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2 October 2013

First Minister launches International Centre for Energy Arbitration

The Right Honourable Alex Salmond MSP, First Minister of Scotland, today launched the International Centre for Energy Arbitration (ICEA). The ICEA is a joint venture between the Scottish Arbitration Centre and the Centre for Energy, Petroleum and Mineral Law and Policy at the University of Dundee (CEPMLP). The ICEA aims to work with the energy sector to allow Scotland to become an international specialist in international energy dispute resolution.

The launch, hosted by the Law Society of Scotland, took place in Edinburgh. The First Minister was welcomed by Andrew Mackenzie, Chief Executive of the Scottish Arbitration Centre and Secretary General of the ICEA, and Bruce Beveridge, President of the Law Society of Scotland.

The First Minister said, 'Scotland is a leading international energy centre, being home to a global oil and gas hub and some of the best renewable resources and technologies on the planet. At the same time, we have built on Scotland's distinguished legal system to develop a world-class legal framework for cost-effective arbitration services. It is fitting, therefore, that we are opening an International Centre for Energy Arbitration - a development that will further enhance Scotland's attractiveness to global energy companies, associated professional service providers and investors. I congratulate the Scottish Arbitration Centre and CEPMLP for their considerable work in establishing the centre and wish them the very best for the future.'

Brandon Malone, Chairman of the Scottish Arbitration Centre and Director of the ICEA, said, 'When it comes to energy dispute resolution in Scotland, we find that in our universities, in our legal firms, and in industry, we have a clustering of legal and technical energy expertise that is not readily found in any other part of the world.'

Professor Peter Cameron, Director of the CEPMLP and of the ICEA, said, 'Energy-related disputes are now making up more than a third of all disputes in international commerce. For Scotland to stake a claim to expertise in this area is timely and builds on our deep knowledge of all kinds of energy resources.'

Andrew Mackenzie, Chief Executive of the Scottish Arbitration Centre and Secretary General of the ICEA, said, 'We will now consult the energy sector and work with relevant representative bodies to establish current trends and desired requirements in respect of dispute resolution within the industry. This research will support the proposed preparation of bespoke energy arbitration rules. We are keen to hear from the sector, so those interested in contributing or interested to find out more should email info@energyarbitration.org. In the meantime, we will promote Scottish arbitration under the Arbitration (Scotland) Act 2010 for energy disputes, Scotland as a place to arbitrate such disputes, and the Scottish Arbitration Centre as an appointing body in ad hoc arbitration.'

Contact
Andrew Mackenzie, Secretary General of the ICEA
Tel: 0131 474 7844/07827 232 494
chiefexec@scottisharbitrationcentre.org
www.energyarbitration.org

Background on both Centres for Editors

Background on the Scottish Arbitration Centre
Established in March 2011, the Centre is a non-profit company limited by guarantee made up of the Law Society of Scotland, the Faculty of Advocates, the Chartered Institute of Arbitrators, the Royal Institute of Chartered Surveyors, and the Scottish Ministers. The Centre is governed by a board comprised of representatives of these bodies, under the chairmanship of Brandon Malone, a partner with McClure Naismith LLP. The Chief Executive of the Centre is Andrew Mackenzie.

It promotes arbitration, to the Scottish business community as an effective alternative to litigation, and promotes Scotland to the world as a place to conduct international arbitration, building on the entry into force of the Arbitration (Scotland) Act 2010, The Centre's arbitration suites in Dolphin House on historic Hunter Square in Edinburgh are available to be booked for large or small scale arbitrations and other types of alternative dispute resolution, and for conferences and meetings regarding alternative dispute resolution. Developing the Centre into a fully serviced arbitration institution is a longer term objective.

Sir David Edward is Honorary President of the Centre. The Centre also has two Honorary Vice Presidents, The Hon Lord Dervaird (Professor John Murray QC) and Hew R. Dundas.

The Scottish Arbitration Centre also has an independent Arbitral Appointments Committee, which consists of:

  • David Carrick, Senior Vice President, Hill International, Edinburgh. David is a Chartered Arbitrator with vast international experience.
  • Teresa Cheng, Senior Counsel, Des Voeux Chambers, Hong Kong. Teresa is a Chartered Arbitrator, Vice President of the International Chamber of Commerce (ICC) International Court of Arbitration and a past President of the Chartered Institute of Arbitrators.
  • Vincent Connor, Head of Asia Pacific, Pinsent Masons, Hong Kong. Vincent is hugely experienced in the field of arbitration in Scotland, and internationally.
  • Thomas Halket, Partner, Halket Weitz, New York. Tom is a Chartered Arbitrator and an Adjunct Professor of Law at the Fordham University School of Law. He has particular expertise in intellectual property law. He is also 2nd Vice President of the St Andrew's Society of the State of New York.
  • Kaj Hober, Mannheimer Swartling, Stockholm. A vastly experienced arbitrator.
  • Elie Kleiman, Partner, Freshfields, Paris. Elie is an experienced arbitrator, and has acted for parties in international arbitrations under all of the major institutional procedures. He advises across a broad range of commercial sectors.
  • Lindy Patterson QC, Dundas and Wilson, Edinburgh. Lindy is a solicitor advocate specialising in construction law and is an experienced arbitrator.

Background on the Centre for Energy, Petroleum and Mineral Law and Policy
The Dundee Centre is a post-graduate teaching institution that attracts students from all over the world. Currently, it has nearly 600 students enrolled in its programmes. Students are from Latin America, the Middle East, Africa, India and China. It is probably unique in the world in being inter-disciplinary with expertise in law, economics, politics and management. It is closely linked to the UNESCO Water Centre at Dundee; CEPMLP Director, Professor Peter Cameron, actively promoted the Glasgow 2015 World Water Forum campaign.

The Centre has attracted significant amounts of external funding for its research, amounting to around £5 million recently. This money comes from the European Union, the World Bank, Department of International Development and various research councils. Its EU project is currently delivering Policy Briefs to the European Commission.

Renewable energy research forms a key area of Centre strategy for the future. Current work focuses on regulatory issues surrounding electricity market design with the rapid growth of intermittent supplies on the horizon. It has submitted a report to The Scottish Government on this at its request and has an open dialogue with the European Commission and key stakeholders on this, drawing upon its expertise in law, economics and trading.

Currently, the Centre is expanding its student recruitment: its senior teachers are active in Brazil, Colombia, Ghana, Uganda, Turkey and Kurdistan to attract new students to its programmes. Its future lies as an educational hub with a variety of courses offered in Scotland or abroad and also on a distance learning basis.

The Centre will launch the establishment of a new online data centre at the end of January 2012. This is the outcome of a project funded by The World Bank and will be publicised in all major energy producing parts of the world throughout 2013-14. It will make available in one place a unique collection of 'best practice' guidance for hundreds of countries around the world. Data will be downloadable to PCs and mobile phones anywhere in the globe.

CEPMLP offers several courses in international arbitration with a special emphasis upon the energy sector and its distinct problems.

Arbitration
Arbitration, a form of alternative dispute resolution (ADR), is a legal technique for the resolution of disputes outside the courts, where the parties to a dispute refer it to one or more persons (the "arbitrators" or 'arbitral tribunal') by whose decision (the 'award') they agree to be bound.

Advantages of arbitration
Parties often seek to resolve their disputes through arbitration because of the potential advantages over the courts. Advantages include:

  • Unlike in court, parties can select an arbitrator with an appropriate degree of expertise.
  • Arbitration is often faster than litigation in court.
  • Arbitration can be cheaper and more flexible, and, if desired, less formal than court.
  • Unlike court rulings, arbitration proceedings and arbitral awards are confidential.
  • Unlike in court, there are very limited avenues for appeal of an arbitral award, which limits the duration of the dispute and any associated liability.
  • Due to the provisions of the New York Convention 1958, arbitral awards are generally easier to enforce in other nations than court judgments.

Advantages of Scottish arbitration
The Scottish courts have always recognised the right of parties to agree to exclude the jurisdiction of the courts to inquire into the merits of their disputes and instead to refer any disputes to arbitration.

Scotland has new legislation which reforms and modernises its law of arbitration. Indeed, some commentators have pointed out that the Arbitration (Scotland) Act 2010 ('the Scottish Act') offers a number of improvements on the Arbitration Act 1996 ('the English Act'), which applies to the rest of the UK. Advantages include:

  • The Scottish Act uses modern and international terminology - 'arbitrators', not 'arbiters', and places its procedural arbitral rules together in a schedule to make the law more user-friendly, particularly for non-lawyers involved in arbitrations.
  • A confidentiality rule puts into statute the position governed by case law in the rest of the UK - unless the parties agree otherwise. Few other legislatures in the world have made clear that arbitration is usually a confidential business. Confidentiality is of course one of the attractions of arbitration to parties whose dispute is commercially sensitive. Where a party to an arbitration suffers loss as a result of another party breaching the duty of confidentiality, the aggrieved party can bring an action for damages.
  • Where the process the parties have agreed for appointment of an arbitrator fails, recognised persons or bodies ('arbitral appointments referees') can resolve the failures, thus reducing recourse to the courts. The English Act provides that this is a role for the court. The Scottish Act misses out this unnecessary step, but retains the courts as a backstop only in the event of irreconcilable disputes over the appointment process.
  • Subject to issues of proof, oral as well as written arbitration agreements are recognised by the Scottish Arbitration Rules in the Act. Otherwise, they would remain subject to the old (unsatisfactory) common law. They are excluded from the substantive provisions of the English Act.
  • Reflecting modern arbitral practice, the Scottish Act requires arbitrators to be independent as well as impartial.
  • Prospective and post-appointment arbitrators are placed under an explicit continuing disclosure requirement concerning conflicts of interest.
  • It is clear in the Scottish Act that experts, witnesses or legal representatives have immunity in respect of acts or omissions as if the arbitration were civil proceedings.
  • The Scottish Act includes express provision covering the resignation of the arbitrator. The English Act does not provide for the process of resignation.
  • To reduce unnecessary court challenges, the Scottish Act limits appeals from the Court. There is no appeal to the Supreme Court.
  • Where a correction of an award has a consequential effect on another part of the corrected award or any other award, whether on some part of the substance of the dispute or on expenses or interest, the tribunal may make consequential correction of that award.
  • The Scottish Ministers have the power, by order subject to affirmative resolution procedure in the Scottish Parliament, to amend and update the Scottish Act in consequence of changes to the UNCITRAL Model law, the UNCITRAL Arbitration Rules or the New York Convention.

Advantages of arbitrating in Scotland
There are a number of reasons why parties may be attracted to Scotland. Advantages include:

  • the new state-of-the-art law;
  • arbitration in Scotland is anticipated to cost probably only 40% of the cost of arbitration in London or New York;
  • we are an English-speaking jurisdiction;
  • we are, in arbitration terms, separate from England - this neutrality may be attractive to foreign parties in dispute with English firms;
  • Scotland is a very attractive venue in which to arbitrate, with good transport links and accommodation;
  • we have a mature legal system to back up arbitration, with judges who appreciate the need to support the arbitral process.

Contact
Andrew Mackenzie, Secretary General of the ICEA
Tel: 0131 474 7844/07827 232 494
chiefexec@scottisharbitrationcentre.org
www.energyarbitration.org


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