From June 13 to 14, the Deutsche Institution für Schiedsgerichtsbarkeit e.V. (DIS) and the law firm Klauberg Baltics jointly hosted the 8th DIS Baltic Arbitration Days. The DIS Baltic Arbitration Days have developed into a high profile arbitration event for arbitration practitioners. Around 140 practitioners and students from all around the world were welcomed by Korinna von Trotha (DIS) and Theis Klauberg (Klauberg Baltics) in the Stockholm School of Economics in the center of beautiful Riga, Latvia. The conference covered three topics: arbitration in construction and procurement disputes, current events regarding Brexit as well as investment arbitration.
1. Conference day #1:
The first day of the conference was all about the development and future of dispute resolution and upcoming challenges due to digitalization and artificial intelligence. There were two key note speeches by Heidi-Merikalla-Teir (Merilampi) and Prof. Jörg Risse (Baker McKenzie). Heidi-Merikalla-Teir, who is a renowned Finnish lawyer and the former secretary general of the Finland Arbitration Institute (FAI) talked about her experiences at the FAI. She was glad to present that gender diversity in dispute resolution improved and that nowadays more and more young practitioners become nominated as arbitrators (“new generation of arbitrators”). With regards to the future development, she encouraged practitioners to be more open towards changes and alternative dispute resolution. In her opinion, a shift in the mindset of practitioners and the development of a toolbox with different skills are required, as dispute resolution should not be based on tough lawyer skills only. She closed her speech by highlighting a very interesting yet still overlooked aspect: can dispute resolution be more sustainable and reasonable?
The second speaker was Prof. Jörg Risse, who is one of the best-known arbitration lawyers, arbitrators and mediators from Germany. With a very distinguishing and memorable presentation, he demonstrated a slightly critical picture of arbitration and its future. According to his view, there are three key challenges for the arbitration practice: (i) the digitalization and computer-made judgments, (ii) the huge amount of soft-law lacking legitimacy and overloading arbitral proceedings and (iii) the future handling of construction disputes which are increasingly complicated and extensive. As many construction disputes are decided on the facts and technical questions, he stressed that arbitration may not always be the right choice and that expert adjudication could oftentimes be preferable. With regards to digitalization, Prof. Jörg Risse called attention to artificial intelligence which might become a “disruptive event for arbitration”.
2. Conference day #2:
The second day offered four excellent panels dealing with arbitration in public procurement disputes, construction disputes, investment arbitration as well as Brexit and its consequences for the arbitration practice. Despite the variety of topics, there was a thread passing through the discussions which made the day even more interesting.
2.1 Arbitration in Public Procurement Disputes
The first panel consisted of Gediminas Dominas (Walless), Pontus Ewerlöf (Hannes Snellman), Dr. Justus Jansen (GSK Stockmann) and Kristiina Rebane (Klauberg Baltics). The session was moderated by Santtu Turunen (The Finland Arbitration Institute) who asked the panelists to focus on their experience with arbitration in public procurement disputes in their home jurisdictions and on possible challenges.
Interestingly, the panelists agreed upon the fact that there is no real need for arbitration in public procurement disputes. Their experience showed that disputes in connection with procurement proceedings are (to date) referred to state courts. And there seems to be a good reason for that: the court system is functioning pretty well. The proceedings are cheap and fast (on average six months) and the judges are highly qualified with regards to the complex field of procurement law. Irrespective of the need, there were doubts as to whether such disputes were arbitrable at all. Making a reference to a ruling by the ECJ, Gediminas Dominas stressed that the public interest in public procurement proceedings might prohibit the states from arbitrating their disputes. Dr. Justus Jansen gained the attention of the audience by mentioning surprising developments in Germany. A new law on packaging foresees the conduct of arbitral proceedings to review the tender process. By rendering a tender, every tenderer agrees on arbitral proceedings under the DIS Rules (the proceedings are to be finalized eight weeks after the request for arbitration is filed). There was some skepticism about this and thus it remains to be seen whether this quite unique procedure will be successful. As to the question whether public procurement contracts could be arbitrated, there were different views. Again, public interest might be an issue here. The same applies to the enforcement of an award in a public procurement matter. What can be said for sure, is that there are still some unanswered questions.
2.2 Arbitration in Construction Disputes
The second panel was moderated by Maximilian Bülau (Hengeler Müller). The topic of arbitration in construction disputes was dealt with by Christopher Boog (Schellenberg Wittmer), Gideon Weinbaum (Epstein Rosenblum Maoz), Rimma Malinskaya (Bryan Cave Leighton Paisner), Uwe Uusitalo (Castrén & Snellman) and Dr. Valentina Wong (Wolf Theiss).
There were basically two main topics of discussion: the use of alternative dispute resolution mechanisms in construction disputes and possible solutions to counteract the challenges previously mentioned by Prof. Jörg Risse. According to Dr. Valentina Wong and Uwe Uusitalo, mediation does not play a decisive role in construction disputes since the parties are oftentimes unwilling to make compromises and further fear the lack of expertise of the mediators. The speakers referred to the option of expert adjudication proceedings as a more attractive alternative, however, stressing the importance of having at least one lawyer on the panel. Gideon Weinbaum proceeded by encouraging lawyers to be more aware of expedited procedures in small to mid-size construction disputes. He explicitly referred to Art. 30 of the ICC Rules according to which expedited proceedings are automatically applicable if the amount in dispute does not exceed two million USD. Rimma Malinskaya presented the benefits of paperless arbitration, the use of software and cloud-based case management, which in her experience can contribute to more efficient proceedings. Finally, Christopher Boog referred to the revised DIS Rules which provide for features fostering efficiency in complex disputes. He especially highlighted Art. 27.7 and Annex 3 of the Rules which deal with expert management. This “unique feature” allows the tribunal and the parties to conduct the expert proceedings in a more reasonable way, e.g. by jointly agreeing upon the topics which should or should not be referred to experts. He concluded that for this and for many other reasons the DIS Rules are perfectly suitable for large construction disputes.
2.3 Investment Arbitration
The third panel focused on investment arbitration and the implications of the famous Achmea decision by the ECJ. Diana Tsutieva (Foley Hoag) has been representing states in investor disputes for years and could thus add a different perspective to the one from Andrei Solin (Shearman & Sterling), Olga Hamama (Freshfields Bruckhaus Deringer) and Dr. Richard Happ (Luther). Olga Hamama presented the Achmea decision in full depth. It was controversially debated whether the Achmea decision would impact the system of investor state dispute settlement in other treaties that have connections to a European state. Andrei Solin took a very clear stance by arguing that the Achmea decision has nothing to do with the Energy Charter Treaty (“ECT”) since tribunals deciding on the ECT do not have to apply EU-law. Subsequently, Diana Tsutieva focused on the enforcement of awards in the US and how the Achmea decision could be of relevance in this regard. If the award was issued under the law of one of the EU member states, the state might argue that the arbitration agreement is not valid due to the primacy of EU-law. She explained that nowadays an increasing number of investors tries to enforce the awards in the US. However, US courts haven taken note that the Achmea decision might have an impact on the enforceability of such awards. Last but not least, Dr. Richard Happ pictured a very critical perspective for ISDS. According to his and Diana Tsutieva’s view, the ECJ might render a similar decision with respect to the ECT. His concern is that investor protection under EU law is insufficient because investors do not have the means to claim damages in case of a violation of their rights. According to Dr. Happ, this situation is also not about to change.
2.4 Brexit and Arbitration
The most controversial topic was reserved for the final panel which consisted of Brandon Malone (Brandon Malone & Company), Gustaf Möller (Krogerus), Sophie Weber (One Essex Court), Dr. Ilze Dubava (State Chancellery) and Richard Waugh as moderator (Fieldfisher). The question was mainly whether arbitration is in any way affected by Brexit. Ilze Dubava mentioned that there is a consequence for ISDS. The EU is a member to several treaties providing for ISDS. Once the UK leaves the European Union, the UK will have to negotiate and conclude its own investment protection treaties. It was discussed whether after Brexit the Achmea decision will have an impact on the BITs that are in place between the UK and EU Member States.
Gustaf Möller expects to see more arbitration in England instead of litigation. As soon as the UK leaves the EU, judgments will no longer be enforceable under the Brussels I Regulation. Arbitral awards, on the other side, will still be enforceable under the international New York Convention (NYC). Sophie Weber pointed to numbers of the LCIA according to which arbitral proceedings in London have increased since the vote. She claimed, however, that not the Brexit itself but the existing uncertainties were the cause for this development. In Brandon Malone’s view there are two factors that might influence the arbitration practice in London: (i) as many companies already left London, the interest in London as an arbitration hub might decrease and (ii) the parties might no longer perceive London as an open and attractive seat of arbitration. In summary, the panelists agreed that it is very difficult to predict the future developments. Yet, the panelists agreed that Brexit will have an impact on arbitration.
The conference days were characterized by excellent panels, controversial but productive debates as well as international participants. This and the highly hospitable and attentive hosts as well as the numerous opportunities to meet and to exchange views are what made the conference so special.