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CONSTRUCTION LAW SUMMER SCHOOL 2014 CLAIMS AND DISPUTES: A PRACTICAL GUIDE

Jane Davies Evans 3 September 2014

CLAIMS AND DISPUTES: A PRACTICAL GUIDE

• How to raise a claim under the contract prior to arbitration?

• How to bring a claim in arbitration? • Key stages under various rules (ICC, LCIA, UNCITRAL)

• Getting started under various rules (ICC, LCIA, UNCITRAL)

• Commencing the arbitration

• Appointing the tribunal

• Project managing your the arbitration

HOW TO BRING A CLAIM UNDER THE CONSTRUCTION CONTRACT BEFORE ARBITRATION?



Claim considered at

Project level

Claim considered by

Engineer

Claim considered by

senior management

Claim considered by

Dispute Board

Mediation

ARBITRATION

Expert determination



• Do what the contract says • Notice

• Substantiation

• Keeping contemporary records etc.

• Typically no specific requirements as to format/content of the claim

• Keep it simple

• Identify the contract clauses being invoked

• Avoid legal argument

• Simple narrative as to the issue

• Appendices scheduling out the figures cross referenced to key documents

• Attach copies of the key documents

HOW TO BRING A CLAIM IN ARBITRATION?


ICC Rules LCIA Rules UNCITRAL Rules

Request for Arbitration Request for Arbitration Notice of Arbitration

Answer Response

Appointment of Tribunal and Transmission of File

Formation of Tribunal Formation of Tribunal

Terms of Reference

Procedural Ruling Procedural Ruling Procedural Ruling

Exchange of detailed submissions / evidence

Statement of Case Statement of Claim

Statement of Defence and Counterclaims

Statement of Defence and Counterclaims

Statement of Reply and Defence to Counterclaims

Further submissions

Reply to Counterclaim Defence

Hearing Hearing Hearing

Draft Award issued

Scrutiny of draft by ICC

Final Award Final Award Final Award

GETTING STARTED

Commencing the arbitration

ICC ARBITRATION


HOW TO BRING A CLAIM IN ARBITRATION UNDER THE CONSTRUCTION CONTRACT?

Getting started – ICC arbitration (1/2)

• ICC Rules (1998 and 2012) → Request for Arbitration

• Claimant sends the Request to the ICC (not the Respondent)

• X hard copies of the Request (X = no. of parties + no. of arbitrators + one for the ICC Secretariat)

• Filing fee (currently US$3,000)

• Can take the Request to the ICC offices in Paris, Hong Kong or New York

• Email, fax, letter, courier, in person counts for the filing

• Must follow up with the requisite no. of hard copies

• Date when the ICC receives the Request is the date of commencement

• ICC serves the Request on the Respondent

• Claimant may choose to provide a „courtesy‟ copy to the Respondent(s), but not essential



Getting started – ICC arbitration (2/2)

• What must be in the Request for Arbitration?

• Party details for all parties (name, description, address, other contact details)

• Details of Claimant‟s representatives (name, address, other contact details)

• Description of the “nature and circumstances of the dispute”

• Description of the basis of the claim

• Statement of relief sought and estimate of monetary value (if possible)

• Relevant agreements and copy of the arbitration agreement

• If more than one arbitration agreement, indication of which agreement is relevant to which claim

• Details of Claimant‟s nominee for arbitrator (if 3 arbitrators)

• Comments on the number of arbitrators if none specified

• Details (or comment if not specified) as to applicable law, place of arbitration and language of arbitration

LCIA ARBITRATION



Getting started – LCIA arbitration (1/2)

• LCIA Rules (1998 and 2014) → Request for Arbitration

• Claimant sends the Request to the Registrar of the LCIA in London

• 2 hard copies of the Request if a sole arbitrator, 4 hard copies if 3 arbitrators

• Filing fee (currently £1,750)

• Can take the Request to the ICC offices in London

• Email, fax, registered post, courier, in person counts for the filing (anything that provides a record of transmission)

• Must follow up with the requisite no. of hard copies

• Date when the LCIA receives the Request is the date of commencement (provided fees paid)

• Claimant serves the Request on the Respondent



Getting started – LCIA arbitration (2/2)

• What must be in the Request for Arbitration? • Party details for all parties (name, address, telephone, fax, (telex) and email)

• Details of Claimant‟s representatives and Respondents‟ representatives (if known) (name, address, telephone, fax, (telex) and email)

• Copy of the arbitration agreement (1998)

• Full terms of the arbitration agreement (not the LCIA Rules)(2014)

• Copy of the contractual documentation in which the arbitration agreement is found / in respect of which the dispute arises

• Brief statement as to the “nature and circumstances of the dispute” and claims advanced by the Claimant

• Statement as to any matters (seat, language, number of arbitrators, qualification of arbitrators etc.) already agreed; proposals if no agreement

• If arbitration agreement provides for party nominations, details of the Claimant‟s nominee for arbitrator

• Confirmation that the Claimant has served the same material on the Respondent(s) (or is doing so simultaneously with sending to LCIA)(1998). Proof of delivery or demonstrating actual delivery impossible / other means of communication(2014)

• Confirmation that fees paid (2014)

UNCITRAL ARBITRATION



Getting started – UNCITRAL arbitration (1/2)

• UNCITRAL Rules (2010) → Notice of Arbitration

• Claimant „communicates‟ the Notice of Arbitration to the Respondent

• Any means that can be demonstrated should suffice

• If Respondent may challenge the validity of the Notice / limitation may expire, use a communication method authorised under the construction contract / other relevant agreements

• Date when the Respondent receives the Notice is the date of commencement



Getting started – UNCITRAL arbitration (2/2)

• What must be in the Notice of Arbitration?

• Demand that the dispute be referred to arbitration

• Party details for all parties (names and contact details)

• Identify the arbitration agreement

• Identify the contract / other legal instrument out of which the dispute arises

• If no contract / legal instrument, brief description of the relevant relationship

• Brief description of the claim and indication of amount involved

• Relief or remedy sought

• Proposal as to number of arbitrators, language, place of arbitration if not previously agreed

• Optional content of the Notice of Arbitration • Proposal as to an appointing authority

• Proposal for appointment of a sole arbitrator

• Notification of the party appointed arbitrator if 3 arbitrators and parties to appoint

GETTING STARTED

Appointing the tribunal

ICC ARBITRATION



Getting started – appointing the tribunal – ICC arbitration (1/3)

• The Parties nominate; the ICC Court appoints

• If number of arbitrators not specified:

• Default is a sole arbitrator

• ICC Court may decide to appoint 3 arbitrators “where it appears to the Court that the dispute is such as to warrant the appointment of three arbitrators”

• High value

• Complex / sensitive issues

• One party is a State / State entity




• Claimant to include nomination within Request for Arbitration

• Respondent to include nomination within Answer

• If Parties fail to nominate, the ICC Court appoints (but the ICC Secretariat will give opportunity the opportunity to nominate beforehand)

• ICC Secretariat will „vet‟ the nominees for independence, availability and relevant experience and make recommendation to ICC Court to appoint or refuse nomination

• Parties have opportunity to object to other nominees (before and after appointment)

• Who chooses the Chair?

• Parties may agree mechanism (agreement, party nominees to agree/propose, exchange of lists etc.)

• If no agreement

• ICC Secretariat makes a recommendation to the ICC Court

• ICC Secretariat recommendation based on proposal from relevant country committee




• Tribunal are appointed by the ICC Court → no direct contract between the parties and the Tribunal

• Tribunal fees calculated on an ad valorem basis (by reference to the sums in dispute)

• ICC website provides details of fee calculation, and calculator function to estimate fees

• ICC Court may vary the fees (up or down) if consider appropriate (for example, if preliminary hearings etc.)

• ICC Secretariat use the value of the claims converted into dollars using the exchange rate in force at the date the RFA is filed

• ICC will ask for deposits to be paid in advance

• Typically an initial deposit, followed by the remainder of the anticipated fee to be paid before the substantive hearing)

• Failure to pay a deposit → claim or counterclaim may be „struck out‟

• Default if that parties pay 50% of anticipated fees irrespective of „share‟ of claimed amount

• Can apply for different allocation, but difficult

LCIA ARBITRATION



Getting started – appointing the tribunal – LCIA arbitration (1/3)

• The Parties nominate; the LCIA Court appoints


• Default is a sole arbitrator

• LCIA Court may decide to appoint 3 arbitrators if “in view of all the circumstances of the case a three-member tribunal is appropriate”

• High value

• Complex / sensitive issues




• Claimant to include nomination within Request for Arbitration if party nominations specified

• Respondent to include nomination within Response

• If Parties fail to nominate, the LCIA Court appoints

• Nominees must agree to the LCIA fee scale, and sign declaration as to partiality/independence

• LCIA Court appoints within 30 days from receipt of Response (if possible). Will appoint if no Response filed

• How does the LCIA identify potential arbitrators? • Secretariat prepare resume of matter and identify key attributes of arbitrator

• LCIA Court reviews

• Secretariat searches LCIA database for candidates with these attributes (may extend search beyond database if insufficient names within database) → makes recommendation to the LCIA Court

• Who chooses the Chair? • Parties may agree mechanism (agreement, party nominees to agree/propose, exchange of lists etc..)

• If no agreement, LCIA Secretariat makes a recommendation to the LCIA Court




• Tribunal are appointed by the LCIA Court → no direct contract between the parties and the Tribunal

• Tribunal fees calculated on an hourly rate

• Maximum hourly rate £450 (save in exceptional circumstances) plus expenses

• LCIA will ask for deposits to be paid in advance

• Typically an initial deposit, followed by the remainder of the anticipated fee to be paid before the substantive hearing)

• Parties pay 50% of anticipated fees irrespective of „share‟ of claimed amount

• Failure to pay a deposit → other party can pay and apply for immediate award from the tribunal to recover as a debt (plus interest)

UNCITRAL ARBITRATION



Getting started – appointing the tribunal – UNCITRAL arbitration (1/5)

• Unless agree to use an appointing authority, the Parties nominate and appoint


• Default is 3 arbitrators

• Parties can agree sole arbitrator (in the arbitration agreement or within 30 days after Respondent receives the Notice of Arbitration)

• Claimant does not need to include nomination within Notice of Arbitration even if party nominations specified

• Respondent does not need to include nomination within Response even if party nominations specified




• If parties cannot agree on an appointment, or a party fails to appoint within required deadline → appointing authority will appoint

• Who is the appointing authority?

• Whoever the parties agree

• The PCA (Secretary General of the Permanent Court of Arbitration in the Hague) if no agreement




Appointment of sole arbitrator

• If sole arbitrator is not agreed within 30 days from receipt of proposal by other parties → any party can ask the appointing authority to appoint

• Unless agreed otherwise, or appointing authority considers inappropriate

• Appointing authority send list of at least 3 names to each party (same list to all parties)

• Parties to return list within 15 days

• Strike out names to which it objects (no reasons required)

• Number remaining numbers in order of preference

• Arbitrator appointed from names not struck out taking into account preferences

• If this process results in no names → appointing authority to use discretion in identifying the sole arbitration




Appointment of tribunal if three arbitrators

• Each party to appoint one arbitrator

• Party appointed arbitrators appoint the third arbitrator who acts as „presiding‟ arbitrator

• If a party fails to appoint within 30 days from receipt of notification of appointment by another party → the party who has appointed can ask the appointing authority to appoint for the other party (parties)

• If the party appointed arbitrators have not appointed the third arbitrator within 30 days of the second arbitrator being appointed → any party can ask the appointing authority to appoint (as for sole arbitrator)




• Tribunal are appointed by the parties → parties must sign terms of appointment with the members of the Tribunal

• Tribunal free to set hourly rates / request deposits

• Difficulties can emerge if parties appoint arbitrators with different rates / terms → may be preferable to await until full tribunal constitutes and try to agree a single set of terms

PROJECT MANAGING YOUR CONSTRUCTION ARBITRATION


ICC Rules

T+0 Request for Arbitration

T+30 Answer / initial response

T+60 Answer and Counterclaims

T+60 Appointment of Tribunal and Transmission of File

T+120 Terms of Reference

T+210 Claimant submits Statement of Case and all evidence relied on

T+300 Respondent submits Statement of Defence, Counterclaims and all evidence relied on

→ T+330 Document production phase

T+360 Claimant submits Reply and Defence to Counterclaims incl. further evidence

T+390 Respondent submits Rejoinder and Reply to Counterclaims incl.. further evidence

→ T+420 Expert conclaves etc..

T+430 Pre-hearing conference / site visit / paginated bundle available / confirmation of witnesses

T+450 Opening submissions (written)

T+455 → Hearing

H+14 Post hearing briefs (Round 1)

H+28 Post hearing briefs (Round 2)

H+ …. Final Award


T+300 Respondent submits Statement of Defence, Counterclaims and all evidence relied on

0 Receive Statement of Claim and all evidence from Claimant

0 – 14 Review submission

14 Strategy meeting to decide upon approach for Defence

18 Instructions to experts

48 Initial opinions from experts → focus of factual witness statements

58 Input from factual witnesses to experts

68 Near final draft expert reports / witness statements available

76 Expert reports / witness statements fixed

83 Near final draft to senior management for approval

89 Submission fixed – printing / hyperlinking etc.

T+300 90 FILE SUBMISSION


PROJECT MANAGING YOUR ARBITRATION

How best to present your case? (1/2)

Make it easy for the Tribunal

• File as user friendly a submission as possible to the Tribunal • Checklist of issues to be determined

• Coding documents and transcript by issue

• Hyperlinked, searchable DVDs

• A5s of key documents only until the hearing bundle

• Electronic bundles

• Site visits

• Fully searchable secure extranets

• Presentational materials during hearings • Time lapse videos / 3D models etc.



How best to present your case? (2/2)

1. Be clear

2. Be concise

3. Be persuasive

4. Be interesting

5. Be selective

“More is not better”

• Recommendation – use a case theory



Using a case theory

• What is a case theory?

• Keep it short and simple

• 5/6 points at most

• Guide – what would you present to your board? What can you fit on one slide?

• Why do you need a case theory?

• To identify what evidence is required to proof your case

• To assess how long you need for each stage of the arbitration

• To assess your costs / budget required

• To assess chances of success / settlement strategy

• Worked example (following slides)



EXAMPLE CASE THEORY

• The Supplier agreed to deliver a # MW power plant on an EPC basis within # years

• The parent companies issued Parent Company Guarantees, guaranteeing the performance of the EPC contract by their subsidiaries

• Certain events which entitle the Supplier to an Extension of Time caused # months delay to the Works

• The Supplier – through its gross negligence – has caused a further # months of delay

• The Supplier cannot rely on contractual limitations of liability where it has caused damage through its own gross negligence

• The Supplier and the parent companies are therefore liable for all the financial losses that flow naturally from the Supplier‟s gross negligence



USING THE CASE THEORY TO IDENTIFY WHAT EVIDENCE IS REQUIRED (1/2)

• The Supplier agreed to deliver a # MW power plant on an EPC basis within 3 years • CONTRACT

• The parent companies issued Parent Company Guarantees, guaranteeing the performance of the EPC contract by their subsidiaries • Guarantees

• Factual evidence demonstrating Employer triggered liability under PCG

• Expert evidence on nature of PCG?

• Certain events which entitle the Supplier to an Extension of Time caused # months delay to the Works • Contemporary documents

• Factual witness statements

• Delay expert to opine on extent of delay

• Technical expert to support delay expert?



USING THE CASE THEORY TO IDENTIFY WHAT EVIDENCE IS REQUIRED (2/2)

• The Supplier – through its gross negligence – has caused a further # months of delay • Contemporary documents • Factual witness statements • Delay expert to opine on extent of delay • Technical expert to opine on standard of work done • Legal expert to opine on what constitutes gross negligence under applicable law

• The Supplier cannot rely on contractual limitations of liability where it has caused damage through its own gross negligence • Legal expert to opine on applicable law

• The Supplier and the parent companies are therefore liable for all the financial losses that flow naturally from the Supplier’s gross negligence • Contemporary documents • Factual witness statements • Quantum expert? • Legal expert to opine on applicable law



Using a case theory

• Review and update the case theory as the case develops

• Responding to matters raised by the other party

• Reflecting more detailed understanding of issues

• Reflecting expert opinions / witness testimony

• Assess strengths and weaknesses of each aspect of the case theory

• Realistic / objective appraisal of range of outcomes

• Guide settlement proposals / negotiations

• Use as the basis for your opening / closing submissions (and hopefully, the Award)

CONTACT DETAILS Jane Davies Evans [email protected] +44 7714 960096

Questions?

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