INTERNATIONAL ARBITRATION NEWSLETTER
Thwarting Torpedoes and Other Clarifications: Recast Brussels Regulation in
Force From 10 January 2015
The European Parliament and Council update the Regulation on jurisdiction and the recognition and enforcement
of judgments within the EU to improve clarity and eliminate stalling tactics.
Page 2 Click to view
NEWS IN BRIEF
CIETAC’s New Arbitration Rules for 2015
Page 4 Click to view
IBA Issues Revised Guidelines on Conflict of
Page 5 Click to view
International Energy Charter Signals New Global
Cooperation in the Energy Sector
Page 3 Click to view
Better, Faster, CheaperPage 2
Thwarting Torpedoes and Other Clarifications:
Recast Brussels Regulation in Force From 10 January 2015
The European Parliament and Council update the Regulation on jurisdiction and the recognition and
enforcement of judgments within the EU to improve clarity and eliminate stalling tactics.
By Oliver Browne
One of the relatively unsung success stories of the European Union (and its predecessors) is its experiment in judicial
co-operation. The first major component of this experiment was the 1968 Brussels Convention on Jurisdiction and
the Enforcement of Judgments in Civil and Commercial Matters. The Brussels Convention was updated, and partly
superseded, by Council Regulation (EC) No 44/2001 on jurisdiction and the recognition and enforcement of judgments
in civil and commercial matters. Regulation 44/2001 (now referred to as the Original Brussels Regulation) has
been recast by Regulation (EU) No 1215/2012 of the European Parliament and of the Council on jurisdiction and
the recognition and enforcement of judgments in civil and commercial matters (referred to as the Recast Brussels
For those dealing with transactions and disputes across borders in Europe, these fundamental pieces of legislation
address two very important issues: which EU courts have jurisdiction, and how judgments from one Member State can
be recognized and enforced in another Member State. They also touch on a number of other features of international
disputes including, for example, the relationship between arbitration and litigation and the validity of court selection
The Recast Brussels Regulation entered into force on 10 January 2015. The changes it introduces are relatively
limited. Set out below are details of the most important:
• Abolition of exequatur: The Recast Brussels Regulation has simplified the system for enforcing judgments across
Member States, and has reduced costs and delays, by abolishing exequatur. This was an intermediate procedure
required by the Original Brussels Regulation as part of the enforcement process whereby judgments were formally
recognized before they could be enforced. The Regulation now also promotes the use of standard forms to
facilitate the recognition and enforcement of foreign judgments by the competent authorities.
• Extension of the jurisdiction rules in the Regulation to disputes involving defendants who are not
domiciled in an EU State: The Original Brussels Regulation contains jurisdiction rules which are mainly applicable
if defendants are domiciled in Member States. The Recast Brussels Regulation applies those rules to non-EU
defendants, allowing those defendants to be sued within the EU in certain circumstances — for example, in the
case of certain insurance, consumer and employment contracts.
• Changes to the lis pendens rules: Under the Old Brussels Regulation, it was possible to commence so-called
“torpedo” actions (see the European Court of Justice decision in Gasser (Erich) GmbH v MISAT Srl C-116/02
 QB 1,  1 All ER (Comm) 538). In “torpedo” actions, claims are deliberately brought in slow moving
Courts in breach of exclusive jurisdiction clauses. This strategy could potentially delay proceedings, as the court
selected in the jurisdiction clause was obliged to stay proceedings before it until the court first seized determined
whether it had jurisdiction. The Recast Brussels Regulation now says that proceedings in breach of exclusive
jurisdiction clauses must be stayed until the court selected in the jurisdiction clause determines whether it has
jurisdiction. This change hopefully will significantly reduce “torpedo” actions and forum shopping.
• Arbitration exception: Another significant change relates to the nature of the “arbitration exception” (i.e. the
provision expressly excluding arbitration from the scope of the Recast Brussels Regulation), which had been
heavily debated. The changes are generally supportive of arbitration, and the primacy of the New York Convention,
and address some of the difficulties following the ECJ’s decision in Allianz SpA v West Tankers Inc (Case
C-185/07). In that case, an anti-suit injunction from the court of the seat of arbitration aimed at preventing litigation
in another Member State was held to be contrary to the Brussels Regulation. Now, the Recast Brussels Regulation
clarifies that the Courts of Member States should not be prevented from referring parties to arbitration, from staying
or dismissing proceedings in favour of arbitration, or from examining whether the arbitration agreement is null and
void, inoperative or incapable of being performed. However, the wide-ranging reforms initially proposed have not
fully materialized and some have criticized the Recast Brussels Regulation for not going far enough.
• Court selection clauses: The Recast Brussels Regulation expressly states that court selection clauses are
separable agreements on jurisdiction and will be treated as independent of the other terms of the contract in
which they are contained. The validity of court selection clauses cannot now be contested solely on the ground
: CPR Offers New Rules forPage 3
that the contract is not valid. Court selection clauses now fall within the Recast Brussels Regulation more easily:
the requirement that the parties to agreements containing such clauses must include at least one party domiciled
in a Member State has been removed. This means that the domicile of the parties becomes less relevant and
that parties can more easily establish whether the Recast Brussels Regulation applies. However, the requirement
that the court selection clause selects a Member State court remains in place (so if a non-Member State court is
selected, the relevant court selection clause falls outside the Regulation).
On balance, the Recast Brussels Regulation fine tunes an already successful piece of legislation and the changes
discussed above are not wide-ranging and should be welcomed. However, there is some sense that an opportunity
was missed by the regulators, particularly in relation to the scope of the arbitration exception, to provide even more
clarity and certainty.
NEWS IN BRIEF
International Energy Charter Signals New Global Cooperation in
the Energy Sector
Officials meeting in Brussels in November 2014 have agreed the text of the International Energy
Charter, creating the framework for greater international cooperation in foreign investment and
capacity building in the energy sector.
By Catriona E. Paterson
The International Energy Charter (the Charter) follows a four-year consultation process by the Strategy Group of
the Energy Charter Conference with all interested States, and involved a number of States not currently party to the
Energy Charter Treaty (the ECT) such as China and India.1
The Charter’s primary objectives were to create a platform to address challenges facing the energy industry,
modernize the European Energy Charter – the original, non-binding, political declaration of engagement in the Energy
Charter Process which was a precursor to the ECT – and enhance established principles of energy cooperation.
The new Charter contains several provisions addressing the modern challenges facing the energy industry, including
• Reflecting the increased demand for energy from developing countries. The Charter encourages cooperation to
enhance capacity building and to share research.
• Reflecting the need to focus on sustainable, environmentally-friendly energy production. Signatories agree to take
steps towards making renewable energy sources and clean technologies more financially competitive in the energy
market and to promote low emission technologies.
• Acknowledging that energy generation from a diverse range of sources and supply routes will be critical to
achieving energy security for all.
The Charter also reiterates some of the fundamental principles seen in the ECT, allowing States which are not
currently signatories to the ECT to publicly declare their commitment to such principles, such as: the promotion of
a favorable investment climate in the energy industry; the importance of access to adequate dispute settlement
mechanisms; and the need for political and economic cooperation to develop free trade in efficient cross-border
The Netherlands will host a high-level ministerial conference in May 2015 at which States are expected to sign and adopt
the Charter. A number of States that are not currently signatories of the ECT have indicated their intention to do so.
The Charter is a political declaration of intent and as such will not give rise to enforceable obligations on the signatory
States. Nevertheless, the text represents a positive step towards strengthening international energy cooperation
insofar as it sets out the framework for modernizing the ECT. The Energy Charter Secretariat has also expressed
hopes that the Charter may ultimately encourage a number of new signatories to the ECT, expanding investment
protection to additional States.
Better, Faster, Cheaper: CPR Offers New Rules for
Parties to disputes arising from cross-border business transactions may benefit from new rules for
By Dave McLean
The International Institute for Conflict Prevention and Resolution (CPR) has released a new set of Rules for
Administered Arbitration of International Disputes. The Rules, which went into effect on 1 December 2014, are for
use in cross-border business transactions. They reflect best practices and address current issues in an international
arbitration such as arbitrator impartiality, time to reach resolution and growing administrative costs.
Although CPR’s heritage has been in the non-administered arena, the Rules provide for administered arbitration.
Some of the new Rule’s salient features include:
• Time to Award: CPR must approve any extension beyond one year from the constitution of the tribunal, effectively
incentivizing tribunals to complete their work within 12 months.
• Arbitrators: CPR’s global and industry‑specific panel of arbitrators is comprised of experienced neutrals who have
been vetted by CPR, although the parties retain the ability to designate for appointment any arbitrators of their
• Confidentiality: The arbitrators, parties, counsel and CPR are all subject to an express confidentiality requirement.
• Screened Selection Process: The parties may agree that the arbitrators can be appointed without knowing which
party has selected them in order to ensure impartiality.
• Capped Administrative Costs: CPR’s sliding fee schedule is capped at US$34,000, absent certain
circumstances. Arbitrators are compensated at their designated hourly rates.
• Party Control: The parties are able to control the process by providing only for those administrative functions
needed. In this way the Rules are more streamlined than those of some other international organizations.
• Settlement Opportunities: The tribunal is authorized to propose settlement and assist the parties in initiating
mediation at any stage of the proceedings.
The Rules can be viewed at www.cpradr.org.
CIETAC’s New Arbitration Rules for 2015
As of 1 January 2015, new CIETAC Arbitration Rules for 2015 bringing CIETAC arbitration into line
with international best practice
By Ing Loong Yang, Tina Wang and Catriona E. Paterson
The China International Economic and Trade Arbitration Commission (CIETAC) has published new Arbitration Rules
which entered into force on 1 January 2015 (the 2015 Rules). The revisions are intended to bring the CIETAC
Arbitration Rules into line with international best practice, and to address issues arising out of the break-away of
CIETAC’s former Shanghai and Shenzhen sub-commissions in 2012.
The 2015 Rules introduce key changes, including:
• Emergency arbitrator procedure: In line with recent changes to the rules of other arbitration institutions - such
as the LCIA, ICC, SIAC and HKIAC - Article 23 and Appendix III of the 2015 Rules allow a party to apply to an
emergency arbitrator, appointed by the CIETAC Arbitration Court, for interim emergency relief, before constitution of
the tribunal. However, in Mainland-seated CIETAC arbitrations, an emergency arbitrator’s scope of power is limited
given that the arbitration law in Mainland China does not, as yet, provide for the enforcement of relief granted by
emergency arbitrators. Nonetheless, a Mainland-seated emergency arbitrator may still be able to grant interim relief
that is not reserved by the PRC courts, or which may be enforced in other jurisdictions (e.g. Hong Kong).
• Multi-contract disputes: The 2015 Rules have introduced a new provision at Article 14, which now permits a
claimant to bring a single arbitration proceeding under multiple contracts provided that the:
• Contracts consist of principal and ancillary contracts, or involve the same parties and “legal relationships of the
• Dispute(s) arise out of the same series of transactions;
• Arbitration agreements are identical or compatible.
• Joinder: The newly introduced Article 18 allows any party to an arbitration to apply to CIETAC to join an additional
party to the proceedings. CIETAC may decide not to join an additional party if the additional party is prima facie
not bound by the relevant arbitration agreement, or if any other circumstance exists that makes the joinder
• Consolidation: Under the old rules, multiple arbitrations could only have been consolidated with the parties’
agreement. Article 19 changes this approach and provides for additional grounds on which multiple arbitrations
may be consolidated. CIETAC may now consolidate multiple arbitrations if any of the following apply:
• The claims are made under the same arbitration agreement;
• The claims are made under multiple identical or compatible agreements which bind the same parties and
involve “legal relationships of the same nature”;
• The claims are made under multiple identical or compatible agreements and the contracts consist of principle
and ancillary contracts; or
• All the parties have agreed to consolidation.
The 2015 Rules also attempt to resolve jurisdictional problems that may arise where an arbitration agreement
refers disputes to CIETAC’s Shanghai and Shenzhen sub-commissions. Article 2(6) of the 2015 Rules provides that
CIETAC’s Arbitration Court will accept the arbitration application and administer the case. However, in a decision
issued on 31 December 2014, the Shanghai Intermediate People’s Court ruled that the Shanghai International
Arbitration Centre (SHIAC) has jurisdiction to hear a dispute arising under an arbitration agreement that referred
disputes to the CIETAC Shanghai sub-commission.2 This decision is unlikely to be the last word on the subject,
meaning that considerable uncertainty remains as to jurisdiction where an arbitration agreement refers disputes to the
now-defunct CIETAC Shanghai and Shenzhen sub-commissions.
The 2015 Rules apply to all CIETAC arbitrations commenced on or after 1 January 2015, unless the parties agree
otherwise. Arbitrations already accepted by CIETAC will continue to be governed by CIETAC’s 2012 Rules.
IBA Issues Revised Guidelines on Conflict of Interest
Arbitration users and practitioners need to take heed of changes in current and future international
By Jan Erik Spangenberg
For the first time since their inaugural publication in 2004, the International Bar Association (IBA) has revised
its Guidelines on Conflicts of Interest in International Arbitration (IBA Guidelines). While the revision does not
fundamentally alter the framework of the IBA Guidelines it does contain some important amendments and
The IBA Guidelines were first published in 2004 to provide arbitrators, parties, and counsel as well as courts
and arbitration institutions with guidance and to promote greater consistency with regard to conflicts of interests,
impartiality and disclosure obligations in international arbitration. To this end, the IBA Guidelines set forth some
“General Standards” with explanatory notes as well as “Red,” “Orange,” and “Green” lists of specific situations
indicating whether they warrant disclosure or disqualification of an arbitrator. Since their adoption in 2004, the IBA
Guidelines have frequently been used in international arbitration practice.
The revised Guidelines issued at the end of 2014 strive to reflect the accumulated experience of the Guidelines’ usage
and to address new developments in international arbitration practice since 2004.
With regard to the “General Standards,” the 2014 Guidelines provide guidance on some important issues:
• Third-party funders share identity of funded party: General Standards 6(b) and 7(a) have been amended to
stipulate that any person having a controlling influence on a party or a direct economic interest in the award to be
rendered may be considered to bear the identity of that party and that such relationship must be disclosed. The
explanation to this standard clarifies that third-party funders and insurers may have such economic interest. These
amendments may require parties to disclose at the outset of an arbitration whether they have obtained third-party
funding or have other relevant funding or insurance arrangements. These disclosures could have far-reaching
implications, including an increase in applications for security for costs (which have recently been granted against
third-party funded parties in investment arbitration).
• Advance waivers do not discharge ongoing duty of disclosure: The new General Standard 3(b) addresses
the practice of “advance waivers”, i.e. declarations by the parties that they will not challenge an arbitrator if he
or she has a conflict of interest in the future. These waivers aim to avoid time delays and costs arising from late
challenges to arbitrators. While not otherwise taking a position as to the validity and effect of advance declarations
or waivers, the 2014 IBA Guidelines clarify that such waivers do not, in any case, exempt the arbitrator from his
ongoing duty of disclosure.
• Scope of IBA Guidelines extends to administrative secretaries: New General Standard 6(a) extends the
application of the IBA Guidelines to administrative secretaries and other individuals assisting arbitral tribunals or
individual arbitrators, thereby recognizing arbitral tribunals’ widespread use of secretaries and assistants. The
new standard imposes a duty on the arbitral tribunal to ensure that this obligation is respected at all stages of the
• Duty to disclose counsel team: Amended General Standard 7(b) also requires parties to disclose the identity of
their arbitration counsel and relationships between their counsel and arbitrators. This duty extends to all members
of a party’s counsel team and requires disclosure both at the earliest opportunity and upon any change in the
counsel team. The party’s disclosure obligations have also been increased by General Standard 7(c), which now
calls upon the parties to perform reasonable enquiries with regard to “any relevant information that is reasonably
available to them.”
• Non-neutral party-appointed arbitrators: The 2004 IBA Guidelines acknowledged the fact that some arbitration
rules and domestic laws (e.g. some domestic arbitrations in the United States) permit party-appointed arbitrators
to be non-neutral and excluded such arbitrators from the application of the IBA Guidelines. The new 2014 IBA
Guidelines no longer make this exception and instead “equally apply to tribunal chairs, sole arbitrators and
co-arbitrators, howsoever appointed” (General Standard 5(a)). Even if the parties specifically agreed on the
appointment of non-neutral arbitrators and waived any corresponding conflicts, under the new 2014 IBA Guidelines
these arbitrators would remain bound by the Guideline’s impartiality and independence obligations.
The “Red,” “Orange,” and “Green” lists have also undergone some minor changes:
• Red list: The Red list, which concerns situations which (depending on the facts of the case) give rise to justifiable
doubts as to an arbitrator’s independence and impartiality, now merely clarifies that an arbitrator who has a
controlling interest in an entity that has a direct economic interest in the outcome of the arbitration has a nonwaivable
• Orange list: In the Orange list, which concerns situations which may give rise to justifiable doubts as to an
arbitrator’s independence and impartiality, two new notable provisions were included. First, with regard to the
relationship between an arbitrator and another arbitrator or counsel, an existing enmity has been added as a
potential conflict. Such enmity may arise from another prior or concurrent arbitration where an arbitrator and
counsel appear on opposing sides. A similar provision has been included with regard to the relationship between
an arbitrator and a party or other individuals or entities involved in the arbitration. Second, the situation of an
arbitrator and another arbitrator, or counsel, currently acting or having acted together within the past three years as
co-counsel, has also been added as a potential conflict.
• Green list: The Green list, which concerns situations where no appearance of a conflict exists, now includes the
situation in which an arbitrator teaches in the same faculty or school as another arbitrator or counsel, or holds an
office in a charitable or professional association or participated in conferences, seminars, or working parties with
another arbitrator or counsel. The list also includes the relationship of an arbitrator with a counsel, or a party or its
affiliates through a social media network.
The 2014 IBA Guidelines substitute the 2004 Guidelines effective immediately. Like their predecessor, the 2014 IBA
Guidelines do not constitute legal provisions and do not override any applicable national law or arbitral rules the
parties chose. Their impact therefore will depend on the international arbitration communities’ acceptance of the
2014 IBA Guidelines. Parties and their counsel are well advised to look out for the relevant changes, some of which
have been outlined in this article, in current and future arbitrations, so as to avoid unnecessary delay resulting from
insufficient or incomplete compliance with disclosure obligations.
1 The ECT was signed in December 1994 and came into force in April 1998. It puts in place a regime for
transparency, stability and cooperation in the energy sector. The ECT has been signed by 52 State Parties, the
European Union and EURATOM.
2 Ni Laibao and Liu Donglian v. Soudal Investment Limited, (2012) Hu Er Zhong Min Ren (Zhong Xie) Zi No.5.
About Latham & Watkins International Arbitration Team
Latham & Watkins International Arbitration team is comprised of approximately 70 lawyers based across Latham’s
global network advising clients on multi-jurisdictional disputes, international commercial arbitration, investment treaty
arbitration and public international law. For more information about the practice, please visit: http://www.lw.com/practices/
About the Publication
Latham & Watkins International Arbitration Newsletter is a regular publication produced by the firm’s global International
Arbitration team designed to highlight important news, legal issues and developments in a practical and informative way.
If you have any questions about this publication please contact a lawyer on the editorial team, Sebastian Seelmann-
Eggebert, Philip Clifford, Catriona E. Paterson and Jan Erik Spangenberg.
INTERNATIONAL ARBITRATION NEWSLETTER
Latham & Watkins operates worldwide as a limited liability partnership organized under the laws of the State of Delaware (USA) with affiliated limited liability partnerships
conducting the practice in the United Kingdom, France, Italy and Singapore and as affiliated partnerships conducting the practice in Hong Kong and Japan. The Law
Office of Salman M. Al-Sudairi is Latham & Watkins associated office in the Kingdom of Saudi Arabia. In Qatar, Latham & Watkins LLP is licensed by the Qatar Financial
Centre Authority. Under New York’s Code of Professional Responsibility, portions of this communication contain attorney advertising. Prior results do not guarantee a
similar outcome. Results depend upon a variety of factors unique to each representation. Please direct all inquiries regarding our conduct under New York’s Disciplinary
Rules to Latham & Watkins LLP, 885 Third Avenue, New York, NY 10022-4834, Phone: +1.212.906.1200. © Copyright 2015 Latham & Watkins. All Rights Reserved.
Page 4 Click to view