CD: Are you finding that ‘tactical’ challenges to arbitration clauses in contracts are becoming more common? Are courts, globally, becoming more or less receptive to these kinds of challenges?

Deffenti: I think that due to the sophistication of lawyers involved in arbitration, tactical challenges have always been part of the process and will remain so. It is difficult to say if there is a clear trend by courts towards accepting or rejecting such challenges. If anything, it would appear that in the common law world, courts are becoming more accepting of challenges in general, with the principle of kompetenz-kompetenz being more and more curtailed, while in the civil law world – at least in Brazil – courts are becoming less inclined to accept them. Challenges based on mere formalities are being frowned upon everywhere, I would say.

Holland: An important trend is the increased willingness of London courts to intervene robustly in tactical challenges to arbitration clauses. In Excalibur v Texas Keystone & Others [2011] the arbitration clause required disputes to be arbitrated in New York. The claimant started an arbitration in New York but, on the same day, started a London court case trying to freeze the respondent’s bank accounts. The London court determined that it, not the arbitrators, or the New York court, should decide whether the respondent had agreed to arbitrate, and went on to decide that it had never signed the arbitration clause. As a result of the claimant’s tactic to freeze bank accounts in London – which backfired – the London court accepted jurisdiction over a foreign arbitration process. To take the other extreme, in BNP Paribas v Ingosstrakh [2012] two parties had agreed to arbitrate any disputes between them in London. A sister company of the Russian respondent then started a Russian court case intended to hamper the arbitration. The High Court in London imposed an order staying the Russian court action, even though the sister company had not been a party to the agreement to arbitrate in London. This suggests that an English court would accept jurisdiction to restrain an independent foreign company from trying to interfere with an arbitration in London, even though they have no connection with London at all. Both are examples of the long arm of English law.

Oct-Dec 2013 issue

Carvalho, Machado, Timm & Deffenti Advogados

Covington & Burling LLP

Perley-Robertson, Hill & McDougall LLP/s.r.l.

Shearman & Sterling LLP