Welcome to our latest update, focused on bringing you closer to the pulse of arbitration in Paris. In this edition we have curated key arbitration points that we believe are important for you, our clients:

• A review of a Paris Court of Appeal decision on the annulment of procedural orders, 
• Key insights into Africa’s evolving arbitration landscape,
• Essential tips to prepare your team and yourself for upcoming hearings, 
• An exploration through the different phases of an offshore wind project and the disputes they can give rise to
  
• The BARD panel on the enforcement of international investment awards…

Enjoy the read! Please do get in touch if you have any feedback or questions.

Ioana

Latest French Arbitration Case Law

ARBITRATION & ANNULMENT OF PROCEDURAL ORDERS: The Paris Court of Appeal clarified on 21 May 2024 that procedural orders (“PO”) issued during arbitration cannot be annulled by a national court.

This decision emerged from a dispute between a Ukrainian businessman and his US-registered company, Investio, against the Russian Federation, where Russia sought to annul a PO confirming the arbitral tribunal’s proper constitution. The Court distinguished genuine arbitral awards, which resolve disputes on merits or jurisdiction, from POs that deal with procedural aspects. It found the PO in question did not affect the merits of the case nor its jurisdiction, rendering the annulment request inadmissible.

Takeaway? Echoing decisions like the ZCCM and K v S cases from the English High Court, this ruling by the Paris Court of Appeal reaffirms that procedural orders, unlike arbitral awards, are not open to annulment. This distinction underscores the final and substantive nature of arbitral awards – which, as such, can be enforced and challenged – compared to procedural orders.

(Read my detailed analysis of the Paris Court of Appeal’s decision here)

Regional Highlights - Africa

In the last decade, arbitration in Africa has entered a transformative era, marked by an unprecedented rise in its significance and complexity. As the continent becomes a focal point for international trade, investment, and development projects, arbitration has emerged as the key mechanism for resolving disputes, reflecting Africa’s growing role on the global arbitration stage:

• Institutional and regional dynamics: The African arbitration scene is still shaped by leading international bodies such as the ICSID, ICC and LCIA, with 8% of the parties in LCIA and ICC proceedings originating from Africa in 2023. Alongside the regional influence of OHADA – which offers a harmonized legal framework across its 17 member states – the rise of regional arbitration centers, in South Africa, Cairo, Kigali, Lagos, or Nairobi, highlights a move towards localized dispute resolution, signalling a shift towards more decentralized arbitration practices;
• Mining sector dynamics: The African Development Bank reports that nearly 70% of Africa’s exports are minerals-based, contributing to over 25% of the continent’s GDP. The importance of the sector is also visible in dispute settlement, as 2 out of the 11 ICSID cases initiated since 2023 involved a mining dispute;
• Construction & infrastructure: The 2022 SOAS survey highlights arbitration as the favored mechanism for resolving disputes in the rapidly expanding construction and infrastructure sector, along with a notable rise in the utilization of dispute adjudication boards and mediation;
• Choice of law preference: The survey also reveals a notable shift towards adopting African laws as the governing law in arbitration agreements, especially in domestic or state-involved contracts, with 73% of respondents favouring local laws;
• Potential future sources of disputes: The push towards net-zero commitments, with 12 African countries aiming for 100% renewable electricity generation by 2050 and all 54 endorsing the Paris Agreement, is reshaping the arbitration landscape. This transition, powered by new environmental legislations and a correlated surge in foreign direct investment due to investor-friendly regulations, sets the stage for potential future arbitrations;
• Basis for arbitration: Investors in Africa benefit from protections for their investments beyond mere contractual agreements, with over 1,000 BITs signed by African states. This offers a welcome multiplicity of avenues for investors as numerous projects in Africa also involve state entities;
• Enforcement of arbitral awards: 42 out of the 54 African states have adopted the New York Convention, streamlining the recognition and enforcement of foreign arbitral awards. The OHADA system further supports enforcement via an ex parte procedure, with final exequatur decisions and appeals before the CCJA.

Practical Tips - Preparing for the hearing

Once the parties determine the format of the hearing during the pre-hearing conference, it’s time to ramp up your preparation for the hearing and apply the finishing touches on your outlines and hearing bundle. This is your moment of peak advocacy: 

• Divide responsibilities and delegate: Hearing preparation might seem daunting but it can be simplified through clear division and delegation of responsibilities. Be aware of the strengths and specialties of your team and use them efficiently (for example, asking a lawyer familiar with quantum to prepare the cross-examination of a financial expert);
• Start early with the bundle: The hearing bundle is crucial, as it will serve as the tribunal’s primary source of documentation during the hearing. Starting your bundle preparation early allows for refinement of your case strategy, avoiding the last-minute rush;
• Know your tribunal: Research the backgrounds, preferences, and previous rulings of your arbitrators. Understanding their perspectives and legal philosophies can help tailor your arguments and presentation style to be even more effective;
• Prepare your client: Ensure your client is fully briefed on the hearing process, its potential outcomes, and their role during the proceedings. I speak of experience when I say that well-prepared clients can provide valuable support and insights during the hearing!;
• Be proactive with witnesses: Guide your witnesses through the procedural aspects as this can reduce their stress and enhance the quality of their testimony. Their insights can also provide valuable perspectives for your case strategy;
• Draft your opening statement: Your opening statement sets the tone for the hearing. Draft a clear, persuasive narrative that encapsulates the essence of your case, insisting on key facts and legal arguments. Rehearse to make sure it is clear and impactful;
• Manage the hearing day: Plan the logistics of the hearing day meticulously, from the arrival times of your team members, the setup of the hearing room to food arrangements, in order to focus on the hearing itself.

Remember General Sun Tzu’s wisdom: “Victorious warriors win first and then go to war, while defeated warriors go to war first and then seek to win”. By preparing well your hearing and creating favourable conditions, you enhance your chances of success once the hearing begins!

Sectorial News - Offshore wind projects

The offshore energy industry, particularly offshore wind energy, is experiencing unprecedented momentum. Driven by the imperatives of energy transition and energy independence, both within the EU and globally, the sector has witnessed record-breaking growth, with global investment reaching $60 billion. According to the 2024 Global Wind Report, the past year has even seen a record-high 117 GW of new wind power installed. The complexity and inherent risks at every stage of offshore energy projects often lead, however, to arbitration disputes:

• Lack of standardization in contracting terms: While parties often resort to standard contracts from other industries (such as the Oil & Gas LOGIC suite), these contracts frequently require extensive redrafting for offshore wind projects. FIDIC and BIMCO are notably in the process of developing standard contracts specifically for offshore wind, but publication still seems some months away;
• Design and technology disputes: Given the rapid pace of technological advancement in offshore wind turbines and infrastructure, disputes may arise over design flaws or the failure of technology to meet performance expectations;
• Supply chain and procurement issues: The global nature of the supply chain for wind turbines and other critical components can result in disputes related to delays, defects, and the non-performance of subcontractors;
• Power Purchase Agreement (PPA) disagreements: Fluctuations in energy prices and market conditions can cause disagreements about PPA terms, such as prices and energy delivery promises;
• Regulatory and compliance disputes: Offshore wind projects are subject to many different local, national, and international regulations, leading to potential disputes over environmental impact assessments, permitting, and compliance with maritime laws;
• Operation & maintenance (O&M) disputes: Once operational, offshore wind farms require ongoing maintenance. Disputes can arise over the performance of O&M contractors, especially concerning warranty claims and the availability of turbines;
• Environmental and maritime logistics disputes: The unpredictable nature of the sea and weather, as well as complex maritime logistics, can lead to disputes related to the environmental impact and logistics management (project delays, damage to marine ecosystems, vessel availability and suitability, etc.);
• Performance and engineering issues: Technical disputes involving performance and engineering issues require extensive expert evidence and can thus be a significant source of contention;
• Investment and financing disputes: The significant upfront investment required for offshore wind projects can lead to disputes over financing arrangements, investment commitments, and the distribution of financial risks.

By the Way

National courts occupy an increasing role in international arbitration in recent years, since the enforcement phase became more complex and litigious, and as a consequence of the CJEU decisions. In the EU, national courts follow the decisions of the CJEU in Achmea and Komstroy, however, courts outside the EU take a different view. Among the most recent decisions we discussed during our panel:

• The annulment of the Triodos v. Spain award in Sweden,
• The annulment of two intra-EU awards (Strabag et. al. and Slot Group) in France;
• The enforcement of the EDF v. Spain award in Switzerland.

Stay tuned, as the UKSC will soon decide on the appeal against the enforcement of the Opera-Fund v. Spain award, case which will be heard during the course of this week.