Welcome to the eighth edition of the Squire Sanders' International Arbitration
In this edition, we look at a number of topics, each of which has an important
impact on the broad spectrum of matters affecting international arbitration, be it
enforcement, confidentiality or conditions precedent.
We are also delighted to announce that Squire Sanders now appears in the Legal
500 as a recommended firm for International Arbitration in Hong Kong and Dispute
Resolution in China.
We also welcome new senior associates Alexis Martinez and Stephan Adell to our
London and Paris offices.
We hope you find the topics of interest and if you would like to discuss any aspect
further, please do not hesitate to contact any member of the team.
George von Mehren
Procedural Conditions Precedent to Price
By way of background, price review provisions in long-term gas and LNG contracts operate to
preserve the long-term commercial relationship between the parties. They are found in supply
contracts that often last for fifteen to thirty years and contain take-or-pay provisions requiring the
buyer to pay for a substantial quantity of gas, whether or not the buyer takes shipment of the gas. On
the one hand, take-or-pay commitments can be critical to the supplier’s ability to obtain financing for
the large capital costs necessary to produce and transport natural gas or LNG because the take-orpay
revenues are pledged as security1. On the other hand, the take-or-pay commitment may
become financially onerous for the buyer when it cannot sell the gas at an adequate margin. A
prolonged imbalance may actually destroy a buyer. In this context, buyers and sellers agree to price
review provisions permitting either of them to initiate a process to consider if the price formula should
be changed and, if so, how it should be changed.
In price review proceedings, a party seeking to change the price formula is required to provide notice
to the other party. The parties are then required to engage in negotiations for a specified period –
four to six months are typical for a mandatory negotiation period. If the price review claim remains
unresolved following expiration of the negotiation period, arbitration is available to resolve the claim.
Based on these notice and negotiation requirements, three conditions precedent to arbitration usually
exist: (1) a timely request for the price review; (2) adequate information in the price review request;
and (3) negotiations that comply with the contract. Issues involving one or more of these conditions
commonly are raised by the party who opposes a change in price. They are asserted as a basis for
dismissal of the price review claim on preliminary grounds.
My observations in this article are general and, of necessity, based on my own experience over the
last ten years representing buyers in Europe. There is little substantive material to support these
observations as these price review proceedings are very confidential. While the bottom line results
may become public in financial disclosures or otherwise, the sale purchase agreements themselves
and arbitral awards dealing with price review requests are almost always confidential and closelyguarded
commercial information. In each specific case, of course, the outcome is determined by
analysis of the contract, the applicable law and the facts2.
1 Holland and Ashley, 30 Journal of Energy & Natural Resources Law, p.29 (2012)
2 There are, however, some useful materials available to a reader interested in reading more about the subject. For example,
an interesting discussion of the contracts typically used for sales of natural gas from Norwegian producers can be found in A
Brautaset, et. al., NORSK GASSAVSETNING Rettslige hovedelementer (NORWEGIAN GAS SALES Main Elements). G.
Block, Arbitration and Changes in Energy Prices: A Review of ICC Awards with respect to Force majeure, Indexation, Adaption,
Hardship and Take-or-Pay Clauses, 20 ICC International Court of Arbitration Bulletin 51-109, contains a very useful
discussion of price review and related contract provisions. In addition, various aspects of price review arbitration are
considered in Gas Natural Aprovisionameintos, SDG, S.A. v. Atlantic LNG Company of Trinidad and Tobago, 2008WL
4344525 (S.D.N.Y Sept. 16, 2008)). The author was lead counsel for Gas Natural in the underlying arbitration.
In most cases, price review provisions dictate that a review may only be initiated at specific intervals
during the term of the contract. For these reviews – commonly known as “regular price reviews” – the
periods between price reviews vary, but three year intervals are common. In addition, some
provisions provide for a limited number of intermediate price reviews – commonly known as “jokers”
– that may be used once or twice during the life of the contract before a regular price review is
These provisions have an important commercial purpose in that they establish price certainty for the
specific periods agreed by the parties. Constant efforts to adjust price are not permitted. Both parties
take the risk that economic and market developments between available opportunities to address
price will be unfavorable to them – with the risk decreased when “jokers” are available.
Arbitrators may be asked to determine if the price review request was made in a timely fashion.
Disputes dealing with this issue are resolved by application of the relevant contract’s general
provisions on delivery of notice and the provisions of applicable law. If the party seeking the price
review has not complied with the timing requirement, the claim is likely to be dismissed.
The Contents of the Request
Sometimes the party opposing a change to the price formula claims that the notice did not contain
sufficient information. Some price review provisions say nothing about the content of the request
except, of course, that it must convey the bare information that the requesting party has requested a
price review. Others, for example, state that the requesting party shall provide information providing
its belief that the price should be revised. Others call for an explanation in “reasonable detail.”
These requirements usually are not interpreted to require that a complete and detailed case be set
forth in the price review notice. They typically are interpreted to require enough information so that,
as a practical matter, the required negotiations may productively begin. The parties can exchange
more substantial information about their positions, and data in support of their positions, during the
The Obligation to Negotiate
Arbitrators may also be asked to determine if the party seeking a price change has fulfilled its
obligation to negotiate. A variety of issues may be involved. Sometimes it is claimed that the
arbitration was commenced before expiration of the contractual period for negotiations set out in the
contract. There may be claims that the right to a price review was waived because negotiation
sessions were not scheduled promptly or because there was a significant hiatus between sessions.
Or the claim may be that the party seeking a price change did not advance adequately clear and
complete positions during negotiations or that sufficiently detailed information concerning the claim
was not provided during the negotiation process.
There are several ways in which these claims may impact the arbitration. One is the issue of whether
a party may rely on grounds during the arbitration that are not related to those set out in the request
or in subsequent negotiations. Another is whether either party may take positions in the arbitration
that are significantly different from, or contradictory to, those that it took in the negotiations.
Arbitrators may address these questions in various ways. Admissibility issues may be involved.
Communications during the negotiation phase may or may not be “without prejudice” or “for
settlement purposes only”. Or, put another way, applicable law or party communications on the
issue may have created legitimate expectations that the content of the negotiations would not be
admitted into evidence in a subsequent arbitration. If the negotiations are admissible, however,
arbitrators may consider the efficiency and fairness of the process and the credibility of the party that
seeks to change (or, in particular, reverse) its position.
In my experience, parties have had limited success with claims that a price review arbitration should
be dismissed based on conditions precedent to the arbitral proceeding.Written and oral submissions
may spend considerable time on these issues but they are not necessarily outcome determinative.
Perhaps this is based on a view that the notice and negotiation phase should essentially be a
commercial process that is not hampered by procedural complexities. Under this view, if the party
seeking a price change has provided a timely notice, the matter can then be pursued during
negotiations with a commercial focus on what is important for business decisions by the participants.
If that process does not produce resolution, the focus then shifts to the more formal arbitration
proceeding in which claims and positions must be more extensively developed and supported by
George M. von Mehren
T +44 20 7655 1395
Enforcing Arbitral Awards in France
International arbitration awards are, by their very nature, final and binding. However, despite these
key characteristics, the awards are not always voluntarily settled by the other party. As a result,
where a party has obtained a favourable arbitration award in another jurisdiction but the other party
has not volunteered payment of the award, the successful party can try to enforce the arbitration
award in France against any assets held by the other party in France.
The Legal Framework Applicable for Granting Exequatur
Although France is a signatory to the Convention on the Recognition and Enforcement of Foreign
Arbitral Awards signed in New York in 1958 ( the “New York Convention”)3, an arbitration award is
incapable of direct enforcement without the assistance of the local courts.
The New York Convention's principal objective is that foreign and non-domestic arbitral awards will
not be discriminated against. It forces countries party to the New York Convention to ensure that
such awards are recognized and generally capable of enforcement in their jurisdiction in the same
way as domestic awards. In accordance with the New York Convention and its objective, the French
Civil Procedural Code governs the enforcement and recognition of foreign arbitral awards in France4.
The recent reform of the French Law on arbitration, which was enacted through Decree n°2011-48 of
13 January 2011 ("the Decree"), has not modified the main features of the enforcement procedure.
Enforcement of foreign arbitral awards is obtained through an ex parte application to the Tribunal de
Grande Instance in Paris to obtain an enforcement or “exequatur order”, i.e. turn a foreign arbitral
award into an enforceable French judgment. In accordance with article IV of the New York
Convention and article 1515 of the French Civil Code, the application to enforce a foreign arbitral
award must be supported by (i) an authenticated original of the arbitral award or a duly certified copy;
(ii) a copy of the arbitration agreement; and, where applicable, (iii) a translation of these documents.
The presence of assets in France is not a pre-requisite for the court to grant exequatur.
As the enforcement procedure is ex parte, the claimant is not required to disclose it to the other party.
However, upon obtaining the enforcement order, the claimant must notify the other party in the
country where it is based. This notification is critical because it triggers the other party's right of
Once the time period available for setting aside the enforcement order has expired and the
enforcement order is final, the arbitral award can be immediately enforced in France, in the same
way a French judgment would be.
3 The New York Convention entered into full force in France on 24 September 1959.
4 French Civil Code, Articles 1514-1527.
The Potential Escape Routes
In France, a foreign arbitral award is not subject to appeal, but only to annulment on a limited number
of grounds, as defined by the French Civil Procedural Code5. However, the enforcement order may
only be challenged by the other party before the Court of Appeal only on the basis of the grounds
available for annulment,6 which are:
(i) the Arbitral Tribunal wrongfully declared itself either competent or incompetent;
(ii) the Arbitral Tribunal was not appropriately formed;
(iii) the Arbitral Tribunal acted beyond the scope of the mandate conferred on it by the parties;
(iv) the adversarial principle was breached; or
(v) the recognition or enforcement of the award is manifestly contrary to international public
Any appeal against the enforcement order of a foreign arbitral award must be made by the other
party within one month of the notification to the other party. Although the grounds available to
challenge the validity of the enforcement order are scant, the appeal procedure follows the normal
One of The Reform’s Innovations
Although Decree n°2011-48, has not modified the main features of the enforcement procedure, it has
introduced a key innovation to the French legislative regime, which demonstrates that France is
striving to become a more attractive and arbitration-friendly seat for arbitration proceedings.
Since the introduction of the Decree, an appeal to set aside an enforcement order no longer
suspends the enforcement of the award in France. This modification aims to prevent dilatory actions
from unsuccessful parties and, provide a higher protection of the rights of successful parties. Prior to
the introduction of the Decree, actions for setting aside the enforcement order suspended the
enforcement of the award, as long as the appeal procedure was still pending8. As a result of the
reform, and as a matter of principle, the claim to set aside an enforcement order does not stay the
execution of the order and an immediate execution is possible.
However, the French legislators have introduced an exception to this rule. Pursuant to article 1526
(2) of the French Civil Procedural Code, the judge may only grant a stay of enforcement of the award
where the unsuccessful party’s rights would be seriously impaired or prejudiced by such an
The Paris Court of Appeal has adopted a very strict interpretation of the conditions and has thus set
a very high threshold that must be satisfied to obtain a stay of enforcement. As a result it has not
made it easy for unsuccessful parties to obtain such measures.
The Court of Appeal reiterated that those measures must remain exceptional and be limited to cases
in which the rights of the party are seriously impaired or breached and where immediate enforcement
would cause material and irreparable harm to the unsuccessful party9. This serious impairment or
5 French Civil Procedural Code, Article 1520.
6 French Civil Procedural Code, Articles 1520 and 1525.
7 French Civil Procedural Code, Articles 900-930-1 and 1527.
8 French Civil Procedural Code, former Article 1506
9 CA Paris, 18 October 2011, n°11/14286 ; CA Paris, 13 juillet 2012, n°12/11616; CA Paris, 23 April 2013, n°13/02612.
irreparable harm may not include any financial difficulties that would result from the immediate
enforcement of the award10.
How to Enforce an Enforcement Order
The main method of enforcing an enforcement order in France is to exercise various types of
seizures of the other party’s assets identified as being located in France. These seizures, which are
carried out directly by a French bailiff once the enforcement order is obtained, mainly consist of:
attachment on the bank accounts located in France of the judgment debtor;
seize money that is owed by a third party to the judgment debtor, by which the unsatisfied creditor
holding the enforcement order will seek payment of his debts from a third party who in turn owes
money to the judgment debtor;
seizing movable or immovable property of the judgment debtor located in France; and
seizing intangible rights and assets of the judgment debtor located in France, such as shares,
interests, securities etc.
The seizures performed by the bailiff may be challenged by the debtor before the French
enforcement judge upon receipt of the notification of said measures. Insofar as the challenge
proceedings are pending, the funds are escrowed either by the bank or by the third party and are
unavailable for both parties11.
In no challenge has been formed, once the challenge period has expired the funds/monies/assets
are awarded to the successful party holding the arbitral award enforcement order.
The provisions of Decree n°2011-48 illustrate the confirmation of France as a key location for
enforcement of foreign arbitral awards and arbitration proceedings. The flexibility and innovation
demonstrated by the legislation will accord an improved level of protection to parties who wish to
enforce an arbitral award within the jurisdiction. The option of enforcing an award whilst an appeal is
pending will discourage unsuccessful parties from commencing vexatious appeals intended to delay
enforcement. However the true success of these provisions will depend upon the stance adopted by
the French Courts. To date the Courts have supported the underlying philosophy of the Decree,
requiring the existence of exceptional reasons to justify staying enforcement. It remains to be seen
whether this approach will continue, or whether unsuccessful parties will manage to secure stays on
the basis of less demanding criteria.
T +33 15 383 7398
T +33 15 383 7522
10 CA Paris, 18 October 2011, n°11/14286.
11 This concerns in particular seizures in the hands of third-parties.
Public Eye: New Transparency Rules
unveiled for Investor-State Arbitrations
After a discussion period of almost three years, on 11 July 2013 the United Nations Commission on
International Trade Law (“UNCITRAL”) adopted the UNCITRAL Rules on Transparency in Treaty-
Based Investor-State Arbitrations (the “Transparency Rules”).
The Transparency Rules will take effect from 1 April 2014 and will apply to all treaty-based investorstate
arbitrations that refer disputes to the UNCITRAL rules, unless the parties agree otherwise.
The rationale behind the Transparency Rules represents a shift from the traditional international
arbitral landscape which has historically been underpinned by confidentiality and privacy.
Confidentiality has long been considered to be one the greatest advantages of arbitration over
litigation. Arbitration is, with limited exceptions, a confidential process in which commercially sensitive
information can be shielded from the public domain. For this reason, parties will often select
arbitration as their means of dispute resolution in order to keep the details of their disputes private.
The concept of confidentiality is more problematic in investor-state disputes where competing issues
of privacy and public interest have created an increasing demand for public access and scrutiny.
Investor-state disputes involve alleged breaches of international investment conditions.
Consequently, improved transparency and public knowledge of these breaches will aid investors in
their investment risk assessments or the potential merits of a treaty-based claim.
Accordingly, the Transparency Rules have been produced and adopted. They represent a general
shift towards greater transparency in international arbitration where public interests and tax payer
funds contend against sovereign state confidentiality.
The Transparency Rules: The Key Features
The applicability of the new rules will be dependent on the date of the treaty under which the claim is
based. The Transparency Rules will automatically apply to those claims brought under a treaty,
concluded after 1 April 2014, provided that the parties to the dispute have not expressly opted out of
the Transparency Rules. For those claims brought under a pre-1 April 2014 treaty, the disputing
parties can agree to adopt the Transparency Rules, thereby opting-in.
A significant amount of information will be made publically available under the new rules, including
details of the parties themselves, the industry sector involved and the investment treaty under which
the claim has been brought. Moreover, under Article 3 of the Transparency Rules, pleadings, written
submissions and the eventual award will be publically accessible and stored electronically by
UNCITRAL.Witness statements and expert reports may also be disclosed with certain limited
exceptions relating to the publication of exhibits.
Under Articles 4 and 5, non-disputing parties to the treaty, or otherwise, (as defined in the
Transparency Rules) will, at the tribunal’s discretion and following a consultation with the disputing
parties, be permitted to make submissions in the proceedings. This may occur where, in the
tribunal’s opinion, those persons hold an interest in the proceedings or where they can add
information to the legal and/or factual issues in dispute. In addition, Article 6 will allow for public
access to the hearing itself.
This being said, the principle of confidentiality has not completely eroded. The Transparency Rules
do provide tribunals discretion to safeguard confidentiality and restrict transparency in certain
Confidential or protected information: including confidential business information, information
protected against being made public under the treaty or under the law of the respondent state, or
any other applicable laws, and information the disclosure of which would impede law
Integrity of the arbitral process: where making information available to the public could hamper
the collection of evidence, result in the intimidation of witnesses/counsel or members of the
What are the implications?
The Transparency Rules undoubtedly mark a change in the arbitral legal framework governing
investor-state disputes. They will allow for greater transparency than is currently available under the
ICSID Rules, which only allow for interested third parties to attend hearings and to intervene in
proceedings at the tribunal’s discretion. The publication of awards and pleadings will certainly assist
investors in gauging their rights and the merits of potential actions under the same treaties in dispute.
Moreover, parties may decide to instigate contractual rather than treaty-based claims to avoid the
heightened publicity afforded by the new rules in treaty based proceedings.
In reality however, the availability of an opt-out provision in the Transparency Rules for treaties
concluded after 1 April 2014, together with the requirement of consent of the parties to opt-in for pre-
1 April 2014 treaty based claims may significantly limit the impact of these changes.
We shall watch this space and update you in the Spring with the key practical implications, if any. If
you would like any more information on these changes, please contact, the author, Max Rockall.
T +44 20 7655 1354
George M. von Mehren leads the firm’s International Dispute
Resolution Practice Group, ranked by The American Lawyer’s 2011
Arbitration Scorecard as a top arbitration practice globally. The 2009
edition of the publication also recognized one of George’s recent
arbitration victories, in which the client benefited by more than US$1
billion, as the second largest arbitration award by dollar amount in the
world during the prior two years. The 2007 Arbitration Scorecard
recognised another of George’s victories as among the five largest
arbitration awards in the prior five years. With more than 30 years of
experience in complex adversarial proceedings, George spends 100
percent of his time representing clients in international arbitrations and
providing strategic advice for litigation in courts outside the US. He has
an established record of working effectively with counsel from around
Paul Oxnard has over 20 years of experience dealing with high value
commercial litigation, and international and domestic arbitration
matters. He has been instrumental in developing the firm’s marketleading
Alternative Dispute Resolution practice in the UK. Paul has
particular experience in relation to disputes in the heavy engineering,
energy (particularly nuclear and gas) and telecoms sectors and white
collar fraud, injunctive work (obtaining, enforcing and resisting general,
freezing, and search and seizure injunctions). He also specialises in
EU public procurement regulations related issues. Paul is recognised
in Chambers Global 2012 within the dispute resolution category.
Antoine Adeline is a partner within the international dispute resolution
practice of the Paris office. He is a French and Canadian national, has
lived and practiced in England for five years and brings more than 20
years' experience to Squire Sanders, as a trial advocate and litigation
and arbitration lawyer in a highly international environment. His particular
focus is on arbitration, cross border disputes, alternative dispute
resolution, particularly mediation, and corporate insolvency. Although he
has particular experience in areas such as construction, software and
various manufacturing industries, he represents a diverse range of
businesses from public, multinationals and household names through to
Laure Perrin practises in international arbitration and international
commercial disputes. Laure has participated in arbitral proceedings
conducted under the ICC and ICSID arbitration rules as well as
commercial and civil litigations and enforcement procedures before
French courts. Prior to joining Squire Sanders, her engagements
included working on ICC commercial arbitrations relating to the
termination of distribution contracts, a post-acquisition dispute and
transnational public international law disputes relating to boundaries.
Laure also participated in non-contentious undertakings, especially in
relation to the renegotiation and price reviews of long-term gas supply
contracts. She has also worked in-house on a US$400 million ICSID
investment dispute in the energy sector in South America for a major
Max Rockall advises on a range of contractual and commercial disputes,
including UK and international commercial litigation, arbitration, shipping
litigation and alternative dispute resolution. Max has experience in
handling disputes before the English High Court, the London Marine
Arbitrators Association and the Court of Appeal.
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