It is my privilege to deliver a brief opening address. I am an international arbitrator and part time Justice at the DIFC Court. I understand the focus today will be on various aspects of the 4th Edition, FIDIC Contract. In my international arbitration practice I have encountered the FIDIC Contract on several occasions but I certainly do not qualify as a FIDIC expert and it would be perilous for me to venture any opinions on it.
Therefore in my brief opening remarks I propose to mention a couple of matters of current debate in the international arbitration field which may be of some interest to you. I shall also touch briefly on aspects of the role of the DIFC Court.
In recent years concerns have been expressed about the actual or perceived lack of independence of many expert witnesses. Expert witnesses are frequently seen as unduly partisan. Recently Dr Klaus Sachs, a leading international arbitrator from Germany has presented an article entitled “Experts, Neutrals or Advocates — A New Approach to Expert Evidence1.
Dr Sachs introduces his paper by saying that in respect of party appointed experts “one increasingly often hears complains that there evidence is of little value because it advocates too much in the interests of the party presenting it. The result is that the Tribunals then find themselves faced with deciding between opinions of opposing experts who have arrived at diametrically opposite and hardly reconcilable conclusions”.
Dr Sachs’ concept, which he has apparently successfully used in practice, is as follows. The parties agree that there will be no party appointed experts. They submit a list of experts in the appropriate disciplines to the Tribunal. The Tribunal then selects the experts from the list. At that point, the chosen expert becomes the Tribunal expert although paid for by the parties. Under this scheme the parties are not excluded from the appointment process.
There have been similar concerns expressed about party-appointed arbitrators especially in international investment arbitrators. Professor Jan Paulsson, a leading international arbitrator, published an inaugural lecture at the University of Miami in April of 2010 entitled “Moral Hazard in International Dispute Resolution”2. He put forward in his address a more radical proposal, namely that the office of party appointed arbitrators should be entirely eliminated in the field of international arbitration and that all arbitrators should be appointed by arbitral institutions. This proposal has received a mixed reception. It has been pointed out that it is in conflict with the overriding principle of party autonomy. Moreover, experienced arbitrators have noted that where dispute resolution clauses call for the parties, or two party-appointed arbitrators, to appoint the Chairman it is commonly observed that they try very hard to avoid the default mechanism which is the utilisation of an institution to appoint the Chairman. This is said to demonstrate a lack of confidence in institutions in respect of appointments.
A related matter of recent discussion is that concerning dissenting opinions in international investment arbitration. A leading arbitrator, Dr Albert Jan van den Berg has conducted an analysis of all dissenting opinions by party-appointed arbitrators in investment arbitration.3 Dr van den Berg points out that dissenting opinions appear to have become an accepted practice in international arbitration. He criticises this trend and points out that his study reveals that virtually all dissenting opinions have been issued by the party-appointed arbitrator whose appointor was the losing party in the arbitration. Since nearly 100% of the dissents favour the party that appointed the dissenter there are obvious concerns about neutrality.
Turning briefly to the DIFC Court most of you will know that the DIFC Court operates within a defined geographic area in Dubai and that it is a creature of Dubai statutes. It may fairly be described as a commercial court. It aims for expedition and efficiency. Case management is an essential feature of the DIFC Court Rules. The Court is under a duty to give directions to ensure that trials proceed quickly and efficiently. To that extent the objectives of the Court are very similar to the objectives of the participants in this conference who are involved in dispute resolution in the construction industry.
The following passages from a judgment, which I gave in the Court last year, underscore this point. The case involved the flagrant disobeyance of a procedural timetable by one of the parties and in my judgment I said this:
“The character of the litigation commenced. The litigation thus commenced was commercial litigation. While in general it is now seen as desirable that most types of litigation be dealt with expeditiously, it is commonly seen as especially desirable for commercial litigation. Its claims to expedition may be less than those of proceedings involving, for example, extraordinary prejudice to children; or the abduction of children; or a risk that a party will lose livelihood, business or home, or otherwise suffer irreparable loss or extraordinary hardship, unless there is a speedy trial. But commercial litigation does have significant claims to expedition. Those claims rest on the idea that a failure to resolve commercial disputes speedily is injurious to commerce, and hence injurious to the public interest.
As Rogers J stated in Collins v Mead:
‘For example, if banks are unable to collect overdue loans from borrowers speedily, if small traders can not recover monies owed to them speedily the commercial life of the [c]ommunity is detrimentally [a]ffected. The consequences of delay in the hearing of a commercial dispute … will impact not just on the two or three persons or companies who are the immediate parties, but may have an effect on the creditors of the business, on employees, and perhaps on other traders unrelated to the immediate dispute.’
Commercial life depends on the timely and just payment of money. Prosperity depends on the velocity of its circulation. Those who claim to be entitled to money should know, as soon as possible, whether they will be paid. Those against whom the entitlement is asserted should know, as soon as possible, whether they will have to pay. In each case that is because it is important that both the claimants and those resisting claims are able to order their affairs. How they order their affairs affects how their creditors, their debtors, their suppliers, their customers, their employees, and, in the case of companies, their actual and potential shareholders, order their affairs. The courts are thus an important aspect of the institutional framework of commerce. The efficiency or inefficiency of the courts has a bearing on the health or sickness of commerce.”
The DIFC Court has dealt with some construction cases. It is also likely to have a supportive role in relation to arbitration which is almost always the ultimate dispute resolution mechanism in construction contracts. In this respect, like any modern Court, its role in arbitration matters is not an interventionist role but a supportive role. The DIFC Court under DIFC arbitration law is authorised to assist the arbitral process in the following areas:
I congratulate the organisers for bringing together experts from several disciplines to discuss the interlocking construction contract issues by reference to FIDIC 4th Edition. The quality of the speakers should ensure a valuable educational experience for all participants in this fundamentally important area.