Download The Key - Winter 2012 (PDF, 468KB) - Kennedys

More documents

Recommendations

Info

Arbitration Centre (DIAC) as the body whose rules would govern the arbitration. It is therefore not surprising that a large number of arbitrations have been launched in the DIAC, often by property owners seeking redress in circumstances where the property they had bought off-plan had still not been delivered several years after the due date. Enforcing awards While arbitration proceedings are private, it is widely understood that a great many of these claims have succeeded. The failures have largely been claims started before the “drop dead” date, when, under the contract, the purchaser became entitled to cancel the contract, or where the developer has succeeded in extending that date because of a force majeure event. So far, so good. But where a respondent opts not to perform the terms of an award, the claimant is left with the task of enforcing it through the courts. This is much the same in all jurisdictions except that, in the Middle East, enforcement tends to be necessary rather more often than in other parts of the world. Historically, there has been a perception that courts in the Middle East are prepared to search for reasons not to enforce awards. Since the issue concerned the distribution of wealth, that made it a matter of public policy, said the court, and consequently something that could only be dealt with by judges. Recent developments Two recent and seemingly inconsistent developments have given cause for thought. The first is the decision of the Dubai Court of Cassation – Dubai’s highest court – to ratify an overseas award so that it could be enforced against assets owned in the emirate. This has rightly been heralded as a sign that the United Arab Emirates regards its obligations under the New York Convention on Enforcement of Arbitral Awards seriously and is attempting to send a clear signal that the UAE is indeed an international hub for arbitration. It may be that legislation will be introduced to prevent an over-zealous adherence to Decision No 14. However, the Court of Cassation has also recently handed down Decision No 14 of 2012. This concerned an application to ratify the decision of an arbitrator in a domestic arbitration. The claim concerned a part of the Waterfront development, where one of the phases of the Palm Jebel Ali has seemingly been mothballed. The purchaser of a property in that development complained that it had not been handed over in accordance with the contract and that his title had not been registered with the Real Estate Regulatory Agency (the equivalent of the English Land Registry), contrary to the relevant statutory rules. The claimant wanted an order cancelling the contract and ordering repayment of the sums he had paid to date, together with damages. The arbitrator ruled in favour of the purchaser. The Dubai Court of First Instance and Court of Appeal gave leave for the award to be enforced. However, before the Court of Cassation, the developer argued that the decision of the arbitrator breached public policy. Since the issue concerned the distribution of wealth, that made it a matter of public policy, said the court, and consequently something that could only be dealt with by judges. Strong reactions The decision has provoked strong reactions. Some commentators say that it calls into doubt the availability of arbitration as a remedy in any property-based dispute. Others believe that the decision should be regarded as particular to its own facts and, in large measure, the result of a very restrictive interpretation of the registration regulations. Another line of argument is that since the UAE has a civil law system with no doctrine of precedent, the case is necessarily a one-off. Conversely, it has been said that subsequent benches of the Court of Cassation are in fact likely to follow this case out of intellectual consistency. Interestingly, the lawyers who advanced the public policy argument – members of the Dubai office of an English law firm – have gone so far as to issue a press release in which they say that suggestions that they have undermined the basis for arbitrations in Dubai are greatly exaggerated. Where this might leave us The courts of Dubai are unpredictable. It may be that legislation will be introduced to prevent an over-zealous adherence to Decision No 14. But until that happens, there is a risk that this case will be used to argue that parties cannot pursue arbitration. However, at the same time, the Dubai courts are being encouraged to uphold arbitration clauses. The danger is that the resulting dilemma may result in parties being deprived of any remedy at all. That fact alone may be enough to ensure that the case is not widely followed. Nick Carnell Partner Dubai n.carnell@kennedys-law.com 2
Managing risk in Denmark A look at the insurance and liability risk management problems for Danish industrial companies. In Denmark, most companies in the building, machinery and trade industries have a combined commercial and product liability insurance cover issued on standard terms and conditions drafted by The Danish Insurance Association and approved by the Confederation of Danish Industry. Under this insurance, the insured company: • has insurance cover for product liability in respect of damage to other products; • may have partial insurance coverage for liability for defects if the insured company’s products are made part of or are incorporated in another product (defined in Denmark as ingredients or components); but • does not have any insurance coverage for delay. …it is important for Danish companies that liability for indirect loss or for delay is either waived entirely or strictly limited. As a general rule, the insurance also does not cover the insured company’s liability for operational loss or various other types of indirect loss suffered by the injured party (irrespective of whether the injured company is a customer or a third party). If liability is waived, the company is not liable under generally applicable rules of law and the insurance does not provide coverage. In addition, the standard policy says that: • the insured company will be liable to the injured party in accordance with generally applicable rules of law; and • the insured company must not have waived its right to recourse against sub-suppliers. Focusing on customers Given the terms and limitations of this combined cover, Danish companies have therefore had to focus strongly on risk control in their contracts with customers. So, for example, it is important for Danish companies that liability for indirect loss or for delay is either waived entirely or strictly limited since the standard insurance does not cover these types of loss. As regards liability for defects and product liability – which is covered (at least to some extent) by the standard insurance – it is important that a company does not waive such liability entirely or at least agrees to strict limitations if the company wants to accept liability (for example, as regards an important customer). If liability is waived, the company is not liable under generally applicable rules of law and the insurance does not provide coverage. …contractual risk management is a fine balance between not assuming such extended liability and not waiving insuranceprotected liability entirely. On the other hand, it also important that the company does not assume an extended liability beyond that which is normally imposed under generally applicable rules of law. For instance, warranty liability – which is a common feature in several European countries as well as in the US – would be regarded as an extended liability when compared to general Danish law. If the insured company is liable because of a warranty provision in the contract but would not have been liable under generally applicable rules of law, then the insurance contract will not provide any protection. Consequently, for Danish companies, contractual risk management is a fine balance between not assuming such extended liability and not waiving insurance-protected liability entirely. However, a company’s risk management strategy should not focus solely on its customers. It also needs to ensure that their purchasers do not accept subsupplier’s terms and conditions for sale that include waivers or strict liability limitations. Standard industrial terms Of course, it would be desirable if the industrial standard terms and conditions provided a fair balance of risk for purchasers and the sellers of goods and services. The contracting parties would find it much easier to control their risk if such standard industrial terms: • contained strict limitations or waivers regarding the types of losses that were not covered by insurance (such as indirect loss and delay); and • imposed liability only in accordance with generally applicable rules of law backed by monetary limitations (for example, DKK1m) 3
Page 1: The Key Winter 2012 Arbitrating in
Page 5 and 6: Why D&O insurance matters Two recen
Page 7 and 8: Taking a consistent approach The EU
Page 9 and 10: A useful purpose English judges hav
Page 11 and 12: Developments for the Dubai & Hong K

Download The Key - Winter 2012 (PDF, 468KB) - Kennedys

You also want an ePaper? Increase the reach of your titles

Delete template?

Save as template?