CHOOSING THE BVI AS THE SEAT OF ARBITRATION
Until recently Russian and CIS clients would often, without hesitation, choose London as the seat of arbitration and the London Court of International Arbitration (“LCIA”) Rules as the rules governing the arbitral procedure. Today, parties now opt for more non-traditional alternatives, and in so doing recognise that there is no strict correlation between the choice of the seat and the arbitration rules adopted by the parties.
The arbitration rules set out the parties’ agreement about the procedural framework of the arbitration. In the absence of the parties’ agreement, the arbitration act of the relevant seat provides the statutory framework for the arbitral procedure. The “seat” in actuality is a legal fiction of sorts. It is not the geographical location of the arbitration proceedings, that is its venue. It is the law governing the arbitration procedure. This can be significant as it will also determine the degree of involvement or intervention which the courts exercising jurisdiction at the seat will assert. The arbitration proceedings can take place in any country and indeed in many countries.
The BVI as the Seat of Arbitration
The new BVI Arbitration Act 2013 (the “Act”) came into force on 1 October 2014, following the BVI has acceding to the Convention on the Recognition and Enforcement of Arbitral Awards (the “New York Convention”). The Act takes account of modern developments in international arbitration: it is forward thinking, flexible and in many aspects innovative. For example, the Act expressly states that the arbitral tribunal has the power to consolidate arbitral proceedings. It allows the parties to choose the law governing the contract other than the law of the seat of arbitration and gives the parties a choice to exclude an appeal of the award on points of law and serious irregularity. The Act also allows the parties to conduct arbitration proceedings anywhere in the world and gives the freedom to select a legal representative of their choice without restriction relating to nationality or qualification.
The Act is modelled on the UNCITRAL Model Law on International Commercial Arbitration (1985), with amendments as adopted in 2006. The Act provides for little interference by the courts in the arbitral proceedings. The arbitral tribunal has power to order interim measures and such measures are enforceable in the BVI. The BVI court also has the power to order interim relief in aid of an existing or anticipated arbitration and the decision of the BVI court is not subject to appeal. Unlike England, the applicant applying to the BVI court for interim measures does not have to obtain the tribunal’s prior permission. The Court in exercising its power to grant interim relief has a wide discretion to do so with very little impediments to the exercise of such. That said it may dismiss the application if it considers that the tribunal is better placed to grant the relief sought. Importantly, when an applicant applies for relief there is no requirement to establish a connection between the BVI and arbitral proceedings. Even before the passing of the Act the BVI Commercial Court has adopted a pro-arbitration approach in the case law. This approach has been solidified by both the modern pro-arbitration statutory framework and by presence in the BVI of high quality legal community with credible and extensive commercial experience. The judges of the BVI Commercial Court and indeed the Eastern Caribbean Supreme Court and the Court of Appeal have extensive international experience and are familiar with the legal framework of international arbitration. They are well placed to assist in complex international arbitrations and regularly do so. Parties frequently apply to the court for interim measures in support of international arbitration proceedings, but they also frequently apply for the recognition of those awards in the BVI and for orders in aid of the enforcement of those awards.
BVI IAC Rules 2016
The BVI IAC Rules 2016 (Rules) are based on 2010 UNCITRAL Arbitration Rules. The Rules compliment well the choice of the BVI seat, but can be used independently with any other seat. Its draftsmen included prominent international arbitration practitioners, drawing from the experience in a number of systems. The Rules take account of international arbitration standards, and draw on the results of the publicly available feedback provided by the users of international arbitration rules. For example, in response to a concern about predictability of the costs of arbitration, the Rules provide for a cap to administration and arbitrator’s fees. In addition, there is an on-line calculator which gives the parties the ability to estimate the average arbitration costs based on a standard and well accepted scale of fees.
The Rules stand out for taking a hands-on approach to the confidentiality of the arbitration proceedings. For example, Article 17(6)-(7) of the Rules includes amongst the confidential materials “documents produced by another party in the proceedings”, which would include any documents produced by a third party which otherwise would have been public (for example, court orders made in support of arbitration proceedings). This committed approach to confidentiality is also reflected in the Court process in the BVI since any application made in the court in respect of the enforcement of an arbitral award would also be considered confidential. Without an express provision, court orders may become a source of public information about arbitration if the arbitration law does not provide for their confidentiality. The Rules provide that the arbitral tribunal may impose sanctions for breach of confidentiality or take such conduct into account when awarding the costs.
The Rules are different from a number of other arbitration rules because they do not contain provisions about emergency arbitrators. This is a procedure designed to give a prospective party the opportunity to apply for provisional measures before a panel is selected, without the need to seek the court’s assistance. The absence of this provision from the Rules avoids entirely the current jurisprudential controversies surrounding emergency arbitrators. The BVI court has always provided and continues to provide outstanding support to arbitral proceedings before, during and after the arbitration proceedings. Moreover, according to Article 26(9) of the Rules a request for interim measures addressed by any party to a judicial authority shall not be deemed incompatible with the agreement to arbitrate, or as a waiver of that agreement. Therefore, by choosing the Rules the parties choose the old and tested by case law court regime for applying for interim measures before formation of an arbitral tribunal.
In relation to appointment of an arbitral tribunal, the Rules provide that, unless the parties agree otherwise, the BVI IAC shall appoint three arbitrators. Upon application, the BVI IAC may appoint a sole arbitrator if it determines that, in view of the circumstances of the case, this is more appropriate. Unlike other leading arbitral institutions, the BVI IAC has published online the list of arbitrators from which the institution selects the arbitral tribunal. The parties may also agree to appoint any arbitrator which is not on the list, this option is another hallmark of the flexibility of the Rules. Any arbitrator may apply to be included in the list which currently includes prominent international arbitrators, such as Bernard Hanotiau, Juliet Blanch, Lucy Reed, Stavros Brekoulakis, Jose Rosell, Niuscha Bassiri, Gerard Farara QC, Jeffery Elkinson, Sir Bernard Eder, Ian Glick QC, Lord Goldsmith QC, Ian Hunter QC, Roman Khodykin, Sophie Lamb, Julian Lew QC, Wendy Miles QC, Christopher Newmark, Chris Parker, Joe Smouha QC, Tom Sprange QC, David Sutton, Ian Quirk, Angeline Welsh, Jason Fry, Alexis Mourre, Michael Polkinghorne, Marie Stoyanov, Klaus Sachs, Klaus Reichert SC, Domitille Baizeau, Gabrielle Kaufmann-Kohler, William Rowley QC, Nigel Blackaby, John Fellas, Mark Friedman, Eric Schwartz.
Recommended Arbitration Clause
Annex A to the Rules contains the following recommended arbitration clause for inclusion in the commercial agreements:
“Any dispute, controversy or claim arising out of or relating to this contract, or the breach, termination or invalidity thereof, shall be settled by arbitration in accordance with the BVI IAC Arbitration Rules.“
[“The number of arbitrators shall be… [one or three];
The place of arbitration shall be… [Road Town, Tortola, British Virgin Islands, unless the Parties agree otherwise];
The language to be used in the arbitral proceedings shall be… [language].”]
3rd BVI Annual International Arbitration Conference 2019
The 3rd Annual International Arbitration Conference in the BVI will take place on 18-22 November 2019. The participants of the conference will be both local and international lawyers. Seminars, workshops, lectures and networking events will be held throughout the conference week. Discussions will take place about the choice of the BVI IAC Rules and the BVI as the seat of arbitration, interim measures in support of international arbitration and enforceability of the awards in the BVI. RCAN (Russian and CIS Arbitration Network) will support a seminar which will be broadcasted by video link and could be accessed online. More information is available on the official website of the conference.
Tameka Davis, Partner at Conyers
Jane Fedotova, Associate at Conyers