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:

• An exploration of the French Court of Cassation's stance on the autonomy of arbitral tribunals in calculating damages,
• Insights into the SCC’s new policy on deciding the seat of arbitration in intra-EU disputes,
• Practical tips for preparing effective post-hearing briefs (PHBs),
• A look into the growing trend of arbitration in banking and financial disputes, and
• Information about Addleshaw Goddard’s organisation of the GC Powerlist in Paris and the Luxembourg conference on sanctions and investment law, I will speak at!

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

Ioana

LATEST FRENCH ARBITRATION CASE LAW

ARBITRATION & CALCULATION OF DAMAGES: On 9 October 2024, the French Court of Cassation ruled on how national courts should review an arbitral tribunal’s methodology for calculating damages.

The case involved Swiss Re Direct Investments Company Ltd and Ivorian entities in a dispute over financial transactions in Manzi Finances. The main issue was the arbitral tribunal’s decision to award Swiss Re a significant sum for unconverted convertible bonds and a ‘surplus price’, which was challenged for having applied a calculation formula that had not been debated by the parties. The Court dismissed the Ivorian parties’ claims, stating that the elements on which the award was based had been debated and that the tribunal’s calculation of the surplus price was subject to its own discretion.

Takeaway? The Court of Cassation’s ruling reinforces the autonomy of arbitral tribunals in the choice of their methodologies for quantifying damages, as long as the underlying elements have been fully debated by the parties.

(Read my analysis of the French Court of Cassation’s decision here)

REGIONAL HIGHLIGHTS – SCC’s new policy on deciding seat of arbitration in intra-EU disputes

On 5 November 2024, in a significant development for the international arbitration community, the SCC Arbitration Institute (SCC) published a new policy on selecting arbitration seats for intra-EU investment treaty disputes. This policy comes in response to recent CJEU rulings affecting EU investment treaty arbitration, with the aim to ensure the legal enforceability of awards in such disputes.

• The SCC, Stockholm, and Sweden are today referred to in over 120 international investment agreements (IIAs) concluded between states, highlighting the global recognition that the SCC and Sweden have historically played in both commercial and investment treaty disputes;
• The SCC’s new policy stipulates that unless agreed upon by the parties, the SCC Board will no longer select Stockholm, or any other judicial district within the EU, as the seat of intra-EU, or potentially intra-EU, investment treaty arbitrations – a marking departure from the SCC’s longstanding practice of generally choosing Stockholm as the arbitration seat;
• Instead, the SCC Board will designate seats of arbitration in locations outside the EU and beyond the territories of states that are candidates or potential candidates for EU membership;
• This decision is grounded in the SCC’s commitment to ensuring the legal enforceability of arbitral awards rendered under the SCC Rules, in line with the CJEU’s recent Achmea and Komstroy rulings which have invalidated arbitration agreements contained in IIAs between EU member states, deeming them incompatible with EU law;
• The SCC’s new approach is also designed to bring clarity to investors and states by selecting a seat outside the EU to avoid obstacles for enforcing awards within the EU, thus seeking to safeguard the parties’ interests in a legally uncertain environment.

PRACTICAL TIPS – Post-hearing briefs

The post-hearing brief (“PHB”) is a key instrument in the arbitration process, offering a final opportunity to refine your arguments and directly address the tribunal’s concerns. This phase allows you to articulate your case one last time, capitalizing on the evidence and discussions presented during the hearing. Here are some practical tips for crafting effective PHBs:

• Understand the tribunal’s expectations: Begin with a clear understanding of what the tribunal expects from the PHB. This includes the format, specific issues to address, and any page limits. Tailoring your brief to meet these expectations ensures that it will be received favourably;
• Focus on key issues and evidence: Concentrate on the critical issues and evidence that emerged during the hearing. Your brief should succinctly summarize how the evidence supports your case, highlighting any new facts or clarifications that arose during the hearing;
• Legal framework and analysis: Reiterate and expand upon the legal framework supporting your case. Use the PHB to draw on the hearing debates and to reinforce the strength of your legal arguments;
• Address the tribunal’s questions: If the tribunal posed specific questions or expressed particular concerns during or at the end of the hearing, ensure your PHB provides clear and comprehensive answers;
• Strategic use of citations: Carefully select and incorporate citations from the hearing transcript to reinforce your arguments. This not only substantiates your claims but also guides the tribunal to key evidence and testimonies that support your case;
• Conclude with a strong summary: End your PHB with a thorough summary of your main arguments, the evidence that supports them, and the legal basis for your claims. This reinforces your narrative and leaves a lasting impression on the tribunal;
• Final request for relief: Clearly restate your requested outcomes, and make sure they align with the arguments and evidence presented in your brief.

SECTORIAL NEWS – Arbitration in banking and financial disputes

In recent years, the banking and finance sector has increasingly turned to arbitration as a preferred method for dispute resolution. This shift, partly due to the fallout from the 2008 financial crisis and further accelerated by the COVID-19 pandemic, not only highlights the limitations of traditional litigation in national courts for cross-border financial disputes, but also acknowledges arbitration’s ability to handle the complexities of modern financial transactions.

• Growing adoption of arbitration: This upward trend is reflected in the case statistics of major arbitral institutions. For example, the sector’s representation in all LCIA disputes varied between 16 and 32% between 2019 and 2023. Similarly, the HKIAC saw banking and finance disputes constitute as much as 36.9% of its total caseload in 2022;
• Typology of arbitration disputes: Disputes within the banking and finance sector that frequently go to arbitration include disagreements over complex financial products, derivatives transactions, breaches of financial agreements, and disputes arising from advisory services;
• Investment treaty context: In the realm of investment treaty arbitration, transactions by banks often looked at include loans, hedging contracts, purchase of government bonds, and long-term project finance. Recent decisions such as British Caribbean Bank ltd v. Belize, Deutsche Bank AG v. Sri Lanka or Portigon v. Spain have increasingly recognized such transactions as “investments” protected under various bilateral and multilateral treaties;
• Relevance and specificities: The complexity of these disputes often requires arbitrators with specialized knowledge in financial instruments and markets. Given the fast-paced nature of financial markets, the ability to quickly resolve disputes while protecting sensitive financial information is also crucial;
• Initiatives promoting arbitration (I): The International Swaps and Derivatives Association (ISDA) has played a pivotal role in promoting the use of arbitration through the ISDA Arbitration Guide – a guide that offers arbitration clauses tailored for the ISDA Master Agreement, reflecting the sector’s increasing globalization and the need for a dispute resolution mechanism that matches this complexity;
• Initiatives promoting arbitration (II): the Panel of Recognized International Market Experts in Finance (P.R.I.M.E. Finance) aims at resolving complex financial disputes through arbitration and mediation. It provides access to a panel of expert arbitrators and a set of arbitral rules designed specifically for the financial market and administered by the Permanent Court of Arbitration (PCA).

BY THE WAY

My partners from Addleshaw Goddard’s Paris office and I are thrilled to co-host next week, on Wednesday, 27th November 2024, the third edition of the General Counsel Powerlist, together with Legal 500. This special evening will honour in-house legal directors who have significantly influenced their organizations through their innovative approaches and leadership. The perfect opportunity to celebrate excellence of in-house lawyers, our clients!

Following this, on Thursday, 12th December, I’m excited to participate in the Luxembourg conference on “The Clash of Sanctions and International Investment Agreements”. I’ll be joining a brilliant panel including Giorgio Mandelli (King & Spalding), Prof. Toni Marzal (Glasgow University), Dr. Rémy Gerbay (Hughes Hubbard) and Alvaro Nistal (Arnorld & Porter), with Ziva Filipic (ICC) moderating. I would love to see familiar faces there, so please do let me know if you'll be attending!