevertheless, the UK committed to “undertak[ing] a process in good faith to bring the UK into compliance” with its obligations under the TCA.

The European Commission also welcomed the ruling, emphasising that “it is essential that any unilateral measures are consistent with the commitments and principles in the TCA”, and that it expected the UK to outline compliance measures within 30 days.

Political Context of the Ruling

The sums in contention were not significant in the context of EU-UK trade, with the revenue loss for non-UK vessels estimated at around GBP 45 million. The case’s importance lies instead in its political ramifications, being the first test of the TCA’s arbitration framework.

The Starmer government’s current policy aims to establish closer ties and reduce barriers to trade with the EU. This culminated in the recent EU-UK summit on 19 May 2025, leading to the announcement of a new agreement to facilitate EU-UK trade and cooperation. The agreement contains a guarantee of reciprocal fishing rights in British and EU waters for a further 12 years. Under the terms of the agreement on fishing, the UK government has also announced that the UK would “retain control over its waters to pursue its own sustainable fishing policies”, remaining outside the EU’s fisheries rules.

In light of the agreement, the UK government may look to claim that, by granting EU vessels continued access to UK waters, it is now in compliance with the “principle of applying proportionate measures for the conservation and management of fisheries resources”. The UK government certainly appears to have framed the deal as a proportionate response to the EU’s concerns about being denied access to UK fishing waters. The official communication, released on the date that the deal was finalised, emphasised both the guarantee of reciprocal future fishing rights and the UK’s ability to pursue its own sustainable fishing policies.

Indeed, on 25 June 2025, the UK government announced that the fishing ban in English waters would remain in place. The statement confirmed that the government had “completed a new decision-making process based on updated advice and evidence”, which “resolves the failings identified by the tribunal, and brings [the UK] into compliance with [its] TCA obligations”. The EU’s reaction to this announcement is awaited.

Functioning of the TCA Dispute Resolution Mechanism

The case also saw interventions from amicus curiae participants, as provided under Article 751 and Annex 48 point XII of the TCA. This mechanism allows third-party submissions relevant to the issues in contention, akin to the World Trade Organisation’s dispute settlement process, aimed at addressing concerns about the confidential nature of arbitration in matters of social or environmental importance.

In this case, amici curiae included environmental organizations (Greenpeace UK and ClientEarth), industry bodies (the Danish Fishers Producer Organisation and the Danish Pelagic Producers Organisation), and local charities (the UK Royal Society for the Protection of Birds).

Although the Tribunal’s ruling does not explicitly address these interventions, the case nonetheless offers an insight into the role of third-party submissions in the TCA dispute resolution forum. The amici curiae represented both fishing industry interests and environmental concerns, ensuring representations were made on both sides of the dispute. The involvement of wildlife conservation and marine ecology specialists appears particularly apt in a case such as the present, where a key issue in dispute was whether the UK and Scottish governments had acted in accordance with “best scientific advice” on the importance of sandeels to seabird populations.

Precedent Value of the Case

Lastly, the case sets a precedent for EU challenges in other areas where the EU may consider that the UK has diverged from EU environmental laws since Brexit.

Since the UK formally left the EU on 31 January 2020, the UK government has not automatically mirrored changing environmental regulations within the EU. This approach was envisaged by the TCA. Article 411 of the TCA provides that both the EU and the UK recognise each other’s right to “determine its future policies and priorities with respect to […] environmental or climate protection”.

However, Article 411 also acknowledges that:

“significant divergences in these areas can be capable of impacting trade or investment between the Parties in a manner that changes the circumstances that have formed the basis for the conclusion of this Agreement.”

In the case of material impacts on trade or investment arising from such “significant divergences”, both the EU and the UK are entitled to “take appropriate rebalancing measures to address the situation”, including tariffs on goods. If consultations on rebalancing measures fail, either side can refer the issue to arbitration under Article 739 of the TCA.

So far, no UK environmental policies have led to arbitration or rebalancing measures. However, there are areas where UK regulations have not matched the EU’s, such as bans on certain chemicals, efforts to remove deforestation from supply chains, and binding targets on microplastic reduction. If the EU considers that any of these to be “capable of impacting trade or investment” – for instance, if the UK’s lack of regulation on a particular area gives it a competitive trade advantage – this may leave the UK exposed to ‘rebalancing measures’ or arbitration proceedings.

All the same, given the Starmer administration’s current emphasis on restoring stronger ties with Europe, the UK may look to adopt more ‘dynamic alignment’ with EU environmental policies. This may reduce the likelihood of the EU or UK resorting to the TCA dispute resolution mechanism.

Conclusion

The ruling on the sandeel fishing ban marks an important moment in UK-EU relations under the TCA, highlighting the delicate balancing act between the right to regulate in the environmental sphere and the imperative to maintain close UK-EU commercial ties. As both sides navigate compliance with the TCA, the case is likely to set a significant precedent for future environmental and trade disputes.

The views expressed are the author’s own, and not those of Herbert Smith Freehills Kramer LLP.

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Finally, the book review section starts with a review written by Nikos Lavranos regarding the book, The Conduct of International Arbitration Proceedings, written by the very well-known arbitrator and counsel Yves Derains. The second book review by Paolo Vargiu provides an in-depth analysis of the book, Rething Investment Law, edited by David Schneiderman and Gus van Harten. In short, the contents of this issue confirm again the unrelenting dynamism of the complex interaction between different branches of international law and European law, which in turn requires in-depth analysis and reflection. Indeed, this is the very reason why the Review continues to attract so much attention, not only by scholars and practitioners but also from national courts and arbitral tribunals. The wide range of topics and jurisdictions featured in this issue is testimony to the increasing reach of the Review worldwide. Meanwhile, the Editorial Team of the Review has undergone some changes. Our former Managing Editors Trisha Mitra and Samuel Pape have, after seven years (!) of hard work and dedication, decided to pass on the torch to Dr Szilard Gaspar-Szilagyi and Prof. Veronika Korom. We are hugely indebted to Trisha and Samuel and are very happy that both have agreed to stay with the Review by joining the Editorial Board. At the same time, we are very happy that Dr Szilard Gaspar-Szilagyi and Prof. Veronika Korom have agreed to be the new Managing Editors of the Review and we are confident that they will continue the great work done so far. In addition, we welcome Vanda Kopic and Prof. Hugo Cardona as new Editorial Team members, who will work closely together with Mark McCloskey and Dr Maria Fanou. Last, but certainly not least, we remain indebted to Vincent Verschoor and Gwen de Vries of Kluwer Law International for their relentless support and enthusiasm in developing and producing this Review. In order to ensure that each issue we produce is substantial, innovative, and intriguing, we invite unpublished, high-quality submissions (both long and short articles as well as case notes) that fall within the scope of the Review. The Call for Papers and the house style requirements are published on the Review’s website, https://efila.org/eila-review/.

Prof. Loukas Mistelis, Co-Editor-in-Chief

Prof. Nikos Lavranos, Co-Editor-in-Chief

E-mail: eilarev@efila.org

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In our forthcoming article in the UC Irvine Law Review, titled The Return of Context to the Federal Arbitration Act: How International Standards Eroded U.S. Arbitration Protections, we explore this overlooked reversal. While much attention has focused on how the FAA has influenced international arbitration practices, the untold story may be the opposite: international commercial arbitration principles have reshaped the FAA since its inception, often undermining protections for consumers and employees.

From Domestic Shield to Global Sword

When Congress enacted the FAA in 1925, its primary aim was to enforce agreements to arbitrate between commercial entities—sophisticated parties on relatively equal footing. The statute was born out of a desire to provide a forum for efficient dispute resolution in commercial relationships, at a time when courts were skeptical of private arbitration.

For much of its early history, the U.S. Supreme Court interpreted the FAA through a contextual lens. The Court applied different principles depending on the context each case arose in. This approach recognized that different statutory regimes and social dynamics required tailored legal treatment, and developed three distinct arbitral regimes based on the different statutory and policy priorities at issue in labor arbitration, domestic arbitration, and international commercial arbitration.

But since the 1980s, the Court has shifted toward a one-size-fits-all approach. It began to borrow doctrines and justifications from the international and labor arbitration contexts and apply them to all arbitration agreements, including in employment and consumer contracts. This trend, which we term “inverse fertilization,” has flattened distinctions that were once crucial and has allowed powerful parties to enforce arbitration clauses even in scenarios that Congress never envisioned. The case of McGee v. Armstrong demonstrates the effect of this inverse fertilization. Kevin McGee, a public employee and National Guard officer, faced retaliation at work for fulfilling his military duties. McGee not only had statutory and constitutional claims, he also enjoyed statutory process protections and brought his claims under statutes specifically designed to provide a judicial forum. Nonetheless, he was barred from having his day in court by the arbitration clause in his employment contract. A series of precedents from the Supreme Court had forced the court to compel the case to arbitration.

How Global Arbitration Standards Crept into Everyday Contracts

McGee is the result of a decade of precedents where standards originally set out in international arbitration gradually ambled further and further than their original context. First, in Scherk v. Alberto-Culver Co., the Court distinguished an earlier case where it held claims under the Securities Act of 1933 non-arbitrable because of the distinctly international nature of the contract in question. Such a different result was warranted because the international context of the contract in Scherk presented such new and different policy considerations, wholly inapplicable in the domestic context, that it demanded a different outcome. A decade later, in Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth, Inc., the principles undergirding Scherk would be extended to a new statute applied to another international agreement. But by deemphasizing the unique nature of international arbitration that Scherk relied on, Mitsubishi would lay the groundwork for them to be taken one more step (then another, and another) further from their original context.

Soon these principles would find their way into domestic consumer contracts, and in 1991, the Supreme Court would draw an analogy between employment discrimination claims and disputes between international companies engaged in global commerce in Gilmer v. Interstate/Johnson Lane Corp. Per the Supreme Court’s reasoning, if a car dealer could find an adequate arbitrator to resolve its disputes with a Japanese conglomerate, why can’t employees arbitrate with their employers? After all, it was just another arbitration agreement protected by the FAA. This is the logic that would eventually come to bite Kevin McGee.

Kevin McGee’s story is far from unique. It illustrates a growing problem in the United States: statutory rights that were designed to protect weaker parties are increasingly subject to mandatory arbitration and, due to the confidential nature of the proceedings, it is unclear whether they are being adequately adjudicated. Worse still, the legal reasoning that permits this often rests on precedents from international commercial arbitration—a field designed to facilitate dispute resolution between multinational corporations on relatively equal footing, not between employers and workers or businesses and consumers.

Why the Logic of International Commercial Principles Helps to Undermine Domestic Justice

Our article demonstrates that certain principles developed for international arbitration—such as a presumption in favor of arbitrability and deference to arbitral decisions—have been transplanted into domestic jurisprudence without sufficient scrutiny.

In international arbitration, these principles are justified by the need to protect cross-border commercial agreements and are often counterbalanced by mechanisms like Article V of the New York Convention, which post dates the FAA and allows courts to refuse to enforce an arbitral award if it puts public policies of the State in danger. This fact was mentioned by the Supreme Court in Mitsubishi as an ultimate safeguard if a foreign arbitral award would put in danger the goals of the antitrust statutes in the U.S. Domestic arbitration under Chapter 1 of the FAA lacks these safeguards. In the context of domestic arbitration there are no textually permissible public policy grounds to refuse to enforce or annul awards. Yet U.S. courts have adopted international-style presumptions wholesale, making it nearly impossible for individuals to challenge arbitration clauses, even in cases involving fundamental rights.

As we point out in our article, this inverse fertilization has been facilitated by the Supreme Court’s increasing reliance on broad generalizations about the FAA’s purpose—namely, a “liberal federal policy favoring arbitration”—without paying attention to the specific context and policy goals of the statutes involved.

Bringing Back Context: A Path Forward

As we move ahead with the practice of arbitration, we advocate for returning to a context-based approach to interpreting the FAA—one that takes into account the nature of the contractual relationship, the substance of the claims, and the relative bargaining power of the parties. An approach that was well understood by the Supreme Court in the early decades of the FAA.

Such an approach would not mean abandoning arbitration. Rather, it would mean tailoring its application to fit the situation at hand, thereby ensuring that it advances rather than obstructs legislative objectives. For example, enforcing arbitration clauses in commercial contract disputes between sophisticated parties may make perfect sense, while enforcing them in statutory employment or consumer disputes—especially in those where there is no genuine consent—may subvert the very rights Congress sought to advance.

Looking Ahead: Reinterpreting the FAA for the Next Century

As we celebrate the 100th anniversary of the FAA, this post is both a tribute and a caution. The FAA’s global influence is undeniable—its principles have shaped the laws of numerous countries and made the United States a preferred seat for international arbitration. But the domestic consequences of its modern interpretation demand urgent attention.

We urge courts, scholars, and lawmakers to reconsider how we apply the FAA. Arbitration jurisprudence must be anchored once again in the reality of how contracts are negotiated, the power dynamics between the parties, and the policies underlying intertwined statutes. This means recognizing that not all arbitration agreements are created equal—and that statutory protections must remain meaningful in practice, not just in theory.

In a world where private dispute resolution is increasingly the norm, ensuring fairness and accountability within arbitration is more critical than ever. A centennial is a milestone, but it can also be a turning point. Perhaps now is the moment to return context to the FAA—and justice to those who have lost their right to have their day in court.

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The dissolution of CADER, Uganda’s sole public arbitral institution, represents a critical moment in Uganda’s arbitration landscape and a moment of reflection on the status of arbitration on the continent.

This blog post discusses CADER’s statutory mandate, its structure and financing models, and the challenges that plagued the institution for years, culminating in its eventual dissolution. It analyses the judicial response to the dissolution and concludes with suggestions for improving the efficiency of arbitral institutions in Africa.

Statutory Mandate of CADER

CADER was established in 1998 as a statutory body under Section 67(1) of Uganda’s Arbitration and Conciliation Act, Cap 4 (now Cap 5). Its core function was to manage and provide technical and administrative support to arbitration proceedings in Uganda and appoint arbitrators where parties could not agree.

Its other duties, captured under Section 68 of Cap 4, included facilitating, certification, registration, and authentication of arbitration awards, enforcement of ethics, establishing and administering a schedule of fees for arbitrators, and other acts necessary and conducive to implementing the objectives of the Act.

CADER was headed by an Executive Director who was tasked with its general management and day-to-day operations as well as acting as its principal accounting officer. It was managed by a governing council, established under Section 69 of the Act, responsible for the formation and implementation of the Centre’s policy.

Challenges Faced by CADER

Since its inception, CADER struggled with logistical, legitimacy, mismanagement, and funding shortfalls that made the execution of its duties near impossible.

Despite being mandated to operate as a self-regulating body under Section 75 of Cap 4, CADER struggled to receive direct government funding for over two decades. Instead, relying on external donor support, which was later withdrawn, further stifled the Centre’s work.

CADER also struggled with a lack of governance structures. While presenting the report by the Committee on Legal and Parliamentary Affairs in Parliament, the Chairperson, Hon. Steven Bakka, Member of Parliament, justified the dissolution of the Centre, noting the reasons for mainstreaming it:

“. . . There is a lack of a governing council. Whereas Section 69 of the Arbitration and Conciliation Act requires CADER to have a governing council, there is no council currently, and none has existed before . . . The third is lack of funding from the Government. CADER has not been receiving funding from the Government and therefore putting it back to the ministry is a way of effecting mediation in the justice process.”

Challenge of CADER’s Power to Act as Appointing Authority

CADER’s woes were compounded by court decisions that exposed the institution’s management and governance inadequacies.

In International Development Consultants Ltd vs Jimmy Muyanja & Others (Miscellaneous Cause No. 133 of 2018), the Applicant challenged the power of the Centre’s Executive Director to exercise the authority vested in the CADER Governing Council to appoint arbitrators.

In his defence, the Executive Director of CADER argued that he exercised the Governing Council’s delegated authority, an argument that Justice Musa Ssekaana, Head of the Court Civil division of Uganda, rejected.

The court found that the Executive Director could not solely exercise the powers of the Governing Council under Section 69. This judgment rendered the Executive Director’s unilateral appointment of arbitrators in the absence of the governing council ultra vires and subject to challenge by way of judicial review. The decision highlighted CADER’s management and governance inadequacies and the need for realignment of its internal structure with the Act to attain the intention of the drafters.

In the absence of a Governing Council, the decision had the effect of stripping CADER of its power to act as an appointing authority under Section 2 of the Act.

On 23 April 2019, the then Minister of Justice and Constitutional Affairs, Hon. Kahinda Otafiire, gave the International Centre for Arbitration and Mediation Kampala (ICAMEK) appointing authority under Section 2 of the Act. An appointing authority is an institution, body, or person appointed by the Minister to perform the functions of appointing arbitrators and conciliators. Although there have been challenges to the legality of ICAMEK and its powers, functions, and establishment, these have not been successful, and it remains the only institution in Uganda with appointing authority.

Today, in the absence of CADER, ICAMEK and other emerging arbitration centres, such as Praxis Conflict Centre and the Muslim Arbitration and Mediation Centre Uganda, continue to provide management and administrative services for arbitrations in Uganda.

During the pendency of Miscellaneous Cause No. 133 of 2018, the Executive Director of CADER and CADER filed a constitutional petition, Jimmy Muyanja & Another Vs Attorney General (Constitutional Petition No. 0011 of 2019).

This Petition sought, inter alia, to have CADER recognised as a constitutionally established subordinate court under Article 129 of the  Constitution of Uganda 1995, as amended and a declaration that CADER’s decisions are not subject to Judicial Review. In her lead Judgment, Justice Monica Mugyenyi dismissed the petition, distinguishing the mode of establishment, the appointment of judicial officers, and the composition of the court from that of the Centre from a subordinate court within the meaning of Article 129 of the Constitution..

In its unanimous decision, the Constitutional Court confirmed that CADER’s functions are primarily administrative and should not be equated to the decision-making functions of the High Court and other tribunals exercising judicial authority. Relying on Article 42 of the Constitution, CADER’s decisions were found to be in the exercise of quasi-judicial authority and subject to judicial review should that authority be exceeded or in the case of procedural impropriety in the decision making.

This decision clarified the Centre’s powers and authority compared to that of established courts of judicature, placing it as an independent forum for providing dispute resolution management services. It juxtaposed the judicial functions exercised by the courts of judicature with the administrative roles that aid the arbitration and mediation of disputes exercised by CADER.

The court’s decisions coincided with the government’s Policy for Rationalisation of Government Agencies and Public Expenditure (RAPEX), which the Cabinet adopted on 22 February 2021.

The policy intended to curb public expenditures, improve government efficiency, and reduce administrative costs caused by the proliferation of government agencies, which led to mandate overlaps and jurisdictional ambiguities.

Judicial Response to CADER’s Dissolution

Despite the dissolution of CADER, courts have remained reluctant to intervene in matters the parties had contracted to resolve through arbitration. While the judicial responses have varied, the courts have generally adopted a pro-arbitration stance and have had to interpret the law judiciously to breathe life into arbitration clauses where no appointing authority is named—a role previously exercised by the Centre under Sections 11, 51, and 68 (a) of the Act.

Therefore, courts require parties to abide by contractual terms to have their dispute resolved through arbitration.

Justice Patricia Kahigi Asiimwe’s decision in Zhonghao Overseas Construction Engineering Company v Attorney General and 3 others, choosing ICAMEK as the appointing authority in an arbitration that had stalled due to non-appointment, is a testament to the judicial activism employed to fill this legal lacuna left by CADER’s dissolution.

Justice Boniface Wamala took a different approach in Ambitious Construction Company Ltd v Uganda National Cultural Centre, where he appointed another arbitral institution, Praxis Conflict Center, to assign a suitable arbitrator to the dispute.

The dicta of Justice Patience Rubagumya best capture the court’s response in Tumo Technical Services Ltd. v. China Railway 18th Bureau Group Co. Ltd., where the Respondent sought to circumvent the agreement to arbitrate citing, inter alia, CADER’s legitimacy and constitution challenges. Taking judicial notice of CADER’s challenges as an arbitral institution in Uganda, the trial judge stated, inter alia, that:

“. . . I take cognizance of the current challenges in one of the arbitral institutions specifically CADER. However other arbitral institutions in the country can be considered by the parties as to set the arbitration in motion. In light of section 98 of the Civil Procedure Act which gives the High Court inherent powers to take decisions as may be necessary for the ends of justice, in the instant case and given the facts, justice demands that arbitration be undertaken in accordance with the intention of the parties as expressed in Clause 13 of the Subcontract Agreement. The intention of the parties as clearly stated in the arbitration clause should be given effect.” 

African Context of Arbitration

The dissolution of CADER highlights the challenges African arbitral institutions face, which have curtailed the growth of arbitration on the continent. Despite having nearly 100 arbitral institutions on the continent, the London Court of International Arbitration (LCIA) reported an increase of cases involving parties from Africa from 4% in 2022 to 8% in 2023.

This statistic should be compared to the sharp decline of arbitrations with Asian parties, which plummeted from 24% to 8% within the same period. Similarly, the International Chamber of Commerce’s (ICC’s) Court of Arbitration registered an increase in arbitrations from Africa from 6.8% in 2020 to 7.8% in 2023 despite the continent’s arbitral institutions increasing from 91 in 2020 to over 100 today.

This contrast can be attributed to stronger arbitral institutions, like the Singapore International Arbitration Centre (SIAC) and the Hong Kong International Arbitration Centre (HKIAC), an adaptive legal framework, and continuous conclusion of intra-Asian bilateral investment treaties (“BITs”) such as the  Singapore-Indonesia BIT.

The increase has also been supported by China’s and Japan’s foreign direct investment (“FDI”) outflows, which have surged in the past 10 years, with China doubling its FDI outflow in the past decade.

According to the 2025 International Arbitration Survey by White & Case and Queen Mary University of London, SIAC and HKIAC rank among the top five most preferred arbitral institutions globally, each attracting 25% of respondents’ votes. Singapore and Hong Kong also feature prominently as two of the top three most preferred arbitral seats, praised for their strong legal infrastructure, judicial support, and efficiency.

These findings reflect a broader trend of parties within and outside the Asia-Pacific region—increasingly favouring well-established Asian arbitral hubs, further solidifying Asia’s emerging dominance in the international arbitration landscape.

Unfortunately, like CADER, many of Africa’s arbitral institutions still face challenges in funding, legitimacy, rule of law, and expertise that derail progress of arbitration in Africa and prompt disputing parties to seek arbitral assistance from foreign institutions.

To arrest this, Africa can bank on its high population, the proliferation of digital services and trade, youthful entrepreneurship, and the Africa Continental Free Trade Area Agreement (AFCFTA) which offer the continent a competitive advantage to boost arbitration and Alternative Dispute Resolution (ADR) in the continent.

Opportunities for African Institutions

African institutions must invest in local dispute resolution systems and expertise to benefit from the increased international trade and disputes arising from the continent. This can be done through professional capacity building, judicial alignment, and the enactment of iron-clad supporting legislation, providing investors with much-needed confidence in local institutions.

African governments should invest in developing investor-friendly institutional frameworks that promote efficiency, transparency, and integrity of institutions that guarantee parties professional services and enforceable awards.

The 2024 SOAS Arbitration in Africa Survey Report also suggests addressing issues such as judicial delays, reducing interference, and ensuring arbitrator protections to enhance the potential of economically significant countries acting as key African arbitration venues.

With the signing of the AFCFTA in March 2018, 54 of the 55 countries have now signed the continental trade legislation; there is a prime opportunity for African countries to develop local institutions. The expected proliferation of trade among African States provides a platform for this.

Providing arbitration as the principal mode of dispute resolution, the AFCFTA offers an unmissable opportunity for growth, development, and expansion for African arbitral institutions and a strong legal basis for arbitration on the continent.

Conclusion

The dissolution of the CADER was a culmination of judicial decisions and the national policy on rationalising government agencies, which was intended to cut government spending and improve efficiency. However, it highlights broader issues affecting arbitration and the development of arbitral institutions in Africa, which require broader strategic interventions in legislation, national policy, rule of law, and judicial support to promote local dispute resolution on the continent.

As Africa continues to grow as a global economic player and with the signing of the AFCFTA, governments must invest in strengthening local arbitration frameworks. This calls for coordinated efforts from governments, the judiciary, and the private sector to create sustainable, effective institutions that will handle the complex disputes of the future.

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The 10th Annual European Federation for Investment Law and Arbitration (“EFILA”) Conference, hosted by the London office of Herbert Smith Freehills on 29 April 2025, gathered global thought leaders and practitioners who traversed the globe to explore how Achmea and EU law continue to permeate investment law and arbitration, as they intersect with global conflicts, sanctions, and energy transition amidst shifting global economic powers.

“Old Treaties, New Outcomes”

To set the stage, the keynote speaker, Prof. Dr. Gerard Meijer (Linklaters), provided a clear-eyed reminder that the vast majority of past and present ISDS cases continue to be based on old-generation BITs, pending the entry into force of modernized EU investment treaties. In the meantime, he suggested alternative avenues for arbitral tribunals to apply other international norms on climate change, energy transition, and human rights issues, citing the Dutch landmark cases (Urgenda) against The Netherlands and Shell, which were brought before Dutch courts by NGOs.

He argued that arbitral tribunals could systematically integrate the emerging energy transition and climate change standards by relying on the Vienna Convention on the Law on Treaties (“VCLT”) as the center of gravity pulling the strings of international law, including binding State commitments, as well as soft law instruments.

Global Impacts of Post-Achmea EU Policies: A Glimpse into a More Dynamic World

Non-EU courts remain unimpressed with Achmea-based jurisdictional objections, limiting the decision’s impact to within the EU. This is particularly emphasized in the renewable energy ISDS cases under the Energy Charter Treaty (“ECT”) (despite the Komstroy judgment of the CJEU), the EU’s withdrawal from the ECT coordinated with some EU Member States, and its Declaration retroactively denying any legal effects of the ECT in intra-EU disputes.

Meanwhile, outside the EU, States are reinforcing the legal and institutional capacities to navigate the global challenges of tariffs, sanctions, and climate change. In this sense, new treaty standards and dispute resolution tools are emerging, somewhat ironically, from the EU-driven “crusade” against ISDS.

Following the thought-provoking keynote, the first panel engaged specific post-Achmea treaty practices reflecting these shifting tides. Stephanie Collins (Gibson Dunn) highlighted the EU-Mercosur free trade agreement (which does not contain provisions on investment protection) or the Global Agreement with Mexico (which adopts the CETA model). The EU, thus, continues to include the investment court system in new treaties, although its treaties featuring this mechanism—i.e., those with Canada, Vietnam, and Singapore—have still not entered into force. The narrower investment protections, along with an untested dispute resolution mechanism, reflect an idealistic policy direction, “detached from commercial realities” in the words of Hannah Ambrose (Herbert Smith Freehills).

Post-Brexit UK investment policies reflected a more reality-based approach, even though the UK subscribed on paper to the BIT terminations without effectuating its objectives. Rather, as Ms. Ambrose explained, the UK continues a more strategic use of ISDS, as reflected in its accession to the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (“CPTPP”) and maintenance of over eighty of its old or unmodernized BITs.

True to their counterproductive form, the EU obstructed the modernization of the ECT which it promoted and formulated, only to withdraw from the original ECT (along with some EU Member States), without any alternative EU policy fit for the energy transition or the new realities of global energy supply. What the EU left behind, however, was the “greenest” international investment treaty in the energy sector, with actionable compliance provisions for climate change and sustainable development standards, increased transparency for ISDS, and a State-to-State accountability mechanism for violations of its climate change provisions. As Ms. Collins noted, the ECT itself will continue to be relevant outside of the EU in over 40 remaining Contracting Parties and in emerging regions, such as Africa.

The EU also has an eye on “protecting” its sole powers to interpret EU law in sports and commercial arbitration, drawing on matters of public policy (such as competition law, environmental protection standards, and ESG). Here, Anya George (Schellenberg Wittmer) highlighted some prominent sports arbitration cases, such as International Skating Union v. European Commission and Royal Football Club Seraing v. FIFA. Dr. Maria Fogdestam Agius further examined the trends in the commercial arbitration space. Both warned about the risk of increased public scrutiny in private cases. Other alternatives to intra-EU arbitration, such as the European Court for Human Rights (ECHR) or contract-based mechanisms, were also raised as possibilities, but certainly more limited, recourse for claimant investors.

International Perspectives

The second panel picked up from the perspective of the global, multilateral system of rules and alliances spearheaded by the U.S. in the post-World War II era. In light of the more recent turbulence in international trade and investment policies under the new administration, that same system is deeply shaken as it continues to hold up the existing ISDS framework. Against this background, Henry Smith (Control Risks) highlighted regulatory instability as a growing space for alternative sources of power and legitimacy, but also for more conflicts.

In sharp contrast, U.S. courts (particularly the 2024 Decision in the Spanish renewable energy saga enforcement proceedings against Spain) remained steady in compliance with U.S. international commitments under the New York and ICSID Conventions. Carlos Ramos Msrsovsky (Baker Hostetler) outlined the U.S. Court of Appeals for the District of Columbia Circuit’s affirmation of the validity of the underlying arbitration agreements in the ECT as viable exceptions to sovereign immunity under U.S. law, indicating a more positive outlook for future enforcement of intra-EU awards in the U.S.

Africa is also emerging as an attractive investment destination, holding 30% of global critical minerals reserves, most of which are crucial for renewable energy technologies, including 50% of cobalt and platinum. As Saadia Bhatty (Gide) illustrated, Africa is also becoming a trend-setter in robust treaty design, ensuring its increased rule-making role in investment law. This new legal and institutional framework will shape the outcomes of the growing number of ISDS claims against African States (currently 20% of ICSID cases). For future disputes, Ms. Bhatty noted the embrace of dispute prevention and amicable settlement methods in recent African BITs, which should help continue key renewable energy projects, but also stave off disputes.

Finally, Alexander Leventhal (Quinn Emanuel) rounded up and affirmed the dynamic trends outside of the EU by outlining the increased treaty-making activities in the Global South, as the EU has effectively terminated over 130 BITs. While the new treaties are protective of a State’s right to regulate and include climate change obligations, they also severely limit investment protection and access to ISDS (as is the case, for example, in the India-UAE BIT).

The Impact of the New U.S. Administration’s Trade and Investment Agenda for Europe and Beyond

Finally, the impact of the recent regressive U.S. trade and investment policies brought the discussion back to Europe, focusing on the possible legal and economic effects it will project onto future policies. Looking at the Baltics, Prof. Dr. Solveiga Vilčinskaitė (TGS Baltic) noted that the economic impacts of the shifting dynamics can be overcome in light of historical experiences with Russia-related measures. However, the harmful precedents undermining international law pose a higher risk, and must be upheld, starting with the UN Charter Foundational principles, as stressed by Iana Dreyer (Founder & Editor of Borderlex).

Striking a more forceful tone, Arne Fuchs (Ashurst) described the existing U.S. and EU subordination of international law as “moral disasters” as the system is confronted with a “multidimensional crisis.” Importantly, Mr. Fuchs observed shifts in investor attitudes under these circumstances, as they proactively seek treaty protections and risk insurance. This seems to reaffirm the stabilizing effects of international norms in severely challenging times.

With an eye on the future recovery of Ukraine, Marie Talasova (Wolf Theiss) proposed concrete steps the EU should take to support the country in this process. Primarily, this would include encouraging new investments in Ukraine, monetizing frozen assets through its existing mechanisms, and bolstering its legal and institutional frameworks through capacity development and legal reform. In this sense, Ms. Talasova stressed that international arbitration could be a confidence-building factor.

Messages for the International Legal Order for the Next Decade: “Do What is Right, Act with Conviction”

The shapeshifting and disruptive policies of the EU and the U.S. in recent years have shaken the foundations of trusted international legal norms, but they continue to stand tall, right outside and beyond the EU’s borders. True to its mission, the 10th Annual EFILA Conference left the participants with inspiration and renewed motivation to continue reinventing and reinforcing international investment law, even as the “long shadow” of Achmea and EU law continue to give shade to a thriving international legal order.

The full program and list of speakers and panel moderators are available here.

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The existing system of adjudicators’ appointment has long been driven by a laissez-faire ideal of party autonomy. The most popular sets of procedural rules provide for almost unlimited liberty of parties to appoint arbitrators—as long as these arbitrators remain impartial and independent. For example, Article 14 of the ICSID Convention requires arbitrators to be “persons of high moral character and recognized competence in the fields of law, commerce, industry or finance, who may be relied upon to exercise independent judgment,” while the UNCITRAL Arbitration Rules do not provide for any such requirements. The parties are expected to choose and appoint the most experienced and well-suited arbitrators for their own case—perfectly in line with the liberal features of arbitration, distinguishing it from more rigid modes of dispute resolution.

But does this meritocratic model work in reality? Or has it incentivised the parties to stick to a very narrow list of well-known “usual suspects”? Concerns over the lack of diversity in ISDS have become very vocal in recent years, in particular around gender and geography. For instance, the 2024 ICSID data shows that women constituted only 15% of all appointments in the ICSID cases to that date. In a similar vein, arbitrators living and practicing in the Global North account for 75% of appointments. Even this figure may not adequately reflect the true degree of the lack of geographic diversity, as many Global South appointees are still often trained in developed countries in the Global North—and thus are very much influenced by the relevant discourses.

The lack of diversity in ISDS extends beyond measurable characteristics of certain groups and manifests itself on a more “personal” level. A heavily cited 2017 study identified “an inner core of influential arbitrators followed by a second ring of arbitrators,” which account for a lion’s share of appointments in ISDS. The existence of this “core” further amplifies the problem of the lack of diversity in sometimes unpredictable ways. For instance, two women from this narrow circle (Brigitte Stern and Gabrielle Kaufmann-Kohler) account for a whopping 57% of all appointments of female arbitrators as of 2018.

This situation can be explained by multiple factors, not least—by common biases which plague any decision-making process. In the case of ISDS, these biases mostly materialise in the form of strong preferences given to “predictable” candidates perceived as pro-State or pro-investor (depending on the side appointing the relevant arbitrator) and familiar to counsel.

Regardless of its roots, this lack of diversity creates serious concerns about the legitimacy of the entire ISDS mechanism. An image of a closed circle of elite arbitrators from Western countries scrutinising legislation of developing States (such as environmental laws or emergency economic measures) in the interest of transnational corporations and awarding billions of dollars in damages to these corporations has become a powerful visualisation widely utilised by the critics of the ISDS.

A Standing Mechanism for ISDS—a Sensible Mean of Improving Diversity?

During the WGIII discussions, it was explicitly recognised that party autonomy does not need to be “a key component of ISDS,” in particular because it is believed that “party appointment was the main reason leading to concerns about the lack or apparent lack of independence and impartiality of decision makers in ISDS.” In this context, some States acknowledge that the existence of the narrow pool of arbitrators is the responsibility of States who repeatedly appoint them. The WGIII suggested that proposed standing mechanism for resolution of investment disputes could be less party-driven than the existing system.

As a starting point, the Draft Statute adheres to the existing model emphasising the “merit” of prospective candidates. Under Article 7, the tribunal members “shall be persons of high moral character, enjoying the highest reputation for fairness and integrity” and should have recognised competence in public international law, private international law, international investment law, or the resolution of international investment disputes. While some participants opined that tribunal members should, for example, “have an understanding of the different policies underlying investment, of issues of sustainable development” or have specific expertise, such as industry-specific knowledge or calculation of damages, these proposals did not advance. The WGIII agreed that establishing such strict requirements may potentially have an opposite effect and reduce the pool of qualified candidates.

The Draft Statute, however, goes beyond the purely “meritocratic” model and explicitly recognises that diversity factors shall be considered in the process of appointing adjudicators. The WGIII agreed that diversity is essential as it would enhance the quality of the ISDS process: tribunal members from different legal systems, cultures, and countries with different levels of economic development could “ensure more balanced decision-making” in ISDS. Article 8 of the Draft Statute thus sets out “equitable geographical distribution, the representation of the principle legal systems and equal gender representation” as a factor directly relevant to the appointment process.

Draft Statute: Real Impact or Declaratory Commitment?

The suggested reform may bring the selection and appointment mechanism in ISDS closer to the one existing in international courts, such as the International Court of Justice.

Throughout its work, the WGIII examined various options for selecting and appointing adjudicators, including establishing a roster of qualified candidates or a permanent body with full-time adjudicators. The WGIII also considered different nomination mechanisms: by States; by an independent entity established within the permanent body; or by interested individuals themselves. Further discussions addressed the selection process, including a selection by the participating States (by a vote or by consensus) or by a committee. The possibility of incorporating a screening process and/or consultation stage with stakeholders (e.g., representatives of investors) was also discussed.

The Draft Statute suggests that Contracting Parties shall nominate a to-be-determined number of candidates (not limited to its nationals) for potential appointment as tribunal members. They shall serve as full-time salaried adjudicators and, in general, shall not be eligible for reappointment. Additionally, candidates may be selected through an open call.

During the nomination process, the Contracting Parties are expected to provide an explanation on how the candidates fulfil the qualifications and requirements set out by Article 7 of the Draft Statute and to “take into <account> gender representation” (Article 9).

A selection committee is then to review and verify whether candidates meet the necessary qualifications and requirements and form a list of suitable candidates for appointment to the Tribunal. Notably, Article 7 of the Draft Statute does not contain any requirements on geographical diversity. One possible explanation is that the Contracting Parties are expected to nominate their own nationals or candidates from a similar cultural and legal background. Gender diversity is mentioned, but the relevant provisions do not clarify how exactly equal representation of genders is to be ensured at the nomination stage. It may mean that the selection process is expected to remain driven by general requirements of qualifications and good character of the candidates.

However, the provisions regarding later stages of forming dispute resolution panels shed some light on how WGIII expects the diversity requirements to be enforced.

According to the Draft Statute, once the selection committee approves candidates, the Conference of the Contracting Parties is to appoint the Tribunal members, taking into account the requirements on geographical distribution and equal gender representation. The Draft Statute appears to entrust the Conference with the task of ensuring that the final composition of the Tribunal is sufficiently diverse. The viability of this mechanism will likely depend on the number of candidates nominated compared to the number appointed to the Tribunal. If the latter is large enough to include candidates nominated by multiple countries representing both the Global North and the Global South, the proposed procedure can become an efficient means of addressing the diversity deficit.

Further, upon constitution of the Tribunal, three-member panels shall be formed by the President and Vice-President, who in turn are elected by a majority of votes of the members of the Tribunal. In constituting panels, the presidency is again expected to take into account the diversity elements referred to in Article 8. However, it remains unclear how this mechanism is expected to work on the level of specific panels consisting of only three members.

Finally, once a dispute is initiated, a panel will be assigned for its resolution on a random basis. Although this procedure can have a significant effect on improving diversity, it may be more problematic rather than problem-solving. It can reasonably be argued that a more tailored approach—where a panel of arbitrators who have relevant expertise for a particular dispute (e.g., experience of dealing with complex regulation concerning the mining sector) is assigned—could enhance the credibility and legitimacy of ISDS (see discussion here).

Conclusion

The WGIII’s proposal marks a major shift from a party-driven “meritocratic” model of appointments in ISDS, which has created a diversity deficit. This issue needs to be tackled promptly to ensure the legitimacy of ISDS.

The Draft Statute correctly emphasizes the need to ensure geographic and gender diversity of candidates as an independent factor alongside qualifications and expertise. While at this stage it is not entirely clear if the proposed mechanism will fully address existing imbalances, the reform proposal recognises the vital role of diversity considerations, which can be considered a step in the right direction.

Notwithstanding that, the Draft Statute seems to at times lose sight of other important aspects of the selection and appointment of arbitrators. In particular, the Draft Statute focuses on the most visible areas of diversity deficit and ignores potential “views” of arbitrators (the “pro-State” or “pro-investor” bias), despite concerns raised by some States during WGIII discussions. This means that the existing biases can still be a driving force behind the nomination process.

Relatedly, the current proposal appears to be too State centric. While the notion of ISDS refers to a resolution of disputes between foreign investors and States, the reform proposal grants States the primary role in the nomination process, depriving investors of their right to participate in the formation of a tribunal. At the same time, States—albeit indirectly—preserve this role. This can lead to new imbalances in the system and create a shortage of candidates who are not openly pro-State. A fine balance needs to be struck for ISDS to regain its role as a neutral and depoliticised system serving the interests of the international community.

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Alongside a collection of contributions on a variety of themes, issue 91.2 features a standout contribution from Claudia Salomon, President of the ICC Court of Arbitration, whose 2024 Alexander Lecture addressed the role of arbitral institutions in protecting the integrity of the arbitral process, promoting the rule of law, and providing access to justice.

In her editorial introduction to this issue, Professor S.I. Strong highlights the importance of Salomon’s remarks, where she posits that arbitral institutions must and do serve a greater purpose by ensuring access to justice, promoting the rule of law, and protecting the integrity of the arbitral process.

Underscoring arbitration’s importance as an integral part of the civil justice system, Professor Strong writes:

Though some scholars take the view that judicial dispute resolution is superior to and separate from private dispute resolution processes, efforts to downplay the importance of arbitration and related mechanisms are problematic for several reasons.

First, purely public forms of dispute resolution would be overwhelmed if all of the disputes heard in private processes were returned to the courts.  Judges around the world are already overworked, and few countries would be willing or able to hire more judges to hear matters that are currently resolved in arbitration and mediation.  Because justice delayed is justice denied, private forms of dispute resolution are necessary if a country is to ensure reasonable access to justice.

Second, arbitration is functionally similar to litigation in a way that mediation is not.  For example, arbitration operates strictly within the law, recognizing only those rights and remedies that would be available in court.  In so doing, arbitration must live up to certain procedural standards akin to what is required in court, what some commentators have called “procedural jus cogens.”  These fundamental features result in a system that promotes the rule of law as a matter of both substance and procedure.

Finally, arbitration provides parties with a safe and predictable dispute resolution mechanism in jurisdictions where the judiciary suffers from systemic challenges such as corruption or political intimidation.  Confidence in the judicial system may also begin to erode if judicial actors are seen to mis- or over-use artificial intelligence (AI).  Empirical studies have recently identified a number of problems associated with generative AI, including issues associated with automation bias, cognitive loafing, and AI addiction, and parties may want to have their disputes heard in private processes that allow disputants to tailor the use of AI by advocates and adjudicators.  Arbitral institutions are already assisting in this process by providing guidance (such as the Ciarb Guideline on the Use of AI in Arbitration) that will ensure the integrity of the arbitral process while simultaneously promoting appropriate party autonomy.

This issue of Arbitration also includes several articles that deal with issues relating to the legitimacy of private dispute resolution, and other practical problems which arise in dispute resolution.

We are happy to announce that the latest issue of Arbitration is now available and includes the following contributions:

ARTICLES

Theresa FENNER, What is the Impact of Annulment Decisions at the Seat of Arbitration on the Enforcement of Arbitral Awards Internationally? The German vs. the French Approach

Annulment of arbitral awards at the seat is one of the grounds on which the international enforcement of awards may be refused under Article V(1)(e) of the Convention on the Recognition and Enforcement of Foreign Arbitral Awards (New York Convention). Annulment proceedings at the seat may result either in a decision to set aside an award or in a decision to confirm the award. However, the impact of annulment decisions courts at the seat of arbitration on the international enforcement of awards is not clear. There have been two main approaches to resolving this issue —the classic and the internationalist—and there are also voices in between. Given the ambiguity and differing approaches, there is a great need to clarify.

This article explores how different jurisdictions approach the enforcement of arbitral awards that have been set aside at the seat of arbitration. It focuses in particular on Germany and France, two countries often viewed as taking contrasting positions on this issue. Additionally, the impact of foreign annulment decisions confirming the award on enforcement proceedings in Germany and France is analysed and compared. This is a highly topical issue, as the German Federal Court of Justice (Bundesgerichtshof – BGH)’s decision I ZB 33/22, in which the BGH had to rule on the issue for the first time, has triggered a major debate in the country. This article also examines whether a new approach is necessary, and if so, what form that approach might take. It concludes that as the place of enforcement is crucial, lawyers must take into account the attitude of the courts in the country where enforcement is sought, as attitudes may differ considerably from one country to another, and thus drastically different outcomes for their clients.

Emad HUSSEIN, AI Meets Mediation: Shaping the Future of Dispute Resolution in a Digital World

Commercial mediation is evolving with the rapid advancement of artificial intelligence (AI), which is reshaping the traditional boundaries of dispute resolution. As the volume and complexity of commercial disputes grow, AI-driven tools are emerging as valuable assets in mediation, offering enhanced efficiency, consistency, and cost savings. This article explores how AI is currently transforming mediation, focusing on applications such as predictive analytics, virtual mediation platforms, and automated document review. While AI does bring substantial benefits, it also introduces ethical and operational challenges, including risks related to algorithmic bias, confidentiality, and the limitations of AI in addressing the human dimensions of conflict. These issues are critical to ensuring that AI’s role in mediation is both responsible and effective. By examining practical case studies and analysing the impact of AI on time, cost, and outcome quality, this article provides a grounded view of AI’s integration in real-world mediation settings. 

It also highlights both its transformative potential and the careful approach required to optimize its use. 

Eva LITINA, Diversity in International Arbitration and the Role of Arbitration Institutions 

In recent years, there have been many discussions and surveys on the lack of diversity in the wider field of international arbitration as well as numerous initiatives aiming to promote the inclusion of women, younger arbitrators, and different racial groups. However, diverse and underrepresented groups still face many obstacles. This article focuses on diversity in the international arbitration context and presents the available data on arbitrator appointment and diversity of the most prominent arbitration institutions. It then identifies the key barriers to entering the arbitration field. Based on the data, the article evaluates the role and initiatives of arbitration institutions and the arbitration community in further promoting diversity and proposes ideas to strengthen diversity.

Rajarshi SINGH, Case Review: Asiana Airlines LTD. V. Gate Gourmet Korena LTD. & Ors. 

The right of a non-party to seek anti-suit injunction is a vexed question in international arbitration discourse. This article examines such an issue which arose before the Singapore Court of Appeal, yet with an interesting twist to address the particular question: can an anti-suit injunction be extended to a non-party to shield a contracting party from consequential liability of a foreign judicial proceeding brought in breach of an arbitration agreement? In a significant ruling that may potentially shape the debate surrounding this topic, the Singapore Court of Appeal has crystallised the position with respect to the issuance of anti-suit injunctions, including its availability for non-parties to an arbitration agreement. This decision therefore builds upon the existing international jurisprudence concerning the basis for the grant of such injunctive relief to both parties and non-parties, and provides clarity with respect to the extent of legitimate judicial intervention.

Claudia SALOMON, Guardian, Gatekeeper, or Guide: The Role of Arbitral Institutions in Protecting the Integrity of the Arbitral Process, Promoting the Rule of Law, and Providing Access to Justice

BOOK REVIEWS

Gordon BLANKE: DIFC Courts Practice, edited by Rupert Reed KC, and Tom Montaigu-Smith KC (Edward Elgar, 2024), 1184 pp., £355.00, ISBN: 978-1-80392-544-8

Gordon BLANKE: Lawyer, Scholar, Teacher and Activist: A Liber Amicorum in Honour of Derek Roebuck, edited by Neil Kaplan, and Robert Morgan (Holo Books, 2021), 555 pp., £35.00, ISBN: 978-0-9572153-9-9

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This post focuses primarily on arbitration, examines the alignment of the arbitration section of Ghana’s ADR Act with international standards, and explores potential reforms to enhance Ghana’s arbitration landscape, making it more efficient, investor-friendly, and globally competitive. This post highlights key areas where Ghana’s arbitration framework aligns with international best practices. It further identifies gaps and challenges in the current ADR Act and whether Ghana should maintain an integrated ADR Act or enact a standalone Arbitration Act.

Alignment with International Standards

This section outlines how Ghana’s ADR Act (Act 798) aligns with evolving international arbitration standards, focusing on three pillars: (A) consistency with the UNCITRAL Model Law, (B) enforcement of foreign arbitral awards under the New York Convention, and (C) comparative insights from the recently reformed English Arbitration Act.

(A) Consistency with UNCITRAL Model Law (1985, amended 2006)

Firstly, the Ghana ADR Act allows for both arbitration clauses and separate arbitration agreements, as mandated by the UNCITRAL Model Law.

Further, Ghana’s ADR Act empowers tribunals to rule on their jurisdiction (s. 24), aligning with UNCITRAL’s jurisdictional autonomy principles. The arbitral tribunal has the authority to determine its jurisdiction, particularly concerning: (a) the existence, scope, or validity of the arbitration agreement; (b) the existence or validity of the substantive or container agreement; and (c) whether the matters submitted to arbitration align with the arbitration agreement.

Also, Ghana’s ADR Act limits court involvement in arbitration, consistent with the UNCITRAL Model Law’s principle of minimal judicial interference.

(B) Enforcement of Foreign Arbitral Awards (New York Convention, 1958)

Ghana is a signatory to the New York Convention and enforces foreign arbitral awards under Section 59 of the ADR Act. Grounds for refusal of enforcement are aligned with Article V of the Convention (e.g., lack of proper notice, invalid arbitration agreement, procedural unfairness).

In some instances, Ghanaian courts have delayed the enforcement of foreign arbitral awards due to procedural hurdles. For example, in the case of Balkan Energy v The Republic of Ghana, PCA Case No. 2010-7, there was a dispute before an arbitration tribunal that was formed after a breach of a power purchase agreement between the Government of Ghana and Balkan Energy Limited regarding the Osagyefo Power Barge in 2007. Enforcement proceedings extended over two years due to judicial review applications after the tribunal mandated Ghana to pay Balkan Energy damages of $11.75 million, plus interest and costs.

(C) The Reformed English Arbitration Act and Ghana’s ADR Act

It is important to note that Ghana’s ADR Act strengthens confidentiality obligations compared to the English Arbitration Act, 2025 (“English Arbitration Act”). The English Arbitration Act, however, does not explicitly provide the same level of protection. The English arbitration confidentiality requirement remains an implied duty and not statutory. In Ghana, confidentiality is statutorily provided for under Section 34 of the ADR Act. Except as otherwise agreed to by the parties, the Arbitral Tribunal is mandatorily required to make orders concerning the confidentiality of the arbitration proceedings or any other matters in connection with the arbitration and may take measures for protecting trade secrets and confidential information.

The English Arbitration Act gives arbitrators express powers to summarily dismiss unmeritorious claims, while Ghana’s ADR Act lacks such a provision. Ghana may consider, in its arbitration reform, the expanded powers of the tribunal. The duties and powers of an arbitrator under Section 31 do not give the arbitrator the power to dismiss unmeritorious claims summarily. It is important to note that this reform to the English Act aligns the arbitration process with the summary judgment standard used in civil litigation in England, specifically Civil Procedure Rule 24. Both laws expressly state “no real prospect of success” as the main test for summarily dismissing unmeritorious claims or cases. Although Order 14 of C.I 47 of Ghana is similar in substance to that of the England’s Civil Procedure Rule 24, it does not have the specific words. In our bid to reform, Ghana could use the same approach and legislate a test that reflects the current regime of summary judgment in Ghana to achieve the same level of uniformity.

Secondly, unless specified otherwise, an arbitration agreement is governed by the law of the underlying contract. The English Arbitration Act clarifies this position: the law relevant to an arbitration agreement is the law expressly agreed upon by the parties, or, in the absence of such an agreement, the law of the arbitration seat. The English Arbitration Act further adds an exception to this new default rule for investor-State arbitrations when the arbitration agreement stems from a treaty or non-English legislation. In Ghana, however, if the parties do not indicate which law should govern the arbitration agreement, the courts are likely to rule that the law of the arbitration seat will apply. The Supreme Court of Ghana accepted this approach in the case of Dutch African Trading Company Bv (Datc) v West African Mills Company Limited (J4/29/2023) [2024] Ghasc 8 (28 February 2024). However, a clear statutory provision can be made to render the law of the seat of the arbitration as the choice of law where there is no explicit agreement by the parties. This is key in settling the debate on the law applicable to arbitration agreements.

The English Arbitration Act also broadens the scope of arbitrator immunity, protecting arbitrators from liability for resignation unless the resignation is deemed unreasonable. However, Ghana’s ADR Act excludes the immunity of liability incurred by arbitrators resulting from resignation under Section 31.

Should Ghana Have a Standalone Arbitration Act?

The current ADR Act provides a cohesive system that accommodates arbitration, mediation, and customary dispute resolution under one law, making it accessible and familiar to local practitioners.

Unlike many jurisdictions, Ghana recognizes traditional and informal dispute resolution mechanisms, which help reduce litigation backlog and promote community-based conflict resolution. Businesses and individuals can choose the most suitable dispute resolution method without navigating multiple laws.

A dedicated arbitration law could strengthen Ghana’s position as a preferred seat for international arbitration, providing clearer rules and a stronger enforcement regime. Most leading arbitration jurisdictions (e.g., UK and Singapore) separate arbitration from other ADR methods, making arbitration more robust and investor-friendly.

The Thorny Issue of Artificial Intelligence and Arbitration

Artificial Intelligence (AI) has become an integral part of our personal and professional lives. For a country like Ghana, where arbitration is growing and the adoption of technology is rising, we must stay on top of the trends, especially in the practice of arbitration, if we want to make Ghana an arbitration hub. Leading institutions like Singapore International Arbitration Centre (SIAC), International Chamber of Commerce (ICC), London Court of International Arbitration (LCIA), and among others, have started incorporating AI tools into e-filing and case management systems to improve efficiency.

While we must embrace the use of AI in arbitration in Ghana, being cognizant of the pitfalls is instructive. There have been instances where AI tools such as ChatGPT have hallucinated and produced non-existent case law when used by lawyers. For example, in the recent U.S. case Wadsworth v. Walmart Inc., lawyers submitted a filing citing non-existent cases generated by an internal AI tool. The judge in the case fined the lawyers and removed one of them from the case. Similarly, in Zhang v Chen, 2024 BCSC 285 (CanLII), a Vancouver lawyer submitted a brief in a child custody case to the British Columbia Supreme Court that included non-existent cases generated by ChatGPT. This led to the initiation of an investigation by the Law Society of British Columbia.

It is our considered opinion that Ghana cannot fully benefit from the use of artificial intelligence in arbitration, nor effectively guard against its potential risks, without a clear regulatory framework or professional guidance. We propose that national guidelines be developed to support the ethical and efficient use of AI by arbitration practitioners and institutions. Two central concerns that require attention are confidentiality and the independence of arbitrators. Ghana’s ADR Act, under section 34, places a statutory duty on arbitrators to preserve the confidentiality of proceedings. However, the use of AI tools, especially third-party or cloud-based platforms, may expose sensitive information to external risks. Both the CIArb Guideline on the Use of AI in Arbitration (2025) and the SVAMC Guidelines on the Use of AI in Arbitration (2024) highlight the need for due diligence, cautioning against inputting confidential data into AI systems without proper safeguards. They also flag the danger of relying on AI tools that may generate unreliable or unverifiable results.

The CIArb Guideline encourages arbitrators to disclose their intended use of AI to the parties involved, while the SVAMC Guidelines underscore the importance of transparency and caution to preserve the fairness and enforceability of awards. This step would ensure that Ghana keeps pace with global developments while safeguarding the integrity of its arbitral system.

Conclusion

Ghana’s ADR Act is generally aligned with international standards but lacks some modern arbitration innovations. Learning from some of England’s 2025 reforms to its arbitration act and global trends, Ghana can make strategic updates to its law and regulatory framework to increase efficiency, attract investment, and reduce court intervention in arbitration.

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Whether, for the purposes of enforcement of [the “BIT Awards”], India has submitted to the adjudicative jurisdiction of the English Courts by prior written agreement within the meaning of s.2(2) of the State Immunity Act 1978, by its ratification of the New York Convention 1958 and thereby (on the Fourth to Sixth Claimants’ case) its consent under Article III to the English Court recognising and enforcing the Awards.

For the purposes of this case, the relevant provision of the New York Convention is Article III, which provides that “[e]ach Contracting State shall recognize arbitral awards as binding and enforce them in accordance with the rules of procedure of the territory where the award is relied upon, under the conditions laid down in the following articles.” (emphasis added.)

Background

The dispute arose out of a contract (the “Devas Contract”) concluded between Devas Multimedia Private Limited (“Devas”) and Antrix Corporation Limited (“Antrix”), an Indian registered entity wholly owned by India. The Devas Contract contained an arbitration clause providing for arbitration in accordance with the rules and procedures of the International Chamber of Commerce or the United Nations Commission on International Trade Law.

India terminated the Devas Contract in February 2011, and in 2012, the Claimants (all shareholders of Devas) commenced arbitration proceeding against the Respondent (India) under the 1998 India-Mauritius Bilateral Investment Treaty (“India-Mauritius BIT”). The arbitration proceeding—CC/Devas (Mauritius) Ltd., Devas Employees Mauritius Private Limited, and Telcom Devas Mauritius Limited v. Republic of India (I), PCA Case No. 2013-09—resulted in the BIT Awards that the Claimants are now trying to enforce. As of September 2024, the outstanding value of the Awards stood in excess of EUR 195 million.

In response to the Claimants’ effort to enforce the Awards, India claimed immunity under the UK State Immunity Act 1978 (“SIA”), sections 1, 2, and 17 of which provide:

1 General immunity from jurisdiction.

(1) A State is immune from the jurisdiction of the courts of the United Kingdom except as provided in the following provisions of this Part of this Act. [. . .]

2 Submission to jurisdiction.

(1) A State is not immune as respects proceedings in respect of which it has submitted to the jurisdiction of the courts of the United Kingdom.

(2) A State may submit after the dispute giving rise to the proceedings has arisen or by a prior written agreement; [. . .]

17 Interpretation of Part 1.

[. . .]

(2) In sections 2(2) . . . above references to an agreement include references to a treaty, convention or other international agreement. (emphasis added)

The Claimants’ Arguments

Under section 2(2) of the 1978 Act, a State loses its adjudicative immunity if by prior agreement it has submitted to the jurisdiction of the English courts. The question before the court was whether Article III of the New York Convention satisfies the requirements of prior agreement to submit to the jurisdiction of the courts under section 2(2) of the 1978 Act. The Claimants argued that the question before the court should be answered in the affirmative because Article III of the New York Convention constitutes an express consent from India that the UK courts should recognise as binding. Consequently, the Claimants urged the court to: (i) enforce the BIT Awards falling within the scope of the New York Convention; and (ii) consent to the UK courts having adjudicative jurisdiction to do so. For support, the Claimants relied in part on Infrastructure Services Luxembourg v. Spain, a case that focused on Article 54(1) of the ICSID Convention, which is similarly worded as Article III of the New York Convention. In Infrastructure Services Luxembourg v. Spain, the court held that Article 54 of the ICSID Convention falls within “prior written agreement” for the purposes of the 1978 Act. According to the court in Infrastructure Services Luxembourg v. Spain, for there to be an agreement in writing and, therefore, an express submission to the jurisdiction under section 2(2) of the SIA, it is not necessary to use the term “waiver” or “submit” if the implication of waiver or submission is clear from the words expressly used.

The Claimants also argued that awards against States are not excluded from the ambit of the New York Convention and that the only limitation on awards subject to Article III is that they must constitute “foreign” arbitral awards within the meaning of Article I of the Convention. According to this line of argument, “all States consented to the recognition and enforcement in other States of all arbitral awards seated abroad including awards rendered against States.” Overall, the argument is that state immunity is fundamentally inconsistent with the object and purpose of the New York Convention because it interferes with the effectiveness of arbitral awards and gives rise to delays and inefficiencies.

The Judgment

The court started by noting that the case raised several interrelated issues, including: (i) whether ratification of Article III of the New York Convention is, on its own, an “express,” “unequivocal,” and “unmistakable” waiver of state immunity; (ii) whether the reference to “rules of procedure” in Article III preserves state immunity in its own terms; and (iii) whether the New York Convention only applies to States in relation to private law disputes.

The court clarified that regarding waiver of state immunity by treaty, the applicable test in English law is as stated by the House of Lords in R v Bow Street Metropolitan Stipendiary Magistrate, ex parte Pinochet Ugarte (No 3), and is that waiver of state immunity by treaty must always be express. On whether India’s ratification of the New York Convention amounts to consent by way of “prior written agreement” for the purposes of section 2(2) of the SIA, the court held that it did not. According to the court:

Article III of the NYC preserves state immunity by its own terms, because the obligation on a “Contracting State” is expressed to be “in accordance with the rules of procedure of the territory where the award is relied upon.” It is established in English law that “State immunity is a procedural rule going to the jurisdiction of a national court. It does not go to substantive law[.]”

The court offered several reasons for its holding.

First, relying on the travaux préparatoires in respect of the New York Convention, the court reasoned that it was not the intention of the drafters of the treaty to preclude immunity-based arguments in enforcement actions against States.

Second, the court concluded that Article III of the New York Convention preserves state immunity by its own terms, because the obligation on a “Contracting State” is expressed to be “in accordance with the rules of procedure of the territory where the award is relied upon.” Citing Jones v Saudi Arabia, the court stated that it is established in English law that state immunity “is a procedural rule going to the jurisdiction of a national court” and “does not go to substantive law.”

Third, applying the test for waiver in English law, the court decided that the ratification of the New York Convention is not, on its own, a waiver of state immunity by India. According to the court, “[a] waiver of state immunity by treaty or convention must always be express, and expressed in a clear and recognisable manner, as by an unequivocal agreement.”

Lessons

The case is important for at least three reasons.

First, this case highlights the challenges associated with enforcing international arbitral awards. In this case, the court acknowledged the extraordinary delays that had occurred in enforcement and India’s efforts to thwart the enforcement of the BIT Awards.

Second, the case underscores the fact that BITs can have serious impact on domestic policymaking and that States must pay very careful attention to the international investment agreements that they sign and ensure that they provide themselves with adequate domestic regulatory space in these agreements. As a sovereign State, India had the right to limit the scope of investor-State arbitration from the 1998 India-Mauritius BIT or exclude it completely, but did not do so. Had India limited the scope of investor-State dispute settlement in the 1998 India-Mauritius BIT or excluded it altogether, this case would not have arisen. While observing that India’s effort to avoid honouring the BIT awards “may [. . .] be explained by the fact that it regards the issues as going to its vital national interests,” the court acknowledged that “it is an aspect of the BIT that [India] entered into that there is no expectation on the part of the parties that a court will go behind the arbitration awards.” On this point, it must be noted that Principle 9 of the United Nations Guiding Principles of Business and Human Rights encourages States to “maintain adequate domestic policy space to meet their human rights obligations when pursuing business-related policy objectives with other States or business enterprises, for instance through investment treaties or contracts.”

Third, the case also underscores the fact that the effects of BITs can be felt long after they are terminated. The India-Mauritius BIT implicated in this case was concluded in 1998, entered into force in 2000, and terminated in 2017. In effect, although now terminated, the India-Mauritius BIT is still rearing its head nearly thirty years after it was concluded. The inevitable conclusion is that, given the longevity of BITs, States must pay careful attention to the terms of the international investment agreements that they negotiate and ratify.

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The Structural Imbalance in International Arbitration

Arbitration was designed to be a neutral, efficient, and effective dispute resolution mechanism. However, in practice, its prohibitive costs often place smaller claimants at a disadvantage. According to data from the United Nations Conference on Trade and Development (UNCTAD) and the International Council for Commercial Arbitration (ICCA), the average cost of an Investor-State  arbitration exceeds $8 million, with legal fees accounting for nearly 80% of expenses. This financial barrier could possibly deter legitimate claims, effectively granting economic power the ability to dictate access to justice.

If the ability to seek redress depends more on financial resources than on the merits of the case, does this not undermine the very foundation of a fair legal system? How can justice be truly impartial if economic constraints prevent individuals from holding powerful entities accountable?

Regulators recognise access to justice as a safeguard against abusive market practices, yet financial barriers often prevent affected individuals—particularly minority and economically disadvantaged groups—from pursuing legitimate claims. The cost of litigation can make challenging global corporations impractical, allowing anti-competitive and illicit behaviors to persist unchallenged. The same holds true for affected foreign investors from pursuing meritorious claims against State wrongdoing.

Litigation funding disrupts this dynamic by enabling claimants with strong legal grounds—but limited financial resources—to access arbitration without upfront costs. In exchange, funders receive a portion of the awarded damages if the case succeeds. This model does not only provide financial support but also enhances claim credibility, as funders conduct rigorous due diligence before committing capital and may even trigger effective settlement.

Key Trends in Arbitration Funding

1. Growth in Investor-State Disputes

Investor-State arbitration, governed by treaties like ICSID (International Centre for Settlement of Investment Disputes) and UNCITRAL, has become an attractive area for litigation funders. A number of sovereign States often deploy financial resources and prolonged legal strategies, making litigation funding crucial for claimants seeking to challenge unfair expropriations, regulatory changes, or discriminatory measures.

More sophisticated companies are turning to third-party funding as a way to optimise their financial strategy. This approach reshapes risk calculations, allowing businesses to focus their own resources on growth rather than diverting funds to legal claims. By leveraging external funding, companies can transform legal liabilities into financial assets, shifting the burden off their balance sheets and freeing up capital for core operations.

2. Corporate Adoption of Litigation Funding

Recent trends indicate that third-party funding has become a significant feature of international arbitration. This observation is supported by empirical data: a recent Queen Mary Survey (via NYU GlobalEx) found that 39% of practitioners had encountered third-party funding in their cases. Moreover, the global market for litigation finance expanded from USD 18.2  billion in 2022 to projections approaching USD 37  billion by 2032, reinforcing the narrative of sustained growth.

A rising trend in litigation finance is the monetisation of awards under a non-recourse model, allowing investors to receive a portion of claims without assuming risk. For investors, this presents a unique opportunity to access free capital without exposure to legal uncertainties. For founders, it’s an appealing avenue—once damages and liabilities are quantified, the timeline for financial recovery is significantly shorter compared to cases still in the early stages, where risks remain high.

Funders assess a case not only based on the likelihood of a favorable award but also on its enforceability. A key factor is whether the respondent State will pay voluntarily— recent statistics show that 66% of ICSID damages awards are paid voluntarily or reached a post-award settlement. Notably, a growing number of States particularly in Latin America are choosing to comply or negotiate payment to avoid accumulating post-award interests. Where voluntary compliance is uncertain, funders must consider the prospects of Sovereign asset-freezing measures. As States may become more proactive in honoring awards, these dynamics could possibly reshape investment arbitration and the strategies behind legal financing.

3. Regulatory Developments and the Debate on Transparency

With the growing prevalence of third-party funding, regulators and arbitral institutions are debating whether disclosure should be mandatory. The ICC (International Chamber of Commerce) and SIAC (Singapore International Arbitration Centre) have introduced soft guidelines and rules on funder disclosure, while ICSID’s 2022 Rule Amendments now require disclosure of third-party funding arrangements.

Critics argue that forced transparency could give respondents an unfair tactical advantage, while proponents insist it ensures procedural fairness and prevents conflicts of interest.

The Chartered Institute of Arbitrators (CIArb) has issued a call for comments on its proposed Third-Party Funding (TPF) guideline. An interesting question under review is whether arbitration tribunals should have the authority to order respondents to cover litigation funding costs as part of damages—particularly in cases where the respondent’s actions left claimants with no choice but to seek external funding, as illustrated in domestic arbitration in the UK.  The UNCITRAL’s Working Group III on ISDS Reform is reviewing the issue of allocation of third party funding costs in Investor-State arbitration, suggesting an increased transparency and even limiting third party funding in exceptional circumstances. (Draft Provisions 9 and 12).

Litigation Funding in Action

Infrastructure Disputes (Energy, Mining, Construction) frequently involve Third-Party Funding due to their long timelines, technical complexities, and high costs. Arbitration in these sectors often requires extensive expert testimony, document review, and prolonged proceedings, making external financing a practical solution. Funders assess claims based on their enforceability and potential returns, ensuring that viable disputes receive financial backing. As funding becomes more prevalent, it is reshaping how infrastructure-related arbitration is approached, providing claimants with the resources needed to pursue legal action effectively.

The Future of Litigation Funding in Arbitration

The role of litigation funding in arbitration is expected to expand further due to:

• Greater institutional acceptance: Leading arbitral institutions, including ICSID, ICC, and SIAC, are formally incorporating litigation funding into procedural frameworks. The move towards standardization of funding disclosures, as seen in ICSID’s 2022 amendments, indicates increasing acceptance. This trend could extend to national arbitration laws as jurisdictions move towards harmonization, notably in the European Union where a EU Directive is under current discussions.
• Portfolio financing models: Funders are diversifying risk by financing multiple claims in structured portfolios rather than single-case investments. This shift allows claimants with smaller or mid-sized cases to secure funding that would traditionally be unavailable under single-case assessments. In addition, it enables claimants to group related claims, leveraging economies of scale in legal strategy and procedural efficiency.
• Data-driven risk assessment: The integration of AI and machine learning in litigation funding is refining case selection, valuation, and risk modeling. AI-powered analytics now assess historical arbitration trends, tribunal biases, and enforcement probabilities to improve funding decisions. This innovation is expected to enhance funders’ ability to predict outcomes and optimise investment allocation in arbitration finance.
• Expansion beyond traditional arbitration hubs: While litigation funding has been dominant in London, New York, and Paris, emerging arbitration centers in Latin America and Africa are increasingly recognising its value. Institutions like the Hong Kong International Arbitration Centre (HKIAC) have introduced new rules accommodating third-party funding, which is now permitted in Hong Kong, broadening access to financed arbitration.

Conclusion

Litigation funding is no longer a marginal phenomenon—it is now a fundamental pillar of international arbitration. By democratizing access to justice and mitigating financial risk, it enables meritorious claims to proceed regardless of the claimant’s financial standing. As regulations evolve and funding models mature, litigation finance will continue to shape the future of arbitration, reinforcing its role as a mechanism of legal and economic equilibrium.

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Although B ultimately settled with A, the question lingers: can conditional awards shield middle parties in chain disputes from such legal limbo? This post, drawing on international practice and Vietnam’s evolving legal framework, explores how conditional awards, enforceable upon a future event, can break this deadlock.

The Chain Dispute Trap

Supply chains are prevalent in commercial disputes. In a construction scenario, a main contractor commonly has to deal with an employer’s claim for delays caused by a subcontractor. The problem is exacerbated by the applicability of time bars to these supply chain disputes. In M&A transactions, indemnity claims for breaches of representation or warranty often expire 24 to 36 months after closing.

Consider a case where a share purchase agreement (“SPA”) requires notice of claims to be raised within 24 months. If the buyer receives a notification from the tax authority about a potential Value-Added Tax penalty for the target company but the final ruling on the penalty is delayed, waiting for damages to crystallize could cause the notice period to lapse, leaving the buyer without a remedy despite a contractual breach.

Filing for a conditional award before the time bar expires, contingent on the tax ruling, could preserve the buyer’s rights, thereby bridging the gap between anticipated risk and actual loss. This pre-emptive approach transforms time limitations from obstacles into manageable procedural checkpoints, which is particularly valuable in cross-border transactions where enforcement timing is critical.

Conditional Awards: A Global Perspective

While still relatively novel, conditional awards are gaining recognition in international arbitration. They resolve liability fully but subject the rulings on liability to conditions like third-party decisions or downstream claims, thereby offering a pragmatic solution to multi-tiered disputes in supply chains, M&A, and construction.

In Konkola Copper Mines v U&M Mining Zambia [2014] EWHC 2374 (Comm), the English High Court upheld a conditional award with a “show cause” provision, affirming its validity. Cooke J emphasized at [97] that there is no reason why, as a matter of principle, “an award cannot be final and conclusive in its terms where it clearly provides for specific relief … which only bites at a point in the future, in the absence of submission and evidence from an absent party to the contrary”.

Similarly, in Voltas Ltd v York International Pte Ltd [2024] SGCA 12, the Singapore Court of Appeal upheld a conditional award imposing a payment obligation contingent on a third-party payment, affirming its validity as a final award. The Court emphasized at [42] that there is “no reason for thinking that a conditional award may not constitute a final award”, and the “key inquiry is whether the conditions in such an award make it necessary for the tribunal to reopen or reconsider the matter” (see further analysis in this blog post). The Singapore courts also differentiate “conditional” awards from “provisional” awards which “do not definitively or finally dispose of either a preliminary issue or a claim in an arbitration” and are better regarded as orders rather than awards (see PT Perusahaan Gas Negara (Persero) TBK v CRW Joint Operation [2015] SGCA 30 at [50]).

These decisions reflect an emerging consensus: conditional awards are consistent with the principle of finality, provided they definitively resolve the dispute and delegate no further authority to the tribunal to reopen or reconsider the dispute. By enabling tribunals to address contingent risk without fragmenting proceedings, conditional awards represent a useful and enforceable remedy in complex cross-border arbitration.

Vietnam’s Legal Lens: From Ancient Maxim to Modern Tension

Vietnam’s insistence on proving “actual damages” (Vietnam’s Civil Code 2015, Article 584) stems from its civil law tradition, which is deeply influenced by French legal doctrine. Historically, Roman law’s damnum emergens (actual loss) principle shaped civil codes, requiring tangible harm for compensation—a legacy Vietnam inherited.

In practice, Vietnamese courts insist on proven actual losses when enforcing liquidated damages clauses. In the Supreme Court’s Decision No. 15/2016/KDTM-GDT, a 5% delay penalty in a construction contract was challenged due to insufficient evidence of damage or severity of breach, reflecting the reluctance of the Supreme People’s Court of Hanoi (“Hanoi Supreme Court”) to enforce such clauses without proof of actual loss.

Likewise, in Toepfer v Sao Mai (2011), the Hanoi Supreme Court rejected the grant of liquidated damages in an award issued by a tribunal constituted under the Grain and Feed Trade Association Arbitration Rules. The court deemed the tribunal’s award of a fixed sum, which lacked proof of harm or of any attempt by the award creditor at mitigation (as required under Vietnam’s Commercial Law 2005, Articles 304 and 305), a violation of fundamental principles of Vietnamese law on damages. Therefore, awards lacking proof of harm may conflict with public policy, hindering foreign award enforcement under the New York Convention’s Article V(2)(b).

Yet, Vietnam’s legal framework is not entirely rigid. Vietnam’s Commercial Law 2005 (Article 292) allows for remedies beyond damages—such as agreed penalties or “other measures not contrary to fundamental principles”. Vietnam’s Law on Commercial Arbitration 2010 (Article 4.1) reinforces party autonomy and grants tribunals broad discretion. Hence, if parties agree to include in their contracts clauses like “the tribunal may award appropriate remedies”, conditional awards could fall within the scope of such terminology, thereby sidestepping the hurdle of being required to prove actual damage.

Recommended Practical Strategies

Assuming that conditional awards can indeed be issued, in order to effectively leverage conditional awards in chain disputes, it is recommended that parties consider adopting the following contract drafting approaches:

• Incorporate Explicit Contingent Relief Provisions: “If Party A is held liable to Third Party under the [Upstream Contract] for losses arising from [Event], Party B shall indemnify Party A for all such liabilities within 30 days of written notice”.
• Address Time-Bar Concerns in Supply Chains: “Seller acknowledges that Buyer may face claims from downstream customers. Any notice of potential claim from Buyer, even before damages crystallize, shall preserve Buyer’s right to indemnity, provided that final quantum is determined within 12 months thereafter”.
• Empower Tribunals with Remedial Flexibility: “The tribunal may issue any award it deems appropriate to protect the parties’ rights, including conditional awards contingent on future events or third-party determinations”.
• Select Award-Friendly Jurisdictions: Choose arbitral seats with demonstrated receptiveness to innovative remedies (e.g., Singapore, London) and institutional rules that expressly recognize a tribunal’s powers to issue provisional or partial awards.

Should parties find themselves caught in a chain dispute, it is recommended that the following tactical manoeuvres be considered:

• Preserve Rights Through Pre-emptive Filing: Initiate arbitration before limitation periods expire, even when damages remain unquantified. Support your application with evidence of impending harm (including correspondence documenting claims, proceedings in related contracts, and expert assessments of potential liability).
• Request Specific Procedural Orders: Explicitly seek tribunal confirmation that conditional relief is within its powers under the applicable rules and law, ideally at the case management conference stage. In the event the tribunal is unwilling to make an order or ruling that it has the jurisdiction and/or power to issue conditional relief, request a stay of proceedings pending the actualization of damages.
• Utilize Settlement Dynamics: Position conditional award requests as leverage in settlement negotiations. The certainty of a tribunal’s determination—even if contingent on future events—often drives earlier, more favorable settlements than might otherwise materialize, as demonstrated in the Vietnamese fruit juice dispute case study outlined at the start of this post.

Conclusion: A Shield Worth Forging

Conditional awards offer a precise antidote to a glaring flaw in modern commerce: the plight of the middle party snared in chain disputes.

While recent institutional reforms like Rule 17 of the 7^th Edition of the Arbitration Rules of the Singapore International Arbitration Centre regarding Coordinated Proceedings (discussed in this blog post) attempt to address this issue through coordinated case management, they face significant practical limitations. Notably, the effectiveness of such coordination is hindered by the requirement that each arbitration agreement must refer to the same institutional rules, which is not always provided for. Additionally, some parallel disputes, such as those involving tax authorities, may be non-arbitrable under certain jurisdictions’ laws, further restricting the scope of coordinated solutions.

Constituting tribunals with consistent composition across disputes with different arbitration agreements also introduces challenges arising from arbitrator appointments, conflicts of interest, and jurisdictional complexities—such as reconciling varying scopes, applicable laws, or institutional rules. Even when coordination of parallel disputes is achieved, the risk of inconsistent findings remains when different applicable laws are applied to the same facts across cases or when parties in the middle of the chain advocate for opposing outcomes in related disputes. These risks may undermine the intended efficiency by complicating decision-making and prolonging proceedings.

Conditional awards elegantly sidestep these complications, and transform deadlines from obstacles into tactical advantages. Their widespread adoption depends on three pillars: institutional endorsement, judicial support in enforcement proceedings, and practitioner implementation in contract-drafting and dispute resolution strategies. For jurisdictions like Vietnam, they represent an opportunity to harmonize civil law traditions with modern commercial needs.

The true test will be cross-border enforcement, where a key challenge lies in the enforceability of conditional awards. Since these awards are contingent on a subsequent development for the relief to crystallize, they may not definitively resolve an issue or claim. Hence, contrary to the position in Singapore, some courts may view such awards as “provisional”, and therefore as mere orders rather than final awards. If successfully enforced despite this ambiguity, conditional awards will enhance—but not revolutionize—arbitration’s fundamental purpose of delivering efficient, business-oriented dispute resolution.

The author acted as counsel for party B in the case study mentioned in the opening paragraph.

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As in many—if not all—industries, business sectors, and areas of daily life, the topic of artificial intelligence (“AI”) is currently attracting significant attention in arbitration. Given the pace of technological progress, it is challenging to assess AI’s future role in arbitration. While skeptics emphasize the limits and risks of deploying AI, others are eager to explore its potential. The conference focused on precisely this question: how can AI’s potential be meaningfully harnessed in arbitration?

The conference opened with a welcome by Prof. Dr. Stefan Kröll (DIS), who thanked the organizing team: Dr. Karsten Grillitsch (DIS/Bosch), Dr. Roland Kläger (Haver & Mailänder), and Dr. Claudia Krapfl (Gleiss Lutz).

Arbitration 2030: AI’s Role in the Future of Dispute Resolution

The keynote address by Bridget McCormack (American Arbitration Association) set an ambitious and inspiring tone. She portrayed AI and dispute resolution as a “match made in heaven,” arguing that AI can democratize access to justice and drive innovation and prosperity. Furthermore, she emphasized AI’s core strength—its ability to understand language—and highlighted its potential in various arbitration-related tasks such as data management, fact analysis, and enhancing legal writing. She also pointed out that the American Arbitration Association is pursuing impressive and far-reaching projects to explore and develop the application of AI in the field of dispute resolution. For example, at the AAAiLab, tools such as ClauseBuilder—a generative AI for drafting arbitration agreements—and an AI-powered chat book that supports advocates, students, and self-represented parties with tailored guidance at every stage of arbitration proceedings, are being developed (see also here). Bridget McCormack’s closing call encouraged the audience to proactively engage with the topic.

Case Studies: How AI is Already Used in Arbitration

The first panel, moderated by Dr. Anke Meier (Noerr), provided hands-on insights into practical applications of AI in arbitration. Live polls via QR code gave insight into the audience’s experiences with and views on AI. For instance, tools like ChatGPT, DeepL, Harvey, and Libra were cited. Concerns included hallucinations, data privacy, and effective prompt design.

Dr. Ramona Schardt (DIS) presented the DIS’s proactive efforts to integrate AI in a meaningful way, focusing on initiatives like the DIS eFile, a fully digital case management system designed to enhance efficiency and transparency. She also emphasized efforts to ensure a legally secure AI framework.

Florian Diekmann (Regional Court of Rottweil) shared state court experiences, highlighting the role of the newly established Commercial Court in Baden-Württemberg as an innovation driver. He also reported that the majority of case files are now maintained digitally and that, in Stuttgart, AI was also used in the diesel mass litigation procedure to sort the overwhelming influx of cases.

Franziska Fuchs (Bosch) highlighted the substantive cost savings of up to 90% that can be achieved in arbitration with existing AI tools, such as summarizing depositions and analyzing documentary evidence. She emphasized that commercial clients expect law firms to proactively embrace AI and suggested that law firms work closely with their clients to jointly shape the integration of AI into their workflows.

Prof. Dr. Eric Wagner (Gleiss Lutz) stressed that while implementation of AI is costly, it is necessary to maintain competitiveness.

The panel agreed that the successful use of AI in arbitration depends on budget, technical capability, and mindset.

Will Disputes Soon Be Resolved by Robo-Arbitrators?

This for and against debate, moderated by Dr. Felix Zimmermann (LTO), presented opposing views on whether AI could and should one day replace human arbitrators:

Prof. Dr. Thomas Riehm (University of Passau) argued that AI cannot replace arbitrators, as human communication and consciousness are essential for decisions that are acceptable and legitimate for the parties involved. While AI can certainly analyze procedural risks and distill them into amounts and decision proposals, such AI-driven decisions would represent a fundamentally different concept from the current arbitration system.

Dr. Alexander Steinbrecher (BVG Berlin) countered with a pragmatic view: AI could replace arbitrators, especially from an economic perspective, since it can deliver faster and potentially even more accurate decisions at lower cost. This development aligns with the expectations of the business world, where legal disputes are basically seen as unwelcome business interruptions.

The lively debate revealed broad agreement that, while fully AI-driven decisions are difficult to envisage (especially when it comes to evaluating evidence and developing the law), AI may serve well as a predictive or advisory tool—at least for now.

Amara’s Law: A Turning Point in Arbitration?

Prof. Dr. Jörg Risse (Baker McKenzie) offered a thought-provoking take on Amara’s Law—the notion that we overestimate technological change in the short run, but underestimate it in the long run. He argued that we have crossed the threshold into an era of exponential change in legal tech.

He presented three fictional, yet plausible, AI use cases: an arbitrator using AI-generated case assessments to nudge the parties toward settlement, a statutory AI system reducing court burdens by resolving mass flight compensation claims, and a powerful law firm’s in-house AI predicting legal success rates.

His conclusion: although these scenarios are not yet real, they could soon be. In line with Amara’s law, having passed the trough of disillusionment, we now stand at the threshold of an unstoppable and exponentially accelerating development of AI in arbitration.

Limits and Best Practices for AI in Arbitration

Moderated by Dr. Vanessa Pickenpack (Oppenhoff), the next panel explored both the potential and the challenges of AI tools:

Nathalia Schomerus (Legora) demonstrated real-world applications like Google’s Gemini and Legora’s AI solution designed for legal professionals. She illustrated how these tools can be used for tasks such as searching for a suitable arbitrator, reviewing documents, summarizing witness statements, and identifying contradictions within materials.

Dr. Daniel Schnabl (Freshfields) and Prof. Dr. André Janssen (Radboud University) discussed advantages and risks of such use cases. Challenges included issues of bias, transparency, and ethical considerations. All panelists concurred that cautious and critical experimentation—beginning with the use of free AI tools and advancing to more sophisticated, paid solutions—is the best way forward.

Looking Ahead: Revolution or Evolution of Dispute Resolution through AI?

The final session, moderated by Dr. Andreas Hacke (Zwanzig Hacke Meilke & Partner), featured representatives from the legal tech sector: Alisha Andert (Legal Tech Verband), Dr. Micha-Manuel Bues (Bryter), and Dr. Dierk Schindler (Liquid Legal Institute).

All panelists affirmed that AI adoption is inevitable for the legal market. Their advice to practitioners was to start small, collaborate across sectors with legal tech providers, clients and even competitors, and focus on suitable use cases. Good tools exist, but are underused.

Looking ahead, the panel anticipated key trends shaping the future of AI in dispute resolution: a shift from one-size-fits-all tools to solutions specifically designed for the legal sector, an increasing reliance on external providers rather than in-house development, and—most notably—a rapidly approaching, far-reaching, and fast-paced transformation. This shift is set to redefine the dispute resolution landscape.

Conclusion

Prof. Dr. Stefan Kröll (DIS) concluded the conference by encouraging everybody to “just get started.” His message reflected the spirit of the day—an invitation to embrace an AI-enhanced future of arbitration with courage, curiosity, and an open mind.

Participants left the conference not only with plenty of food for thought, but also with concrete ideas for implementing AI into their daily work. Effective use cases for AI in arbitration already exist today, such as processing large volumes of data, intelligently identifying contradictions, and refining legal arguments both stylistically and substantively. Developing one’s own expertise is crucial for the successful application of these tools.

However, the conference also called attention to important limitations, especially regarding privacy and ethics, making transparency and clear guidelines essential. The discussions also made clear that from the majority’s point of view, the core process of legal decision-making involves a deeply human element and that the arbitration community, at least for now, is not ready to hand over this key task to AI.

How soon and to what extent AI will reshape arbitration practice depends on each individual—but the momentum is undeniable. The conference inspired attendees to actively shape this transformation rather than watch it unfold from the sidelines.

The world of AI innovation includes innovators, early adopters, early and late majority, and laggards. This year’s DIS Spring Conference brought together a strong lineup of leading innovators. After such an inspiring event, the number of early adopters in arbitration will likely grow.

The content of this post is intended for educational and general information. It is not intended for any promotional purposes. Kluwer Arbitration Blog, the Editorial Board, and this post’s author make no representation or warranty of any kind, express or implied, regarding the accuracy or completeness of any information in this post.

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Background to the SCPEI’s Decision

The proceedings before the SCPEI arose out of a dispute regarding the existence of a contract to purchase seed potatoes between the applicant, HZPC Americas Corp. (“HZPC”), and the respondent, Skye View Farms (“Skye View”). HZPC argued there was no contract, whereas Skye View claimed there was a binding contract that ought to be enforced by the Fruit & Vegetable Dispute Resolution Corporation (“DRC”), an organization in which both parties were members and which provides private commercial dispute resolution services to businesses engaged in the fresh produce trade.

As members of the DRC, the parties were bound by the DRC Mediation & Arbitration Rules (the “Rules”), which mandated arbitration. Article 69 of the Rules provided that “[u]nless the parties agree otherwise, the place (seat) of arbitration under this Formal Arbitration Procedure is the province of Ontario, Canada whose laws shall govern the agreement to arbitrate and the arbitral procedure”. Though the parties selected an Ontario-based arbitrator in accordance with Article 69, the parties chose to conduct the arbitration in PEI to reduce costs and ensure convenience for counsel and witnesses.

The arbitrator found in favour of Skye View. HZPC subsequently commenced an application in the SCPEI seeking judicial review of the arbitral award. HZPC claimed that PEI’s Arbitration Act applied or, alternatively, that the SCPEI had jurisdiction to grant substantive relief under Ontario’s Arbitration Act. Skye View maintained that Ontario’s Arbitration Act applied and HZPC was in the wrong court.

The “Seat” of an Arbitration Is a Choice of Law

The SCPEI accepted Skye View’s position, relying heavily on the fact that Article 69 of the Rules prescribed the seat of the arbitration to be Ontario. The SCPEI confirmed that the “seat” or “place” of an arbitration is a legal, rather than physical, concept. That is, the “seat” or “place” of an arbitration is not synonymous with the location where the arbitration takes place. Rather, it simply denotes the parties’ selection of a particular jurisdiction whose arbitration law governs proceedings, and under whose law the arbitral award is made. The parties may choose to physically conduct the arbitration at its seat, or they may choose to conduct the arbitration elsewhere for the sake of convenience.

The SCPEI concluded that, while the parties had agreed to the physical location of the arbitration being in PEI for reasons of cost and convenience, the parties had never agreed to change the presumptive seat of arbitration from Ontario to PEI. The SCPEI further noted that, consistent with the foregoing, the arbitrator had signed the award in Ontario. Accordingly, Ontario’s Arbitration Act applied and the SCPEI had no jurisdiction to award HZPC the relief sought.

Changes to PEI’s Arbitral Regime

In addition to affirming that the “seat” of an arbitration is a purely legal concept, the SCPEI’s decision cast a spotlight on recent changes to PEI’ arbitral regime. HZPC had brought its application for judicial review pursuant to section 12(2) of PEI’s former Arbitration Act, which provided a narrow basis for a court to set aside an arbitral award – namely, “[w]here an arbitrator or umpire has misconducted himself, or an arbitration or award has been improperly procured”.

The former Arbitration Act has been replaced by PEI’s new Arbitration Act, which came into force on March 1, 2024. The new Arbitration Act implemented appeal provisions similar to those in Ontario’s Arbitration Act. Notably, the new Arbitration Act expanded the grounds on which a court may set aside an arbitral award. The grounds consist largely of situations where procedural fairness was denied, such as where an award contains a decision on a matter beyond the scope of the arbitration agreement, where there is a justifiable doubt as to the impartiality of an arbitral tribunal, and where a party was not given a reasonable opportunity to present its case.

Notwithstanding these similarities between PEI’s new Arbitration Act and Ontario’s Arbitration Act, there are also important differences. Under the PEI regime, a party may appeal an arbitral award on a question of law only where an arbitration agreement so provides and where the PEI Court of Appeal has granted leave. Under the Ontario regime, even where an arbitration agreement is silent on appeals on questions of law, a party may appeal an arbitral award on a question of law with leave of the Ontario Superior Court of Justice. Further, whereas the PEI regime entirely precludes appeals on questions of fact, the Ontario regime permits appeals on questions of fact if the arbitration agreement so provides.

In summary, appeal rights under PEI’s new Arbitration Act – while expanded from those under the former Arbitration Act – remain relatively more limited than appeal rights under Ontario’s Arbitration Act. The intent of limited judicial recourse under the PEI regime is reinforced by section 61 of the new Arbitration Act, which precludes judicial review of arbitral awards except as expressly provided.

PEI’s new Arbitration Act is also noteworthy in that it is one of the few arbitration statutes in Canada that expressly provide for remote hearings (see sections 33 and 35(2)(k)). In this respect, PEI’s new Arbitration Act is analogous to the Arbitration Act of British Columbia (see sections 31(2) and 32(2)(xi)) and the Arbitration Act of the Northwest Territories (see sections 33(2) and 34(2)(k)). The growing acceptance and popularity of remote hearings provides parties with ever-greater options in selecting the “seat” of an arbitration and arguably diminishes the importance of aspects such as physical location, as previously explored in the context of forum non conveniens by Christina Doria and Brendan O’Grady in Has Forum Non Conveniens Gone the Way of the VCR Player? Canadian Court finds the Doctrine Obsolete in Age of Virtual Hearings.

For clarity, PEI’s new Arbitration Act does not apply to international arbitrations unless the parties to an international arbitration agree otherwise in writing. Instead, PEI’s International Commercial Arbitration Act (“ICAA”) applies. The ICAA was last amended in 2023 to align with the UNCITRAL Model Law, as amended in 2006. Notwithstanding that a separate PEI statute governs international arbitrations, the general principles in HZPC Americas on the seat of an arbitration are equally applicable. Section 2(3) of the ICAA is consistent with the understanding of the “seat” to be a choice of law.

Relatedly, the SCPEI’s decision is entirely consistent with the prevailing law in Canada on the seat of an arbitration, which the Ontario Superior Court of Justice recently canvassed in Tehama Group Inc v. Pythian Services Inc., 2024 ONSC 1819.

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The 2024 Kenyan High Court decision in Ongata Works Limited v. Tatu City Limited prompts a debate on whether courts can control arbitral cost awards. In particular, how absolute is tribunal discretion under Article 38 of the ICC Rules or other similar institutional rules?

The decision raises fundamental questions: Did the tribunal exceed its authority by allocating costs for a party-appointed expert witness under Article 38(1)? Did the Kenyan High Court justifiably invoke public policy to set aside the award, or did it undermine arbitral autonomy? This post explores the tension between tribunal discretion and judicial oversight in cost allocation.

Background

The dispute arose from an ICC arbitration where Ongata Works Limited (Claimant) secured damages of Kshs. 21,541,823.40 against Tatu City Limited (Respondent). However, the tribunal also ordered the Claimant to pay the Respondent’s legal and expert witness costs totalling Kshs. 109,479,853 (USD 842,152.72) at an exchange rate of 1 USD = 130 Kshs. This was over five times the damages awarded. The Claimant challenged the cost award before the Kenyan High Court, arguing that it was disproportionate, punitive and violated public policy.

The High Court set aside the award, citing two key grounds:

1. Misapplication of the ICC Rules: The tribunal included costs for the Respondent’s party-appointed expert, which the Court deemed impermissible under Article 38(1) of the ICC Rules.
2. Disproportionality of the Cost Award: The Court held that the disproportionate cost burden allegedly restricted access to justice. Particularly, the court observed that while tribunals have discretion to allocate costs under Section 32B (1) of Kenya’s Arbitration Act, the discretion must be exercised reasonably. This culminated in a violation of public policy.

Article 38 ICC Rules: Tribunal Discretion and the Scope of “Other Costs”

Article 38 of the ICC Rules outlines the framework for cost allocation under the ICC, granting tribunals broad discretion while imposing certain boundaries:

1. Costs Defined: Article 38(1) of the Rules includes the reasonable legal costs, which envisage the ad valorem method, and other costs incurred by the parties for the arbitration. Though it provides that the costs of the tribunal include the costs for tribunal-appointed experts, the provision does not explicitly exclude the costs of party-appointed experts. Therefore, the tribunal in Tatu City had the liberty to interpret “other costs” to encompass the Respondent’s expert witness fees, provided they were reasonable and necessary for the case.
2. Reasonableness and Proportionality: Article 38(5) of the Rules provides that tribunals are to take into account factors they consider relevant in awarding costs. This includes the parties’ conduct during the arbitration. As such, the tribunal has the discretion to justify the allocation of expert costs by assessing their relevance to rebutting the Claimant’s claims, among other considerations.
3. Final Allocation Authority: Under Article 38(4) of the Rules, the tribunal retains ultimate authority to fix the costs of the arbitration and decide the proportion each party is to bear. The tribunal in Tatu City allocated 100 per cent of the Respondent’s costs to the Claimant, possibly due to considerations guaranteed under Article 38(5) of the ICC Rules.

Through examination of these Rules, the tribunal’s decision regarding the types of reimbursable costs aligns with ICC practice. Article 38(1)’s silence on party-appointed expert fees implies a non-exhaustive list of reimbursable costs, granting tribunals interpretive discretion to include such expenses when reasonably incurred. However, a separate issue arises in the allocation of those costs. Even if reimbursable in principle, the decision to assign 100% of the Respondent’s legal and expert costs to the Claimant, despite the Claimant partially succeeding in the arbitration, raises legitimate concerns about proportionality. The ICC Rules (Article 38(5)) require tribunals to consider relevant factors, including party conduct and the outcome of the case. Thus, while the High Court may have erred in excluding expert fees outright, its discomfort with the disproportionate allocation of costs relative to the damages awarded and each party’s success rate is more defensible. This distinction is crucial: tribunals enjoy broad discretion under the ICC Rules, but such discretion must be exercised in line with principles of equity and fairness embedded in the arbitral framework.

Judicial Intervention: Public Policy or Overreach?

Public Policy in arbitration as defined in the Kenyan decision in Christ for All Nations v. Apollo Insurance Co. Limited (2002) EA 366, “… must be confined to matters that fundamentally offend the country’s sense of justice, morality or national interest. Mere procedural irregularities or erroneous decisions by arbitrators cannot be elevated to public policy violations.” This is reflected under the New York Convention Article V(2)(b), where public policy defenses are reserved for breaches of a state’s most basic notions of morality and justice. Comparative jurisprudence from Singapore as seen in VV v. VW, where the Singapore High Court declined to review a cost award, affirming the place of tribunal discretion in the allocation of costs. Similarly, the Swiss Federal Tribunal (2006) ruled that courts could only intervene if costs were “wholly disproportionate to the necessary costs of defense”, reinforcing the view that tribunals have significant autonomy in determining costs.

The Kenyan High Court’s rationale that excessive costs violate public policy marks a significant departure from both national and international arbitration norms. The Court’s reasoning reflects a misapplication of Article 38(1) of the ICC Rules, adopting a narrow construction that excludes party-appointed expert costs — a position at odds with the ICC’s flexible cost framework, which affords tribunals discretion in cost allocation. More importantly, however, the court appears to have mischaracterized the nature of the cost issue. While it relied on the “disproportionality” of the award, its analysis conflates two distinct issues: the amount of costs and their allocation.

Contrary to the court’s apparent reasoning, the total costs (Kshs. 109 million / ~USD 842,000) may not have been disproportionate to the overall scale and complexity of the dispute. The more legitimate concern — and one that goes largely unexamined by the court — is that 100% of those costs were allocated to the Claimant, even though it partially succeeded in the arbitration. Given that the Respondent successfully defended the bulk of the claim, it is arguably unjust for the Claimant to shoulder the entire cost burden. If the court had instead focused on this issue of cost allocation fairness, its intervention would have been more coherent and defensible.

That said, the court’s conclusion — that such disproportionality amounts to a violation of Kenyan public policy — stretches the doctrine beyond accepted limits. Under both Kenyan case law (Christ for All Nations v. Apollo Insurance) and the New York Convention (Article V(2)(b)), public policy is meant to address fundamental breaches of justice or morality, not errors of cost assessment absent fraud, bad faith, or procedural abuse. Courts in Singapore, as discussed above, have held that disproportionate cost awards alone do not rise to the level of public policy violations unless they are wholly arbitrary or unjustifiable. The Kenyan High Court’s reliance on abstract proportionality, without identifying a clear violation of fundamental principles, risks setting a precedent for overly broad judicial review, undermining the autonomy central to international arbitration.

Conclusion

The Tatu City case presents both opportunities and challenges for arbitration practice in Kenya and a source of reflection for international arbitration in general. On one hand, the ruling promotes greater accountability in cost allocation, ensuring that tribunals exercise their discretion within reasonable limits. On the other hand, the broad interpretation of public policy risks encouraging more intrusive judicial oversight, with undue judicial interference in the arbitral discretion in cost awards.

While the cost award in Tatu City was severe, the High Court’s use of public policy to address disproportionality was misplaced. Disproportionate costs, without fraud or due process violations, do not justify non-enforcement under public policy. Concerns about cost fairness should be resolved through procedural safeguards, such as reasoned cost decisions and party submissions, not post-award court intervention.

Arbitration already offers mechanisms to address cost-related concerns. Parties can request reasons for allocations, make targeted submissions, and challenge surprise decisions issued without prior notice. Where tribunals fail to engage with such submissions, due process risks may arise — but these are procedural, not public policy issues. Tatu City may involve such overlooked dynamics.

As arbitration under ad valorem models grows, courts must strike a balance: upholding fairness without eroding tribunal autonomy or finality. That balance is key to maintaining the legitimacy of the arbitral system.

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Three Crowns hosted a panel discussion titled “Old Dog, New Tricks: How ISDS Must Innovate to Resolve the Disputes of the Future.” Moderated by Richard Trinick (Three Crowns), the panel included Katrina Limond (A&O Shearman), Maxim Osadchiy (Queen Mary University of London), Cindy Rayo Zapata (RRH Consultores) and Rahul Donde (Donde Dispute Resolution).

Following this, Skadden presented a session titled “New Frontiers in International Investment Agreements,” moderated by Shaneen Parikh (Cyril Amarchand Mangaldas) and Montek Mayal (Osborne Partners). The panel featured Hussein Haeri KC (Withers), Dipen Sabharwal KC (White & Case), Devika Khopkar (Skadden), and Gitta Satryani (Herbert Smith Freehills).

This post highlights the key insights and takeaways from these discussions, offering a snapshot of current trends and future directions in ISDS.

Current Trends in the ISDS Framework

Trend 1: Limiting the scope of investors protected

One identified trend—and one that panellists believe will become even more prominent in the future—is the limitation on investors protected under those treaties. The new United States-Mexico-Canada Agreement (“USMCA”), for example, provides that only investors in certain sectors can bring claims covering the full scope of protection. Other investors may still submit claims, but limited to by a narrower scope of protection. The Energy Charter Treaty (ECT) provides protection for investors in the energy sector. However, the modernized version of the treaty allows for a carve-out of certain investments made in the fossil fuel industry.

Trend 2: New Substantive Clauses

The panellists also discussed some of the main changes seen in traditional clauses of investment treaties to address some of the dissatisfactions with the ISDS system.

• New Fair and Equitable Treatment (“FET”) Clauses. The early generation of investment treaties had a simple FET clause, which led to a lot of controversy due to the broad interpretation given by tribunals to these clauses. As a result of this controversy, investment treaties have followed three different paths: (1) to remove the FET clause from the treaty, excluding any kind of protection under such a standard—a rare but existing approach; (2) to link the FET clause to customary international law; or (3) to create an FET clause that sets out a list of measures that would or would not qualify as FET. One example cited was the new Indonesia–Switzerland BIT (2022), which not only includes a list of measures that can constitute a breach of FET but also provides guidance on how to consider the legitimate expectations of investors.
• New Most Favoured Nation (“MFN”) Clauses. Another traditional clause that has been subject to much discussion regarding its application is the MFN clause, especially in relation to its application to dispute resolution clauses. As with FET clauses, there is an increasing tendency to clarify the situations in which the MFN clause applies or does not apply. The Comprehensive and Progressive Agreement for Trans-Pacific Partnerships (CPTPP) was cited as one example of this tendency—the treaty expressly excludes from the MFN clause international dispute resolution procedures or mechanisms such as those included in ISDS. There are also States that have decided to exclude MFN clauses from their treaties, as seen in the Brazil–India BIT (2020).

The application of the MFN clause is often viewed as so problematic that, even in treaties explicitly extending MFN treatment to dispute resolution provisions, its scope may still be limited by judicial or arbitral interpretation. A cited example was the annulment of the award in Zaza Okuashvili v Georgia by the Swedish High Court, in which the court ruled that the MFN clause could not allow parties to choose a dispute resolution forum different from the one specified in the BIT, despite the Georgia–UK BIT (1995) containing a specific provision that extended MFN treatment to dispute resolution mechanisms.

• New Expropriation Clauses. It was also discussed how expropriation clauses have evolved from their first “skinny” version to adopting more and more guidelines, both in terms of direct and indirect expropriation. Direct expropriation clauses have changed to incorporate the conditions for lawful expropriation and some guidelines regarding the economic model, or the dates considered in the calculation of due compensation. These guidelines, as observed by the panellists, should not impair the investor’s right to adequate and effective compensation, remembering that in ADC v Hungary, the tribunal rejected the treaty’s guidelines for not reflecting adequately the value of the investment.

Indirect expropriations are highly debated, especially due to their tension with a State’s right to regulate. One example discussed was Indonesia: after initially facing numerous investor claims and terminating its treaties, it re-entered treaty-making with a revised approach. Its newer treaties, like the Indonesia–Singapore BIT (2018), maintain a basic expropriation clause but include an annex outlining specific conditions for indirect expropriation. These conditions consider factors such as the degree of interference, investor expectations, economic impact, and proportionality. The annex also clarifies that non-discriminatory measures taken for legitimate public purposes do not qualify as indirect expropriation. Similar provisions appear in other treaties, such as the EU–Vietnam Investment Protection Agreement (2019).

Trend 3: Counterclaims and Investors’ Obligations

To restore balance in the ISDS system, discussions focused on empowering States not only to defend against claims but also to actively respond. Counterclaims were highlighted as a key tool, allowing States to raise their own concerns, which can enhance legitimacy and improve dispute resolution efficiency.

Panellists also noted efforts to include investor obligations in treaties, alongside their rights. This shift aims to create a more balanced system and streamline procedures. An example is the Chile–EU Advanced Framework Agreement (2023), which allows States to bring claims not only related to the investment but also concerning the investor’s failure to meet international obligations.

Trend 4: Exhaustion of Local Remedies

The requirement for the exhaustion of local remedies, which originates from customary international law, was cited as one of the possible trends in the future of ISDS. Involving national courts more directly in the ISDS framework was presented as a potential way to enhance the legitimacy of the dispute resolution process as a whole. The USMCA was again cited as an example, as it provides that certain investors are required to comply with the exhaustion of local remedies before gaining access to the ISDS system.

The Future of Disputes to Expect in ISDS

Both panels also engaged in an exercise to anticipate the types of disputes that may arise under the ISDS system in the future. Some of the disputes mentioned included:

• Outer Space Disputes: Both panels noted a likely increase in disputes related to outer space activities, based on three main factors. First, satellite technology is becoming more accessible due to increased competition. Second, more frequent satellite launches raise the risk of collisions and related damage claims. Third, the complex supply chains and licensing involved in satellite operations expand the potential for disputes.
• Climate Change and Energy Transition Disputes: The ongoing measures to address the climate crisis, including the global shift towards energy transition, were also identified as a continuing source of ISDS claims in the future.
• Digital Decentralised Assets: Disputes involving digital decentralised assets were mentioned as another area likely to see growth, due to the increasing presence of such assets in the global market.
• Transfer Provisions: Panellists also anticipated a rise in disputes related to the free transfer of funds, particularly in light of the impact that recent sanctions have had on foreign investors.
• Technology Disputes: Finally, disputes involving the use of new technologies—such as Artificial Intelligence—were highlighted. Panellists referred to existing arbitration frameworks developed to address such issues, including the Blockchain Expedited Arbitration Rules by the London Chamber of Arbitration and Mediation(LCAM), aimed at resolving disputes in the Web3 and digital asset space, and the UNCITRAL Model Clauses on Specialised Express Dispute Resolution (SPEDR), which were drafted with the focus on technology-related disputes.

Conclusion

Expectations for the future of ISDS remain closely linked to addressing past criticisms. While the system must continue protecting investors’ rights, it also needs to adapt to the evolving needs of States. Both panels suggested that the future lies in greater codification within investment treaties, offering States more regulatory space and limiting tribunals’ interpretive discretion. However, this shift will require tribunals to adapt to interpreting more detailed provisions. Codification alone will not resolve complex issues, such as how tribunals assess the legitimacy of public interest measures.

The discussions made clear that investment treaties have evolved significantly since the 1990s. Yet, challenges persist, and ongoing technological and geopolitical developments are likely to keep driving investment disputes in the foreseeable future.

This post is part of Kluwer Arbitration Blog’s coverage of London International Disputes Week 2025.

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But habit cannot be fabricated. Community requires spontaneity, time, and repetition. Yamasaki’s drawings made no room for these. His social logic was abstract, ideal, and imposed from above. Within four years, the corridors became dangerous, the skip-stop elevators helped thieves more than neighbors, and the towers became one of the city’s most dangerous places. Dystopia. The demolition came to be known as the day modern architecture died. ¹⁾ “Modern Architecture died in St. Louis, Missouri on July 15, 1972 at 3.32 p.m. (or thereabouts) when the infamous Pruitt-Igoe scheme, or rather several of its slab blocks, were given the final coup de grâce by dynamite.” Quote by architectural historian Charles Jencks, in his 1977 book ‘The Language of Post-Modern Architecture’ commenting on the demolition of the Wendell O. Pruitt Homes and William Igoe Apartments, known as the Pruitt–Igoe joint urban housing projects. I want to thank Ada Souza-McMurtrie, Doctoral Researcher in Architectural History at the University of Edinburgh for the advice on the points of architecture and urban planning.

There are limits to what theoretical purity alone can achieve when ruling the unknown, and there are consequences when we try. I am not enthusiastic about the AI-Arbitration soft law issued between 2024 and 2025. What follows is a meditation on the virtues of waiting.

The AI Guidelines

From 2023 to March 2025, many have attempted to regulate the use of artificial intelligence in arbitration: the American Arbitration Association–International Centre for Dispute Resolution (AAA-ICDR) Principles, the Silicon Valley Arbitration & Mediation Center (SVAMC) Guidelines, the Chartered Institute of Arbitrators (CIArb) Guideline, and the Vienna International Arbitral Centre (VIAC) Note. All stress fairness, transparency, competence, and procedural integrity.

At first glance, they all appear to agree. AI is treated as both promising and risky. Arbitrators must retain control. Confidentiality must be preserved. Parties should understand the tools they are using. Human judgment must not be outsourced.

Yet this apparent consensus is misleading.

For instance, the guidance on disclosure diverges significantly. SVAMC states that disclosure is not generally necessary, treating it as a case-by-case exception. CIArb implies that disclosure may be required, particularly where AI impacts evidence or procedural fairness. According to CIArb, arbitrators may also impose disclosure themselves. VIAC takes the middle path: disclosure should be discussed at the case management conference but is not assumed. AAA-ICDR avoids the issue altogether. What seems like a shared principle dissolves into three divergent recommendations and one omission.

The same can be seen in the approaches to the use of AI by arbitrators. CIArb is cautious. Arbitrators are encouraged to consult the parties before using any AI tool, and refrain if the parties object, unless the tool is explicitly ‘low risk.’ SVAMC is more permissive. Consultation is only needed when relying on AI-generated content outside the record. VIAC leaves it to the arbitrator’s discretion. They may inform the parties and invite comments but are not required to do so. AAA-ICDR offers high-level principles, but no procedural rules.

Thus, depending on the guideline followed, an arbitrator using the same AI tool might require party consent, mere notification, or no disclosure at all. It depends not on the facts, but on which guidance they prefer.

Even the definition of AI resists consensus among the different guidelines. CIArb and SVAMC offer definitions which do not align. VIAC, perhaps wisely, avoids defining it altogether.

What remains is the appearance of agreement without its substance. The guidelines repeat values (non-delegation, competence, transparency, impartiality, etc.) that no one would dispute. But they offer little in the way of action. When they do, each standard is paired with an open-ended exception. Disclosure should happen, unless it doesn’t; arbitrators should consult, unless they don’t and so on, in a cluster of standards that are, perhaps, too soft even for soft law. But ambiguous enough to allow for plausible deniability.

This is not the fault of the institutions or the drafters. The problem is more fundamental. The AI guidelines fail to present best practices because, in truth, there are none to draw from yet. The technology is too new, still developing, and barely any court or arbitration cases exist. These guidelines can only respond to imaginary problems and, thus, are limited to Yamasaki-like solutions.

Good Soft Law Comes From Experience

Soft law begins with observation: We watch what is done, find the pattern, and then name the rule.

The IBA Guidelines on Conflicts of Interest are a good example. Far from being a top-down imposition, they were built on decades of experience. Drafted between 2002 and 2004 by a working group of 19 practitioners, they drew on 13 national reports detailing the actual laws and customs of jurisdictions as diverse as Switzerland, Mexico, and Singapore. The group compiled real-world issues (bias standards, disclosure practices, the legal status of arbitrators) and drew up lists of recurring practical scenarios. These were categorized by relevance and risk into the now-familiar Red, Orange, and Green Lists.

Institutions like the ICC, LCIA, ASA, and SCC were invited to comment. Drafts were debated in public sessions in Durban and San Francisco. The guidelines were even stress-tested by arbitrators trained to spot edge cases. Every detail, from the 30-day disclosure window to the distinction between waivable and non-waivable conflicts, was drawn from actual cases.

The IBA Guidelines refined the approach pioneered by the 1987 IBA Rules of Ethics for International Arbitrators, which themselves were shaped by the lessons of 20th-century arbitration, particularly in the post-WWII era. It was prudence building on prudence. Their strength lay in distilling the productive chaos of practice into standards for action. As a result, by 2015, approximately 60% of practitioners regarded the IBA Guidelines as highly effective (see here).

The AI guidelines invert the order: they prescribe norms in the absence of experience.

This is where complexity theory helps.²⁾The evolutionary nature of systems through trial and error is a theme in Karl E. Weick, Sensemaking in Organizations (Thousand Oaks, CA: Sage, 1995). The unpredictability of such evolution is detailed in the study of complex adaptive systems, for which John H. Holland provides a great introduction in Hidden Order: How Adaptation Builds Complexity (Reading, MA: Addison-Wesley, 1995). In well-functioning systems, information flows from practice. Systems evolve through fragmented trial and error so that the norms that endure are those shaped by the very practices they govern. Arbitration is no exception. Like any system, it evolves in ways that are impossible to predict. The impulse to regulate now stems from a deep, unstated belief that we already understand what is to come. But as Niels Bohr famously observed, prediction is very difficult, especially about the future. Premature regulation risks disrupting this process, fixing what isn’t broken, and in doing so, preventing something better from coming into existence.

The IBA Guidelines, by contrast, are rich in detail because they drew on a rich body of practice: Should co-counsel in the same chambers be treated as a conflict? Which institutional affiliations matter? Can a law firm’s prior contact with a party be imputed to an arbitrator? These were not hypothetical questions. They arose from real disputes, and the resulting norms reflect that grounding.

The same holds if we borrow from Friedrich Hayek: knowledge is dispersed. No committee, however expert, can match the insights of practitioners responding to the day-to-day. Common law did not begin with principles; it began with decisions. The lex mercatoria grew out of custom, not doctrine. So did international law. For all its abstract elegance, even civil law began with compilation: the Justinian Code organised what people already did.

Systems that thrive do so from the ground up.

Premature soft law is risky. If not grounded in real practice, guidelines become either too open-ended to matter or impose unnecessary duties. They may require procedures few can justify, or focus on problems that aren’t relevant, and miss the ones that are. For example, the “black box” problem of AI (see previous blog posts here and here) is mentioned in some guidelines, but is it a real problem for arbitration, or simply mentioned just in case? Only time can tell.

The result: ambiguous duties, inconsistent standards, and less flexibility. Such guidelines may offer a false sense of security, as if there are best practices where none yet exist.

As of 2025, no body of practice supports authoritative guidance on AI in arbitration. There are simply not enough cases. These guidelines attempt to control what does not yet exist, with standards not yet tested. And in doing so, they miss what soft law does best, which is turning memory into insight.

What Does It Mean To Be “Soft”?

Soft law has no coercive power, enforcement mechanism, or claim to democratic legitimacy. Technically, it carries no more legal force than this very blog post. Its authority lies not in its form, but in its substance. It reflects what people do, and what experience shows to be wise.

The AI arbitration guidelines are something else entirely. They may serve a signaling function, and their intent is laudable. But we must be careful not to confuse them with lived, experiential soft law.

I understand the generalized fear of AI among lawyers and how that fear pressures institutions. But anxiety is precisely the search for solutions to problems that do not yet exist—problems in a future that may never come. Imaginary worries feel urgent: “What if everyone is using AI but there are no cases because no one discloses it? We need to do something now.” Yet this same reasoning could have applied to conflicts of interest in the 1960s. Back then, too, the undisclosed evil of the unknown could have justified premature regulation. But the IBA waited. Practice emerged in cases, then commentary, then public discourse, and only then did soft law follow. We are better for it.

Speculation has its place, and I’ve indulged in it too, as you can see here, here, and here. It belongs to the collective brainstorming from which practice will eventually distil what matters. But regulation, even at its softest, should be the product of this process, not another voice in the cacophony.

My point is simple: anxiety is a poor legislator. It pushes rules without grounding and may end up strangling that which it seeks to control.

A different posture would serve us better: curiosity over control. Not passivity, but attentiveness. In short: softness. The most responsible move may be to let practice evolve in all its messiness and contradiction—and only then ask: what have we learned?

Good regulation takes time. Sometimes, the wisest action is simply to pause, to breathe, and to let things be.

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