The use of advanced waiver of annulment in civil and common law systems has gained popularity in the last few decades[1]. The main reason of its popularity is because it demonstrates the trust that parties to an arbitral agreement have in such process. However, the issue of advanced waiver is particular problematic as there is a tension between finality and fairness, a subject of a never-ending debate within the international arbitration community. The scope of this paper is to provide the detailed overview of the debate and to understand how currently international commercial arbitration deals with this legal framework.

A comparative approach of the validity of advanced waiver of setting-aside an award

1. Legal systems allowing advanced waiver

 Domestic legal systems explicitly allowing parties to fully waive a set-aside action

 It is true that multiple legal systems tend to allow parties to fully waive a set-aside award. For instance, Switzerland’s Federal Code on Private International Law (“CPIL”) in its Article 192 (1) affords the parties an opportunity to conclude an exclusion agreement, waiving expressly their right to challenge an award before the courts of the seat of the arbitration. According to Article 190 (2) of the CPIL, the parties may exclude one, more or any grounds for annulment of arbitral awards.

2. Legal systems restraining or even prohibiting the practise of advanced waiver Under German Law GCPC

Nevertheless, other legal systems prefer to take a more restrictive approach to the practice of advanced waiver. Under Section 1059 (2) of the German Civil Procedure Code (“GCPC”), the possibility to waive is limited into four grounds including validity and scope of the arbitration agreement, the parties’ right to be heard, the formation of the arbitral tribunal. These grounds are in the interest of the parties, thus can be waived. Section 1059 (2) prohibits the waiver when questions of non-arbitrability and violation of public policy are raised. These grounds are considered as mandatory grounds and thus cannot be waived under any condition.

3. Advanced Waiver recognized by International Arbitral Institutions

The use of advanced waiver of annulment is also recognized by a considering number of international arbitration institutions through their arbitration rules. For instance, Article 35 of Arbitration Rules of the Jerusalem Arbitration Centre (JAC) provides a clear and express waiver of set-aside and states that “the parties shall be deemed to have waived their right to any form of recourse, including appeal and setting aside or annulment, before any judicial authority against any decision of an arbitral tribunal and the Court, insofar as such waiver can validly be made”.

The arbitration rules of the London Court of International Arbitration (LCIA) provide also the possibility to waive its right to object an award, but there isn’t any express reference to set-aside proceedings. Article 26 (8) of the LCIA Rules 2017 provides that “every award shall be final and binding on the parties. The parties undertake to carry out any award immediately and without any delay (subject only to Article 27); and the parties also waive irrevocably their right to any form of appeal, review or recourse to any state court or other legal authority, insofar as such waiver shall not be prohibited under any applicable law”.

A critical analysis of the effect of advanced waiver of annulment

In light of the above, it is important to examine the effectiveness of those types of waivers. Indeed, if the parties’ waiver is valid and enforceable, the immediate consequence is that the latter are barred from seeking to set aside the award before the national courts at the seat. Evidently, this can be problematic in a situation when there is a tension between finality and fairness or even correctness of the award. However, and importantly, this does not mean that those national courts cannot control the award in any way whatsoever[2]. In many jurisdictions the stage of recognition differs from the stage of annulment. This is specifically provided under Swiss and French law; Article 1522(2) of the French Civil Procedure Code (CPC) states that even in case of a set-aside waiver, “the parties nonetheless retain their right to appeal an enforcement order on one of the grounds set forth in Article 1520”. Similarly, according to Article 192(2) of the Swiss PILA, “if the parties have waived fully the action for annulment against the awards and if the awards are to be enforced in Switzerland, the New York Convention applies by analogy”. In other words, the local award (ie made in France or Switzerland) is treated as if it was foreign (ie made outside France/Switzerland), and is thus submitted to the control of foreign awards at the recognition and enforcement stage.  In the same logic an award can be enforced outside Switzerland in a member of state of New York Convention on Recognition and Enforcement of Foreign Awards (NYC). As a result, even if the parties have expressly waived the right to set-aside an award by concluding an exclusion agreement, the final award can still be challenged on any of the grounds provided by the Article V of the NYC. So national courts are able to maintain some control even where waivers are valid, given the grounds for setting aside an award are typically repeated as the grounds for challenging enforcement.

Furthermore, the use of exclusion agreement raises another question, which addressed whether arbitration is fundamentally a creature of contract and if so, why shouldn’t parties have the autonomy to define by concluding an agreement what is fair and what is not fair? In the author’s view, the interaction between parties and society is very tide and parties cannot act independently. Excess on the freedom to waive any grounds of annulment may render arbitration an unattractive adjudicative process repugnant to natural justice and public policy. In Hoeft v. MVL Group 2003 decision from the United States, the court held the waiver invalid on the basis that contractual freedom must have certain limits. The Second Circuit Court considered that it is not for private parties to agree to restrict public interests. Waivers are therefore appropriate only for excluding private (party) rights and interests, and not for excluding grounds in the public interest. The public interest includes ‘public policy’, the ‘fundamental notions of justice and fairness’, including the rules of natural justice.

COVID-19 has changed the world. Over the past six months, our lives have been upended by the viral outbreak, and we have had to drastically change the way we live and work. There have been numerous commentaries about what the “new normal” looks like in a post-pandemic world, and businesses are busy planning for this. What must they do to stabilize things now? What can they do to safely restart offices and operations and what can they do to grow and thrive in the future?

At the core, businesses need to have empathy. We are in an unusual situation where everyone is faced with similar concerns and challenges at the same time. Customers are experiencing heightened levels of stress and uncertainty. Bearing that in mind, businesses have a unique opportunity to connect with their customers in a meaningful way. By putting the customer at the heart of the organization and listening to their needs, businesses can strengthen existing relationships. and grow trust with with their customer base.

Being agile and adaptable to changes is another key attribute that can help businesses successfully navigate these difficult times. With changing business priorities, what has worked a few months ago may no longer be relevant. While staying close to customers, businesses need to pivot quickly to solve customers’ most pressing challenges. Starbucks is one company that has managed to do that. For instance, when its customers were staying at home due to lockdown measures, it modified its operations to focus on Drive-Thru, Delivery, Mobile Order and Contactless Pick-up, or Entryway Handoff only, store by store. Not that the lockdown is being eased, it has quickly brought back the store experience valued by its customers.

The crisis has provided all of us a window into the future. One of the key differentiators for organizations that are able to succeed is their ability to predict customers’ future needs and innovate fast enough to meet them. Some of the greatest brands that we know today have emerged out of crises. Apple and Netflix are great examples. They transformed themselves in the dot com crisis and have revolutionized how we listen to music and watch television. Their genius was that none of us knew we needed these new ways to enjoy music and television, but now we cannnot live without them. We can say the same thing about Uber and ride hailing, Grab and good delivery and Amazon and shopping. As with past crises, this downturn will also spur organizations to think about what customers really need which will, in turn, inspire new innovations to make life better.

For those in the technology world like me, the pandemic has unveiled trends we can all learn to ride on, one of them being the importance of helping businesses to see and understand data. Governments have turned to data when the pandemic hit to learn about the spread of the virus and to how to respond appropriately. As economies open up, businesses, too, will leverage data to make decisions about how to get back to business safely. With the abundance of data collected during the first wave, insights gleaned from this data can help organizations to put in place the planning, logistics, and communication to resume operations, monitor change and respond to new demands while protecting employees.

Another trend that businesses will prioritise is building resilience. Many will transform their business to be able to operate from anywhere and at any time; diversify and strengthen their supply chains and reduce redundancy. Companies that support these needs will thrive. At the same time, let’s not forget that there are also new growth opportunities. Industries like health and wellness are seeing a huge boom as people start to pay more attention to their well-being. Organizations that can unlock these new opportunities will continue to find new revenue streams to stay in business.

Over the last 20 years, we have faced many challenges—the Asian Financial Crisis in 1997, the 9/11 economic downturn, the SARS outbreak, the global financial crisis of 2008, and now, the COVID-19 pandemic. Each time the world’s economy crashed, it has managed to bounce back. However, the world that emerged was very different. Businesses that can adapt quickly to changes, identify new trends innovate to meet customers’ needs will be the ones that thrive in the post-pandemic economy.

Since their emergence, ISDS mechanisms have met with a resounding success. One of the most striking testaments to this success is the steady increase in the number of investor-state arbitrations over the past several years.

However, over the past decade an increasing sceptical attitude of states towards ISDS mechanisms is palpable. One of the recurring themes in the current debate around investor-state dispute settlement clauses is that they are tools of crafty multinationals or big capitalist investors looking to dictate policy to governments or impede their sovereign regulatory power.

The overall consensus that this article intends to draw out would be the discernible shift in the approach to ISDS whose culmination is the note worthy Philip Morris v Australia case and whose repercussions extend to South East Asian waters and beyond.

Focus will also be on the debate surrounding the inclusion of ISDS clauses in major Free Trade Agreements (‘FTAs’) such as the Trans-Pacific Partnership Agreement (‘TTPA’) under negotiation between several groups of states in the region and Bilateral Investment Treaties (‘BITs’) more broadly.

The discussion reveals that ISDS mechanisms are also making headline news around the world, and particularly in Europe within the context of the now not so successful attempt a trade pact, namely, the Transatlantic Tradeand Investment Partnership (‘TTIP’).

Building on the Asian International Arbitration Centre example, the article finally examines the role of Asian arbitral institutions have played so far in promoting ISDS in the region and in fostering the trust and confidence of states and investors in ISDS mechanisms as a response to the growing tense climate.

1.1 La situation évolue – état des lieux 
En tant qu’individus ou entreprises, nous nous organisons progressivement pour effectuer nos tâches de la manière qui nous convient le mieux. Et nous itérons quotidiennement, améliorant notre façon de fonctionner, en fonction de nos priorités. Cette manière qui nous convient n’est pas optimale ou déficiente en elle-même; simplement, elle nous convient le mieux.

Pour réaliser ces tâches, nous utilisons et leur allouons nos ressources (temps, disponibilité d’esprit, argent, équipes, matériel) selon nos priorités, des critères d’allocation de ressources qui nous sont propres. D’après mon expérience, dans les études d’avocat, ces critères comprennent souvent:

• Respecter les règles sur la profession d’avocat et des codes de déontologie;
• Trouver de nouveaux clients;
• Respecter le devoir de diligence, des délais et autres règles de procédure;
• TimeSheet et recherches juridiques;
• Encaissement de factures.

Or, ces critères d’allocation de ressources ne nous laissent guère le temps de nous tenir informés des évolutions du marché, d’effectuer des enquêtes de satisfaction auprès des clients, de découvrir les nouveaux outils technologiques qui arrivent sur le marché.

Ainsi, un avocat choisira souvent de prendre un entretien ou un déjeuner client – même si celui-ci n’est pas prioritaire – plutôt que de recevoir un représentant voulant lui proposer une solution de gestion de documentation. Il ne s’agit pas d’une erreur – il s’agit d’une décision allouant des ressources en priorité à la clientèle, par rapport à la modernisation de son étude.

Souvent, les priorités des avocats n’allouent que peu de ressources à la satisfaction client, à la modernisation de l’étude et à l’écoute des tendances du marché.

Il en résulte un décalage croissant entre les attentes des clients et les services juridiques proposés par les avocats. Ainsi, depuis de nombreuses années on observe une stagnation du marché du droit [PDF]1:

“In terms of demand growth for law firm services (…) stagnation continued in 2019, with demand growth virtually flat from the preceding year.”

Et ceci était la situation ante-covid 19. Il semble que cette situation soit appelée à se péjorer post-covid. La façon de fonctionner traditionnelle apparaissant peu compatible avec les exigences d’hygiène pour bloquer la propagation du coronavirus.

1.2 Nos clients évoluent – Tendances dans les autres industries et l’amélioration continue
Dans les autres industries, on observe naturellement l’utilisation d’autres critères d’allocation de ressources. Mais on observe surtout l’utilisation d’un processus d’amélioration continue.

Ce processus permet, en résumé, de définir des indicateurs de performance pour l’entreprise et de mesurer l’évolution de ces indicateurs. Ceux-ci révèlent notamment leur importance et leur utilité lorsque l’entreprise souhaite tester une nouvelle idée ou un nouveau service sur sa clientèle ou lorsqu’elle souhaite améliorer sa performance.

Dans le cas d’une étude d’avocat, on peut imaginer de mesurer – par exemple – les indicateurs suivants:

• Satisfaction client – via un formulaire de satisfaction
• Taux de succès de l’étude en procédure
• Taux de succès de de l’étude en négociation
• Taux d’encaissement des factures et rapport entre le montant finalement encaissé et le montant de la facture initiale
• Taux de clients qui font appel à nouveau aux services de l’étude
• Rapidité de traitement d’une demande client – combien de temps un client doit-il attendre en moyenne avant de recevoir une réponse de son avocat?
• Combien de clients sont amenés par un client satisfait?
• Visibilité de l’étude et retours clients sur les médias sociaux

Quels que soient les indicateurs de performance choisis par l’étude, il est important pour elle de les surveiller constamment, car ils lui permettront à la fois de détecter une tendance préjudiciable – et donc la nécessité de prendre des contre-mesures – ou de savoir quelles décisions/actions prendre si elle souhaite améliorer sa performance sur un indicateur ou de manière générale.

L’amélioration continue consiste à chercher, en continu, à améliorer nos indicateurs de performance en fonction de nos objectifs stratégiques.

Ceci est important car, en parallèle, nos clients évoluent et s’habituent à d’autres façon de consommer. Les géants de l’internet investissent en effet des sommes colossales dans la satisfaction client et dans la recherche sur les comportements utilisateur. Ainsi, leurs produits sont souvent les plus attirants et faciles à consommer pour la clientèle. Les tendances définies par les GAFAM et autres grandes plateformes internet sont ainsi reprises par la majeure partie des acteurs du marché. Ainsi, Coop@home
2 affiche les produits de sa boutique en ligne selon les mêmes codes qu’Amazon et le “like” de Facebook s’est propagé sur la majeure partie des plateformes en ligne, comme le 20min (qui, comme Facebook, n’autorise pas le “dislike” pouce bleu vers le bas).

Le client, progressivement, s’est habitué à cet environnement et ses modes de consommation. Il s’attend ainsi à pouvoir lire des avis d’autres consommateurs, à consulter une évaluation de service, à pouvoir commencer une démarche en ligne, à gérer ses données personnelles et disposer d’un compte utilisateur.

Si l’industrie du droit n’est pas compatible avec toutes ces évolutions, elle est certainement compatible avec certaines d’entre elles; il appartient à chaque étude d’envisager quels outils sont pertinents pour son activité et, pour ce faire, elle doit définir ses objectifs commerciaux.

C’est à ce stade que nos critères d’allocation de ressources évoqués plus haut agissaient en obstacle à l’évolution des études. Aucun d’eux ne permettait d’allouer des ressources, telles que du temps et de la disponibilité d’esprit, pour mesurer la performance de l’étude au moyen de ses indicateurs – encore moins pour mettre en oeuvre un système de management pour leur gestion et leur maintenance.

Ceci a toutefois été remis en cause par la covid-19. En effet, le respect des règles professionnelles, réglementaires et contractuelles a contraint les avocats à prendre en compte les nouvelles technologies.

1.3 Nous évoluons – Le travail à distance rendu nécessaire par la covid-19
Quel que soit le modèle prédictif examiné, il est vraisemblable que la pandémie de covid-19 ne soit pas prête à s’éteindre, n’en déplaise à certains dirigeants. La plupart des modèles la voient encore présente en 2022. La distanciation sociale semble dès lors devoir perdurer au point qu’elle devrait progressivement entrer dans nos habitudes comportementales – dont une persistance du travail à distance.

Ainsi, récemment, de grandes entreprises ont commencé à réévaluer leur besoin en immobilier3: “Selon une enquête du géant du conseil immobilier Cushman & Wakefield, réalisée en avril auprès de 300 entreprises dans le monde, 89% d’entre elles estiment que le recours au travail à distance se poursuivra au-delà de la pandémie.”

Ainsi, de nombreux consoeurs et confrères se sont également adaptés et ont travaillé davantage à distance. Les tribunaux ne s’étant pas arrêtés avec la pandémie, les avocates et avocats, se sont vus contraints d’explorer les outils technologiques afin de respecter leurs obligations contractuelles et réglementaires.

La covid-19 a ainsi eu pour effet inattendu d’intégrer la technologie dans les critères d’allocation de ressources des avocates et avocats.

Pour les études d’avocats, ceci présente des avantages: on peut notamment envisager une opportunité de réduction des coûts en réduisant la taille des locaux. Cette possibilité n’est pas anecdotique, car toute entreprise cherche en permanence à réduire ses coûts – en accord avec son modèle économique – afin de rester compétitive. Il va de soi que chaque étude d’avocat a sa propre clientèle et ses propres besoins, ses propres services, son propre modèle économique; une solution globale n’existe pas.

Ainsi, une grande étude de la place appliquant une stratégie de différenciation concentrée sur une très haute – et toujours plus haute – qualité de service aura une structure de coûts et un modèle économique bien différents de celles d’une étude boutique spécialisée.

Quoi qu’il en soit, chacune d’elles pourra saisir l’occasion de s’interroger sur nombre de facteurs pouvant influencer sa structure de coûts et – par voie de conséquence – sa rentabilité. Ainsi, l’étude pourrait se demander:

• Si ses dossiers peuvent être entièrement numérisés pour éviter le stockage physique;
• Si l’étude fournit essentiellement des services sur internet ou chez le client et pourrait donc se passer de salles de réunion;
• Si les collaborateurs et associés ont besoin d’être physiquement présents dans des locaux de l’étude toute la semaine ou non – certains préférant travailler à distance pour éviter les interruptions;
• Quel est le besoin réel en surface de travail et si une optimisation est possible;
• Si la qualité des locaux est en adéquation avec les demandes de la clientèle: celle-ci est-elle d’accord de payer plus pour être reçue dans de beaux locaux ou, au contraire, refuserait-elle (ou refuse-t-elle) de payer un surplus pour cette qualité?
• …

Toutes ces questions reviennent à mettre l’accent sur le client en le plaçant au centre des préoccupations et à ainsi appliquer le concept de “Customer-centricity4”. Ainsi, le client et sa satisfaction pourraient occuper une place plus importante dans les critères d’allocation de ressources des études d’avocats.

Être customer-centric, i.e. centré sur le client, demande de pouvoir mesurer et améliorer sa performance en permanence par rapport aux objectifs stratégiques et à la satisfaction du client.

The corona virus presents a unique and an unprecedented situation. Though its occurrence was unforeseeable and unpredictable, could measures have been taken to limit its spread right from the moment when it came to be known, in view of its impact on people’s health, the business and economic sector? The difficulty arises, as China waited, according to available information, 40 days before disclosing the virus to the world. And it was only on 30 January 2020 that the World Health Organisation declared the Covid 19 “a public health emergency of international concern”.

 Was it open to countries to take necessary measures from the moment of disclosure to prevent   its spread which could have avoided a total lockdown in many jurisdictions? In countries around the world, including Mauritius, it was business as usual. Gradually the grim reality hit the world and countries had to resort to the extreme measures of a complete lockdown and curfews to prevent the spread of the pandemic and to save lives. The health of the population, and not the economy, became the priority in the initial stage.

It is beyond dispute that the corona virus has brought about a real turmoil in many sectors of personal life and economic activities. In the midst of the health crisis, many individuals, business people and professionals are asking questions about the fulfilment of their obligations, whether contractual or not. Some may feel they are covered for any breach of their obligations because of the epidemic, whereas others may be grinding their minds at the idea of not being able to execute a contract as planned. But the one question that has to be addressed is whether the corona virus can be a cause of exemption in the event of a breach of a contractual obligation?

In contractual matters, there are two types of exemptions that would allow a party to a contract to escape liability. Some are legal while others are conventional. The legal exoneration cases are the force majeure for a total or partial exemption of liability. Conventional cases are limiting liability clauses and penal clauses.

A party who fails to fulfil his obligations will be held liable for the breach of the contract in the absence of good grounds to justify the breach. In the context of the corona virus, one of the grounds that may be raised is force majeure resulting from the mandatory lockdown decided by the government.

Force majeure is a legal concept that is known in many legal systems. In Mauritius it is provided for in the Civil Code under the chapter dealing with contracts. As a general rule contracts will have a force majeure clause and list out the different events that may amount to force majeure, like natural cataclysms or epidemics. Whether contracts would have included a clause on complete lockdowns as a force majeure remains to be seen. And it would be important to decide whether the government restrictions made performance under a contract impossible.

Force majeure has been explained as an event which is reasonably unforeseeable [imprévisible] at the time the contract was entered, irresistible [irrésistible] during the performance of the contract, and beyond the control of the person who is invoking it as he cannot no longer perform his obligations. In a very interesting decision in 2011, the Full Bench of the Supreme Court, five judges, held in relation to force majeure, that “It is not enough to stop at the element of prévisibilité or imprévisibilité to determine force majeure. One should move one step further. Prévisible or imprévisible, the question to ask is whether the event was irresistible either by its occurrence or by the manner in which the dire consequences of its occurrence were managed.  What is irrésistible is judged from the objective point of view to decide whether it is so overpowering as to go beyond the means of humans to resist or manage its consequences.” 

The situation created by the corona virus is not comparable to other epidemics and pandemics. The lockdown and curfews are having an impact on businesses. For example, supply chains may have been affected. As the situation is uncertain, a party to a contract may seek to rely on force majeure to avoid liability for non-performance of his contractual obligations.

Can force majeure therefore be successfully invoked on the ground that the measures taken following the corona virus were unforeseeable, irresistible and beyond the control of a contractual party and over which he could not have any control and performance was impossible? There cannot be a definite or straightforward answer. The strain on businesses will no doubt give rise to all types of legal issues or disputes.

Could the virus have prevented contractual obligations from being implemented? There was a gap between the outbreak of the virus and the measures taken by the government on lockdown and curfews. During his gap could businesses still have   functioned?

Epidemics by themselves cannot amount to force majeure. Courts are usually reluctant to uphold the force majeure defence when there is a breach of a contractual obligation. In a very interesting article that appeared in Business Magazine, issue 1435,  15 to 21 April 2020,  Barrister Bilshan Nursimulu after analysing the case law in Mauritius on force majeure,  concludes that “The court’s analysis… did not consider whether the epidemic in itself constituted force majeure, but rather the relationship of cause and effect between the epidemic and the non-performance of a specific contractual obligation”.

French courts, English courts and courts in the United States, just like the Supreme Court in Mauritius, have ruled that a pandemic or an epidemic is not sufficient by itself to constitute force majeure. In a recent decision given on 12 March 2020, the Cour d’Appel of Colmar held that the absence of an asylum seeker at a hearing « était justifiée en raison des circonstances exceptionnelles et insurmontables revêtant le caractère de force majeure liées à l’épidémie en cours de Covid-1». This is a very interesting decision and it remains to be seen to what extent it can be used in contractual obligations.

The following epidemics were held not to constitute force majeure by the French Courts: H1N1 influenza; the plague bacillus; the dengue virus; the chikungunya virus; SARS; Ebola. The major difference between the corona virus and the other epidemics or pandemics is that the coronavirus (COVID-19) pandemic has led to complete lockdown and the imposition of curfews with a number of persons being quarantined. With the onset of other epidemics or pandemics, there was no total lockdown and businesses continued their activities.

In 1918, the Spanish Flu infected millions of people worldwide. Many events were cancelled. People were quarantined.  Many died. The situation was no more different from what we are experiencing with the corona virus. The United States imposed restrictions on activities and people were quarantined. In such a context the question arose whether employers were bound to pay their workers. Two courts reached different conclusions on this point.  One court held  that an employer who did not pay its employees during this time was excused from performance, Another court concluded that  the restriction on activities could not excuse non-performance of obligations because an employer knew that the government “had authority to shut down facilities and, thus, the employer should have included a provision in the contract explicitly excusing performance in the event of a government shutdown”. 

A party invoking force majeure will have to establish that there was a causal link between the inability to perform contractual obligations and the measures taken by the government to combat the spread of the virus. If working from home was an option following the mandatory lockdown, can force majeure be invoked? Could alternative measures have allowed the execution of the contractual obligation?

Businesses today are conducted transnationally and many, if not, all around the world, are suffering from the effects of lockdowns.  Many parties to such contracts may be unable to execute their contractual obligations due to coronavirus lockdown and they may invoke force majeure. To what extent will a force majeure clause in such transnational contracts be successfully invoked in different jurisdictions remains to be seen? It has been reported, for example, that in China, the Council for the Promotion of International Trade, has issued several force majeure certificates to companies to enable them to avoid execution of their contracts. These certificates may work between Chinese companies but it is not certain they would in relation to international contracts.  One such example is the rejection by the French oil giant Total of a force majeure notice from a liquefied natural gas buyer in China. There is no doubt that this is an area where difficulties will crop up.  

Given that unprecedented situation where contracting parties may find themselves in uncertain waters legally, views expressed at international level, advise that parties should seek ways and means to mitigate damages. One advice that been given is that “downturn in revenue will have a huge impact on working capital, and those businesses without sufficient reserves may find themselves suffering cash-flow issues. If this occurs, business operators should seek assistance immediately to try to minimise the impact”.

Contracting parties, who find themselves in that situation, would be well advised to send notices to their counterpart to explain and discuss the difficulties they may be facing or will face. Negotiations must be started to see whether the execution of the obligations can be suspended during the pandemic and whether the contract can be renegotiated. In contracts where time is of the essence there would be no point in suspending its operation and the contract will have to be terminated subject to conditions.

English law encourages parties to enter into negotiations. The French Civil Code enables parties to renegotiate the contract if there is a change in circumstances that was unforeseeable at the time of signing of the contract and which renders performance excessively onerous for a party who had not accepted the risk of such a change. If negotiations fail the parties may agree to the termination of the contract, on a date and under the conditions to be determined, or request the court by mutual agreement to adjust the content the contract. If no agreement is reached within a reasonable time, the court may, at the request of a party, revise or terminate the contract, on the date and on the conditions it chooses.

Thank you.
1^st May 2020

Arbitration is one of the methods of alternative dispute resolution (‘ADR’).2 The importance of the history and origin of arbitration cannot be overstated. Pearl S Buck has stated that ‘[i]f you want to understand today, you have to search yesterday’. An examination of the background presents a platform for understanding the prevalence of certain practices in present-day Malaysia as compared to the position globally.

Similar to the ancient use of the mediation process in China and the panchayat system of village justice in India, the customary method of dispute resolution inMalaysia is associated with adat. It represents an archaic system of dispute resolution practised as customary rites.

The Shariah inMalaya dealt with personal and family law inMalaya and the coastal areas of Borneo. During the 15th Century, it evolved into Islamic dispute resolution practices like shafa’a and tahkshim. This form of a

1. Certified International Arbitrator (AIADR) (2019 to date), Chartered Arbitrator (CIArb) (1999 to date), Advocate & Solicitor (Non-Practising). Architect and Town Planner, Director, Asian International Arbitration Centre (2010-2018), Chairman, Asian Domain Name Dispute Resolution Centre (2018), Deputy Chairman, FIFA Adjudicatory Chamber (2018), Member of the Monetary Penalty Review Committee under the Financial Services Act 2013 (2014–2019), Founding President, Asian Institute of Alternate Dispute Resolution, President, Chartered Institute of Arbitrators (2016), President, Asian Pacific Regional Arbitration Group (APRAG)(2011), Founding President, Society of Construction Law Malaysia, Founding President, Malaysian Society of Adjudicators, Founding President, Sports Law Association of Malaysia.

2. It is sometimes referred to as external dispute resolution and includes meditation, conciliation, neutral evaluation, expert determination, mini-trials and last-offer arbitration (where disputing parties submit their final offers to an arbitral tribunal who must decide on one of the offers). The last method pushes the parties to make a reasonable offer and is intended to counter any tendency by the arbitral tribunal to make compromise decisions between the parties’ offers as in John SMurray, et Al, Arbitration 240–243, Foundation Pr s2003.

peremptory type of arbitration used for dispute resolution was part of the long-standing arrangement of resolution of differences in the community.3

The Quran, Sunnah (the sayings and practices of Prophet Muhammad), Ijma’ (consensus among recognised religious authorities) and Qiyas (inference by precedent) combine to form the Shariah.The Shariah provides a foundation of principles that apply to arbitration as well. Peremptory-like prescription for arbitration can be derived from the Quran and Prophetic traditions.

For example, in the following Quranic verse, arbitration was prescribed as the primary method to resolve a marital dispute:

If you fear a breach between them twain (husband and wife), appoint (two) arbitrators, one from his family and the other from her (family); if they both wish for peace, Allah will cause their reconciliation. Indeed, Allah is ever All-Knower, Well-Acquainted with all things. (Surah al-Nisa’ (4):35).4

Another verse in the Quran states:

And if two factions among the believers should fight, then make settlement between the two. However, if one of them oppresses the other, then fight against the one that oppresses until it returns to the ordinance of Allah. Moreover, if it returns, then make settlement between them in justice and act justly. Indeed,

Allah loves those who act justly.5

Arbitration in Islamic Law is limited essentially to property and personal matters where private rights are involved. Parties to a dispute relating to property can go for arbitration. The arbitration agreement has to be fulfilled as a matter of principle. Arbitration clauses are valid as they are necessary for the efficacy of the contract and are beneficial to both the parties.

In Malaya, the origin of the common law legal framework for arbitration as enacted by the dominant colonial power started with the Arbitration Ordinance XIII 1809 in the British-controlled Straits Settlement of Penang, Malacca and Singapore. Thereafter, all states of the Federation of Malaya adopted the Arbitration Ordinance 1950. This was subsequently replaced by the Arbitration Act 1952 (‘the AA 1952’) and later the Arbitration Act 2005 (‘the AA 2005’) followed by subsequent amendments in 2011 and 2018.

3. See Abdul Hamid El-Ahdab, Arbitration with the Arab Countries (2nd Ed Kluwer Law

International, 1999).

4. Dato Syed Ahmad Idid and Umar AOseni, Appointing a Non-Muslim Arbitrator in Tahkim

Proceedings: Polemics, Perceptions and Possibilities [2014] 5 MLJ xvi.

5. Quran 49.9.

While arbitration is the focus of this article and is reflective of the developments in dispute resolution in Malaysia, the growth of other areas of ADR cannot be overlooked. They are indeed equally important. With the world of commerce rapidly innovating at a fast pace, dispute resolution has also had to evolve from dispute avoidance, dispute prevention, dispute management and finally when all fails into dispute resolution.

When arbitration is considered as conventional and rigid, there have been attempts to seek alternatives to it. Normally such ADR methods like mediation, conciliation and adjudication preceding arbitration are used as part of a multi-tiered dispute resolution regime. Such regimes were either set up by way of legislation or through institutional structures.

Even though in the international domain frameworks for domestic legislation are provided by international texts such as the UNCITRAL Model Law on International Commercial Conciliation (2002), this has not been necessarily the case in Malaysia. For example, the Mediation Act 2012 is a mere facilitative legislation without any bite.

Most commercial disputes often resort either to court or to arbitration. Other forms of ADR are gaining popularity. Although the AIAC is the leading arbitral body and ADR provider in Malaysia, it operates in a competitive environment where arbitrations, both domestic and international, and other niche forms of ADR, are also administered by other associations and professional bodies.

They include the Malaysian Institute of Architects (‘PAM’), the Institution of Engineers Malaysia (‘IEM’), the Institution of Surveyors Malaysia, the Malaysian International Chamber of Commerce, and the Kuala Lumpur and Selangor Chinese Chambers of Commerce, as well as commodity associations like the Malaysia Rubber Board and the Palm Oil Refiners Association of Malaysia (‘PORAM’).

With the rise in transactions in the capital markets, the Security Industry Dispute Resolution Centre (‘SIDREC’) was constituted to cater to the needs of disputes related to unit trusts, derivatives and other capital market products. Presently, all capital market intermediaries, which are corporations holding licenses under the Capital Markets and Services Act 2007 to deal in securities and futures and engage in fund management, are members of SIDREC. SIDREC offers an evaluative dispute resolution mechanism. It is efficient and effective, based on the principles of fairness and reasonableness.

Another prominent ADR provider in Malaysia is the Financial Mediation Bureau (‘FMB’), which was set up under an initiative taken by Bank Negara Malaysia to resolve disputes between financial service providers and their customers. The FMB’s jurisdiction is limited to conventional and Islamic banking products and services, as well as insurance and takaful products and services.

Islamic finance, as an alternative to conventional banking, is a growing financial industry, with a unique set of commercial challenges and issues. The different basis and nature of Islamic finance mean that there are far fewer legal experts and judges with the requisite training and knowledge than in conventional finance.

The AIAC emerged as the first institution to constitute ‘i-Arbitration Rules’ to balance the principles of Islamic finance with arbitration. The AIAC’s i-Arbitration Rules 2018 are Shariah-compliant and provide for, amongst other provisions, the power for the arbitral tribunal to seek reference from the Shariah Advisory Council or a Shariah Expert.6

The rise of sports in Malaysia has seen the emergence of multiple professional and amateur associations being formed to advocate and uphold the interests and well-being of their respective fields. The Sports Law Association of Malaysia which has no restrictions on foreign membership was formed to support the study and practice of sports law.

While the Sports Development Act 1997 was amended in 2018 to provide for a Sports Dispute Committee, the AIAC had been providing sports arbitration training with the attendant aim of encouraging the use of arbitration in sports-related disputes. It has also proposed an Asian Sports Arbitration Tribunal with its own arbitration rules and panel of sports law trained arbitrators to provide sports dispute resolution services.

Malaysia’s maritime sector has a well-defined set of domestic and international maritime laws, regulations, standards and practices. However, the increasing complexity of the maritime sector has demanded a system that has a good grasp of the law to enable governments, industry players and other maritime stakeholders to ensure their interests are protected and not be

Over whelmed by the vast and complex ecosystem of the maritime sector.

6. See the AIACi-Arbitration Rules 2018, r 11.The Shariah Advisory Council was established

in May 1997 as a part of Bank Negara Malaysia. The Central Bank of Malaysia Act 2009

(Act 701) stipulates the roles and functions of the Shariah Advisory Council.

The Malaysian maritime community welcomed the establishment of the International Malaysian Society of Maritime Law (‘IMSML’) in 2015.The idea of IMSML was mooted and promoted by AIAC, which now provides the premises for the IMSML’s secretariat. The eventual aim is to build capacity and provide ADR services for maritime disputes.

Malaysia has introduced statutory adjudication for payment disputes in the construction industry in the form of the Construction Industry Payment and Adjudication Act 2012 (‘the CIPAA’). It came into force on 15 April 2014. It has been a runaway success. The number of disputes being resolved under the CIPAA has continued to increase year by year.

The CIPAA applies to all construction contracts made in writing after 22 June 2012 including those entered by the Government of Malaysia. The procedure applies to construction contracts, and adjudicators are appointed by the AIAC unless otherwise chosen by the parties.

The adjudicator has 45 working days after the issue of a response to an adjudication claim (or a reply) in order to issue a written decision. The CIPAA has absorbed the most successful features of adjudication and security of payment legislation that have been enacted around the world.

Mediations are conducted by the FMB, the Malaysian Mediation Centre (‘MMC’), the AIAC and the Biro Bantuan Guaman (‘BBG’). Not all types of complaints can be referred to the FMB.Only claims involving Islamic banking and financial matters not exceeding RM100,000, and insurance and takaful product and services, can be referred.

The MMC offers a comprehensive range of services including professional mediation services, training in mediation, accreditation and maintenance of panel mediators, and the provision of consultancy services.

The BBG only provides mediation services for civil and Shariah cases. The Mediation Act 2012 came into force on 1 August 2012, with the main aim of promoting and facilitating the mediation of disputes for settlement in a fair, speedy, and cost-effective manner.

The Mediation Act 2012 does not provide for mandatory mediation. Parties can mediate concurrently with any civil court action or arbitration. The judiciary has set up its own mediation centre to cater for court-annexed mediation as set out in the Chief Justice’s Practice Direction.

The AIAC, apart from arbitration, also provides mediation services under the AIAC Mediation Rules 2018. The AIAC Mediation Rules 2018 is a set of procedural rules covering all aspects of the mediation process to help parties resolve their domestic or international disputes.

As part of its improved services, the AIAC has produced the updated Arbitration Rules 2018 with the name change from KLRCA. The Rules are modern and up-to-date. It caters for most types of disputes or differences including investor-State disputes. As a result, it is one of the institutions in the region and globally to model its rules after the IBA Rules for Investor-State Mediation.

One of the more recent developments in ADR is that of Domain Name Dispute Resolution. The Asian Domain Name Dispute Resolution Centre (‘ADNDRC’) is one of only four providers in the world, and the first and only one located in Asia, to provide dispute resolution services for generic top-level domain names.

The ADNDRC (Kuala Lumpur office) is governed by the Uniform Domain Name Dispute Resolution Policy (‘UDRP’) and the Uniform Domain Name Dispute Resolution Policy Rules as well as the ADNDRC Domain Name Dispute Supplemental Rules adopted by the ADNDRC.

Only disputes over ‘.my’ country code top-level domain name can be settled through domain name dispute resolution proceedings in Malaysia. This is because only ‘.my’ country code top-level domain names can be registered in Malaysia with the Malaysian Network Information Centre (‘MYNIC’).

All domain name disputes are governed and administered in accordance with MYNIC’s Domain Name Resolution Policy (‘MYDRP’), Rules of the MYDRP and the AIAC Supplemental Rules. The Malaysian model of the UDRP is the Malaysian Network Information Centre’s Domain Name Dispute Resolution Policy succinctly known as MYDRP. MYDRP was designed by MYNIC together with the Rules of the MYDRP and the Supplemental Rules for the AIAC.

Following the Emirates Union on 2 December 1971 and the formal declaration of the establishment of the United Arab Emirates, notable plans and strategies have taken place to encourage investments and economic growth. The positive outcome of the said economic growth strategies turned the UAE to be a very attractive environment for foreign investment. Large global economic entities and companies started to pump their investments in the UAE and the country became one of the largest destinations in the region and the world for foreign employment.

In the light of the above-illustrated facts, huge numbers of foreign employment, workers and aids began to enter and settle in the UAE, resulting in the  population statistics to jump from 232,000 in 1970 to 1,016,000 in 1980 with an increase rate of 337.9%. Considering the known global pandemics and communicable diseases at that time such as Plague, Cholera, and Malaria, the UAE government took the first legislative approach and issued Federal Law No. 27 for the year 1981 issued on 7 November 1981 concerning the prevention of the communicable diseases (the “1981 Law”).

The  1981 Law was significantly sought and required at that time to provide for and establish the requisite and necessary health standards and precautionary measures to ensure the public health of the UAE population and people living within its territories. The law defined communicable diseases as  diseases transferable to others by human beings or by animals, insects, foodstuffs, places or other things and substances contaminated by the microbes and toxins of such diseases. The 1981 Law further provided penalties applicable on the violators of the relevant provisions of the said law, which penalties include provisions for fines and imprisonment.

Post enforcement of the 1981 Law in the UAE, in 2014, one of the Corona Viruses Family began to spread in the Middle East Region and was called the Middle East Respiratory Syndrome-Related Coronavirus (MERS-CoV). MERS-CoV, akin to the current global Covid-19 coronavirus pandemic, related to the infection and inflammation of the respiratory tract On 24 April 2014, the statistic shared by the World Health Organization confirmed 254 reported cases in the world, with 93 confirmed deaths. The statistic shared by UAE confirmed 33 reported cases with 9 confirmed deaths. It ought to be pointed out that the MERS-CoV was not identified as a communicable disease under the 1981 Law.

In light of outbreak of MERS-CoV in the UAE and considering the fact that the 1981 Law did not legally identify the same as a communicable disease, the UAE government realized the necessity of issuing  another law which provided legal coverage for a broader spectrum of “Communicable Diseases”.

In this regard, UAE issued the Federal Law no. (14) for the year 2014 dated 20 November 2014 on combating communicable diseases (“2014 Law”). The 2014 Law provides a broad and detailed schedule of the communicable diseases and is inclusive of more diseases which were not identified in the 1981 Law and provides for more effective and broad measures to be taken in regards to the same. Such diseases include, without limitation, (HIV/AIDS), Influenza Avian, Rubella, SARS, and any unusual emerging disease specified by the concerned department in the UAE Ministry of Health. It ought to be pointed that the 2014 Law shall now apply to the COVID-19 Coronavirus, as it has been formally identified as a communicable disease by the World Health Organization and consequently by the UAE Ministry of Health.