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Sylvain Bollée and Étienne Farnoux

The interface between arbitration and the Brussels I system was hotly disputed during the reform process, with reason. The West Tankers ruling of the European court of Justice had amply demonstrated the shortcomings of the exclusion of ‘arbitration’ from the substantive scope of the European instrument, under Article 1(2)(d) of the Brussels I Regulation. Both the academia and the case law grappled with the meaning and the consequences of the exclusion of arbitration, and the recast seemed a good occasion to clarify this matter. After much debate, however, the result appears to be somewhat disappointing: not only was the issue only addressed through a Recital and not an actual provision of the regulation, but also it is unclear whether this addition will actually bring about any crucial changes to the preexisting situation. The chapter seeks to ascertain what exactly has changed with Recital 12 with regard to the interface between arbitration and the Brussels I Regulation. This endeavor requires first to look back at the roots of Recital 12, both in the light of the West Tankers judgement and with regard to the debate and political choices made during the reform process. Against this backdrop, the input of Recital 12 is nuanced: on the one hand it reaffirms the consequence of the arbitration exclusion, which is a welcome step; on the other, it remains silent on many issues that have profound practical consequences.

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Hayk Kupelyants and Sylvain Bollée

This case arises out of a controversy between Dallah Real Estate & Tourism Holding Co (‘Dallah’) and the Government of Pakistan regarding the validity of an ICC arbitration commenced by Dallah in 1998. Dallah was a Saudi Arabian company that provided services to pilgrims travelling to Saudi Arabia. In 1995, Dallah signed a Memorandum of Understanding with the President of the Islamic Republic of Pakistan, whereby Dallah agreed to build housing for Pakistani pilgrims. In January 1996, the President of Pakistan then established an Awami Hajj Trust (‘Trust’), whose principal objective was to facilitate activities related to the pilgrimage. In the same year, the Trust and Dallah concluded a contract for the construction of housing for 45,000 Pakistani pilgrims. The contract referred to the terms that had been previously negotiated with the Government and also contained an arbitration clause, under which the parties agreed to refer all disputes to ICC arbitration in Paris. However, the Government of Pakistan was not a party to this contract. In November 1996, the Trust ceased to exist and the contract was never really executed. As a result, in 1998 Dallah initiated an arbitral proceeding against the Government of Pakistan before the ICC. The tribunal sided with Dallah awarding approximately US$20 million in damages and legal costs. Sitting in Paris, the tribunal composed of distinguished arbitrators (Lord Michael Mustill, Nassim Hasan Shah and Ghaleb Mahmassani) delivered three awards – on jurisdiction, applicable law and on the merits.