Lawyer Issue

APRIL 2017 

Automatic Exchange of 

Information & The End of 

the Bank Secrecy Era 

The Avoidance and 

Resolution of International 

Construction Dispute 

Recent Developments – 

Company Formations in 

Greece

Contents 

Contact 

www.lawyerissue.com 

Tips on Preparing for and Navigating through Working 

Capital Disputes 4 

The Uk Offshore Oil and Gas Industry – 

Current Challenges and Recent Trends 9 

Automatic Exchange of Information & The End of the 

Bank Secrecy Era 14 

Current Hot Topics in UK Employment Law 19 

Purchasing Residential Apartments Off-Plan 24 

The EU General Court Endorses the Reasoning of the 

European Commission in Relation to Reverse 

Payment Settlements 29 

Recent Developments – Company Formations in Greece 37 

A Strategic Approach to Effective Workplace Investigations 41 

The Italian benefit corporation: to profit and …. beyond! 48 

A Venture Capital and Private Equity career of a Lawyer 53 

The Wait is Over: The ICC’s New Expedited Procedure Rules 

(and other Updates) 56 

Publication of International adjudication Decisions and 

Arbitral Awards: Confidentiality V Transparency 62 

The Avoidance and Resolution of International 

Construction Disputes 81

Lawyer Issue 


Tips on Preparing for and Navigating through 

Working Capital Disputes 

Jonathan Vanderveen and Anthony Caporrino, Alvarez & Marsal 

When engaged in M&A activity, companies and their 

counsel must be well prepared to address working 

capital disputes (post-acquisition disputes that arise 

due to working capital adjustments). Working capital 

adjustments, which protect buyers and sellers from 

working capital volatility after they agree upon a purchase 

price (and a related working capital target), involve a 

mix of both legal and accounting concepts and are often 

filled with contract interpretation and accounting-related 

nuances. 

It is particularly important that counsel 

understand the intricacies of working 

capital adjustments in order to best 

serve clients and address working capital 

disputes, which most often arise when 

final working capital is significantly different 

from target working capital. Although 

each deal’s working capital adjustment is 

unique, below we provide some guidance 

for counsel on addressing working capital 

matters and navigating disputes if and 

when they arise. 

Guidance for Counsel 

We find it is most common for sellers to 

prepare estimated closing balance sheets 

and the related working capital, for buyers to 

prepare final closing balance sheets and the 

related working capital (in transactions other 

than carve-outs), and for sellers to prepare 

objection notices. Therefore, we have made 

these assumptions in the comments below. 

Pre-Closing Target and Estimates: The process 

begins with the parties agreeing on a target 

working capital amount. Immediately 

before or after closing, the seller provides 

an estimated closing statement to 

determine the amount the buyer is to pay 

at closing. 

The majority of issues and dollars 

associated with a working capital dispute 

are decided based upon the wording in 

the purchase agreement. Buyers often 

negotiate language favoring a generally 

accepted accounting principles (GAAP) 

based closing balance sheet (and associated 

working capital). Sellers often negotiate 

language favoring accounting consistent 

with past practices for the closing balance 

sheet (and associated working capital). 

Therefore, counsel should be focused 

on the working capital and associated 

definitions as well as the dispute resolution 

process when constructing the purchase 

agreement. 

Closing Statement: Within a specified 

number of days after closing, the buyer 

prepares the closing statement (including 

the closing balance sheet) with calculations 

of net working capital, cash, transaction 

expenses and/or debt as of the closing 

date in accordance with the terms of the 

purchase agreement. 

Counsel should consider advising clients 

to be thorough in identifying potential 

adjustments in their favor at this stage, 

since buyers normally have only one bite at 

the apple. In most post-closing disputes, the 

original buyer-prepared closing statements 

will be considered final if a dispute 

arises. Buyers will not normally have an 

opportunity to make additional adjustments 

in their favor after issuing the closing 

statements. Keep in mind, buyers can 

subsequently agree to sellers’ objections 

and effectively adjust closing statements 

when the adjustments are in sellers’ favor. 

Objection Notice: After the buyer issues the 

closing statement, the seller identifies any 

objections within a specified number of 

days and issues its objection notice. 

Counsel should advise clients to ensure 

their listings of objections are complete 

because, similar to buyers’ closing 

statements, sellers’ objection notices 

cannot normally be adjusted in their 

favor after the objection notice is issued. 

Especially in circumstances in which sellers 

struggle to get the information needed to 

properly analyze working capital accounts, 

objections to entire account balances at 

the trial balance level can be an effective 

4 | LawyerIssue 5



way to encourage buyers to provide the 

information needed to analyze accounts 

and/or continue settlement discussions 

with buyers. 

Settlement Negotiations and Arbitration: 

Following the issuance of an objection 

notice, the parties engage in settlement 

discussions. If they cannot settle the 

disputed items, the matter is submitted to 

arbitration. 

We suggest buyers and sellers extend 

the settlement process if they are making 

progress. Progress includes removing items 

from an objection notice thereby narrowing 

the items to be brought to an arbitration. 

It is normally in both parties’ interests to 

settle as many items as possible rather than 

bring all objections to arbitration. 

If arbitration is imminent, ensure the 

parties select a knowledgeable arbitrator 

experienced in interpreting purchase 

agreements, addressing discovery requests 

and structuring the process to ensure 

both parties receive due process without 

expanding the scope of the arbitration 

beyond that mandated in the purchase 

agreement. 

What You Should Know 

About the Common 

Types of Working Capital 

Disputes 

As mentioned earlier, working capital 

disputes are unique. That said, many 

disputes have common themes. Below we 

present some common types of working 

capital disputes and what you should be 

aware of with each. 

1. GAAP vs. Consistency 

One of the most common types of disputes 

centers on whether an item should be 

accounted for consistently or in accordance 

with GAAP (if indeed an argument can be 

made that the item is not accounted for in 

accordance with GAAP). This may involve, 

for example, corrections to historical 

errors. Note that if an item was historically 

accounted for in a certain manner and the 

related financial statements were audited 

and received, an unqualified opinion 

does not necessarily mean the item was 

accounted for in accordance with GAAP. 

One reason for a difference might be 

materiality. Materiality normally does not 

apply in accounting arbitrations unless 

specified in the purchase agreement. 

Further, accounting arbitrators typically 

do not rely on another firm to determine 

whether or not an item was accounted for 

in accordance with GAAP. Instead, they 

make that decision themselves. 

This issue can be especially contentious 

because in nearly all cases, an arbitrator 

is unable to adjust the target. Therefore, 

it is possible an item in dispute may be 

accounted for one way in the target working 

capital and another in the final working 

capital. 

We recently consulted the buyer of a 

company with significant amounts of 

inventory recorded on its balance sheet. 

The purchase agreement required net 

working capital be calculated in accordance 

with GAAP consistently applied. After 

closing, the buyer performed a physical 

inventory count and determined more 

than 25 percent of the non-rental inventory 

balance did not physically exist as of 

the closing date. The buyer asserted the 

balances had built up over a number of 

years due to the seller’s failure to properly 

relieve inventory as items were used / sold 

and failure to historically perform physical 

counts. The seller argued the buyer’s 

count methodology was inappropriate and 

that a physical count could not be used 

to calculate net working capital because 

similar counts had not been performed 

historically. The arbitrator agreed with the 

buyer’s adjustment and concluded the 

results of the physical count needed to be 

considered under GAAP per the terms of 

the purchase agreement. 

2. Consideration of 

Subsequent Events 

Working capital disputes often involve a 

disagreement over the relevance of postclosing 

events to the closing date net 

working capital, such as the settlement of 

contested accounts receivable, write-downs 

of inventories and settlement of contingent 

liabilities. Buyers should beware of making 

post-close business decisions such as 

granting credit to a customer for a disputed 

invoice in exchange for future business and 

believing the disputed invoice (accounts 

receivable) will be reserved and result in 

a reduction to the closing working capital 

calculation. 

We were the neutral arbitrator for a 

dispute involving a distributor of residential 

and commercial products. The purchase 

agreement provided for baseball-style 

arbitration, in which the arbitrator must 

fully rule in favor of one or the other party’s 

position. Prior to the closing date, the 

seller began the process of transitioning 

its product lines to a different vendor. 

That action arguably rendered certain 

inventories obsolete. The buyer’s net 

working capital calculation included a 

reserve to account for this obsolescence. 

The seller argued the buyer’s obsolescence 

reserves were overly aggressive in light of 

the liquidation value of the inventory and 

that they resulted from the buyer’s postclosing 

actions to aggressively change the 

vendor rather than making the change over 

a longer time period. The arbitrator agreed 

with the buyer’s position that the seller’s 

pre-closing actions reduced the value of the 

inventory and considered the post-closing 

events as seller-initiated events. Although 

the seller’s arguments had some merit, 

because the arbitration was baseball-style, 

the arbitrator was forced to accept the full 

value of the buyer’s reserve rather than give 

the seller credit for some of its liquidation 

value arguments. 

3. Procedural Objections 

Typical procedural issues involve the 

arbitrability of disputes, as well as the 

timeliness of disputes or the ability to 

introduce new disputes. Lawyers should 

advise their clients that entering into an 

arbitration does not mean a party can 

introduce new disputes. Quite the contrary, 

disputes are limited by closing statements, 

objection notices and even the engagement 

letter with the neutral accounting arbitrator. 

We consulted on behalf of the seller of a 

manufacturing company. The purchase 

agreement contained separate purchase 

price adjustment mechanisms for debt and 

net working capital. The buyer’s closing net 

working capital calculation included the 

balance of outstanding checks as a liability, 

causing the seller to dispute the calculation 

because the purchase agreement stated 

outstanding checks were to be included 

in the calculation of debt, not net working 

capital. The buyer argued that even if the 

outstanding checks liability could not be 

included in net working capital, it should 




be reclassified to debt, which would have 

the same net effect on the purchase price. 

The accounting arbitrator agreed with the 

buyer’s position; however, the arbitrator 

also determined he had no authority to 

consider the buyer-proposed offsetting 

adjustment to debt because the seller did 

not dispute the buyer’s calculation of debt 

within its objection notice. 

Conclusion 

Understanding why working capital 

disputes arise and how they are most 

often resolved can help counsel bring 

value to clients when constructing the 

purchase agreement. It can even help 

avoid these types of disputes altogether. 

Advising clients on what purchase 

agreement language best positions them 

for potential disputes, how to prepare an 

effective closing statement or objection 

notice, what they can expect when 

requesting closing statement accounting 

information and support, how to handle 

discovery and settlement discussions, how 

to negotiate the arbitration process should 

settlement discussions fail, how to select 

an arbitrator, and what type of support 

and presentations are necessary to be best 

positioned to win an arbitration are all 

things on which counsel should be ready 

to advise its clients regarding each deal. 

The Uk Offshore Oil and Gas Industry – 

Current Challenges and Recent Trends 

Judith Aldersey-Williams and Penelope Warne 

Jonathan Vanderveen 

Managing Director at Alvarez & Marsal 

T: +1 312 601 4221 

Email: jvanderveen@alvarezandmarsal.com 

Jonathan Vanderveen is a Managing Director with Alvarez & Marsal’s Disputes and Investigations practice. His practice 

centers on assisting clients dealing with post-acquisition disputes, internal investigations, litigation and regulatory issues. As 

an expert on GAAP issues, Mr. Vanderveen assists clients (both sell- and buy-side) involved in post-acquisition disputes, 

including working capital, earn-outs and other types of disputes. He has also served as a neutral arbitrator on dozens of 

matters across a range of industries and issues. 

Anthony Caporrino 

T: +1 212 328 8486 

Email: acaporrino@alvarezandmarsal.com 

Anthony Caporrino is a Managing Director with Alvarez & Marsal’s Transaction Advisory Group. With more than 15 years 

of transaction-related experience, he specializes in coordinating and leading financial accounting due diligence projects for 

private equity and strategic buyers. Mr. Caporrino advises clients on leveraged recapitalizations, purchase accounting and 

analyzing, and supporting purchase price adjustments. He brings extensive experience in analyzing quality of earnings and 

costs in acquisitions of divisions of public companies. He has performed financial accounting due diligence projects across 

numerous industries, including environmental, manufacturing, transportation, branded consumer products, technology, 

aerospace, distribution, insurance brokerage, medical devices and entertainment. 

The UK’s offshore oil and gas industry has undergone a 

torrid few years, starting even before the oil price crash of 

2014. The industry has of course been here before and has 

demonstrated itself to be adaptable and resilient. In 2014, 

with oil prices which had averaged over $100 for several 

years, production was 1.4 million barrels of oil equivalent 

(boe) a day, down from a peak of almost 3 million boe a 

day in 1999, while operating expenditure was through the 

roof, production efficiency was poor and exploration was 

at historically low levels, offering little prospect of staving 

off a slow decline. 




Since then the price has crashed to lows 

and/or price increases are needed to 

remaining reserves of the UK Continental 

the existing powers to revoke, or partially 

below $30, recovering somewhat to the 

enhance activity further. 

Shelf (UKCS). 

revoke, licences and remove operators. 

mid-$50s. The scale of the crisis hitting 

the industry is demonstrated by the fact 

that for the first time since the offshore 

industry began production in 1968, tax 

revenues in the tax year ending 2016 were 

net negative i.e. the government paid 

out £24 million more in tax relief than it 

received in taxes, while the industry took 

in less cash than it spent in 2016, for the 

fourth year in row. With minimal attention 

in the national press, the brutal discipline 

of the marketplace has cut the workforce 

supporting the offshore industry from 

450,000 to 330,000 with wave after wave of 

redundancies. 

As capital investment is expected to 

continue to fall from its peak in 2014, the 

improvement in production levels is likely to 

be a short-lived respite and total production 

is expected to begin to fall again within a 

couple of years, depending on the timing 

of start-ups. Nine new fields started up in 

2016 including Cygnus, Solan, Laggan and 

Tormore, but only two new fields were 

approved, though the forecasts for 2017 

are slightly better. With just 23 exploration 

and appraisal wells being spudded in 

2013, down from highs of over 100 in 

the mid-2000s, discovering new fields to 

replace those reaching the end of their 

Swiftly implementing the recommendations 

of the Wood Review, which reported 

in February 2014, the government 

established a new regulator, the Oil & 

Gas Authority (“OGA”), initially in April 

2015 as a government agency and since 

May 2016 as a government company. The 

OGA is designed to regulate, influence 

and promote the offshore sector in a 

manner better suited to the challenges of 

an ageing basin, with numerous marginal 

fields dependent on a network of highlyinterconnected 

infrastructure which is 

reaching the end of its life. The industry has 

new legal obligations, incorporated into the 

While the OGA can neither rewrite existing 

contracts, nor force licensees to invest, it 

can declare that reliance on existing legal 

rights is contrary to MER UK, and require 

licensees who do not wish to invest to 

divest or relinquish the relevant assets. 

While such draconian interventions are 

likely to be rare, and the OGA has to bear in 

mind the need not to deter investment in 

the UK, there is a degree of nervousness in 

the industry as to how the OGA will exercise 

its very broad discretion. 

So far the signals are that the OGA will 

seek to influence and encourage far more 

than to compel. This is important. From its 

As a result of relentless pressure on 

life is increasingly challenging. Most new 

Petroleum Act 1998 by the Infrastructure 

relatively recent establishment, the OGA 

contractor rates, down-manning and 

discoveries are small, expected to produce 

Act 2015, to seek to maximise economic 

has hit the ground running, having issued 

the pruning of discretionary spending, 

between 10 and 30 million boe, though 

recovery of hydrocarbons in the UK’s 

a large number of subsidiary strategy 

operating costs have fallen from an average 

some of 2016’s start-ups are exceptions 

territorial waters and Continental Shelf, 

documents and delivery plans, as well as 

of £18 a barrel in 2014 to £11.30 last year 

- Cygnus is expected to supply 5% of UK 

in particular through collaboration with 

establishing a wide-ranging stewardship 

while a focus on production efficiency has 

gas demand at its peak while Laggan and 

other industry players, and to comply with 

survey to measure the performance of 

led to an improvement from 65% to 71% 

Tormore have estimated reserves of 170 

a Strategy produced by the regulator to 

operators and enable it to benchmark 

over the same period. This improvement 

million barrels. It’s worth remembering, 

achieve that end, known as “MER UK”. 

performance, prioritise its regulatory 

in production efficiency, as well as record 

levels of capital investment approved 

while the oil price was still above $100, 

has resulted in a turnaround in production 

which has been on the increase for the first 

time in many years: the 322 oil, gas and 

condensate fields currently in production 

produced over 1.7 million boe per day in 

2016. However, new investment is very 

dependent on the oil price. Professor Alex 

Kemp, a leading oil economist based at the 

University of Aberdeen, argues that at $50 

a barrel, new investment activity is stifled 

and few projects pass investment hurdle 

rates. Even if Brent crude reaches $60 a 

barrel, it will be helpful butit is not going 

to transform the industry as there will still 

be many fields which remain uneconomic. 

In the longer term further cost reductions 

also, that UK domestic production is still 

meeting around two-thirds of our oil 

demand and more than half of our gas 

demand. 

While dealing with the day to day pressures 

of this financial shock, the industry has also 

been getting to grips with an overhaul of 

its regulatory regime. In 2013, recognising 

the problems facing the industry even then, 

the government appointed Sir Ian Wood to 

review existing regulation to see if it was fit 

for purpose. He recommended a new tripartite 

relationship between the industry, 

a new better-resourced and independent 

regulator, and the Treasury representing 

the interest of the nation in its hydrocarbon 

resources, to make the most of the 

The OGA has taken over many of the 

powers and responsibilities formerly held 

by the Offshore Licensing Unit of DECC, 

including the power to award licences and 

grant field development approvals, but 

the Energy Act 2016 has also given it new 

powers and greater resources, funded 

by a significant industry levy. The new 

powers include powers to attend industry 

meetings, to request a broad range of 

information, and to give non-binding 

recommendations to resolve disputes. The 

OGA also has a greater range of sanctions 

to impose on those who fail to comply 

with their obligations under the licence 

or the MER UK Strategy, including powers 

to impose fines of up to £1 million and to 

issue enforcement notices, in addition to 

activities, and to develop regional plans for 

the development of many of the currently 

uneconomic discoveries. It has also funded 

seismic studies to open up new exploration 

possibilities and is investing in better 

technology to store and share data. The 

organisation is less than 180 people and so 

will not be able to solve all of the industry’s 

problems but its proactive approach is 

showing signs of success – it claims to 

have successfully intervened in more than 

70 cases already to enable development 

of discoveries, extensions of field life, 

unblocking of commercial issues, cost 

savings and improved plant operations. 

A significant legal issue for the industry 

is how to balance its new statutory duty 

to collaborate to achieve MER UK with its 




duties to comply with competition law 

– this is likely to require more frequent 

substantive analysis of competition law 

issues to determine whether or not 

proposals for collaboration, particularly 

between operators rather than vertical 

collaboration between operators and the 

supply chain, are justifiable on competition 

grounds. 

Not all is gloom. The oil and gas industry 

is resilient and has been at the cliff edge 

before. A degree of stability in the oil price, 

closing the valuation gap between buyers 

and sellers, has enabled something of a 

resurgence in oil and gas M&A activity. In 

the last six months, deals have been signed 

over almost £5 billion worth of North Sea 

assets, including Shell’s recent £3billion 

sale of North Sea assets to Chrysaor, the 

£993million acquisition of Ithaca Energy by 

Israeli-based Delek Group and BP’s disposal 

of an interest in Magnus to Enquest for 

£68million. Recent transactions have also 

shown a new appetite for banks to lend and 

private equity to invest in the sector (the 

Chrysaor deal was backed by EIG Partners 

as well with a reserve-based lending 

package from a consortium of banks while 

Blackstone and Bluewater Energy have 

put over £400million into Siccar Point 

Energy). One of the factors in enabling 

deals to proceed is the use of innovative 

structures, such as those offering upside 

for the seller (for example, in the Shell/ 

Chrysaor deal, an additional $600 million 

is payable contingent on the average price 

of oil between 2018 and 2021 exceeding 

$60 a barrel and a further $180 million 

contingent payment is dependent on future 

discoveries by Chrysoar). The sharing of 

decommissioning liability is also key to 

transactions since many assets are at the 

point where their remaining production 

will not generate sufficient tax capacity to 

offset decommissioning costs and allow full 

relief of those costs: Shell has reportedly 

accepted continued decommissioning 

liability of $1bn (about 25% of the total cost) 

of the assets sold to Chrysaor while in its 

transaction with Enquest, BP has retained 

the decommissioning liability. EnQuest will 

pay BP additional deferred consideration 

of 7.5% of the actual decommissioning 

costs on an after tax basis, subject to a cap 

equal to the amount of cumulative positive 

cash flows received by EnQuest from the 

transaction assets. 

Given the maturity of the basin and its 

financial challenges, decommissioning 

is one of the most significant issues 

facing the industry over the next decades 

but also a substantial opportunity for 

the development of a strong specialist 

supply chain. There are about 250 fixed 

installations, 250 subsea installations, 

5000 wells and 3000 pipelines in the UK 

sector of the North Sea, with much of 

that infrastructure being well past its 

original design life. There is evidence 

that the oil price crash has resulted in 

some acceleration of decisions to cease 

production, but this should not be 

overstated – while COP dates for 72 assets 

were brought forward in 2016, 33 were 

deferred and 135 remained the same. 

Decommissioning expenditure is currently 

running at over £1billion annually and it 

is estimated that over the next ten years 

around £17.6 billion will be spent on 

decommissioning. A key plank of the OGA’s 

activity is to reduce decommissioning costs 

and therefore the cost to the Exchequer of 

decommissioning tax relief. Collaboration 

between operators and the supply chain 

over best practice and the use of new 

technology and between operators on 

multi-well programmes will form part of 

this initiative but there are also new legal 

obligations for licensees to consult the 

wide powers of Part IV of the Petroleum Act 

OGA before submitting decommissioning 

1998. 

programmes for approval. Lawyers are 

awaiting revised guidelines from BEIS, 

Technology however, will absolutely be the 

which now has responsibility for approval 

key to the continued success of the sector, 

of decommissioning programmes, and from demonstrated by the opening in Aberdeen 

the OGA, to see how this process will work 

of the Oil and Gas Technology Centre, but 

in practice. Reducing decommissioning 

along with high-tech tools and innovative 

costs will also reduce the ever increasing 

methods, the industry is continuing to 

burden of decommissioning security, 

focus on more efficient ways of working 

required to protect licensees from joint 

to keep costs down, especially through 

and several liability for the execution 

collaboration under the auspices of Oil & 

of decommissioning programmes, and 

Gas UK and other trade bodies. 2017 sees 

vendors from the risk of being brought back the industry in a more optimistic mood, but 

to conduct decommissioning under the 

aware of the challenges that lie ahead. 

Judith Aldersey-Williams 

Partner at CMS Law 

T: +44 1224 267 164 

Email: judith.aldersey-williams@cms-cmck.com 

Judith worked as a commercial solicitor in London for ten years before joining the Aberdeen office of CMS in 2000, becoming 

a partner in 2007. She advises energy industry clients on commercial and regulatory matters and competition law. She has 

worked closely with Oil & Gas UK on many industry initiatives including the standard Decommissioning Security Agreement 

(DSA) and Joint Operating Agreement and the introduction of Decommissioning Relief Deeds. She is recommended by Legal 

500 for oil and gas and competition law, and rated Band 1 by Chambers 2017 for Oil & Gas in Aberdeen and surrounds. 

Penelope Warne 

Senior Partner at CMS Law 

T: +44 20 7367 3928 

Email: penelope.warne@cms-cmck.com 

Penelope is an oil and gas specialist. As the Energy practice group leader for CMS, she has opened offices in Aberdeen, 

Edinburgh, Brazil, Mexico and Dubai. Her practice spans the globe advising clients in the oil and gas industry in the North 

Sea, the US, Norway, Brazil, EMEA and Russia. 

Penelope is at the cutting edge of oil industry issues, active in thought leadership and trains oil industry lawyers in her role as 

an Honorary Fellow and Trustee of the Centre for Energy, Petroleum and Mineral Law and Policy at Dundee University. 

Penelope works globally with governments, energy industry specialists and academics and is a member of the Oxford 

University Vice Chancellor’s Circle. 




Automatic Exchange of Information & 

The End of the Bank Secrecy Era 

Zoe Kokoni, Alena Malaya and Anna Pushkaryova 

As a reminder, a landmark Agreement 

introducing international AEoI, namely 

the Multilateral Competent Authority 

Agreement on Automatic Exchange of 

Financial Account Information (MCAA) 

prepared by the OECD, was signed on 

October 29th, 2014 at the 7th meeting of 

the Global Forum on Transparency and 

Exchange of Information for Tax Purposes. 

Prior to the MCAA execution, in 2013, 

the G20 Finance Ministers and Central 

Banks’ Governors endorsed the European 

initiative of information exchange based on 

US FATCA codes (which gave rise to such 

international phenomena as the AEoI), 

and in September 2014 they proceeded 

to approve the global AEoI standard. 

This standard - called the ‘Standard for 

Automatic Exchange of Financial Account 

Information - Common Reporting Standard’ 

(CRS) - will be used as the standard for 

reporting purposes, while the MCAA is the 

international agreement activating the 

OECD AEoI. 

In the official press release of the OECD 

dated 22 December 2016, it was stated that 

there are now more than 1,300 bilateral 

relationships in place across the globe, 

most of them based on the Multilateral 

Competent Authority Agreement on 

Automatic Exchange of Financial Account 

Information (the CRS MCAA). Thus, bilateral 

agreements based on the CRS MCAA are the 

most popular way of implementing the AEoI 

between a pair of jurisdictions. Besides, 

CRS can be also implemented by countries 

based on double tax treaties and bilateral 

tax information exchange agreements. The 

largest amount of bilateral information 

exchange relationships established, as well 

as CRS implementations, was made by and 

between EU countries. 

In 2016, countries have only begun to 

collect the reportable financial account 

information to be automatically exchanged 

while the first such exchanges will take 

place during 2017. 

International automatic exchange of financial account 

information (AEoI) – an issue of global importance 1 

closelydiscussedandanalyzedbyprofessionalsandmarket 

players during the last year - is constantly evolving, 

and, thus, requires further analysis and attention. We 

have already provided the basics of AEoI and its global 

standard in previous articles while in this article we would 

like to present a brief update hereof and implications for 

businesses, in light of the actual commencement of AEoI 

by countries in 2017. 

1 AEoI is a global instrument for the prevention and fighting against tax avoidance and the hiding of 

taxable assets abroad. It has been first initiated by OECD in order to put dividends, interest, royalties, 

proceeds of the sale of financial assets, other income and account balances within the scope of AEoI. 

By the end of 2016 more than 101 

jurisdictions had either signed MCAA or 

committed to implement AEoI via the 

CRS. Some of these jurisdictions (early 

adopters) have undertaken to commit 

first information exchanges in 2017 

and the others (late adopters) will do so 

during 2018. The list of such jurisdictions 

is constantly growing. According to the 

latest news, Pakistan, Switzerland and 

Liechtenstein has ratified OECD Convention 

on Mutual Administrative Assistance in 

Tax Matters, thus soon we can expect 

those countries to join the Global Standard 

on AEOI. At the same time, a number of 

jurisdictions have neither signed MCAA 

nor officially committed to implement CRS, 

including in particular Armenia, Azerbaijan, 

Belarus, Georgia and some other countries. 

In regards to Cyprus, on October 29, 

2014, the Republic of Cyprus - following 

a Council of Ministers decision dated 

October 22, 2014 - signed the CRS MCAA, 

and determined September 2017 to be 

the first date of exchange (i.e. with respect 

to exchange of data pertaining to the 

year 2016). Cyprus banks have already 

started gathering the information for the 

CRS reporting. In January 2017, Cyprus 

banks commenced reporting to the local 

tax authorities. It is expected that by 

September 2017 the first exchange of 

information between tax authorities will 

take place. Information will be exchanged 

on automatic basis only with jurisdictions 

with which Cyprus has mutually agreed to 

exchange information based the relevant 

bilateral agreements. 




We would like to separately note several 

December 2015, starting from 1 January 

natural person(s) can be identified as 

Despite the above mentioned strict 

specific issues which are worth taking into 

2016 – new accounts) the aggregate 

exercising control of the entity, the 

requirements and rules, there is a number 

account by actual businesses in view of 

account balance of which does not 

controlling person(s) of the entity will 

of legitimate, doable and practicable 

the commencement of the global AEoI, 

exceed USD 250,000 as of December 

be the natural person(s) who holds the 

options of escaping reporting under CRS for 

and, if necessary, to take relevant timely 

31, 2015 or in any subsequent year. 

position of senior managing official, 

the reason of being exempt therefrom, or 

measures in order to avoid respective 

The accounts of financial institutions 

except for entities that are (or are 

not covered by the relevant requirements. 

negative consequences with this regard. In 

themselves are not reportable based 

majority owned subsidiaries) an entity 

In any case, regardless of whether you will 

particular: 

on CRS. The above exemptions from 

listed on a stock exchange; 

be subject to AEoI under the CRS or will be 

• reporting under CRS shall be 

made by the reportable financial 

institutions which should report to 

relevant competent authorities of 

their respective jurisdictions about 

reporting can be considered for 

purposes of businesses structuring or 

restructuring in the new global reality. 

• only passive Non-Financial entities 

(NFEs) will be obliged to disclose their 

- for unions, administrative committees, 

foundations, clubs, association and 

funds raising committees: members of 

the Board of Directors/Committee and 

administrators of accounts; 

excluded, the fact is that all businesses will 

be either directly or indirectly affected by 

new rules in the international tax sphere. As 

such, businesses will need to quickly adapt 

to the new reality. 

reportable persons accordingly. Once 

a financial institution is classified 

and determined as the “financial 

institution”, further its necessary to 

determine whether its reportable or 

not reportable. . Reportable institution 

shall be subject to relevant due 

diligence and reporting requirements. 

controlling persons - which, in most 

cases, are the ultimate beneficiary 

owners (UBOs) of such entities. The 

criterion for determining whether the 

NFE is active or passive is the following: 

active NFE is an entity whose gross 

income for the preceding calendar 

year or other relevant reporting 

- for trusts (if trust qualifies as passive NFI): 

the settlor(s), trustee(s), the protector(s) 

(if any), the beneficiary(ies) and any other 

natural persons exercising ultimate 

effective control over the trust. If trust 

qualifies as a financial institution, then 

different reporting requirements apply. 

We at Eurofast are ready to meet all your 

needs and assist you with any requests 

which you may have with respect to the 

introduction of AEoI and provide you with 

practical solutions which would meet your 

financial and business needs. 

Accordingly, strong due diligence 

period consists of no more than 

procedures and relevant technical 

50% passive income (i.e. dividends, 

infrastructure will need to be in place to 

interests and royalties), and less than 

facilitate the recognition of reportable 

50% of the assets held by the NFE 

accounts and gather the accountholder 

during the preceding calendar year 

identifying information that needs to 

or other relevant reporting period are 

be reported for such accounts, and to 

assets that produce or are held for 

also ensure the protection of personal 

the production of passive income. All 

information within the AEoI; 

the other NFEs which do not qualify 

as active ones are considered to be 

• reportable persons under CRS will 

include any individual or entity that 

passive NFEs. 

is resident in a reportable jurisdiction 

• The controlling person (natural 

under the tax laws of such jurisdiction, 

persons), to be reported automatically 

other than a corporation, the stock of 

by passive NFEs, are the following 

which is regularly traded on one or 

persons: 

more established securities market; 

any corporation that is a related entity 

• for companies and cooperative 

of a corporation described above; a 

societies: UBO(s), who ultimately owns 

governmental entity; an international 

or controls a legal entity through direct 

organization; a central bank, a financial 

or indirect ownership of 10% and more 

institution; and pre-existing entity 

shares in the company`s capital (for 

accounts (those that are open on 31 

Cyprus – 25% and more). In case no 




Alena Malaya 

Tax and Legal Advisor at Eurofast 

Current Hot Topics in UK Employment Law 

Martin Warren 

Email: alena.malaya@eurofast.eu 

Alena holds a Bachelor’s degree in Law with honours. In 2013, she obtained her Master’s degree in corporate law from the 

Kiev V. Hetman National Economic University. In 2015, she graduated from the Ukrainian private school “ProBusiness school” 

and obtained her Project Management certificate. 

Alena has gathered considerable experience working for both local and international companies. Her engagements included 

international tax structuring, high-worth investment projects, Forex licensing within the EU, residency & citizenship, as well as 

foreign company incorporation and administration. Alena actively contributes to professional publications on tax issues. 

Anna Pushkaryova 

Country director at Eurofast 

T: +995322180310 

Email: anna.pushkaryova@eurofast.eu 

Anna Pushkaryova has 13 years of experience of advising clients on complex tax issues, including international tax and 

corporate structuring with the use of foreign jurisdictions in Georgia and Ukraine, corporate restructuring, including within 

cross - border transactions of multinational companies. Anna is also experienced in negotiation and drafting contracts 

in international financing projects, representing clients` interests in a wide range of M&A transactions, including those 

related to the sale and purchase of banks and financial institutions, as well as banks` reorganization; consulting clients 

on issues of foreign investments, corporate governance, creation and liquidation of legal entities, employment law issues, 

and restructuring of distressed assets. She holds Master of Law degree with honor from Kyiv Shevchenko University. 

She is a licensed attorney since 2007, Member of the Ukrainian Bar Association and Attorneys` Association of Ukraine. 

Recommended by the Legal 500: Europe, Middle East & Africa 2014 in Corporate and M&A. 

Zoe Kokoni 

Director at Eurofast 

T: +357 22 699 222 

Email: zoe.kokoni@eurofast.eu 

Zoe is a Director at Eurofast Taxand Ltd specializing in tax, payroll and labour issues. Zoe has extensive experience in Greek, 

Bulgarian and Cypriot immigration rules. She deals with citizenship and residency permits issues, provides advisory services 

to expatriates on taxation issues and employee benefits as well as social security issues. Zoe deals extensively with the payroll 

and employer services division offering services to multinationals as well as to regional companies in South East Europe 

and Eastern Mediterranean. Zoe is a member of Taxand Global Compensation Service line and is the Head of our Eurofast 

representation in a number of associations in Cyprus and Greece. Zoe is fluent in English and Greek. 

What a difference the Brexit vote has already made. 

This time last year we were anticipating, with some 

certainty, various employment-related proposals from 

an established government. Now, what lies ahead is 

much less predictable, given a different prime minister, 

the prospect of Brexit and renewed calls for increased 

delegationofpowersamongstthedevolvedgovernments,if 

not independence. In addition, the drain on government 

resourcescausedbyBrexitpreparationsisalreadyresulting 

in delays to legislation and consultations. 




Brexit 

female employees in each quartile pay 

band of the workforce. 

are steps to tighten the supervision of 

picketing, longer advance notice of strikes, 

In February 2017 the UK Supreme Court 

refused permission to appeal and we 

The outcome of last year’s EU referendum 

did not result in any immediate changes to 

UK employment law and is unlikely to do 

so for some two years. The prime minister 

has committed that “as we translate the 

body of European law into our domestic 

regulations, we will ensure that workers’ 

rights are fully protected and maintained”. 

However, whilst no employment law 

changes are envisaged in the short-term, 

of immediate concern to many employers 

is the impact Brexit may have on the 

movement of workers. It is currently 

unclear how immigration will be managed 

post-Brexit, although the indications are 

that new controls on European immigration 

will seek to accommodate an ongoing need 

for skilled and seasonal workers. 

Gender pay reporting 

Addressing a reducing but persistent 

gender pay gap has been on the 

government agenda for some time. 

Regulations taking effect in April 2017 

require larger employers in the private 

sector to report on their gender pay gap. 

There are similar regulations covering 

public sector employers operating in 

England. 

The regulations require employers to 

publish the difference between the median 

and mean average hourly rate of pay 

paid to male and female employees; the 

difference between the median and mean 

average bonus paid to male and female 

employees; the proportions of male and of 

female employees who receive bonuses; 

and the relative proportions of male and 

In the private sector, employers’ first gender 

pay reports will have to be published no 

later than 4 April 2018, based on hourly pay 

rates as at 5 April 2017 and bonuses paid 

between 6 April 2016 and 5 April 2017. The 

public sector regulations will require the 

first pay reports to be published no later 

than 30 March 2018, based on hourly pay 

rates as at 31 March 2017 and bonuses paid 

between 1 April 2016 and 31 March 2017. 

For private sector employers, there is no 

specific penalty for non-compliance. A key 

incentive is the risk of adverse publicity and 

reputational damage. However, compliance 

is also not risk-free, depending upon the 

data collated and how it is presented. 

Employers concerned that publication could 

prompt negative perception may therefore 

choose to volunteer additional information, 

explaining the context of any pay gap and 

how they are responding. 

Labour law developments 

Changes affecting the way trade unions 

organise industrial action came into force 

on 1 March 2017. These Trade Union 

Act provisions are aimed at stopping 

unrepresentative strike action, such as 

where disruption occurs despite a low 

turnout for the strike ballot. A new 50% 

threshold for voter-turnout during strike 

ballots now applies. An additional 40% 

support threshold applies for industrial 

action in important public services 

(including some health, education, fire, 

transport and border security services) 

where the majority of those entitled to vote 

are normally engaged in the provision of 

such services. Accompanying these changes 

changes to the ballot paper and the reballoting 

of ongoing disputes. 

The balloting changes are anticipated to 

result in more focused, and possibly fewer, 

ballots, as trade unions seek to ensure the 

new thresholds are met. It is conceivable, 

however, that alternative forms of protest 

may also manifest where a minority 

of workers harbour strong grievances 

which are not supported more widely 

by colleagues. In addition, unions may 

challenge some of the changes on human 

rights grounds and the Welsh government 

is also disputing the application of some to 

Welsh devolved services. 

The way in which trade unions operate 

has also come under recent government 

scrutiny. The result is a series of measures 

which will introduce new public sector 

check-off arrangements (where the 

employer deducts union subscriptions 

from pay), reporting on public sector facility 

time and an extension of the role of the 

Certification Officer (a form of regulator for 

trade unions). A phased implementation of 

these changes will take place over this year 

and next. 

Hot topic litigation 

The calculation of holiday pay has been a 

significant and high-profile employment 

law issue before the courts over recent 

years. The critical question under review 

was whether UK legislation could be read 

to conform with EU requirements in terms 

of what elements of pay fall due during 

periods of statutory holiday. 

now know that representative resultsbased 

commission and non-guaranteed 

overtime (overtime which workers are 

contractually required to perform) must 

be included in the calculation of holiday 

pay for the first four weeks of holiday 

under the Working Time Regulations. 

However, the position with respect to 

truly voluntary overtime (overtime 

which workers are not contractually 

required to perform) remains unclear. 

Although there are a number of first 

instance tribunal decisions which do 

suggest that truly voluntary overtime 

should be included, there is no binding 

UK authority on the point. 

The other emerging hot topic relates 

to the employment status of workers, 

typically in the gig economy. A tribunal 

has ruled that two Uber drivers who 

brought test cases against the company 

were ‘workers’, not independent 

contractors, and were therefore entitled 

to holiday pay and to be paid at least 

the national minimum wage while 

working. 

In UK law, having ‘worker’ status is 

a passport to a range of employment 

rights such as the national minimum 

wage, holiday pay and access to a 

pension scheme, although the full 

array of employment rights, including 

statutory sick pay and protection 

against unfair dismissal, is reserved 

for the narrower category of workers 

commonly referred to as ‘employees’. 

Uber is appealing this decision. 

Two further cases, one at first instance 

involving a cycle courier and the other 

in the Court of Appeal involving a self- 




employed plumber, were also successful 

in claiming ‘worker’ status. 

At the same time, the government and 

MPs are conducting separate reviews 

into new forms of work, including the 

gig economy and worker status issues. 

There are also concerns that the growth 

in self-employment is reducing national 

tax revenue, which may result in a 

defensive response from the Treasury. 

Organisations reliant on contractors, 

freelancers, agency workers and the 

self-employed need to ensure that their 

staffing models keep pace with change 

in this area. 

A national living wage 

In 2016, the national minimum wage 

rate in UK increased significantly for 

workers aged 25 and over, with the 

introduction of a supplement the 

government termed, “the National 

Living Wage”. This increment was 

accompanied by a promise of further 

rises in the following four years, the first 

of which takes effect from 1 April 2017, 

raising the statutory minimum pay level 

to £7.50 per hour for those aged 25 and 

to £7.05 for 21 to 24 year olds. 

Applying these revised minimum pay 

rates has been a challenge for many 

UK employers. Employers need to be 

careful if they plan to vary employees’ 

existing terms and conditions to absorb 

the higher rate national living wage. 

Depending on the approach taken, such 

actions could be challenged by staff as 

unlawful. 

Employment tribunal 

changes 

There is one aspect of employment 

tribunal practice that has dominated 

the headlines in recent years and that 

is the introduction of tribunal fees. 

There is no doubt that the government 

is coming under increasing pressure to 

justify current fee-levels. In January 

2017 it revealed the outcome of its fee 

review and launched a consultation 

on new proposals to change the fees 

remission scheme. The planned changes 

are relatively minor and fall a long way 

short of satisfying those who have called 

for an overhaul of the fees regime. 

That fight continues on 27 March, when 

the Supreme Court hears Unison’s 

appeal against the rejection of its 

legal challenge by the Court of Appeal. 

Although the government acknowledges 

that “there does appear to be evidence 

that fees have discouraged some people 

from bringing proceedings” it states that 

there is “no conclusive evidence that 

anyone has been prevented from doing 

so.” 

Of more immediate impact is the 

introduction of a new online database 

of employment tribunal decisions 

allowing new decisions of the tribunal 

to be viewed online. Previously, the 

fact a claim has been pursued and 

the names of the parties required a 

trawl through paper documents held 

centrally at Bury St Edmunds, meaning 

many cases passed unnoticed by the 

wider public. Employers and claimants 

should be prepared for increased press 

interest and the potential use of such 

information by both sides to support 

their own contentions. 

Boosting apprenticeship 

funding 

A high-profile manifesto pledge of the 

UK government on re-election in 2015 

was the improvement and expansion 

of apprenticeships over a five year 

period. Pivotal to the government 

plans for apprenticeship growth is the 

question of funding and to generate 

greater financial support, from April 

2017, an apprenticeship levy is to be 

introduced for employers with a payroll 

bill exceeding £3 million. The levy, of 

0.5% of the salary bill, will be collected 

through the employer’s normal PAYE 

Martin Warren 

Partner at eversheds sutherland 

T: +44 207 919 4745 

systems, alongside usual income tax 

and national insurance contributions. 

Employers paying the levy will have full 

access to their contributions to fund 

their apprenticeship needs but it also 

envisaged that many will not utilise 

their contributions in full, leaving a 

surplus the government can apply for 

the benefit of others, especially smaller, 

non-levy paying organisations. 

In summary, while it is true that Brexit 

is diverting the government’s attention, 

it is also apparent from the above that 

there is still much to occupy employers 

and their lawyers in the interim. 

Martin is a Partner and Head of Eversheds Human Resources Group. Martin has an excellent track record, including 

experience of restructuring and redundancy exercises conducted in the teeth of opposition from trade unions. Martin has 

recently provided advice on European Works Councils, international framework agreements and issues arising out of global 

labour. He is currently working with a number of large corporations in relation to restructures, redundancy, industrial action 

and related collective issues. He has worked closely with the CBI on employment policy for 20 years and is regularly asked for 

expert comment by the media on these issues. 

Email: martinwarren@eversheds-sutherland.com 




Purchasing Residential Apartments Off-Plan 

Gbolahan Elias, Lynda Chinweokwu, Pelumi Asiwaju and Tomilehin Babafemi 

Introduction 

Developers in Nigeria have turned to 

off-plan sales of properties as a means of 

funding property development without 

recourse to bank financings and their high 

interest rates. In urban cities, residential 

and mixed developments sponsored 

by State Governments (including PPP 

arrangements) or private developers more 

often than not utilise varied forms of offplan 

sale arrangements. The affordability 

and relative payment flexibility that the 

off-plan sale arrangement offers has lured 

many unwary buyers to purchase off-plan 

property without adequate consideration of 

the legal and practical implications of such 

investment. This article gives an overview of 

the legal regime for off-plan property sales 

in Nigeria, and some risks and mitigants 

that should be considered before buying an 

off-plan property. 

Legal Regime 

Nature of Interest 

In Nigeria, all land comprised in the territory 

of each State is vested in the Governor of 

that State. The Governor holds the land 

in trust and administers it for the use and 

common benefit of all Nigerians. Sections 

1 of the Land Use Act 1978 (“LUA”). The 

highest interest that can be held over land 

is a right of occupancy. Ss. 5 and 6 LUA; 

Nkwocha v. Governor of Anambra State (1984) 

6 SC 404. An agreement to buy off-plan 

property is, in effect, an agreement to buy 

the right of occupancy in that property. 

Such an agreement is required by law to be 

in written form in other to be enforceable 

(s. 4 Statutes of Fraud Act, 1677). In practice, 

off-plan purchases usually entail having 

two separate agreements -- one contracted 

before or during construction of the 

property and the other after completion. 

The first agreement evidences the buyer’s 

agreement to buy a futuristic property 

while the second agreement evidences 

the transfer of proprietary interests in the 

property to the buyer. It is also possible 

to have the two agreements executed 

before or during construction but the 

second document will be escrowed until 

the property, and payment of the purchase 

price, is completed. 

By law, any alienation of a right of 

occupancy requires the prior consent of the 

Governor of the State where the property 

is located. (See s. 22 LUA) Two pertinent 

questions that arise in off-plan sale 

transactions are (i) whether the Governor’s 

consent is required for the sale; and (ii) 

when to apply for and obtain the consent of 

the Governor. The answer is that a property 

bought off-plan requires the consent of 

the Governor but only when the right of 

occupancy is transferred, that is at the 

stage when the second agreement becomes 

effective. 

The position is that the first agreement is 

nothing more than an agreement to sell the 

right of occupancy and does not transfer 

the legal title to the right of occupancy 

in the property. That transaction does 

not therefore require the consent of the 

Governor. This position was affirmed in 

International Textiles (Industries) Nigeria 

Limited v. Aderemi (1999) NWLR, (Pt 614) 

268. The second agreement takes effect 

after completion of the property and it is 

calculated to transfer the seller’s right of 

occupancy in the property to the buyer. 

This second agreement constitutes the 

alienation of the seller’s interest and 

therefore requires the consent of the 

Governor. 

In off-plan sale transactions, the specific 

property which is the subject-matter of the 

sale may not be in existence at all at the 

time of the first agreement, or, it may be 

in varying stages of construction. Where 

the property does not yet exist in any form 

whatsoever, the buyer does not acquire any 

proprietary interest in the property with the 

possible exception for the common areas 

on the ground floor. However, as soon as 

construction commences and the property 

becomes identifiable, the buyer acquires 

an equitable interest in the property by 

virtue of the first agreement. Dantata v. 

Dantata (2002) NWLR (Pt. 756) 144. So, even 

though the right of occupancy still remains 

with the seller, seller must deal with the 

property in the interest of the buyer. 

This is also the case for a property that is 

partially constructed at the time of the first 

agreement. In addition, if upon completion 

of the property, the seller fails to transfer 

the right of occupancy to the buyer, the 

buyer can ask the court to compel the seller 

to transfer the property to him. See Isaac 

Gaji v. Emmanuel Paye (2003) NWLR (Pt. 823) 

583. 

Resale 

Another issue that often arises with offthe-plan 

sales of property is whether a 

buyer of off-plan property can re-sell the 

property before the property is completed. 

The answer is yes, unless there is a specific 

provision in the sale agreement to the 

contrary. As stated previously, on the basis 

of the first agreement, the buyer acquires 

an equitable interest in the property as 

soon as it becomes identifiable. That 

equitable interest is property that can be 




re-sold to a third party. The third party will 

significant sums of money will have been 

of the parties. Often times, a contract 

agreed between the parties. In the real 

then have the right to receive the right of 

paid. 

designed for the sale of an undeveloped 

world today, the documentation is not 

occupancy from the original seller when the 

property is completed. Most sellers of offplan 

property will require that their consent 

be obtained before a buyer of off-plan 

property can re-sell the property to a third 

party. This is because what the seller would 

prefer ideally is to control the sale, refund 

the money to the first buyer and then resell 

to the second buyer at a higher price. The 

price is typically higher once the asset has 

actually been built. 

In some cases, a re-sale is expressly 

prohibited by the seller. In such cases, a 

buyer who no longer wishes to complete 

the purchase can terminate the agreement 

and will be entitled to a refund of monies 

paid (less penalties). Most times, a refund 

is given only after the seller has found an 

alternative buyer for the property. 

Risks and Mitigation 

Insolvency of the seller 

In the intervening period between the 

execution of the first and the second 

agreements, legal ownership of the 

property continues to rest in the seller. If 

the seller becomes insolvent during that 

period, the property still remains part of 

the seller’s estate available for distribution 

to its creditors, subject to the buyer’s 

equitable interest. The buyer will have 

to prove as an unsecured creditor in the 

insolvency proceedings to recover any 

sums paid to the seller. Because an off-plan 

sale generally allows the buyer to pay by 

instalment on the occurrence of specified 

milestones, risk is managed by paying only 

a little at a time so that a physical asset 

in which the buyer will own the equitable 

interest will be in existence by the time 

Where the property is not ascertainable, 

the buyer may have some protection if the 

deposit or part-payment is paid into a trust 

account of the seller created specifically 

for the purpose. Funds in trust accounts 

are generally insolvency-remote. However, 

this is difficult in practice and will not really 

achieve the developer’s objective of building 

the property using the buyer’s deposits and 

installment payments without having to 

borrow from bankers to do so. 

Permits 

Developers sometimes advertise off-plan 

sales of property which is yet to have 

planning or development approvals from 

government agencies. In Lagos State for 

example, the cost of obtaining the requisite 

permit can be more than ten percent (10%) 

of the value of the undeveloped property. 

Sometimes, developers will commence 

off-plan sales of properties with the 

expectation to fund the application for the 

required permits out of the proceeds of 

the sales. A buyer who invests in such offplan 

property faces a real risk of losing the 

investment if the permits are not granted. 

Insurances for such risks are rare. 

Proper “due diligence” is a critical mitigant 

for this risk. The buyer should not only 

confirm from the seller that all the 

applicable permits have been obtained 

but should take further steps to verify 

the authenticity of such permits from the 

records of the planning authorities of the 

state where the property is situated. 

Documentation 

Most off-plan sale agreements do not 

adequately address the key expectations 

land or a fully completed property is 

adopted by the parties for an off-plan 

property transaction. At the end, a buyer 

may find that the finished property is a 

far cry from the expectations that he had 

at the time the price was agreed. A buyer 

should resist pressure from the seller to 

accept a “standard” sale agreement for an 

off-plan sale of property or the temptation 

to take short-cuts in a bid to save money on 

lawyer’s fees. 

An off-plan sale agreement should at the 

minimum provide for the following key 

terms: completion time, specification of 

the finished property, type and quality of 

materials, minimum quantity of materials, 

defects liability, power to rescind, insurance, 

events and consequences of default and 

the exact location of the flat within the 

building. It is also ideal for the agreement 

to give the buyer the right to inspect the 

property from time to time to confirm that 

the seller is complying with the agreed 

specification. A detailed sale agreement 

should be negotiated and executed before 

any payment is made in respect of an offplan 

property. 

Prepayments 

Off-plan sale arrangements can be 

terminated at any time before completion 

of the sale. However, it is not in all cases 

of termination that all monies paid by 

the buyer is recoverable. The buyer risks 

losing the monies paid or part of them, 

where the prepayment is considered a 

deposit as opposed to a part payment. A 

deposit is forfeitable where the termination 

results from the buyer’s default while a 

part-payment is refundable subject to any 

penalties (usually 10% -15% of the price) 

fixated on this terminology. It will clearly 

state in what circumstances there will be a 

refund and to what extent. 

Strata Title Law Reform 

The LUA does not expressly recognize 

or regulate the rights of unit owners in 

multi-unit developments to have individual 

beneficial interest over the land on which 

their unit is situate. This has created some 

uncertainties as to the manner by which 

the interests of unit owners over their units 

and the common areas may be recognised 

and registered. A draft model strata title 

statute has been prepared but has not been 

implemented by States in Nigeria. The draft 

model statute recommends among other 

things that a strata development shall be 

capable of being subdivided into units and 

common property to be held under Strata 

Titles. The draft statute also recommends 

that units to be created by a strata plan 

must be designed in such a way that allows 

the boundaries of each unit to be clearly 

ascertained. 

Conclusion 

Off-plan purchases are potentially-useful 

financing tools to enable the development 

of residential apartments without recourse 

to mortgage financing. However, where 

the risks are not adequately assessed and 

mitigation measures taken, an off-plan 

purchase can be a costly liability to a buyer. 

A buyer should ensure that proper “due 

diligence” is done on a proposal to buy offplan 

property and that the recommended 

minimum contractual terms are reflected 

in an off-plan sale agreement before any 

money is paid. 




Gbolahan Elias 

Presiding Partner at G. Elias & Co. 

T: +234 803 402 3878 

Email: gbolahan.elias@gelias.com 

The EU General Court Endorses the Reasoning of 

the European Commission in Relation to Reverse 

Payment Settlements 

Pablo Figueroa and Suzanne Nusselder 

Professor Gbolahan Elias is the presiding partner at G. Elias & Co. He is also a visiting professor of law at Babcock University 

Ilishan. Called to the Nigerian and New York Bars, he is a member of the Chartered Institute of Arbitrators and a Senior 

Advocate of Nigeria. He has led the team on many off-plan real-estate developments 

Lynda Chinweokwu 

Associate at G. Elias & Co. 

T: +234 803 814 2628 

Email: lynda.chinweokwu@gelias.com 

Lynda Chinweokwu is an associate at G. Elias & Co. A member of the Nigerian Bar, her main practice areas are banking and 

real estate. She has over 8 years experience in real estate and project finance work and has acted for high profile domestic 

and international clients in the real estate sector. 

Pelumi Asiwaju 


T: +234 808 737 5534 

Email: pelumi.asiwaju@gelias.com 

Pelumi Asiwaju is an associate at G. Elias & Co. She has experience in real estate work, structuring off-plan land transactions, 

title-to-land investigations, and perfection of titles to land. 

1I. Introduction 

Tomilehin Babafemi 


T:+234 806 380 2023 

Email: tomilehin.Babafemi@gelias.com 

With the Lundbeck Decision, the European Commission’s (the “Commission” and the 

“Decision,” respectively) ended its ten-year investigation on reverse payment settlements 

and found that the Danish pharmaceutical company, Lundbeck, and four generics 

producers had concluded anticompetitive agreements, in breach of Article 101 of the Treaty 

Tomilehin Babafemi is an associate at G. Elias & Co. A member of the Nigerian Bar, her main practice areas are corporate 

and commercial matters. 

1 Pablo Figueroa and Suzanne Nusselder are, respectively, a senior associate and a trainee with Gibson, Dunn & 

Crutcher LLP’s Brussels office. In addition, Pablo Figueroa is a visiting Lecturer at Queen Mary University (London, 

United Kingdom), a guest lecturer at Oxford University and a guest lecturer and senior external researcher at Deusto 

Translaw Research Group. The author is grateful to Fredrik Löwhagen, from Linklaters, Rais Amils, from Clifford Chance, 

Paulius Mencas from Valiunas Ellex and Professors Herbert Hovenkamp, Stephen Calkins and Pablo Ibañez, and to 

Rakhal Zamal, trainee at the Brussels office of Gibson Dunn & Crutcher LLP, for their comments. Any remaining mistake 

is of the authors. The views in this article do not represent those of Gibson, Dunn & Crutcher LLP or its clients. 




on the Functioning of the European Union 

which, according to the Commission, 

and the generic undertakings were at 

issued infringement decisions to a 

(the “TFEU”). 2 According to the Commission, 

provided only “a more limited protection”. 7 

least potential competitors; 12 and (ii) the 

number of companies regarding ‘pay-for- 

this would have allowed Lundbeck to keep 

In particular, Lundbeck had filed a salt 

agreements at issue constituted restrictions 

delay’ agreements over the supply of an 

the price of its drug citalopram artificially 

crystallisation process patent. 8 

of competition by object, in breach of the 

antidepressant. 19 

high. 

On 8 September 2016, the EU General 

Court (the “General Court”) confirmed that 

certain pharmaceutical “reverse payment 

settlements” can constitute a breach of 

the EU antitrust rules (the “Ruling”). 3 Under 

the so-called “reverse payment settlement 

agreements”, an original pharmaceutical 

manufacturer, or “originator”, settles an IP 

challenge from a manufacturer of generics 

by paying the latter to stay out of the 

market. 

According to the Commission, in 2002, 

Lundbeck concluded six agreements 

concerning citalopram with four entities 

active in the production or sale of generic 

medicinal products, namely Generics (UK), 

Alpharma, Arrow and Ranbaxy. Always 

according to the Commission, in return for 

the generic undertakings’ commitment not 

to enter the citalopram market, Lundbeck 

paid them substantial amounts . 9 In 

addition, Lundbeck purchased stocks of 

generic products for the sole purpose of 

destroying them, and offered guaranteed 

prohibition of anticompetitive agreements 

provided for under Article 101 TFEU. 13 

The Commission imposed a total fine of 

€93.7 million on Lundbeck and € 52.2 

million on the generic undertakings. The 

Commission took into consideration the 

length of its investigation (almost ten years) 

as a mitigating circumstance which led to 

fine reductions of 10%. 14 Lundbeck and 

the generic undertakings brought actions 

before the General Court, seeking the 

annulment of the Commission’s decision. 

The Court dismissed the actions brought by 

Lundbeck and the generic undertakings and 

In addition, since 2009, the Commission 

has been continuously monitoring patent 

settlements in order to identify settlements 

which it regards as “potentially problematic” 

from an antitrust perspective, namely those 

that limit generic entry against a value 

transfer from an originator to a generic 

company. The latest report was published 

in December 2015. 20 

III. The Ruling 

II. Background 

According to its website, Lundbeck is 

“ a global pharmaceutical company 

specializing in psychiatric and neurological 

disorders”. 4 These include medicinal 

products for treating depression . 5 From 

the late 1970s, Lundbeck developed and 

patented an antidepressant medicinal 

product containing the active ingredient 

‘citalopram’. 6 

After its basic patent for the citalopram 

molecule had expired, Lundbeck only held 

a number of the so-called “process” patents, 

2 Commission Decision C(2013) 3803 of 19 June 2013 

relating to a proceeding under Article 101 [TFEU] and 

Article 53 of the EEA Agreement, Case AT.39226 — 

Lundbeck (the “Decision”). 

3 See T-472/13 Lundbeck v. Commission [NYR] (the 

“Ruling”). 

4 See, for more detail, http://www.lundbeck.com/ 

global/about-us. 

5 See Ruling, at para. 1. 


profits in a distribution agreement. 10 

In October 2003, the Commission 

was informed of the existence of the 

agreements at issue by the Konkurrence- 

og Forbrugerstyrelsen (the “KFST”, the 

Danish authority for competition and 

consumers). 11 The Commission took over 

the case and, by decision of 19 June 2013, 

made the following findings: (i) Lundbeck 

7 See European Commission Press Release IP/13/563, 

19 June 2013, available at: http://europa.eu/rapid/ 

press-release_IP-13-563_en.htm?locale=en. It should 

be recalled, in this regard, that, according to Article 

27 of the TRIPS (WTO) Agreement, “patents shall be 

available for any inventions, whether products or 

processes, in all fields of technology, provided that they 

are new, involve an inventive step and are capable of 

industrial application”. 


9 See Ruling, at paras. 26; 35; 39; 42-43 and 47-48. 

10 See Ruling, at para. 26; 35; 39; 42-43; 47-48. 

11 See Danish Competition and Consumer 

Authority Press Release 1120-0289-0039/VIS/SEK, 

28 January 2004 , available at: http://www.kfst.dk/ 

Afgoerelsesdatabase/Konkurrenceomraadet/ 

Styrelsesafgoerelser/2004/Undersoegelse-af-Lundbe 

ck?tc=E538038EB1E04A96B9964BE4C0F85F46 (Only 

available in Danish) 

confirmed the fines imposed on them by 

the Commission. 15 

After the Lundbeck case, in 2013 and 

2014, the Commission imposed fines on 

companies in two other reverse settlement 

investigations – one concerning fentanyl, 

a pain-killer 16 , and the other concerning 

perindopril, a cardiovascular medicine. 17 

The Fentanyl decision was not appealed. 

Several appeals against the Servier decision 

are pending before the General Court. 18 

In 2016 in the Paroxetine Investigation, the 

UK Competition and Market Authority 

12 See Decision at paras. 610 ff. 

13 See Decision at paras. 647 ff. 

14 See Decision, at paras. 1306, 1349 and 1380. 

15 See Ruling, Operative part. 

16 See European Commission Press Release 

IP/13/1233, 10 December 2013, available at: http:// 

europa.eu/rapid/press-release_IP-13-1233_en.htm. 

17 See European Commission Press Release IP/14/799, 

9 July 2014, available at: http://europa.eu/rapid/pressrelease_IP-14-799_en.htm. 

18 See OJ L C-462/25, 22.12.2014 

First, like the Commission, the Court 

analysed whether Lundbeck and the 

generic manufacturers concerned were 

indeed potential competitors at the time 

the agreements at issue were concluded. 21 

The General Court made the following 

findings in this regard: 

In order for an agreement to restrict 

potential competition, it must be 

established that, had agreement not 

been concluded, the competitors would 

have had “real concrete possibilities” of 

19 See Case CE/9531-11 Paroxetine 12 February 

2016. For a comment on the case see Ezrachi, A., EU 

Competition Law: An Analytical Guide to the Leading 

Cases, 5 th Edition, Bloomsbury, 2016, 396 

20 See, European Commission, “6th Report on the 

Monitoring of Patent Settlements (period: January- 

December 2014)”, 2 December 2015, available 

at: http://ec.europa.eu/competition/sectors/ 

pharmaceuticals/inquiry/patent_settlements_report6_ 

en.pdf. 

21 See Ruling. The General Court separately analysed 

each agreement. See, inter alia, in relation to Lundbeck 

and Merck, para. 225; in relation to Lundbeck and 

Arrow, paras. 266-270, in relation to Lundbeck and 

Alpharma, para. 290 and, in relation to Lundbeck and 

Ranbaxy, para. 330. 




entering that market. 22 The Court held 

infringes Article 345 TFEU, according to 

Second, the Court analysed whether the 

be alternative and not cumulative. 

that the Commission had carried out a 

which “[t]he Treaties shall not prejudice the 

Commission was entitled to conclude that 

Otherwise for a settlement to be 

careful examination, as regards each of the 

rules in the Member States governing the 

the agreements at issue constituted a 

lawful it must not delay entry (which 

generic undertakings concerned, of the real 

system of property ownership”. Thus, Ibañez 

restriction of competition by object, a point 

probably is enough, in and of itself, to 

concrete possibilities they had of entering 

Colomo has noted that “Lundbeck departs 

to which we will turn next. 

avoid the antitrust concern, namely, a 

the market. In doing so, the Commission 

from the principle whereby an agreement 

delayed entry of generics) and it must 

relied on evidence such as the investments 

already made and the steps taken in order 

to obtain a marketing authorisation 23 

Moreover, the Court noted that in general 

the generic undertakings had several 

real concrete possibilities of entering the 

market at the time the agreements at issue 

were concluded. 24 Those possible routes 

included, inter alia, launching the generic 

product with the possibility of having to 

face infringement proceedings brought by 

Lundbeck (i.e., the so-called launching ‘at 

risk’). 25 More precisely, the General Court 

was of the view that “the presumption of 

validity cannot be equated with a presumption 

of illegality of generic products validly placed 

on the market which the patent holder deems 

to be infringing the patent”. 26 Consequently, 

the Court, continued, “’at risk’ entry is not 

is not restrictive by object where it remains 

within the substantive scope of an intellectual 

property right”. 28 This principle would derive 

from the Eraw-Jacquery, 29 Coditel II, 30 BAT 

v. Commission and Nungesser 31 rulings of 

the ECJ. Ibañez Colomo’s point becomes 

particularly clear at para. 335 of the 

(Lundbeck) Ruling where the General Court 

expressly noted that “even if the restrictions 

set out in the agreements at issue fall within 

the scope of the Lundbeck patents – that is to 

say that the agreements prevented only the 

market entry of generic citalopram deemed 

to potentially infringe those patents by the 

parties to the agreements and not that 

of every type of generic citalopram – they 

would nonetheless constitute restrictions on 

competition ‘by object’ since, inter alia, they 

prevented or rendered pointless any type of 

challenge to Lundbeck’s patents before the 

IV. Conclusions: On 

Reverse Payments as 

Restrictions of 

Competition by Object 

The Lundbeck ruling brings a number of 

what Donald Rumsfeld would probably 

refer to as “known unknowns”, that is things 

we know we do not know, in relation to 

reverse payment settlements. 33 Indeed, 

the findings of the Lundbeck ruling can be 

summarised as follows: 

1. There are certain patent settlements 

which are likely to be considered 

compatible with Article 101 TFEU. This is 

the case of settlements: 

be necessary (i.e., it probably needs to 

meet the requirements of an ancillary 

restraints defence, more on which 

below) and the payment might be 

linked to the strength of the patent “as 

perceived by each of the parties”. Such 

an intrinsically subjective requirement 

appears to the writer as particularly 

complicated to administrate and at 

odds with the objective nature of Article 

101(1) TFEU. It would appear that the 

Court is encouraging conversations 

such as the following: “let’s settle, but 

only if we can ensure the settlement 

reflects (and comes across as reflecting) 

your and my perception of the strength 

of the patent (and a number of other 

cumulative requirements my lawyers and I 

need to meet), otherwise we might have an 

antitrust concern”. 

unlawful in itself”. 27 

As rightly noted by commentators, these 

considerations introduce a further layer 

of complexity in the already intricate 

relationship between EU Competition law 

and IP law. In addition, since the right to 

exclude lies at the core of any IP right, it can 

be argued that the Commission’s findings 

22 See Ruling, at para. 100. See further Case T-360/90 

E.ON Ruhrgas and E.ON v Commission, at para. 98. 


24 See Ruling, at para. 97. See further Decision, at para. 

635. 

25 See Ruling, at paras. 121. 

26 See Ruling, at paras. 97. 


national courts, whereas, according to the 

Commission, that type of challenge is part 

of normal competition in relation to patents 

(recitals 603 to 605, 625, 641 and 674)”. 32 

28 See Ibañez Colomo, P., “GC Judgment in Case 

T-472/13, Lundbeck v Commission: on patents and 

Schrödinger’s cat”, at Chillin’ Competition, 13 September 

2016, available at: https://chillingcompetition. 

com/2016/09/13/gc-judgment-in-case-t-47213- 

lundbeck-v-commission-on-patents-andschrodingers-cat/. 

29 See Case 27/87 SPRL Louis Erauw-Jacquery v La 

Hesbignonne SC. 

30 See Case 262/81 Coditel SA, Compagnie generale 

pour la diffusion de la television, and others v Cine-Vog 

Films SA and others. 

31 See Case 258/78 Nungesser v Commission. 

32 See Ruling, at paragraph. 335. 

a. In which, in the words of the 

General Court, “(i) payment is linked 

to the strength of the patent, as 

perceived by each of the parties; (ii) 

[payment] is necessary in order to 

find an acceptable and acceptable 

and legitimate solution in the eyes 

of two parties and (iii) [payment] 

is not accompanied by restrictions 

intended to delay the market entry 

of generic”. 34 

The inclusion of the word “and” is 

worrying. The requirements set out 

in the preceding paragraph should 

33 See Rumsfeld, D., Known Unknown: A Memoir, 

Sentinel, 2011. 


b. Qualifying for an ancillary restraints 

defence. I.e., settlements in 

relation to which the parties to the 

settlement (for the burden of proof 

will be on them) can demonstrate 

they are objectively necessary and 

proportionate in order to defend 

their IP rights. 35 


which are likely to be considered 

incompatible with Article 101 TFEU as 

restrictions of competition by object. The 

ruling is not particularly clear in this 

regard. 

35 See Ruling, at paras. 451 ff, in particular, at paras. 

458 and 460. 




a. A literal reading of paragraph 

invalid or not infringed, and the 

5. According to the Court, “the 

for which it might represent payment 

334 of Lundbeck could potentially 

higher the damage to the originator 

agreement at issue transformed the 

and the lack of any other convincing 

make “problematic” each patent 

undertaking resulting from successful 

uncertainty in relation to the outcome 

justification. The existence and degree of 

settlement “where they [provide] 

generic entry, the more money it 

of such litigation into the certainty 

any anticompetitive consequences may 

for the exclusion from the market of 

will be willing to pay the generic 

that the generics would not enter the 

also vary among industries”. 47 

one of the parties, which was at the 

very least a potential competitor of 

the other party, for a certain period, 

and where they were accompanied 

by a transfer of value from the patent 

holder to the generic undertaking 

liable to infringe that patent (‘reverse 

payments’).” 

b. A more holistic reading of Lundbeck 

would confine the Commission’s 

finding to the facts of the case. Even 

though it is difficult to pinpoint 

what the court considered to be the 

decisive factors when stating that 

a reserve settlement constituted a 

restriction by object, the following 

factors appear to have been 

relevant: 

1. The allegedly “disproportionate 

nature” of such payments “combined 

with other factors, such as the fact 

that the amounts of those payments 

seemed to correspond at least to 

the profit anticipated by the generic 

undertaking”. 36 Referring to the US 

Supreme Court ruling in Actavis, 37 

the Court indicated that “the size 

of a reverse payment may constitute 

an indicator of the strength or 

weakness of a patent”. 38 According 

to the Commission “the higher the 

originator undertaking estimates 

the chance of its patent being found 

36 See Ruling, at paras. 354; 355. 

37 See Federal Trade Commission v. Actavis, 570 US 

(2013). 

undertaking to avoid that risk”. 39 

2. Indeed, the correspondence 

between the amount of the 

payment that seemed and the 

profit anticipated by the generic 

undertakings if they had entered 

the market. 40 According to the 

Commission “the value which 

Lundbeck transferred, took into 

consideration the turnover or profit 

the generic undertaking expected if it 

had successfully entered the market”. 

41 

3. The absence of provisions allowing 

the generic undertakings to launch 

their product on the market upon 

the expiry of the agreement without 

having to fear infringement actions 

brought by Lundbeck. 42 

4. The presence in those agreements 

of restrictions going beyond the 

scope of Lundbeck’ s patents, 43 

such as restrictions with regard to 

citalopram products that could have 

been produced in a non-infringing 

manner. 44 

39 See Decision, at para. 640. 

40 See Ruling, at paras. 354; 383; 414. 

41 See Decision, at paras. 6; 788; 824; 874; 962; 1013; 

1087. 

42 See Ruling, at paras. 354; 383; 410. 


market which may also constitute a 

restriction on competition by object 

when such limits do not result from 

an assessment, by the parties of 

the merits of the exclusive right at 

issue, but rather from the size of the 

reverse payment which, in such case, 

overshadows that assessment and 

induces the generic undertaking not to 

pursue its independent efforts to enter 

the market”. 45 The generics thus no 

longer had an incentive to continue 

their independent efforts to enter 

the market 46 . 


which (presumably) are considered to 

be incompatible with Article 101 TFEU 

as restrictions of competition by their 

effects. Hic sunt dracones. More precisely, 

given that none of the pay-for-delay 

decisions dealt with by the Commission 

conducted an effects analysis, we are 

left without guidance as to how that 

analysis will be conducted. Again, a 

known unknown. The Commission’s tenyear 

investigation on reverse payment 

settlements has not shed light to how 

to conduct an effects analysis under 

Article 101(1) TFEU. We are left, perhaps, 

with the findings of the US Supreme 

Court in Actavis, according to which, “the 

likelihood of a reverse payment bringing 

about anticompetitive effects depends 

upon its size, its scale in relation to the 

payer’s anticipated future litigation costs, 

its independence from other services 


Moreover, to the extent that the case for 

restrictions of competition by object is 

administrability, this author cannot but 

note that the Lundbeck ruling does not 

constitute a positive evolution. The General 

Court noted that “it is established that certain 

collusive behaviour […] may be considered so 

likely to have negative effects, in particular on 

the price, quantity or quality of the goods and 

services, that it may be considered redundant, 

for the purposes of applying Article 101 TFEU 

to prove that they have actual effects on the 

market”. 48 However, the Decision has 464 

pages. Given that the Fentanyl and Servier 

decisions occupy 147 and 813 pages, 

respectively, in investigations that lasted for 

almost ten years, 27 months and 5 years 

(again, respectively), one cannot but wonder 

whether the Commission’s resources would 

have been better spent analysing the actual 

effects of the agreement and not defending 

a legal category 

47 See Federal Trade Commission v Actavis 570 US 

2013. 

38 See Ruling, at paragraph 353. 

44 See Decision para. 693. 


48 See Ruing, at para. 341. 




Pablo Figueroa 

Senior Associate at Gibson & Dunn 

T: +32 2 554 72 07 

Email: pfigueroa@gibsondunn.com 

Recent Developments – Company Formations 

in Greece 

Corina Fassouli-Grafanaki 

Pablo Figueroa is a senior associate in the Brussels office of Gibson, Dunn & Crutcher LLP with more than ten years of 

experience working in European and National Competition law. A graduate from the University of Deusto (Bilbao, Spain), the 

College of Europe (Bruges, Belgium) and the Cornell Law School (Ithaca, New York), Pablo has particularly wide experience 

in EU and Spanish cartel law and litigation. He has litigated before the EU Courts and the Spanish Courts. Pablo lectures on 

Competition law at Queen Mary University the Universidad de Deusto, is an editor of World Competition, Law and Economics 

Journal (Kluwer) and is recommended by Legal 500 EMEA 2015. 

The Greek Private Capital Company and recent legislative 

initiatives to meet current business requirements 

According to the Greek legislation, the 

following types are the main capital 

company formations for conducting 

business in Greece and are usually 

preferred over entrepreneurships, in 

principal due to the limited liability of 

their shareholders : (i) the Greek limited 

liability by shares company (“Societe 

Anonyme” - “SA”), (ii) the limited liability 

company (“EPE”), (iii) the Private Capital 

Company (“PCC”- “I.K.E.”) and (iv) the 

European company (“Societas Europea” 

-”SE”). While the SA has been for years 

the most common company formation in 

Greece, recently the P.C.C. has started to 

gain significant ground due to fewer formal 

requirements for incorporation that enable 

its operation literally few days after its 

registration at the Business Register. 

Introduced in Greece in virtue of the law 

n. 4072/2012, the P.C.C is incorporated 

pursuant to a simple private agreement 

signed by its founders. The articles of 

association are included in the agreement 

and can be customized according to the 




special needs or objects of the desired 

treasury or bank account within 30 days of 

the annual financial statements should be 

The rest of corporate documentation 

business. The agreement for the company’s 

registration. 

also filed with the Business Register and 

(minutes of General Meetings of the 

incorporation should then be filed with the 

competent – determined by the place of 

the company’s registered seat and main 

business activity - Business Register and 

the whole procedure for the company’s 

establishment is completed at the One- 

Stop-Shop department of the Business 

Register, within 10-15 days after the 

submission of the required documentation. 

Simultaneously with the company’s 

registration at the Business Register, the 

company is also directly registered at the 

Greek Tax Authorities, obtaining a Tax 

Identification Number, which is necessary 

for starting conducting business according 

to its objects. For any amendments to the 

articles of association or for any shares 

sale and purchase agreements thereof 

during the lifetime of the company, a simple 

private agreement suffices; amendments 

to the articles of association should be also 

filed with the Business Register and they 

come into force upon their registration. 

Regarding management, the P.C.C. is 

managed by one or more administrator(s), 

whose powers of representation are 

determined in the articles of association 

and by the shareholders’ resolutions. The 

administrator should be a natural person/ 

individual, Greek or European citizen 

holding a Tax Payer Identification number 

in Greece, and in case of a non-European 

resident, a Visa is normally requested 

(Visa-D for business executives), according 

to the provisions of law n. 4251/2014 

(Greek Immigration and Social Integration 

Code). The administrator should be also 

registered at the Greek social security 

system and pay the respective social 

security contributions. The administrator is 

liable towards the company for any breach 

of the company’s articles of association, of 

the law or of the shareholders’ resolutions, 

as well as for any damage caused as a 

result of breach of duties. Such liability does 

not exist in case of actions or omissions 

then approved by the shareholders. Greek 

Law n. 4403/2016, which incorporated into 

the Greek legal system the EU Directive 

2013/34/EC, has recently introduced several 

developments concerning the commercial 

companies’ financial statements by 

regulating their preparation and 

publication based on their classification, 

aiming at the facilitation of cross-border 

investment and the improvement of 

Union-wide comparability and public 

confidence in financial statements and 

reports through enhanced and consistent 

specific disclosures. This regulation, which 

is applicable to all capital –by shares – 

companies, attempts to balance between 

the interests of the addressees of financial 

statements and the interest of undertakings 

in not being unduly burdened with 

reporting requirements. 

The main advantages of the P.C.C. and 

the flexibility for its incorporation and 

operation are obvious when compared with 

shareholders and minutes/resolutions 

of the Board of Directors) do not have 

to be notarized, except for the General 

Meetings of the Shareholders in case of 

one sole shareholder. The SA is managed 

by a Board of Directors, consisted of 

at least three members, which may be 

either individuals or legal entities (in such 

case for the exercise of management a 

representative should be appointed). There 

is not any restriction as per the nationality 

or residence of the members of the Board 

of Directors. It should be noted that for 

some specific activities, SA is the only 

available company type according to the 

law and several parameters, beyond the 

abovementioned basic framework, should 

be taken into consideration in order to 

decide upon between P.C.C. and S.A. 

The Business Register in Greece has been 

recently reformed providing access to the 

existing data base via its website (www. 

businessregistry.gr), which can be used 

The articles of association of a P.C.C, any 

based on a lawful resolution taken by the 

the corresponding legal requirements for 

both by the registered businesses and 

amendments thereof and the shareholders’ 

shareholders or on reasonable business 

the incorporation of a Societe Anonyme 

the public. Until the full integration of all 

resolutions could be drafted in one of the 

decision, conducted in good faith, based on 

(“SA”); governed by mandatory legislation 

Greek companies/businesses at the general 

official EU languages, but the Greek version 

sufficient information and only towards the 

(“ius cogens”), i.e. the codified law n. 

Business Registry at the end of year 2012, 

shall prevail concerning relations between 

corporate interest. If more managers acted 

2190/1920, the Greek SA is incorporated 

different registration systems and registers 

the company and its shareholders on one 

together, they are jointly and severally 

through a notarial deed, executed 

existed for each company/business type. 

hand and third parties on the other hand. 

liable. The shareholders may discharge the 

before a notary public in Greece, which 

Thereupon, the reformation of the Business 

The founders of a P.C.C. resolve upon the 

administrator(s) from any and all liability 

includes the company’s articles of 

Register has facilitated significantly the 

amount of the share capital, without any 

during the annual General Meeting of the 

association. The share capital should be 

capability of the companies to comply with 

limitation as per its minimum amount (this 

shareholders which resolves upon the 

always indicated in money even if the 

their reporting obligations under the law 

could be even zero). Since the previously 

approval of the financial statements of the 

shareholders’ contributions consist in 

through its portal (www.businessportal.gr) 

imposed tax of 1% on the company’s initial 

previous fiscal year. 

kind. The share capital, which should be at 

but has also enhanced the actual publicity 

share capital has been abolished (according 

to law n. 4254/2014, yet remaining for any 

share capital increase), actually there are 

not any restrictions towards determining 

the initial share capital, apart from that 

this should be deposited at the company’s 

As per the reporting requirements, apart 

from obligation to file with the Business 

Register any amendment to the articles of 

association as well as any resolution taken 

by the shareholders or the administrator 

that should be filed according to the law, 

least 24.000,00 Euro, must be paid either 

in cash or in kind within two (2) months 

after registration. After the execution of 

the notarial deed for the incorporation, 

the company should be registered at the 

competent Business Register and upon its 

registration, it acquires legal personality. 

of the companies’ data, as required by 

the law, and thus has reinforced the 

transparency and the security of the 

transactions. Through the platform www. 

businessportal.gr any business can carry 

out the entire procedure for submitting 

a registration request to the Business 




Register, filing the necessary documents 

meet the needs and requirements of the 

and payment of the relevant fees. The 

parties involved and the effective use and 

processing and verification of any request 

exploitation of information collected. 

as well as the completion of registration are 

also conducted electronically through the 

In 2017, Greece while being at the heart 

system. 

of the economic recession affecting all 

financial markets globally and especially 

Recently in virtue of Greek Law n. 

EU, struggles to keep up with the current 

4441/2016, “e-One Stop Shop” has been 

requirements in business activity, by 

introduced. This new, modern institution 

amending its relevant legislation towards 

aims at the incorporation of the most 

the modernization of its corporate, tax 

popular types of companies in Greece, 

and business system thus making great 

through a procedure completed entirely on efforts to further promote productivity, 

an electronic platform practicing techniques investment and employment. Newly 

like “e-ID Authentication Process” (EU REG 

introduced, flexible, corporate forms like 

910/2014), links between other e-platforms 

P.C.C, new institutions and platforms like 

like “TAXIS” (Greek Tax Online Platform) and 

the Business Register where most of the 

taking all necessary actions in order for a 

ordinary corporate actions are completed 

company to be incorporated online, thus 

online, constitute the modern ‘’tools” 

accelerating and facilitating business and 

provided to any entrepreneur who wishes 

corporate activity in Greece. 

to make business in the country, forming 

an effective solution by putting in place 

The combination of a single general 

a flexible framework which can reduce 

Business Register with the establishment of obstacles to the smooth functioning of 

the one-stop-shops for the incorporation of the market, hoping to make Greece an 

companies constitutes a major step towards attractive country not only to visit and 

simplification of the basic procedures of 

explore but also to invest. 

the Greek business environment, aiming to 

Corina Fassouli-Grafanaki 

Managing Partner at Corina Fassouli-Grafanaki & Associates Law Firm 

T: (+30) 210-3628512 

F: (+30) 210-3640342 

Email: korina.grafanaki@lawofmf.gr 

Corina Fassouli-Grafanaki is the Managing Partner of CORINA FASSOULI-GRAFANAKI & ASSOCIATES LAW FIRM, in Athens, 

Greece, founded in 1981. The firm has established a significant presence in Greece in various areas of law, providing both 

advisory and dispute resolution services of high quality in relation to domestic and cross-border transactions. Holding a Law 

Degree from the National Kapodistrian University of Athens, Corina Fassouli-Grafanaki has been a member of the Athens 

Bar Association and a practicing lawyer since 1987. Her areas of practice are mainly corporate law, banking and financial 

institutions, real estate transactions and investments, renewable energy, healthcare/ pharmaceuticals and project finance. 

She is fluent in English, German and French. She is a member of the Commercial Lawyers Association of Athens. 

A Strategic Approach to Effective Workplace 

Investigations 

Christina Silva, Esq. 

Employers often question how they can avoid the impact 

and expenses associated with defending against claims 

raised by employees for misconduct in the workplace. The 

employer wants to take employment action against an 

employee but hesitates to do so because of the risk of costly 

litigation for a claim of wrongful termination. When a 

complaint about employee misconduct is received, or the 

employerbecomesawareofemployeemisconductthrough 

an anonymous source or a demand letter, the employer 

may inquire whether it can go on with “business as 

usual” or be required to take steps to address the alleged 




conduct. In such cases, as well as those in which any claim 

of harassment, discrimination, breach of confidentiality, 

security, or any other form of employee misconduct 

comes to the attention of the employer, the employer’s 

investigativeresponsecanpotentiallyincreaseordecrease 

the employer’s risk of liability. 

Employers are tasked with the duty of 

ensuring its workplace complies with 

federal and state laws which prohibit a 

hostile, discriminatory or retaliatory work 

environment, and which are intended to 

protect employee safety. This duty requires 

the employer to promptly determine 

whether there is any merit to a claim of 

employee misconduct, and effectively act 

to address such misconduct to prevent 

any further recurrence. In addressing 

allegations of improper workplace conduct, 

the manner in which the employer 

responds is of critical importance to 

its ability to assert defenses. A faulty 

investigation can result in the employer’s 

failure to prevent repeated misconduct, 

failure to remedy conduct which violates 

state and federal law, failure to comply 

with its own employment policies against 

harassment, discrimination, retaliation, 

and safety regulations in the workplace, 

and can also result in claims of defamation 

and intentional infliction of emotional 

distress by employees who participated in 

the investigation process. By implementing 

an effective and responsive workplace 

investigation plan, employers can establish 

a defense to such claims and increase the 

likelihood of being successful if faced with 

litigation. 

I. Employer’s Affirmative 

Defense 

The United States Supreme Court has 

determined that investigations of workplace 

harassment 1 are a key component of an 

employer’s response to allegations of 

employee misconduct, providing employers 

with an affirmative defense to vicarious 

liability for a supervisor’s hostile work 

environment where the employer’s action 

does not result in a tangible employment 

action, provided that: (1) The employer 

exercised reasonable care to prevent and 

correct promptly harassment; and (2) the 

employee unreasonably failed to take 

advantage of any preventative or corrective 

opportunities provided by the employer 

to avoid harm otherwise. Burlington 

Industries, Inc. v. Ellerth, 524 U.S. 742, 765 

(1998); Faragher v. City of Boca Raton, 524 

U.S. 775, 807 (1998). 

Employer liability may be premised on 

negligence based on failure to have 

effective policies and procedures for 

addressing employee complaints. See 

Lehmann v. Toys ‘R’ Us, 132 N.J. 587, 621 

1 These guidelines are not limited to charges of sexual 

harassment but also apply to all forms of workplace 

harassment that violate Title VII of the Civil Rights Act of 

1964. EEOC Enforcement Guidelines (1999). 

(1993) (finding that “a plaintiff may show 

that an employer was negligent by its 

failure to have in place well-publicized 

and enforced anti-harassment policies, 

effective formal and informal complaint 

structures, training and monitoring 

mechanisms). An employer may avoid 

liability if its procedures for investigating 

and remediating alleged discrimination are 

sufficiently effective. See e.g., Bouton v. 

BMW of North America, Inc., 29 F.3d 103, 

106 (3 rd Cir. 1994). Through an effective 

investigation, an employer reaffirms 

commitment to, and enforcement of, 

policies against employee misconduct. See 

Ilda Aguas v. State of New Jersey, 220 N.J. 

494 (2015). The goal of deterring employee 

misconduct is promoted by an employer’s 

“responsible efforts to detect, address and 

punish it” to prevent violations. Aguas, 

supra, at 519, citing Burlington, supra, 524 

U.S. at 764; Faragher, supra, 524 U.S. at 

805-06) (Employer may have an affirmative 

defense if it exercised reasonable care 

to prevent and correct misconduct). An 

affirmative defense cannot be asserted by 

employers who fail to implement effective 

anti-harassment policies, and “employers 

whose policies exist in name only.” Aguas, 

supra, at 523; see also Gaines v. Bellino, 173 

N.J. 301, 314 (2002) (finding that employer’s 

due care is demonstrated through effective 

complaint, sensing and monitoring 

mechanisms, and through showing of 

commitment to workplace policies through 

consistent practice). 

An employer’s remedial action is adequate 

if it is “reasonably calculated to prevent 

further harassment. Knabe v. Boury Corp., 

114 F.3d 407, 412, n.8 (3 rd Cir. 1997). 

“The prospect of an affirmative defense 

in litigation is a powerful incentive for 

an employer to unequivocally warn its 

workforce that [harassment] will not be 

tolerated, to provide consistent training, 

and to strictly enforce its policy… [A]n 

employer that implements an ineffective 

anti-harassment policy, or fails to enforce 

its policy, may not assert the affirmative 

defense.” Aguas, supra, at 523. Effective 

remedial measures include the process 

by which the employer arrives at the 

sanction that it imposes on the alleged 

harasser. If the effective measures are 

those reasonably calculated to end the 

harassment, then neither a court nor a 

jury can evaluate the effectiveness without 

considering the entire remedial process…. 

[t]he effectiveness is gauged by the process 

of investigation – including timeliness, 

thoroughness, attitude toward the allegedly 

harassed employee, and the like.” Lehmann, 

supra, at 623; Payton v. New Jersey 

Turnpike Authority, 148 N.J. 524, 537 (1997). 

II. Policy Enforcement 

Through An Effective 

Workplace Investigation 

An investigation is not only worth doing, it 

is worth doing well. An employer’s policy 

against harassment, discrimination and 

retaliation, and policies for the protection 

of its employees, are only as effective as 

the measures utilized to implement and 

enforce such policies. A poorly conducted 

investigation can compound an employee’s 

complaints about wrongful conduct in 

the workplace, and provide evidence 

that the employer knew of unlawful 

conduct and failed to take appropriate 

action to remedy it. A properly conducted 

workplace investigation sends a message to 

employees that the employer is committed 

to enforcing its policies on workplace 

conduct and employee protection. 




A. Employer’s Pit-falls in 

Investigating Employee 

Complaints. 

An employer may be defeated in asserting 

an investigation as an affirmative defense 

if it engages in action or inaction that is 

reflective of a “sham” investigation rather 

than an effective investigation. Examples 

of such conduct include: delaying the 

commencement of an investigation 

or taking too long to complete an 

investigation; conducting the investigation 

with pre-determined intention to shield 

the employer from liability or protect 

the accused, rather than address the 

employee’s legitimate concerns; failure 

to select an unbiased investigator; 

making an employment decision before 

the investigation even commences, or 

reaching conclusions based on one-sided 

information; showing disrespect for the 

individual interviewed, or not affording a 

full opportunity to respond (e.g., rolling 

eyes, raising voice, aggressive questioning); 

making pre-judgment statements during 

the interview (e.g., “I don’t believe this, that 

does not sound like something he/she 

would do”); failing to take down names of 

additional witnesses; refusing to interview 

key witnesses; interviewing key witnesses 

in the presence of company management 

showing lack of independence; taking a 

dismissive approach to the investigation, 

particularly if the complaining employee 

has a history of making complaints; failing 

to conduct an investigation when the 

employee says that he or she wants to 

make the employer aware of a concern, but 

does not want anything done or said about 

it at this time; promising the complaining 

employee that the employer will keep 

the complaint completely confidential, 2 

(complaint and investigation should be kept 

on a need-to-know basis); failing to conduct 

a sufficiently thorough investigation, 

including interviews of all parties, or not 

talking to all relevant witnesses; failing 

to properly and appropriately document 

the investigation; failing to monitor the 

workforce, address and remedy potential 

situations or interactions which violate 

employer policies. 

B. Employer’s Investigation 

Plan. 

The primary goal of an investigation is to 

provide the employer with the appropriate 

findings and facts to make a decision 

regarding the matter. For an employer 

to legitimately rely on the results of an 

investigation, the investigation must 

commence promptly upon receipt of 

complaint or notice of misconduct; be 

conducted thoroughly through review 

of all allegations, interviews with all 

relevant witnesses, review of all relevant 

documentation and applicable employment 

policies; be conducted by the investigator in 

an objective, fair and neutral manner; and 

the investigation’s findings must create a 

proper foundation for carrying out effective 

remedial measures, and provide the 

2 Employers may not tell employees who make a 

complaint not to discuss the matter with co-workers 

while an investigation is ongoing, since such a request 

violates employees’ rights to discuss the terms and 

conditions of their employment as protected under 

Section 7 of the National Labor Relations Act. See 

Banner Health Systems d/b/a Banner Estrella Medical 

Center, 358 NLRB No. 93 (July 30, 2012) (holding that 

employers could not apply a general rule prohibiting 

employees from discussing ongoing investigations of 

employee misconduct and that instead, it must first 

determine whether in any investigation there are 

grounds to justify a requirement of confidentiality, e.g., 

for protection of investigation witnesses, to protect 

evidence that is in danger of being destroyed, where 

testimony is in danger of being fabricated, or where 

there is a need to prevent a cover up). 

company with the grounds upon which to 

initiate appropriate steps for resolution of 

the matter. 

The company should be prepared to 

promptly identify employees who may have 

information pertinent to the investigation, 

and gather all relevant documents to be 

reviewed as part of the investigation. These 

include: written allegations of complaints 

by complainant (or by anonymous note or 

other employee writing); written policies 

and procedures; personnel files; electronic 

files; e-mails; texts; voice mail messages; 

prior complaints and investigation files; 

organizational charts; and information 

from social media websites to the extent 

permitted by state law. 

1. Selection of Investigator 

An employer should give careful 

consideration to the selection of an 

investigator to conduct the workplace 

investigation. The investigator selected 

must be impartial, objective, fair, and 

unbiased; be knowledgeable about 

relevant laws and applicable workplace 

policies; have effective communication 

and interviewing skills; be sensitive to the 

situation and persons involved; and be able 

to conduct a thorough investigation and 

prepare an accurate report. 

Investigations may be conducted internally 

by in-house counsel or a member of the 

employer’s human resources department 

or senior management team, or by 

outside counsel for the employer, or by 

an independent third party investigator. 

There are certain pros and cons depending 

upon whether the employer elects to have 

the investigation conducted internally or 

through an outside third party, particularly 

outside counsel. Some benefits to having 

an investigation conducted by in-house 

counsel or a member of the Human 

Resources department or management, 

is that the investigator will have a preexisting 

knowledge of the corporation, its 

structure, its policies and procedures, its 

record-keeping practices, its culture, and 

possibly even the personalities and politics 

involved in the underlying claims, and be in 

a position to start the investigation almost 

immediately. 

In contrast, an “internal” investigator may 

not be viewed as independent enough to 

conduct a thorough and impartial inquiry; 

may become a witness in litigation resulting 

from the matter being investigated; and 

if the in-house investigator is also legal 

advisor to the company, may face issues 

relating to the confidentiality and privilege 

of information obtained during the course 

of the internal investigation. 

In circumstances where the attorney 

conducts the investigation and becomes 

a witness to the content of information 

and documentation obtained during an 

investigation, it must be understood that 

the attorney may later be disqualified 

from representing the company as its 

legal counsel in litigation ensuing from 

the allegations of workplace misconduct 

and/or accompanying investigation. 

Similarly, an attorney who appears at an 

investigation interview with his/her client, 

the complainant, and thus becomes an 

investigation witness, may be disqualified 

from representing the complainant in 

subsequent litigation. 

Regardless of how time and cost efficient 

an internal investigation could be, if it 

fails to thoroughly and fairly address the 

allegations or workplace misconduct, or 

is seen as partial or otherwise lacking 

in credibility, it could ultimately cause 

the employer more expense and risk of 




liability in the event the matter proceeds to 

litigation. 

2. Application of Privileges in an 

Investigation 

The role of in-house or outside counsel 

in an investigation presents the risk that 

communications with the lawyer during 

the investigation may not be protected by 

the attorney-client privilege or the workproduct 

privilege. When an employer 

intends to rely on the investigation as a 

defense that it took reasonable and justified 

responsive and remedial action, documents 

related to the employer’s internal 

investigation are subject to discovery 

since it demonstrates the employer’s 

response to an employee’s complaint, 

inclusive of facts obtained, the timing of 

the investigation, the employer’s evaluation 

of the facts, and any action taken by the 

employer in response to the findings of the 

investigation. See Payton, supra. 

What may remain privileged from 

disclosure, however, is the attorney’s legal 

advice and recommendations. Privilege only 

applies to confidential communications 

made to a client “by an attorney acting as 

such.” Upjohn v. United States, 449 U.S. 

383, 394-95 (1981) (holding that… “where 

communications at issue were made 

by corporate employees to counsel for 

corporation acting as such, at direction of 

corporate superiors in order to secure legal 

advice from counsel, and employees were 

aware that they were being questioned 

so that corporation could obtain advice, 

such communications were protected.” 

See also, Waugh v. Pathmark Stores, Inc., 

141 F.R.D. 427 (D.N.J. 2000) (finding that 

attorney-client privilege was not waived 

where employer’s in-house counsel 

attended meeting with employer’s decisionmakers 

after internal investigation into 

employee’s discrimination complaints, and 

reviewed related documents in his capacity 

as attorney for employer, to provide legal 

advice on remediation efforts; counsel did 

not conduct investigation himself or act as 

decision-maker in employer’s remediation 

efforts); Harding v. Dana Transport, Inc., 

914 F.Supp. 1084 (D.N.J. 1996) (finding that 

any communications between company 

and counsel involving legal opinions and 

legal advice was subject to attorney-client 

privilege). 

It should be noted, however, that the 

attorney-client privilege may be waived if 

an attorney will be presenting evidence 

at a trial which was developed during the 

course of the investigation. The attorney 

cannot assert the attorney-client privilege 

for the purpose of restricting disclosure 

of matters related to the investigation, 

and subsequently seek to introduce the 

information, or even selected portions of 

the information, as evidence on behalf of 

the employer at trial. See Harding, supra, 

914 F.Supp. at 1096) (attorney-client 

privilege waived as to investigatory files of 

counsel who conducted investigation of 

harassment allegations, when employer 

raised reasonableness of investigation 

as an affirmative defense; “by asking 

[the attorney] to serve multiple duties, 

the defendants have fused the roles of 

internal investigator and legal advisor. 

Consequently, [the employer] cannot 

now argue that its own processes are 

shielded from discovery.”) The waiver of 

the attorney-client privilege and work 

product privilege in this context also 

extends to documents which relate to the 

investigation, although the documents 

may be redacted to exclude attorney 

communications which reflect legal advice 

or legal opinion. Id.; see also Payton, 148 

N.J. at 551-52. 

Where the attorney is acting in a business 

role, i.e., fact-finder, rather than in a legal 

role for purposes of offering legal advice 

or preparing for pending or threatened 

litigation, privileges may not apply. In 

addition, the privileges will not protect 

the underlying facts from disclosure, 

even if those facts were contained in a 

communication to the attorney. Upjohn, 

449 U.S. at 395-96; see also XYZ Corp. 

v. United States, 509 U.S. 905 (1993) 

(communications between attorney and 

client regarding an internal investigation 

were privileged, but factual information 

contained in written communications, 

including the results of investigation, were 

not shielded from discovery) 

For these reasons, both the attorney and 

employer should recognize that even where 

the employer has retained the attorney 

Christina Silva 

Partner at Lum, Drasco & Positan, LLC 

for purposes of investigating an internal 

complaint, only the attorney’s legal analysis 

and advice is privileged from disclosure, 

and the facts uncovered during the 

investigation are discoverable. 

III. Conclusion 

While no two investigations are exactly 

the same and there are no mandatory 

procedural rules or court imposed 

deadlines for conducting an investigation, 

an employer is well guided to ensure that 

any workplace investigation is conducted 

in a prompt and thorough manner by an 

unbiased and experienced investigator, 

resulting in effective remedial action in 

response to complaints of employee 

misconduct. 

T: (+1) 973-403-9000 

Email: csilva@lumlaw.com 

Christina Silva is a Member of the Firm and Vice-Chair of the Labor and Employment Group of Lum, Drasco & Positan, LLC, in 

Roseland, New Jersey. She specializes in the representation of management in the litigation of employment law matters, and 

also concentrates her practice in the areas of workplace investigations and employer counseling in all areas of employment 

law, including employment discrimination, restrictive covenants, employee discipline and termination, employment policies 

and contracts, severance agreements, employee leaves of absence, and reductions in force. She conducts training on antiharassment 

and anti-discrimination policies, management best practices and compliance, and efficient and effective workplace 

investigations. 

She is a Fellow of the Litigation Counsel of America, and a member of the New Jersey Women Lawyers Association and Hispanic 

Bar Association. She has served as the liaison between the New Jersey State Bar Association’s Labor and Employment Section 

Executive Committee and the Hispanic Bar Association, as well as Co-Chair and Vice-Chair of the Labor and Employment 

Law Committee of the Essex County Bar Association. An Articles Editor on the Editorial Board of the New Jersey State Bar 

Association’s Labor and Employment Quarterly since 1995, she has lectured at continuing legal education programs on 

harassment and discrimination litigation, anti-harassment / discrimination training, and workplace investigations. She is 

admitted to practice in New Jersey and in the United States District Court of New Jersey. 

Ms. Silva received her B.A., magna cum laude, from Villanova University, and her J.D. from Seton Hall University School of Law. 




The Italian benefit corporation: to profit and …. 

beyond! 

Marco Mazzeschi and Giuditta De Ricco 

Benefit corporations are for-profit 

companies that – in addition to maximize 

shareholder’s value and profits – undertake 

to expand their purpose to explicitly include 

the creation of public benefit and the 

commitment to carry out their activities in 

a responsible, sustainable and transparent 

way, in favour of persons, communities and 

environment. They are being introduced 

in some legal systems to meet the global 

trends demanding greater accountability 

and transparency from business and 

stimulate a new role that business can and 

should play in society. 

Italy is the first country after US to have 

introduced in its legal system (Law n. 208 of 

December 28, 2015, hereinafter “Law”) the 

so called “società benefit” (hereinafter “SB”). 

The main characteristics of the SB are taken 

from the US benefit corporation, which was 

firstly introduced in the US legal system in 

2010 in Maryland and then in other 29 US 

States. 

What is a benefit 

corporation? 

The distinguishing features of the Italian 

SB are: (i) the legal duty to create general 

public benefit in addition to financial 

return; (ii) to carry out its activities in a 

responsible, sustainable and transparent 

way in favour of persons, communities, 

environment, cultural and social activities, 

associations and other stakeholders 

(hereinafter collectively “Beneficiaries”); and 

(iii) the impact of the SB’s activities must be 

assessed annually by the directors with a 

written report, and must take into account 

the requirements set forth in Annex 4 to the 

Law. 

The Italian legislator did not create a new 

form of corporation but provided for 

that any company can change its status 

and become an SB. It is the intentional 

creation of social and economic benefit 

that differentiates the SB from traditional 

for-profit and non-profit entities. In an SB 

the directors are committed to pursue the 

general benefit, while the market and the 

public must be correctly and transparently 

informed on how the corporation is 

achieving its goals. 

What are the advantages of 

becoming an SB? 

Benefit corporations can help meet the 

demands of those who are interested in 

having their business help solve social 

and environmental challenges. Becoming 

an SB can also help the company to grow 

its business and market share, since an 

increasing number of consumers expect 

companies to act and align their policies 

to a sustainable growth, to take into 

consideration not only profit but also values 

like the need of social communities and the 

impact on the environment. 

The benefit activities 

The activity/ies of public benefit selected 

by the SB must be specifically indicated 

in the SB’s bylaws and must be achieved 

taking into account and balancing both the 

shareholder’s interest and the interest of 

the Beneficiaries. The SB must achieve a 

general public benefit (“beneficio comune”). 

This is defined both to induce a positive 

impact or reduce the negative effects on the 

Beneficiaries and other stakeholders (“altri 

portatori di interesse”). Other stakeholders 

are the persons or groups who benefit 

from the SB’s activities, such as workers, 

customers, suppliers, financial backers, 

creditors, public administration and civil 

society. 

The annual report 

The SB must prepare annually a report (to 

be attached to the yearly financials) where 

it assesses the impact of its activities on 

the general public benefit. The report must 

be published on the SB’s website. The 

report must include: (i) a description of 

the ways and actions implemented by the 

directors to purse general public benefit 

during the year and any circumstances that 

have hindered or delayed its creation; (ii) 

an assessment of the SB’s performance 

determined taking into account the 

standards outlined in the EAS; (iii) a section 

outlining the new goals that the SB wants to 

achieve in the following year. 

Third-party validation 

The report must be prepared applying 

a third-party standard (“standard di 

valutazione esterno” or “EAS”) that must be: 

(i) comprehensive because it assesses the 

effects of the business and its operations 

upon the general public benefit; (ii) 

developed by an entity that is not controlled 

by the SB; (iii) credible because it is 

developed by an entity that both: (a) has 




access to necessary expertise to assess 

overall corporate social and environmental 

in terms of salary, other benefits, training 

opportunities, quality of the workplace, 

Directors responsibilities 

failure to prepare the annual report but, 

since this is mandatory obligation, directors 

performance; and (b) uses a balanced 

multi-stakeholder approach to develop 

the standard, including a reasonable 

public comment period; (iv) transparent 

because the following information is 

publicly available: (a) the criteria considered 

when measuring the overall social and 

environmental performance of a business; 

(b) the relative weightings, if any, of those 

criteria; (c) the identity of the directors, 

officers, material owners, and the governing 

body of the entity that developed and 

controls revisions to the standard; (d) the 

process by which revisions to the standard 

and changes to the membership of the 

governing body are made; (e) an accounting 

of the revenue and sources of financial 

support with sufficient detail to disclose 

any relationships that could reasonably be 

considered to present a potential conflict of 

interest. 

The EAS is not to be confused with the B 

Lab certification that – contrary to the EAS 

– is not mandatory. An SB can become a 

B Corp (Benefit certified corporation) by 

meeting the B Lab standards and obtain the 

relevant certification. B Lab is a non-profit 

organization that serves a global movement 

of people using business as a force for 

good. 

The areas of assessment 

The assessment of the effects of the SB’s 

activities, must include the following 

areas: (i) SB’s corporate governance: so 

that to assess the degree of transparency 

and commitment of the corporation 

for the achievement of the benefit 

indicated; (ii) employees: to determine the 

relationship with workers and associates 

internal communication, flexibility 

and health & safety at work; (iii) other 

stakeholders: to assess the relationship of 

the corporation with suppliers, the territory 

and local communities, charity activities, 

donations, cultural and social activities and 

any other actions implemented to support 

the local development and the SB’s supply 

chain; (iv) environment: to assess the 

impact of the SB’s products and activities 

regarding the use of resources, energy, raw 

materials, the manufacturing, logistic and 

distribution cycles, the use, consumption 

and disposal of the products. 

Directors’ duties 

In addition to the general duties that 

directors have under Italian corporation 

laws, the SB legislation set forth specific 

duties that SB’s directors must comply with. 

Section 380 of the Law set forth that the 

SB must be managed in way to balance the 

interests of shareholders, the pursuing of 

the general public benefit and the interests 

of the other Beneficiaries. The corporation 

must appoint the person/s who shall have 

the responsibility to achieve the goals 

indicated, who can be one of the directors 

but also an officer of the corporation or a 

third party, taking however into account 

the general duty that directors have to put 

place a corporate governance structure that 

is adequate for the dimensions and nature 

of the corporation. If this duty is delegated 

to a third party, it is appropriate that the 

delegate has enough experience in the 

specific sector that the SB has chosen for 

achieving the general benefit. 

SB’s directors (like directors of any other 

corporation) must act in the best interest 

of the corporation and in compliance with 

the obligations set forth by the law and 

the corporation’s bylaws. Directors have 

a duty of care, duty to act knowledgeably 

(for example, with the appropriate skill and 

professionalism) and to monitor the actions 

of the other directors. 

The extent of these duties and 

responsibilities and the standard of care 

required for each director depend on the 

director’s office and specific expertise. 

Directors may have civil liability duties 

towards: (i) the corporation, if they have 

caused damage to that corporation due 

to the breach of the law, the corporation 

bylaws, or the general duties; (ii) the 

corporation’s creditors, if the directors 

have breached the specific rules regarding 

the preservation of the corporate assets, 

and those assets are insufficient to pay the 

creditors off; (iii) each shareholder and 

each third party, if they have suffered direct 

damage from an act performed with fraud 

or gross negligence by the directors. 

As to the SB, it is questionable and still to 

be assessed by jurisprudence, whether 

directors can have any liability towards the 

other Beneficiaries. In any event, directors 

are not accountable and responsible for 

the negative results of the corporation 

provided that their decisions were taken 

with adequate diligence and with the 

goal of achieving the corporate object. 

SB’s directors are however liable in the 

event they fail to appoint a person who 

has the duty to supervise, control and 

be responsible to implement all actions 

necessary to achieve the general benefit. 

The Law does not provide any sanctions for 

shall be liable also in this latter case. 

Sanctions for noncompliance 

The Law set forth that the SB which fails 

to achieve the general benefit indicated, 

is subject to the sanctions established by 

Legislative Decree 145/2007 (governing 

unfair competition and misleading 

advertising) and by Legislative Decree 

206/2005 (the so called Consumer’s 

Code, with particular reference to the 

rules regarding the prohibition of unfair 

commercial practices). This provision was 

enforced in order to guarantee that all 

information disclosed to the public are 

true and accurate so to avoid that an SB 

that does not comply with the Law, take 

any illicit advantage with respect to its 

competitors as well to avoid any distortion 

of the information provided and disclosed 

to consumers. It is the Italian Competition 

Authority (Autorità garante della 

concorrenza e del mercato) that shall have 

the duty to sanction any non-complying SB, 

with administrative sanctions provided for 

by the law. 

References: Assonime, Circolare n. 

19, of June 20, 2016; Esela – The first 

European benefit corporation: blurring 

the lines between social and business; Le 

società benefit - La nuova prospettiva di 

una Corporate Social Responsibility con 

Commitment (Fondazione nazionale dei 

Commercialisti); Domenico Siclari – Le 

società benefit nell’ordinamento italiano; 

Autorità garante della concorrenza e del 

mercato http://www.agcm.it/en 




Giuditta De Ricco 

Attorney at Mazzeschi 

T: +39.0577.926921 

Email: gdr@mazzeschi.it 

A Venture Capital and Private Equity 

career of a Lawyer 

Craig A. T. Jones 

Giuditta De Ricco has an experience of more than 15 years in various fields as real estate contracts, corporate and commercial 

law. She is a law graduate of the University of Siena (2001), took post graduate courses on “Environmental Legislation” (2001), 

“Techniques and ethics of criminal lawyer” (2002) and attended an internship at the Ministry of Foreign Affairs in Rome (2002). 

She was admitted to the Bar Association of Siena in 2006. 

Marco Mazzeschi 

Attorney at Mazzeschi 

T: +39.0577.926921 

Email: mm@mazzeschi.it 

Marco Mazzeschi has more than 25 years of experience in business law and corporate immigration. He is a law graduate of the 

University of Siena (1985). He obtained a postgraduate diploma in administrative law at the Academy of Public Administration 

(1995), and took summer courses on international law at The Hague Academy of International Law (1984) and served as officer 

in the Italian Fiscal Police (1986–1987). He is admitted to the Bar Associations of Milan and Taipei, registered as a foreign 

attorney in Taiwan and admitted arbitrator with the Chinese Arbitration Association (CAA). 

As I worked my way through law school, I had worked for 

5 different law firms so by my third year had concluded 

I wanted to go into business rather than practice law. I 

chose consulting both because the major consulting firms 

were willing to hire lawyers and consulting seemed like a 

great way to get “fire hose” overview of the business world. 

While on a flight from London to 

Amsterdam to look at a potential 

acquisition for a Bain & Co. client, I saw 

an article on the Apple IPO and the role 

of Arthur Rock as an investor and Board 

member. His partner at the time was 

Harvard Law School graduate Thomas 

Davis, who also founded Mayfield Fund. I 

had found my inspiration. I thought venture 

capital represented a field where the deal 

skills of a lawyer and the market intelligence 

of a consultant might be a good fit. I began 

to interview in earnest and landed a job at 

Centennial Ventures in Colorado. 




Over the next 32 years I became a 

voracious student of all things technology 

and healthcare. I chose those two fields 

because in the first case it is the agent of 

change and in the second case because of 

the size of the markets and how it affects all 

of us personally. Over time I began to focus 

on later stage deals. This was due to the 

fact that I am not an engineer or a doctor or 

a PhD, but a business trained lawyer. The 

fit was therefore best in companies where 

a particular formula could be applied, along 

with my cumulative experience. 

Eventually in 2010 I focused exclusively on 

deals with the following characteristics: 

(1) profitable (2) small companies ($5.0- 

$10 million in revenue typically) below the 

radar screen of the private equity firms (3) 

software/SaaS/cloud or healthcare services 

where I had been investing all this time, (4) 

majority ownership, the so-called control 

transactions (5) a heavy value element 

where EBITDA multiples would be no higher 

than 7.5 in technology and no higher than 

6.0 in healthcare services (6) a minimum of 

$1.5 million in EBITDA. 

A key characterization of these companies 

is that they are typically run by Baby 

Boomer-aged management who are 

looking to retire. Usually there had been no 

outside money or just friends and family. 

The entrepreneur wanted to get liquidity, 

diversify his holdings, and retire or semiretire. 

This meant that we as a sponsor 

group had to have the new management 

already selected and groomed by the 

original entrepreneur or bring our own new 

top management. 

Management transition is a key issue in 

these deals. Roughly 10,000 Baby Boomers 

will turn 65 today, and about 10,000 more 

will cross that threshold every day for 

the next 19 years. Most haven’t founded 

businesses, but this generation is the 

richest ever, forecast to have assets of 

about $54 trillion by 2030. 

Our management is often younger, but 

more importantly either trained by a 

top MBA school or having extensive 

management experience or both. The 

classic 21st century analytical management 

with familiarity with dashboards, key 

operating metrics or ratios, and internal 

operating software has a different 

perspective than the seat of the pants 

entrepreneur. This is positive in terms of 

risk reduction and visibility to key levers 

of growth. What are often missing are the 

industry contacts and the natural selling 

skills of the original CEO. 

Think of these small buyouts, what we call 

micro-buyouts, as the bargain basement 

of technology deals, healthcare deals 

and many other industries. These are not 

the type of technology deals appealing 

to venture capitalist. In fact, if these 

companies have ever received VC then we 

know they are “ruined” either because they 

became very successful or are of the size 

and valuation that we cannot afford, or 

they have burned through a lot of equity 

and don’t have much to show for it. Either 

way, it makes the companies ill suited for a 

value-oriented majority control investor. 

Still we have proven we can produce 

venture style investment returns without 

taking venture risk. No, we are not going to 

hit a 100 to 1 return. But we have produced 

5X-realized returns since 2010 across 8 

exits from 26 investments. These returns 

come from 4 basic sources: (1) leverage (2) 

efficiencies (3) revenue growth (4) multiple 

expansion. The large buyouts depend 

primarily on the first two. They have the 

stability of operations to take on relatively 

necessary to attract a much broader buying 

high leverage and they can produce 

audience. A $10 million company with $2.0 

efficiencies by application of analytics, 

million of EBITDA might attract a 6X EBITDA 

metrics, and internal software. 

multiple while a $20 million company with 

$4.0 million of EBITDA might attract an 

In our small buyouts the opposite is true. 

8X EBITDA margin. This EBITA multiple 

The gains come primarily from growth. 

expansion is critical to our returns. 

We do leverage our companies, but the 

leverage is typically not more than 3X 

Some who are lawyers might wonder 

EBITDA or 50:50 equity/debt and often 

whether they can be successful in 

smaller. We do not look for efficiencies in 

technology businesses competing with 

the classic sense of making EBITDA margin 

engineers, or in general competing with 

growth the primary goal. We instead try to 

MBA’s. But the investment field is full of 

preserve as much as possible the typically 

lawyers who first observe the business 

high margins enjoyed by the original 

world, and then enter it successfully. Deal 

entrepreneur. 

skills are highly attractive to investment 

firms. Analytical skills necessary to decide 

We instead often add expenses initially to 

upon the attractive markets and the 

drive growth. The higher growth brings 

attractive business models are held by 

with the hope of eventually higher EBITDA 

many lawyers. The opportunities are there 

margins from economies of scale. Most 

and the most important ingredient is a 

important, by creating higher critical 

curious mind and an attraction to the field. 

mass, we bring the company into the scale 

Craig A. T. Jones 

Managing Partner at Ticonderoga Private Equity 

T: (650) 384 5811 

Email: cjones@ticcap.com 

Craig A. T. Jones is a veteran venture capital and private equity investor. He has invested in technology and healthcare 

services since 1984 for Centennial Ventures, Advent International, Dillon, Read & Co., Ticonderoga Capital and since 2010 with 

Ticonderoga Private Equity. He specializes in control transactions at the low end of the middle market in profitable companies. 

Mr. Jones is a graduate of Harvard Law School and began his career as a management consultant with Bain & Co. in London. 




The Wait is Over: The ICC’s New Expedited 

Procedure Rules (and other Updates) 

Autho 

The year 2017 could mark an important turning point 

for institutional international arbitration. On 20 

October 2016, the International Chamber of Commerce 

(“ICC”) adopted a list of important revisions to its Rules 

of Arbitration (“ICC Rules”) 1 . By the time this article 

is published, for example, new “Expedited Procedure 

Rules” will have come into effect on 1 March 2017. These 

revisionsaimtoimprovetheefficiencyandtransparencyof 

ICC arbitration. Time will tell if they actually will. 

1 These rules are available at http://www.iccwbo.org/Data/Documents/Business-Services/Dispute-Resolution-Services/ 

Arbitration/Arbitration-Rules/ICC-Rules-of-Arbitration-2017-Revision/. 

Through the years, a number of concerns 

have been raised by parties - individuals, 

businesses, states, and international 

organizations - adopting or considering 

adopting institutional arbitration as a 

means of resolving their international 

disputes. These concerns are numerous, 

yet three common threads are a general 

desire to make international arbitration 

more affordable, a wish for more efficient 

tribunals, and a call for a change in a culture 

that is often seen as opaque. At the heart 

of this debate, and fueling calls for change, 

are an increase in the length of hearings, 

a significant increase in the breadth and 

volume of document production, delays in 

obtaining awards, and the absence of an 

obligation on the part of certain institutions 

to provide reasons for institutional 

decisions that impact an arbitration. Such 

calls are not surprising since international 

arbitration was born of the desire to 

provide parties with a low-cost, effective 

and efficient alternative to litigation before 

the courts. One illustration of the problem 

has been a significant decline in the number 

of so-called small cases (i.e. claims involving 

amounts below US$ 1 million) administered 

by the ICC 2 . 

The adoption and implementation of the 

Expedited Procedure is an attempt by 

the ICC to address these concerns and to 

ensure that ICC arbitration remains an 

attractive means of international dispute 

resolution notwithstanding the level of 

complexity of the case and the amount at 

stake. While some critics may argue that 

these changes long overdue, they should 

nevertheless be welcomed by users of 

2 See the ICC Statistics from 1999 to 2015 available 

at http://www.iccwbo.org/Products-and-Services/ 

Arbitration-and-ADR/Arbitration/Introduction-to-ICC- 

Arbitration/Statistics/. 

international arbitration as well as by 

counsel and arbitrators. 

In December 2016, in a text published in 

the ICC Dispute Resolution Bulletin, the 

President of the ICC International Court 

of Arbitration, Alexi Mourre, described as 

follows the spirit and rationale behind the 

Expedited Procedure Rules: 

“Some of our colleagues sometimes say in 

conferences – half jokingly perhaps, but 

half seriously as well – that in arbitration 

parties get to choose two out of the three 

advantages of quality, speed and limited 

costs; if you have speed and quality, you 

should be prepared for increased costs, 

but with less speed, etc. ICC takes issue 

with that. Our message is that if the parties 

so decide, they can get quality, speed and 

limited costs. This is the aim of ICC’s new 

Expedited Procedure Rules, adopted by the 

ICC Executive Board on 20 October 2016.” 3 

As to the Expedited Procedure itself, three 

elements are particularly noteworthy: 

• Under the Expedited Procedure Rules, 

notwithstanding any contrary term or 

provision of the arbitration agreement 

binding the parties, the Court may 

now submit the arbitration case to a 

sole arbitrator (as opposed to a threeperson 

tribunal) 4 ; 

• Under the Expedited Procedures Rules, 

the arbitrator has six months from 

the date of the case management 

conference to render the award 5 ; 

3 Alexis Mourre, “Message from the President” (2016) 2 

ICC Bull. 3, at 4. 

4 See Expedited Rules at Appendix VI, Art. 2(1)-(2). 

5 See id, Art. 4(1). 




• The Expedited Procedures Rules 

Also noteworthy, the Expedited Procedures 

implications, the stage of the arbitration, 

Procedure Rules should not apply in 

expressly confers very extensive 

Rules expressly confers very extensive 

and any other relevant circumstances. 

a particular case 11 . The current Rules 

powers on the arbitrator with regard to 

procedure. 

The first of these has obvious and broad 

ramifications. It has the potential to reduce 

the problems relating to the constitution of 

the tribunal including its fees, the number 

of objections raised, the question of the 

availability of its members, and the time 

needed to deliberate and agree on the 

award. On the other hand, it limits party 

autonomy in a way that has rarely been 

seen before. It deprives parties of the 

traditional ability to appoint one arbitrator 

each – an arbitrator who may, at least in 

their view, have a better understanding of 

their concerns – as members of a threeperson 

tribunal, potentially impacting, some 

say, the legitimacy or integrity of the award 

itself. 

The second of these elements is also 

significant. Under the Expedited Procedure 

Rules, the case management conference 

has to take place at the latest 15 days 

after the transmission of the file to the 

arbitrator 6 . The analysis and the drafting of 

the award will usually take about a month. 

If the arbitral tribunal has six months 

after the case management conference to 

render the award – which might include one 

month of deliberation and drafting - the 

remaining time does not leave much time 

for the process to unfold. Although in all 

cases the ICC Court may grant an extension 

if necessary 7 , there will be a tremendous 

pressure on each participant to the 

arbitration process to get the work done 

within a short delay. 

powers on the arbitrator with regard to 

procedure. Article 3 provides that: 

“[…] the arbitral tribunal may, after 

consultation with the parties, decide not to 

allow requests for document production 

or to limit the number, length and scope 

of written submissions and written witness 

evidence (both fact witnesses and experts)” 

(para. 4); 

“[t]he arbitral tribunal may, after consulting 

the parties, decide the dispute solely on 

the basis of the documents submitted 

by the parties, with no hearing and no 

examination of witnesses or experts”(para. 

5). 

It is to be expected that these rules will give 

rise to claims of due process violation by 

unsatisfied parties. 

In addition to the innovations described 

above, it is to be noted that Article 23 of the 

ICC Rules which provides that the first task 

of a tribunal is to prepare, in collaboration 

with the parties, a document referred 

to as “Terms of References” – one of the 

hallmarks of ICC arbitration - will not apply 

to the Expedited Procedure 8 . Furthermore, 

once the arbitral tribunal is constituted 

under the Expedited Procedure Rules, 

the parties will not be entitled to present 

new claims without authorization of the 

tribunal 9 . Article 3 of Appendix VI of the 

ICC Rules sets up the elements that the 

arbitral tribunal could consider to decide 

whether a new claim should or should not 

be authorized, namely its nature, its cost 

Most importantly, the rules contained in 

the new Article 30 of the ICC Rules and in 

the Appendix VI will apply automatically if 

three conditions are met: (1) the arbitration 

agreement is concluded after 1 March 

2017, (2) the amount in dispute is below 

US$ 2 million, and (3) the parties have not 

explicitly chosen to derogate from the 

expedited procedure 10 . Going forward this 

means among other things that parties 

negotiating an arbitration agreement 

should consider seriously the possibility 

of “opting-out” where they feel that the 

Expedited Procedure is not ideally suited to 

the type of dispute envisaged. An example 

of an opting-out clause is available at the 

end of the revised ICC Rules. Such a clause 

should be drafted carefully keeping in mind 

that if it is not clear enough, the Expedited 

Procedure Rules will apply and the parties 

will be deemed to have agreed to them. In 

other words, problems might inadvertently 

arise where arbitration agreements 

contradict the provisions contained in the 

Expedited Rules. Without entirely optingout, 

the parties could also potentially decide 

in advance to derogate to some sections 

of the Rules only, for example to have 

three arbitrators instead of a sole one. The 

ICC Court might however have the power 

to ignore such exemption if it finds that 

it violates the spirit of the Rules and the 

Appendix (see: Article 5 of Appendix VI of 

the ICC’s Rules). 

While these Expedited Procedure Rules will 

apply on an opt-out basis to all arbitration 

agreements satisfying the conditions 

and explanatory Note to Parties do not 

indicate on what basis such a decision 

would be made. One may presume that a 

key factor will be the level of complexity 

of the case. This is based on the premise 

that the amount in dispute does not 

always – although often - reflect the level 

of complexity of a case. Following the 

same logic, parties to a dispute for which 

the amount in dispute is greater than US$ 

2 million, should also consider, where 

appropriate, the possibility of “opting-in”. 

Indeed, nothing prevents parties from 

agreeing to use the Expedited Procedure. 

On the contrary, this should even be 

encouraged where the circumstances allow 

it. 

Finally, it is worth mentioning that the fees 

under the Expedited Procedures Rules, 

which include the administrative fees paid 

to the ICC and the fees due to the sole 

arbitrator, are 20% lower than the fees 

applicable to other ICC proceedings 12 . 

These new rules, while novel in the 

context of ICC arbitration, are largely 

inspired by the existing rules of arbitration 

institutions, for example the Singapore 

International Arbitration Centre (SIAC), 

and the International Centre for Dispute 

Resolution (ICDR). As mentioned above, 

this set of changes form part of a broader 

effort by the ICC to enhance efficiency and 

transparency in international arbitration. 

They are part of a broader reform in 

which the streamlining procedure has 

not been left out. The following changes 

to the ordinary procedure should also be 

mentioned above, the ICC Court retains 

mentioned: 

the power to decide that the Expedited 

6 See id, Art. 3(3). 

8 See id, Art. 3(1). 

11 See Expedited Rules at Appendix VI, Art. 1(4). 

7 See id, Art. 3(3) and 4(1). 

9 See id, Art. 3(2). 

10 See ICC Rules, Art. 30(1)-(3). 

12 See id, Art. 4(2) and Appendix III of the ICC Rules. 




Article 23(2) has been amended to reduce 

the time-limit for the establishment of 

Terms of Reference from two months to 

one month; 

Article 11(4) has been amended, in order to 

allow the ICC Court to provide reasons for 

its decisions made on challenges, as well as 

for other decisions; 

Survey after survey shows that arbitration 

is the preferred disputed resolution 

mechanism for cross-border disputes. 

When it comes to decide between 

institutional arbitration and ad hoc 

arbitration, users more often than not 

choose the former. The ICC is itself the lovechild 

of institutional arbitration. In 2016, 

the annual International Dispute Resolution 

Survey for Technology, Media and Telecoms 

Dispute showed that the ICC was the choice 

of 64% of the respondents. For EU based 

respondents, this number goes up to 74% 13 . 

If these revisions to the ICC Rules have the 

intended effect, that is to reduce the time 

and cost of arbitrating these claims, they 

could confirm and increase the existing 

trend. The manner in which the Expedited 

Procedure Rules will be applied will be 

of significant importance considering 

the many applicable exceptions. This will 

determine whether or not the entry into 

force of these rules will be a turning point 

for the ICC or more like a stone thrown into 

a pond. 

Jessy Heroux 

Lawyer at Woods LLP 

T: +1 514 982-4505 

Email: jheroux@woods.qc.ca 

Mtre. Jessy Héroux began his career as a law clerk to the Honourable François Doyon at the Québec Court of Appeal. He then 

practiced as a criminal defense lawyer in Québec City, specializing in white collar crime, appellate litigation and regulatory 

charges. From August 2015 to August 2016, he joined the Chambers of the Honorable Suzanne Côté at the Supreme Court of 

Canada. Mtre Heroux has a broad and diverse litigation practice. He advises and represents individuals and companies in 

complex commercial and contractual cases. On a regular basis, he intervenes in cases of professional liability, competition law, 

defamation, securities, disciplinary law, and in the context of investigations before regulatory authorities such as the Autorité 

des Marchés Financiers. He also represents clients in business criminal law matters. 

James Woods 

Senior Partner at Woods LLP 

T: +1 514 982-4503 

Email: jwoods@woods.qc.ca 

Mtre. James A. Woods, senior partner of the firm, graduated from the Faculty of Law of McGill University in 1974 where he 

received a BCL and LLB, standing first in the National Program. He also obtained a B.A. (HONS ECON) in 1970 from McGill 

University. Mr. Woods was awarded the MacDonald Travelling Scholarship in 1974 to study Comparative Law at the University 

d’Aix Marseille in France. He practises in litigation and arbitration and pleads at all levels of federal and provincial courts in 

Ontario and Québec including the Supreme Court of Canada. Named in 2016 “Litigator of the Year” by Le Monde Juridique and 

Lexpert® 2015 as one of the Leading 500 Lawyers in Canada – Montréal, Corporate and Commercial Litigation. Recognized by 

the Best Lawyers directory 2014 for his expertise in the fields of Bet-the-Company Litigation, Class Action Litigation, Corporate 

and Commercial Litigation, Director and Officer Liability, Legal Malpractice Law and Securities Law and Best Lawyer of the 

Year in 2012 for the “Bet-the-Company Litigation in Montréal.” Is member of the Faculty of Law and lecturer in civil litigation at 

McGill University. Fellow of the ACTL, LCA, FDCC and CIA (London). Member of the panel of arbitrators of the AAA, of the CBA, 

QBA, LSUC, LSBC, LSA, LSEW, ABA, IBA, LCIA, AAJ, and CCAC. Called to the Bars of Québec, 1976, Ontario, 1979, Alberta and BC, 

2006, England & Wales, 2007, Barreau Paris, 2013 and discerned Advocatus Emeritus by Québec Bar, 2013. Acted as attorney or 

arbitrator either as President or Member of Arbitration Tribunal in commercial and international arbitrations, either ad hoc or 

ICC. 

13 The report from Queen Mary University of London 

and Pinsent Masons is available at http://www. 

arbitration.qmul.ac.uk/research/2016/. 




Publication of International adjudication 

Decisions and Arbitral Awards: Confidentiality V 

Transparency 

Andrew Burr 1 

1Introduction 

In his entertaining and erudite address 

to celebrate the 150 th anniversary of The 

Incorporated Council of Law Reporting 

for England and Wales 2 , Lord Neuberger 

drew particular attention to the following 

wartime words of Lord Atkin in his famous 

1 Andrew Burr is an adjudicator, arbitrator, barrister 

and mediator, who practised for over thirty years at 

Atkin Chambers, Gray’s Inn, and who now acts as a 

third party neutral at ArbDB Chambers, Fleet Street, and 

as Legal Counsel, with Silver Shemmings LLP. 

2 Delivered in the Great Hall of Lincoln’s Inn on 6 

October 2015. 

(if not infamous) speech in Liversidge v Sir 

John Anderson 3 , described in the Foreword 

to the 150 th Anniversary Edition of the Law 

Reports as a dissent of “power, eloquence 

and passion”. 

The Lord Chief Justice went on to point out 

in his Foreword 4 : 

“First, the case demonstrates the importance 

of a dissenting judgment, for, less than 40 

years later, Lord Diplock was to accept in R 

3 [1942] AC 206 at pages 244 - 5. 

4 By Lord Thomas of Cwmgiedd, the Lord Chief Justice. 

v Inland Revenue Comrs, Ex p Rossminster 

Limited that Lord Atkin was right: 

‘For my part I think the time has come 

to acknowledge openly that the majority of 

this House in Liversidge v Anderson were 

expediently and, at that time, perhaps, 

excusably, wrong and the dissenting speech of 

Lord Atkin was right.’ 

Second, it demonstrates the courage 

necessary to take an unpopular decision and 

to withstand all pressures. The then Lord 

Chancellor attempted to persuade Lord Atkin 

to omit his reference to Alice in Wonderland; 

and Viscount Maugham subsequently 

wrote to The Times to deplore Lord Atkin’s 

characterisation of the Crown’s arguments as 

those which might have been used at the time 

of Charles I. The case thus illustrates why Lord 

Atkin must be regarded as one of our greatest 

judges”. 

(emphasis added) 

This quotation of antique authority serves 

the sole purpose of emphasising the 

immense importance under Common 

Law systems of having accurate and 

comprehensive law reporting, where such 

systems inherently depend upon reference 

to precedent cases. 

Such a system is inevitably eroded when 

important cases (and issues) are decided 

by private “judges”, as has happened, by 

way of example, in the United Kingdom, 

following the coming into force of 

the Housing Grants, Construction and 

Regeneration Act 1996 (the HGCRA) (as 

amended by the Local Democracy, Economic 

Development and Construction Act 2009 (the 

LDEDCA)) and, on the international stage, 

by ad hoc, or institutionally administered, 

arbitration. 

This article sets out to weigh in the scales 

of balance the question of confidentiality, 

which is so vital to private adjudicatory 

proceedings (such as domestic UK 

adjudication proceedings, dispute 

adjudication boards (DABs) under FIDIC 

and other standard from contracts and 

international commercial arbitration), 

with the perceived need for greater 

transparency and a “level playing field”, in 

which all participants (not just the MAFIA 5 !) 

are able to source any relevant precedent. 

The availability of such precedent is 

seriously eroded when adjudicators, DABs 

and arbitral tribunals make decisions (for 

example, upon the proper interpretation 

of commonly-used standard forms), which 

never see the light-of-day in the public 

domain, unless the decision in question 

happen to become the subject-matter 

of enforcement proceedings (usually (in 

England and Wales) in the Technology and 

Construction Court), or on appeal (usually 

(in the same jurisdiction) in the Commercial 

Court). 

Confidentiality 

As Avv Mauro Rubino-Sammartano 

accurately observes at section 19.17 of his 

International Arbitration Law 6 (under the 

heading “Confidentiality of the award”): 

“The award, contrary to court decisions, is not 

in the public domain until it is published, with 

the consent of a party, or it is attacked before 

a court or its recognition is applied for. 

5 Most Appropriate For International Arbitration! 

6 (1990, Deventer, Boston, Kluwer Law and Taxation 

Publishing). 




The problem of classifying a possible breach 

However, the duty of secrecy is expressly 

jurisdiction, or en forcing the award. 14 Equally, 

“Awards are generally not published unless 

of confidentiality by the arbitrators, or by 

specified for the arbitrator by the Polish Court 

there may be disclosure under compulsion of 

they are attacked, or their recognition or 

participants to the proceedings, has been 

of Arbitration 10 : 

law, with the leave of the court, or by consent 

enforcement is sought. An exception to this 

raised. It has been argued that such conduct 

would amount to a breach of confidence. The 

publication of awards is in a border-live region 

secrecy’.“ 

‘He shall be bound to observe 

with the other party to the arbitration. 

(…) 

rule is made for the ICC awards published in 

Clunet (Journal du Droit International) and 

the decisions of the Iran-US Claims Tribunal. 

between the duty to preserve confidentiality 

on the one hand, and the great advantage 

which their publica tions provides in the study 

and progress of the law of arbitration on 

the other. The formula of publishing long 

passages of awards, from which the names of 

the parties has been eliminated, tries to satisfy 

both requirements. 

The publication of awards 7 is expressly 

allowed by the Russian arbitration rules 8 : 

‘With the permission of the President 

of the Arbitration Court the awards of the 

Court may be published in periodicals or in 

special collections of awards. The interests 

of the parties shall be taken into account 

and in particular information containing 

identification of the parties, enterprises 

commodities and prices shall not be 

published’ 

and in the Polish arbitration rules 9 : 

‘The President of the Court of 

Arbitration may order the award to be 

published in juridical and commercial 

periodicals, but without designation of the 

parties’. 

In a similar vein, sections 2-818 and 

2-819 of Volume 1 of the lilac-hued (and 

(emphasis added) 

somewhat “long in the tooth”) fourth edition 

of Bernstein’s Handbook of Arbitration and 

Dispute Resolution Practice 11 read as follows 

(under the heading “Confidentiality of the 

Award”): 

“2-818 An arbitration award is confidential. 

As the cases make clear, it may be disclosed 

to a third party if it is reasonably necessary 

for the establishment or protection of an 

arbitrating party’s legal rights in relation to 

that third party. 12 It is important to note that 

this test does not apply to an application 

for disclosure of the award by a party who 

was not a party to the original arbitration 

proceedings. In this situation, the two tests 

.to be applied are, first, one of relevance, arid 

secondly, whether disclosure is necessary for a 

.fair disposal of the action, so as to out weigh 

the duty of confidentiality. 13 

In addition, a party to the arbitration may of 

course disclose the award to the court for the 

purpose of invoking the court’s supervisory 

2-819 The English courts have not yet had 

to decide a case where it is argued that the 

public interest requires disclosure, as was 

the case in Esso Australia. In international 

arbitration, the confidentiality of arbitration 

awards may be being slowly eroded due to the 

public law aspect of many proceedings. The 

reporting of ICSID, NCAA and Nafta awards 

and the decisions of the Iran-US Claims 

Tribunal illustrate cases where it has been 

recognised that the interest in the arbitration 

lies in the public, rather than the private, 

sphere. 15 Accordingly, it seems likely that 

as both domestically and internationally, 

arbitration becomes recognised increasingly 

as a matter of public law, the public interest 

exception will be further developed. In so 

doing it is necessary to draw a proper balance 

between the protection of the public interest 

in the transparency and accountabil ity of 

public administration, and the legitimate 

interest of commercial concerns to protect 

commercial confidence and the privacy of 

their commercial dealings. 

Transparency 

Individual awards are also occasionally 

presented to law journals and published; 

they are regularly published by the Yearbook 

of Commercial Arbitration. Among the other 

reports one must men tion, besides Clunet, the 

Journal of International Arbitration (Geneva), 

the Revue de l’Arbitrage (Paris), the Rassegna 

dell’ Arbitrato (Rome), Arbitration International 

(London), Arbitration Journal (London), the 

Japan Arbitration Journal, the AAA’s Arbitration 

Journal, the Collection of Information Materials 

(USSR), the News from ICSID, the 

Journal of Commercial Arbitration (Korea) and 

The Arbitrator (Australia). 

Amongst the bulletins which summarise 

information are the ICA Indian Arbitration 

Quarterly, the American Arbitration 

Association Quarterly and the Mediterranean 

and Middle East Quarterly Report (Cyprus). 

Arbitral precedents have no binding nature, 

as the Arbitral Tribunal (Cremades, Chairman, 

Pereira and Redfern) stated in Liberian Easterfi 

Timber 16 : 

‘although the Arbitral Tribunal is not bound 

by the precedents of another ICSID arbitration 

tribunal’, 

7 Honduras v Nicaragua, awarded by the King of Spain, 

23 November 1960, ICJ Reports 1960, at 192. 

8 Paragraph 42, Rules of the Arbitration Court of the 

USSR Chambers of Commerce and Industry. 

9 Paragraph 33, Rules of the Court of Arbitration at the 

Polish Chamber of Foreign Trade in Warsaw. 

10 Paragraph 16, Rules of the Court of Arbitration at 

the Polish Chamber of Foreign Trade in Warsaw, cit. 

11 Edited by John Tackaberry QC and the late, 

great, Arthur Marriott QC (2003, London, Sweet and 

Maxwell, in conjunction with The Chartered Institute of 

Arbitrators). 

12 Hassneh at 247. 

13 Dolling-Baker v Merrett and Another [1990] 1 WLR 

1205. 

At section 3.6 of Rubino-Sammartano, the 

author seeks to distinguish between arbitral 

and court precedents, as follows (under the 

heading “(a) Arbitral precedents”): 

14 Hassneh at 249. 

15 And see the decision of the UNCC to post 

recommendations of its commissioners on its website: 

the process is quasi arbitral and potentially concerns 

sensitive matters since the claimants were in many 

cases carrying out work in Iraq, see also appendix.5. 

but they are carefully examined by the 

arbitrators, who state: 

construction…’ 

‘it is not without interest to note their 

16 Liberian Eastern Timber Corporation (LETCO) v. 

Government of the Republic of Liberia, award 31 March 

1986, Clunet 1988, 166 et seq. 




and who, after having quoted several 

between the same parties and on the same 

selecting an administering institution that 

arbitration to more lawyers. The extent of 

precedents, state that they constitute: 

matters by another arbitrator also sitting in an 

does not publish anything. 

levelling may, however, depend on the cost 

‘a useful guide to the Arbitral Tribunal 

for the assessment of the damages’. 

One could say that arbitral precedents 

have a persuasive value, if this is construed 

as a simple possibility for persuading the 

arbitrator, instead of an indirectly compulsory 

directive. 

Arbitral precedents are referred to frequently 

by arbitrators as witnessed in the important 

oil arbitrations and in express reference to 

them in several ICC awards 17 . In the award 

rendered in 1986 in ICC proceedings No. 

43811 18 the arbitrators openly refer to arbitral 

precedents stating: 

‘whereas it has been recognised by 

arbitral precedents…’ 

Even Derains in his comments on this award 19 

states: 

‘The reasons given by the arbitrators 

in this matter are fundamen tally based on 

arbitral precedents, summaries of which have 

already been published’. 

The awards made in 1977 in ICC proceedings 

Nos. 2745 and 2762 go even further 20 : 

‘It would be paradoxical to hold that an 

arbitrator sitting in an ICC arbitration would 

not be bound by a previous award rendered 

17 The decision in ICC proceedings No 3344 of 1981, 

Clunet, 1982, 986 

18 See, for example, the award rendered in ICC 

proceedings No 4381, 1986 Clunet, 1986,1106. 

19 In Derains-Jarvin, Chronique des sentences arbitrales, 

Clunet, 1986, 1107. 

20 Y Derains, Chronique des sentences arbitrales, 

Clunet, 1978, 992. 

ICC arbitration’. 

A further comment by Derains 21 that the 

publication of arbitral awards contributes to 

the creation of unity in arbitral precedents, 

also seems well- founded”. 

New York Bar survey 

In February 2014, the New York City Bar 

published a Report by its Committee on 

International Commercial Disputes, entitled 

Publication of International Arbitration 

Awards and Decisions, surveying ten major 

international institutions and identifying 

(on pages 1 to 3 inclusive thereof) and 

summarised the following “issues posed by 

publication” of such awards and decisions: 

“A. Confidentiality 

International arbitration has traditionally 

been private though not necessarily 

confidential. Publication of unredacted 

decisions certainly lessens that. Even 

when decisions are just summarised, or 

are published in heavily redacted form, 

to eliminate party and arbitrator names 

and specific facts, that may not hide 

enough to maintain as much privacy as 

the parties desire. Parties who are against 

publication stress the importance of party 

autonomy in arbitration and note that 

they bear the costs of every element of 

the process. Parties who feel strongly 

about confidentiality may therefore want 

to consider drafting arbitration clauses 

with strong confidentiality provisions and 

21 Derains, Chronique des sentences arbitrales, Clunet, 

1976. 

B. Opening the Club/Leveling 

the Playing Field 

International arbitration has been criticized 

for excessive clubbiness, both as to 

arbitrators and advocates. Publication 

of awards and decisions can exacerbate 

or alleviate that widely perceived 

characteristic. Specifically: 

A. There is a (perceived or actual) tendency 

of advocates and parties to return to a 

small group of the ‘usual suspects’ when 

choosing arbitrators. To the extent that 

the names of arbitrators are disclosed 

in published decisions, that tendency 

could increase if publication bore out the 

perception that a small group of arbitrators 

dominate the field, decrease if disclosure 

shows a great diversity of active, widely 

used arbitrators, or simply alter the choices 

to the extent that the parties perceive 

variations in expertise or biases among 

specific arbitrators. 

B. Greater access to the content of awards 

and the arbitrators rendering them confers 

advantages in the process, and that access 

can be very uneven. Lawyers or firms with 

large international arbitration practices 

develop files and institutional knowledge 

about the arbitrators, institutions, and 

procedural customs that may not be 

available to those at smaller films or 

firms less immersed in international 

arbitration. The less information that is 

publicly available about arbitrators and 

their decisions, the greater is the advantage 

of a relatively small group of firms and 

lawyers. Increased publication of arbitral 

decisions may tend to level the playing 

field and open the practice of international 

of access to publications and the degree 

to which published decisions are redacted. 

Smaller practices may not be able to afford 

the often high subscription rates of the 

publications of arbitration institutions, 

which would tend to counter balance the 

greater openness that publication would 

otherwise bring. Also, publication of only 

limited numbers of redacted awards may 

make little difference in this imbalance. 

C. Shift to a Precedent-Driven 

System 

Arbitral awards and decisions have had 

no formal precedential value, either as to 

procedural decisions or interpretations of 

law, but increased publication may alter 

that as a matter of practice even if not as 

a formal matter, at least to the extent the 

decisions involve procedural matters or 

recurring, general substantive issues, and do 

not merely turn on idiosyncratic contractual 

language or factual issues. The extent to 

which practitioners and arbitrators are citing 

and using prior decisions as precedent and 

whether that will accelerate with greater 

publication is a topic for further investigation. 

D. Changes in the Content 

and Style of Awards and 

Decisions 

An arbitrator who knows that his or her 

decision is likely to be published may write 

it differently than one whose sole intent is 

to inform the parties. While some believe 

that the knowledge that their awards will be 

published will impose a desirable discipline 

on arbitrators to articulate coherent legal and 

factual bases for them findings, others are 

concerned that publication will undesirably 

impact the form, substance, and length of 




awards. Arbitrators writing for a broader 

The publication of institutional decisions on 

apply or may be of lesser significance to 

In a similar vein, the author of this article 

public audience than just the parties before 

challenges to arbitrators may, depending 

commercial disputes. 

has carried out a simple comparative 

them may tend to write awards that are longer 

on the trends they evince, encourage, 

survey of many major international arbitral 

and that are driven by considerations beyond 

those necessary to resolve the particular 

dispute before them. 

This may be more likely if the arbitrator’s 

name is disclosed, which has so far been 

the practice of a minority of institutions that 

publish decisions. The sense that publication 

may change how decisions are written 

(whether for better or worse) remains, 

however, even if the names of the arbitrators 

are not disclosed. 

E. The Cost of Selection and 

Editing 

Selecting and editing awards for publication 

incur significant costs, and this fact appears 

to have had an influence on institutions’ 

decisions. The editing process also carries 

certain risks - eg, whether the redactions are 

indeed sufficient to prevent identification of 

the parties. 

F. Publication of Awards vs 

Challenges 

The London Court of International Arbitration 

(‘LCIA’) has decided that it is more important 

and useful to the arbitration community, and 

less threatening to confidentiality, to publish 

the reasoning of decisions on challenges 

to arbitrators. The Stockholm Chamber 

of Commerce (‘Stockholm Chamber’) also 

publishes summaries of some decisions 

on challenges along with other more 

noteworthy awards or decisions. Decisions 

on challenges are more specific to arbitration 

and more difficult to research as compared 

to arbitrators’ reasoning on substantive law, 

for which judicial decisions are available and 

more authoritative. 

discourage, or simply sharpen the arguments 

of such challenges. Some believe that greater 

disclosure of the low rates of success in such 

challenges will discourage frivolous challenges. 

G. Impact on Challenges to 

Arbitrators 

To the extent that arbitrators’ names are 

published, the publication of awards may 

lead to more challenges to arbitrators on 

the basis of partiality. While publication 

of awards may provide useful information 

about an arbitrator’s or potential arbitrator’s 

views on particular issues likely to arise in an 

arbitration, some have expressed concern 

that it may also lead to more challenges to 

arbitrators on “issue conflicts” grounds - ie, 

challenges to an arbitrator on the grounds 

that he or she is biased as to issues likely 

to arise in the arbitration by virtue of prior 

published views on those issues. Such 

challenges are increasingly seen in investment 

treaty arbitrations and might, with increased 

publication of awards with arbitrators’ 

names, also increase in private commercial 

arbitration. 

H. The Difference Between 

Commercial and Investor- 

State Arbitrations 

The policy arguments for publication of 

awards in sovereign arbitration are quite 

different from the arguments for publication 

in the context of private commercial 

arbitration. Claims by investors against a 

sovereign state have far greater political and 

public interest implications, so arguments 

for greater transparency in that type of 

international arbitration may not necessarily 

I. Potential for Publication 

Beyond Institutional Control 

All institutions’ rules on party confidentiality 

have exceptions for court filings to enforce or 

vacate awards. At least in the United States, 

court filings are public, unless a court permits 

a party to file the document under seal for 

reasons of particular confidentiality, which is 

relatively rare. Court files may therefore be 

a fertile ground for finding full, unredacted 

arbitral decisions, and the Committee is aware 

that some legal publishers have contemplated 

mining those files to publish the decisions. This 

may provide more detailed information on the 

arbitrations and arbitrators, and may also be 

a reason for a party to hesitate in seeking to 

confirm or vacate an award. 

For better or worse, the criteria for 

determining disclosure differ between 

institutional publication and court filings. 

Institutional selection reflects institutional 

considerations such as perceived quality and 

broad applicability of the reasoning. The 

selection for court filings is simply the decision 

of a party to seek judicial relief to vacate or 

confirm an award, which could reflect the 

perceived quality of the award or just party 

strategy 22 .” 

Further researches 

22 Professor Catherine Rogers has begun an 

interesting attempt to counteract the bias inherent in 

publication of decisions determined by institutional 

selection, or court filings, and to increase publicly 

available knowledge about arbitrators. Her plan is to 

encourage parties to disclose decisions that will be 

available and searchable on a website with minimal 

editing to protect especially sensitive information and 

trade secrets. 

institutions, the results of which are set out 

in tabular form in the appendix hereto. This 

appendix examines the extent to which the 

various sets of international rules do (or do 

not) encourage the publication of redacted 

awards. 

Further reporting 

encouraged 

One particular field can serve by way of an 

example of when and where such reporting 

is both eminently desirable and necessary, 

namely in the interpretation of standard 

form contracts, such as the FIDIC “rainbow” 

suite of contracts. 

Taking, by way of straightforward example, 

the enforceability (or otherwise) of FIDIC 

dispute adjudication board decisions 

(analogous to those of UK adjudicators 

under the HGCRA (as amended)) searches of 

BAILII and similar electronic search engines, 

throw up the three Persero decisions 23 in 

the Singapore courts, together with the two 

further (Swiss and English) Illustrations set 

out under paragraph 17 below. 

One particular issue which arises 

(particularly under the FIDIC contracts, 

which use a multi-tiered dispute resolution 

process) is what the parties should do 

where a DAB has not been constituted. 

This question is particularly pertinent 

in circumstances where one of the 

parties attempts to delay and disrupt the 

23 See Christopher Seppälä, “An Excellent Decision 

From Singapore Which Should Enhance the 

Enforceability of Dispute Adjudication Boards – The 

Second Persero Case Before the Court of Appeal” (2015) 

31 Const LJ 367. 




constitution of an ad hoc DAB, which has to 

be put in place in order to resolve a specific 

Illustrations 

determined by the adjudicator: Stefanutti 

Stocks (Pty) Limited and S8 Property (Pty) 

and to refer the dispute directly to court 

(which had been chosen by the parties as 

dispute (as opposed to a standing DAB 

appointed at the outset of a project). Absent 

a DAB, how can any dispute be referred to 

it? Can such a dispute be referred directly to 

arbitration (or litigation) instead? 

The standard FIDIC terms do not 

themselves provide a clear answer to 

these questions. However, it has been 

suggested by some commentators that an 

answer could be found in sub-clause 20.8. 

Although entitled “Expiry of Dispute Board’s 

Appointment” (which could be interpreted 

as applying solely where a DAB is already 

implemented), the clause states that the 

provisions relating to the DAB do not apply 

and a dispute may be referred directly to 

arbitration in circumstances where “there 

is no [DAB] in place, whether by reason of 

the expiry of the [DAB’s] appointment or 

otherwise” (emphasis added). The phrase 

“or otherwise” may, perhaps, offer a 

possible answer to the question, although it 

is by no means a clear-cut one. 

One effect of this uncertain situation is that 

a party on the receiving end of a notice of 

arbitration will often challenge the arbitral 

tribunal’s jurisdiction, if only as a tactical 

point to be taken in settlement discussions, 

or to buy more time in which to prepare 

their defence in the arbitration. 

Two decisions in South Africa in 2013 and 

four decisions in 2014 from the Swiss 

Supreme Court and the London and Leeds 

Technology and Construction Courts (as 

well as Persero in Singapore) have provided 

some guidance about the precise manner 

in which this clause ought properly to be 

interpreted. 

Facts: In a case regarding a contract under 

the standard FIDIC Conditions of Contract 

and the effect of sub-clause 20.4 and 20.6 

thereof, it was held: by Plessis AJ, that: “The 

effect of these provisions is that the [DAB] 

decision shall be binding unless and until 

it has been revised as provided. There 

can be no doubt that the binding effect 

of the decision endures, at least, until it 

has been so revised....” “... The notice of 

dissatisfaction does not in any way detract 

from the obligation of the parties to give 

prompt effect to the decision until such 

time, if at all it is revised in arbitration. The 

notice of dissatisfaction does for these 

reasons, not suspend the obligation to 

give effect to the decision. The party must 

give prompt effect to the decision once it is 

given”: Tubular Holding (Pty) Limited v DBT 

Technologies (Pty) Limited 24 . 

Facts: In a further case, Wepener J referred 

to the unreported decision in Esor Africa 

(Pty) Limited v Bombela Civils JV (Pty) Limited 

(SGHC case no. 12/7442), which concerned a 

DAB decision given under sub clause 20.4 of 

the FIDIC Conditions of Contract. Held: that, 

“whilst the DAB decision is not final, the 

obligation to make payment or otherwise 

perform under it is ...” and further that “... 

The DAB process ensures that the quid 

pro quo for continued performance of the 

contractor’s obligations even if dissatisfied 

with the DAB decision which it is required to 

give effect to is the employer’s obligation to 

made payment in terms of the DAB decision 

and that there will be a final reconciliation 

should either party be dissatisfied with 

the DAB decision...” The court therefore 

held that the respondent was not entitled 

to withhold payment of the amount 

Limited 25 . Held: that (at least for international 

arbitrators sitting in Switzerland) the DAB 

procedures under the FIDIC contract must 

be treated as mandatory. An arbitration 

may not be initiated without going first to 

the DAB, if the contract provides for this. 

However, in the particular circumstances 

of this case, where an ad hoc DAB had 

not been constituted 18 months after it 

was requested, R was ultimately found 

to be unable to continue to rely upon the 

mandatory nature of the DAB procedure 

so as to prevent the resolution of the 

dispute by arbitration. The decision 

contains helpful analysis of the relevant 

FIDIC provisions, which could be applied 

equally in other jurisdictions. As part of 

this analysis, the Swiss Supreme Court 

considered the wording of sub-clause 20.8, 

the words “or otherwise” being described 

as a “very vague expression”, although it 

stated: 

“interpreting it literally and extensively would 

short-cut the multi-tiered alternative dispute 

resolution system imagined by FIDIC when it 

came to a DAB ad hoc procedure because, by 

definition, a dispute always arises before the 

ad hoc DAB has been set up, in other words, 

at a time when ‘there is no DAB in place’, 

however such interpretation would clearly 

be contrary to the goal the drafters of the 

system had in mind”: Case 4A_124/2014 (Swiss 

Federal Tribunal)”. 

Facts: C commenced court proceedings in 

the Technology and Construction Court, 

arguing that it was effectively entitled to 

opt-out of the requirement in sub-clause 

20.2 of the FIDIC Silver Book, when it did not 

wish to have a dispute resolved by the DAB, 

the final determination procedure, rather 

than arbitration). C again relied upon 

sub-clause 20.8 and, in particular, the “or 

otherwise” wording. C’s position was that 

the parties could not be under a mandatory 

obligation to achieve the appointment of a 

DAB and that the phrase “or otherwise” was 

wide enough to include a state of affairs 

where a DAB was not in place because a 

Dispute Adjudication Agreement had not 

been concluded as between the parties and 

the DAB. Held: by Edwards-Stuart J in the 

TCC that the clause should be interpreted 

so that the words “or otherwise” should be 

viewed narrowly, with the effect that subclause 

20.8 did not give either party: 

“a unilateral right to opt out of the [DAB] 

process save in a case where at the outset the 

parties have agreed to appoint a standing 

DAB and that, by the time when the dispute 

arose, that DAB had ceased to be in place, for 

whatever reason”. 

The court proceedings commenced by C 

were therefore stayed to enable the parties 

to “resolve their dispute in accordance with 

the contractual machinery”, ie by the DAB. 

Edwards-Stuart J further rejected the 

proposition that sub-clauses 20.4-20.7 of 

the FIDC dispute resolution procedure 

were unenforceable for lack of certainty. A 

number of commentators have commented 

on a potential “gap” in these provisions, 

summarised by the judge as follows (at 

[24]): 

“[ ] what has been described as ‘the gap’ in 

those sub-clauses [...] arises when the DAB has 

made a decision and one party has given a 

notice of dissatisfaction – with the result that 

24 SGHC case no. 06757/2013 

25 SGHC case no 20088/2013 

the DAB’s decision, whilst binding is not final. 




The problem then is that if the unsuccessful 

Waddan Hotel Limited v Man Enterprise Sal 

E’s compliance (or otherwise) with DAB 

Held, by the arbitral tribunal, in an interim 

party refuses to comply with the decision of 

(Offshore) (2014) 27 . 

decision. If the DAB decision was reversed 

award, that the adjudication procedure was 

the DAB as it is required to do by sub-clause 

20.4.4, the only remedy (it is said) available 

to the other party is to refer the dispute 

occasioned by the refusal to comply to yet 

another adjudication. This can have the effect, 

Ms Sinclair submitted, that the party in default 

can embark on a course of persistent noncompliance 

with DAB decisions and thereby 

deprive the other of any effective remedy”. 

Edwards-Stuart J neatly side-stepped this 

issue, because the contract before him 

provided for court proceedings, rather 

than arbitration. He noted that, whilst the 

point “may be arguable in the context of 

the standard FIDIC Books which include an 

arbitration clause”, an English court was not 

Facts: A contractor (C) obtained a DAB 

decision for the payment of $17 million 

against an employer (E). E gave a “notice 

of dissatisfaction” and C commenced an 

arbitration to enforce the DAB’s decision. 

The arbitral tribunal gave a final award, 

enforcing the DAB’s decision, and declined 

E’s request to consider the underlying 

merits of C’s claim. The tribunal ruled 

that the proper course for E was to seek 

such a review by a separate arbitration. 

This final award was struck down by the 

Singapore Court of Appeal as being without 

jurisdiction and in breach of the rules of 

natural justice. The arbitral tribunal was 

required to determine the full dispute 

in the final award, that would not be an 

amendment, or revocation, of the interim 

award, as such, but merely an accounting 

exercise, given effect to by the final 

award. It is expected that this issue will 

be expressly resolved in the revised suite 

of FIDIC contracts (beginning with the 

Yellow Book). For the moment, however, 

though, this case provides welcome 

confirmation that DAB decisions will be 

capable of enforcement by some means, 

despite perceived drafting infelicities): PT 

Perusakaan Gas Negara (Persero) TBK v CRW 

Joint Operation (2014) 28 . 

The ICC has most helpfully also published 

issue 1 for 2015 of the Dispute Resolution 

mandatory, that the formal requirements 

for submitting a dispute to the DAB had 

not been met and that there were no 

exceptional circumstances justifying any 

departure from such requirements. The 

tribunal ordered that the arbitration should 

be suspended whilst the parties proceeded 

with adjudication, but observed that 

(given the likelihood that at least one of 

the parties would probably be dissatisfied 

with the DAB’s decision) they might wish 

to waive the necessity to adjudicate and to 

proceed directly to arbitration. Unusually, 

in this case, the Engineer under the contract 

also acted as the DAB: ICC Case 14431 

(2008) 29 . 

subject to the same jurisdictional limitations 

between the parties and had been wrong 

Bulletin, containing 16 ICC interim, partial 

Facts: C terminated a Red Book contract for 

as an arbitrator. It could, for example, 

to decline E’s request to consider the 

and final awards and procedural orders 

alleged breaches by E. The parties failed 

simply order specific performance of the 

underlying merits of the claim. The Court 

in redacted form, thereby assisting legal 

to agree on the establishment of the DAB 

DAB’s decision, pending final determination 

noted that a better approach for C would 

practitioners to gauge precisely how arbitral 

within the time limits provided in the Red 

of the court proceedings: Peterborough City 

have been to have sought an interim, or 

tribunals are likely to construe clause 20 

Book. An ad hoc DAB was established, upon 

Council v Enterprise Managed Services Limited 

partial, award, pending the making of a 

and similar provisions. 

R’s initiative, rendering two decisions on 

(2014) 26 . 

final award. C took account of the Court’s 

the issues in dispute. C argued that these 

Facts: This case concerned a dispute to 

arbitration under a FIDIC contract pursuant 

to which, obtaining an engineer’s decision 

a condition precedent to a reference of 

any dispute to arbitration. The engineer 

made it clear that it was no longer the 

engineer under the contract and would not 

be determining the dispute. Subsequently, 

MAN Enterprise Sal (D) referred the dispute 

to arbitration. Al Waddan Hotel (C) claimed 

that this ignored the condition precedent. 

Held: by His Honour Judge Raeside QC, that 

C was not entitled to benefit from its own 

wrong, ie its failure to appoint an engineer, 

who could make the necessary decision: All 

comments and commenced a further 

arbitration this time seeking an interim 

award to enforce the amount of the DAB’s 

decision. The interim award was granted 

and E then brought proceedings before a 

Singapore court to challenge its validity. E 

contended that the applicable arbitration 

rules prevented any provisional award 

being made which might be varied in the 

tribunal’s final award and also offended 

against a provision in the rules which 

prevented the tribunal from varying, 

amending, or revoking, an award. 

Held: that E’s challenge should be rejected. 

The tribunal’s award (whilst expressed 

as being “interim”) was final and binding 

in relation to its subject- matter, namely 

Illustrations 

Facts: A contractor (C) sought to recover 

unpaid monies due under a contract for 

maritime clearance work undertaken for the 

employer (E), which contract incorporated 

the 1999 FIDIC Conditions of Contract for 

Construction (the Red Book) and provided 

for a permanent dispute adjudication board 

(DAB). E raised a number of objections, 

including an allegation that the claims 

were not admissible, because they had 

not been submitted to adjudication prior 

to arbitration (as required by the dispute 

resolution provisions in the Red Book). 

decisions were invalid and referred the 

dispute to arbitration. E challenged the 

arbitral tribunal’s jurisdiction and requested 

a partial award to enforce the DAB’s 

decision. Held, by the arbitral tribunal, that 

it had jurisdiction over disputes which were 

sufficiently closely connected to the matters 

that had been decided by the DAB and thus 

could be brought directly to arbitration; that 

the DAB decisions were valid and binding 

and that C’s request for an interim measure 

to suspend the execution of the DAB’s 

decisions should be rejected: ICC Case 

15956 (2010) 30 . 

29 Place of arbitration: Zurich Switzerland. Origin of 

parties: America and Europe. Applicable substantive 

law: Law of E’s country in Eastern Europe 

26 [2014] EWHC 3193 (TCC) [2014] 2 All ER (Comm) 

423; [2014] BLR 735. 

27 [2014] EWHC 4796 (TCC). 

28 [2014] SGHC 146 [2015] BLR 119, [2015] 155 Con 

LR 169. 

30 Place of arbitration: A city in East Europe. Origin of 

parties: Europe. Applicable substantive law: Law of E’s 




Facts: The parties entered into a contract 

Facts: Under a Red Book contract a 

avoiding adjudication: ICC Case 16155 

had become final and binding and could 

for the consideration of a power plant. 

permanent three-member DAB was 

(2010) 33 . 

no longer be submitted to arbitration. Held, 

A dispute arose over the validity of the 

termination by E of the contract in the 

arbitration commenced by C to obtain 

compensation for expenses which it 

had incurred and payments made to a 

sub-contractor. E contested the arbitral 

tribunal’s jurisdiction over claims which 

had not first been submitted to amicable 

dispute resolution and an ad hoc DAB, in 

compliance with the contract. Although 

closely based upon the FIDIC Conditions 

of Contract for EPC turnkey projects, the 

contract contained contradictory provisions 

relating to dispute resolution, one providing 

for amicable settlement and arbitration and 

the other adjudication, amicable settlement 

and arbitration. Held, characterising the 

issue as one of admissibility rather than 

jurisdiction and basing its decision upon 

a good faith interpretation of the parties’ 

intentions the arbitral tribunal found 

that the two-step procedure (comprising 

amicable settlement and arbitration), which 

was a special condition, ought properly 

to prevail over the three-step procedure 

(comprising adjudication, amicable 

settlement and arbitration), which was 

part of the general contractual conditions. 

Moreover E’s insistence that C should 

have submitted its claims to the DAB was 

inconsistent with E’s own submission of 

counterclaims directly to arbitration without 

first referring these to the DAB. Given 

that attempts had been made to settle the 

dispute amicably, the two-step procedure 

had been complied with and C’s claims 

were therefore admissible: ICC Case 16083 

(2010) 31 . 

country in Eastern Europe. 

31 Place of arbitration: Paris, France. Origin of parties: 

Middle East and Sub-Saharan Africa. Applicable 

substantive law: Law of E’s country in Sub-Saharan 

Africa. 

established. After many referrals to the 

DAB and notices of dissatisfaction from 

both parties, E suggested that the parties 

should agree upon an addendum to 

the contract, in order to allow disputes 

to be submitted directly to arbitration, 

thereby bypassing the DAB. C rejected this 

suggestion, claiming that the DAB decisions 

were binding and had to be executed. Held, 

by the arbitral tribunal, that although the 

nature of DAB decisions was binding, since 

in this case the DAB decisions were subject 

to notices of dissatisfaction (NoDs), C’s 

claim for a partial award ordering payment 

of the sums decided by the DAB could not 

be accepted: ICC Case 16119 (2010) 32 . 

Facts: C raised concerns with the Engineer 

regarding E’s ability to make payments 

during the performance of a Red Book 

contract and soon gave notification of 

termination of the contract on the same 

grounds. E also sought to terminate the 

contract, alleging contractual breaches by 

C. The case was submitted to arbitration, 

with E contending that C’s claim was 

inadmissible, since the multi-tier dispute 

resolution mechanism provided under 

the contract had not been followed. The 

arbitral tribunal first found that C’s referral 

of the claim to the Engineer was not 

invalidated by their failure to substantiate 

the claim with supporting information 

and documentation. Held, by the arbitral 

tribunal, that, as the referral to the DAB had 

been impossible by reason of E’s refusal to 

co-operate regarding their appointment, C 

was entitled to resort directly to arbitration. 

The dissenting arbitrator argued, however, 

that this was not a justifiable reason for 

32 Place of arbitration: Capital city of an Eastern 

European country. Origin of Parties: Europe. Applicable 

substantive law: Law of E’s country in Eastern Europe. 

Facts: C referred a dispute to arbitration, 

E arguing that the arbitral tribunal had 

no jurisdiction, since the claims had 

not been previously submitted to a 

DAB, in accordance with the dispute 

resolution provisions. The parties’ contract 

incorporated the 1999 FIDIC Conditions of 

Contract for Plant and Design-Build (Yellow 

Book). The parties disagreed about whether 

the contract provided for an ad hoc, or a 

standing, DAB. Held, by the arbitral tribunal, 

that the contract did not depart from the 

Yellow Book’s provisions requiring an ad 

hoc DAB and confirmed the validity of the 

adjudicator’s appointment and that it was 

not contingent upon the conclusion of a 

dispute adjudication agreement: thus C’s 

objection that there had been insufficient 

consultation prior to the adjudicator’s 

appointment was dismissed; that, since the 

DAB had been validly established, it was 

required to decide upon the clams prior to 

arbitration and, given that this condition 

precedent had not been respected, the 

arbitral tribunal declined jurisdiction: ICC 

Case 16262 (2010) 34 . 

Facts: C referred its claim to arbitration after 

an adjudicator’s decision that it was not 

entitled to all the additional costs claimed. E 

challenged the arbitral tribunal’s jurisdiction 

on the grounds that C had failed to 

comply with the agreed dispute resolution 

procedure to refer the dispute to arbitration 

within 28 days of the adjudicator’s decision 

and that as a consequence, the adjudication 

33 Place of arbitration: Paris, France. Origin of Parties: 

Africa, Asia Applicable substantive law: Law of E’s 

country in Sub-Saharan Africa. 

34 Place of arbitration: London, United Kingdom. Origin 

of Parties: Europe. Applicable substantive law: Law of E’s 

country in Eastern Europe. 

by the arbitral tribunal, that the 28-day 

time-limit was triggered, irrespective of 

the existence of an identifiable dispute, 

and that a formal referral to arbitration 

was necessary within such time limit; since 

there had been no such formal referral, the 

adjudicator’s decision had become final and 

binding, and as a consequence, the arbitral 

tribunal had no jurisdiction to revisit the 

decision: ICC Case 16435 (2013) 35 . 

Facts: The parties incorporated the Yellow 

Book into their contract. C objected to 

E’s notice of termination for delay in 

the performance of the contract and 

established at DAB, which issued two 

decisions. E issued NoDs against both 

decisions in the arbitration. C requested an 

order, enforcing the DAB’s decisions, and E 

objected on the grounds that C’s claim was 

time-barred and counterclaimed. Held, by 

the arbitral tribunal, that E’s counterclaims 

were time-barred, but C’s claims were not. 

However, the DAB’s decisions could not be 

enforced, because it was an ad hoc DAB, 

whereas the parties’ mutual intention was 

to have a permanent one and, thus, its 

decisions could not be binding: ICC Case 

16570 (2012) 36 . 

Facts: Under a Yellow Book contract C 

submitted a claim to the DAB for an 

extension of time (EoT), when the Engineer 

did not respond. The DAB issued two 

decisions, with E giving a NoD for the 

second one, whilst C also gave a NoD for 

matters left undecided in such decision. 

35 Place of arbitration: Port-Louis, Mauritius. Origin of 

Parties: Sub-Saharan Africa Applicable substantive law: 

Law of E’s country in Sub-Saharan Africa. 

36 Place of arbitration: capital city of an East European 

country. Origin of Parties: Europe Applicable substantive 

law: Law of E’s country in East Europe. 




C initiated arbitration to recover losses 

that the ICC should have jurisdiction 

power to enforce a DAB’s decision, against 

that E’s NoD had been given late and that, 

and E accused C of breach of contract and 

over disputes if no other institution were 

which a NoD had been issued. C challenged 

as a consequence, that part of the DAB 

counterclaimed for delay damages. Held, by 

designated. Held, by the arbitral tribunal, 

the validity of the NoD. Held, by the arbitral 

decision to which it related had become 

the arbitral tribunal, that the counterclaim 

that under applicable principles of contract 

tribunal, that the NoD was validly given 

final and binding and could not therefore 

was inadmissible, since E had not submitted 

interpretation, the parties’ intention was to 

and that, since C’s request was limited to 

be submitted to arbitration. E argued that 

its claim to the Engineer, or to the DAB, in 

submit disputes to ICC arbitration: ICC Case 

enforcement of the DAB’s decision, it would 

the DAB decision was not binding upon the 

accordance with the mandatory multi -tier 

17146 (2013) 39 . 

not issue a final award ordering specific 

parties. Held, by the arbitral tribunal, that 

dispute resolution process; that, C’s claim 

for EoT was time-barred, because it was 

made outside the 28-day period under subclause 

20.1: ICC Case 16765 (2013) 37 . 

Facts: Under a Red Book contract, C 

Facts: Under a Red Book contract, C and 

R1 entered into a dispute adjudication 

agreement (DAA) with R2, sole member of 

the DAB. The DAB issued an initial decision, 

awarding a sum of money to R1. When C 

performance of a DAB decision which had 

been contested before it: ICC Case 18320 

(2013) 41 . 

Facts: E terminated C’s contract due to 

delays in performance and changes in the 

the scope of its jurisdiction was determined 

by the dispute as originally submitted to the 

DAB and it could therefore examine all the 

issues covered by that decision: ICC Case 

19346 (2014) 43 . 

sought, by arbitration, enforcement of a 

failed to pay, R1 sought a second decision 

joint venture, both parties having signed 

Facts: The parties signed a Red Book 

decision (No 4) issued by the DAB, which 

from the DAB, claiming that C was in breach 

a Yellow Book contract. C requested the 

contract, appointing a sole member of a 

ordered payment of amounts awarded to 

of contract and should pay immediately 

arbitral tribunal to declare that the contract 

standing DAB. E referred to the Engineer 

it in earlier decision of the DAB. E objected 

also initiating arbitration proceedings, C 

had been unlawfully terminated and to 

and then the DAB certain disputes over 

to the arbitral tribunal’s jurisdiction over 

also initiated arbitration requesting the 

order E to pay the moneys allegedly due. E 

payments, with C objecting to the DAB’s 

this decision. Held, by the arbitral tribunal, 

arbitration tribunal to find that the DAB had 

asked for the proceedings to be bifurcated 

decision and initiating arbitration directly. 

that decision No 4 was a separate decision 

no jurisdiction to issue a second decision, 

and for the arbitral tribunal to issue a 

E thought that C first needed to refer the 

from the earlier decisions and concerned 

since it was an ad hoc DAB, whose mandate 

partial award, rejecting jurisdiction over 

dispute to the Engineer, or the DAB. Held, 

a breach of the obligation to comply with 

expired when the first decision was issued. 

the dispute for non-compliance with the 

by the arbitral tribunal, that C was correct in 

the DAB’s decisions under sub-clause 20.4, 

Held, by the arbitral tribunal, that the DAA 

multi-tier dispute resolution clause. Held, 

referring the dispute directly to arbitration, 

and as a consequence, C was entitled to 

could be terminated only with the consent 

by the arbitral tribunal, that a dispute could 

since the DAB must be considered non- 

damages: ICC Case 16948 (2011) 38 . 

of both parties and, since that consent was 

be brought directly to arbitration where 

existent, given that its sole member lacked 

Facts: C’s construction of a pipeline 

contract was terminated by E for failure 

to complete it within the deadline, leading 

to C’s expulsion from the site. C referred 

the matter to the dispute resolution board 

(DRB), which held that, although E was 

lacking, the DAB had the power to render its 

second decision. However, R1’s initiation of 

an arbitration in relation to the first DAB’s 

first decision, following a NoD, put an end 

to the DAB’s jurisdiction over the dispute: 

ICC Case 18096 (2012) 40 . 

no DAB was in place and that there was no 

obligation first to submit the dispute to the 

Engineer: ICC Case 18505 (2013) 42 . 

Facts: C referred a claim to the Engineer, 

alleging E’s failure to provide within 

the applicable deadline certain design 

the required independence and impartially 

and that, in these circumstances, there 

was no obligation to seek an amicable 

settlement, nor had the dispute first to be 

referred to the Engineer: ICC Case 19581 

(2014) 44 . 

not entitled to terminate the contract 

Facts: The parties submitted various claims 

documents. The parties had signed a Yellow 

The ICC is to be warmly commended upon 

for breach, it was entitled to do so for 

to a DAB under a Yellow Book contract. E 

Book contract. E objected to the Engineer’s 

this initiative and it would surely not be too 

convenience. E gave a NoD and challenged 

issued a NoD against the DAB’s decision 

determination and referred the dispute to 

much to expect other bodies such as the 

the jurisdiction of the ICC arbitral tribunal 

and C and a company to which it had 

the DAB. Both parties issued NoDs against 

Chartered Institute of Arbitrators (CIArb) 

in the ensuing arbitration, on the grounds 

assigned part of its claim sought arbitration 

the DAB’s decision. C initiated arbitration, 

and Glasgow Caledonian University (which 

that the contact did not provide for referral 

in order to enforce the DAB’s decision. E 

seeking delay damaged in reliance upon 

publishes annual adjudication updates), 

to ICC. C argued that the parties intended 

argued that the arbitral tribunal lack of 

the Engineers determination and claiming 

37 Place of arbitration: capital city of an Eastern 

European country. Origin of Parties: Europe Applicable 


39 Place of arbitration: Paris, France. Origin of Parties: 

Europe Applicable substantive law: Law of E’s country in 

Eastern Europe. 






















to name but two, to take measures also to 

International commercial arbitration is a 

Any award may be published 30 days 

in England. This will improve the conduct 

follow the ICC’s helpful suit. 

dynamic and constantly evolving process. 

after the award becomes available to 

of proceedings and the quality of awards, 

The protection of confidentiality is without a 

the parties and no earlier, and any such 

as well as increasing competition and 

This theme is reflected in a recent article 45 

by Elina Zlatanska, who wrote as follows (on 

page 36 thereof): 

doubt essential for the smooth functioning 

of arbitration proceedings. However, 

confidentiality, whilst considered to be one 

publication shall be in a redacted format 

as may be prescribed, and shall preserve 

the anonymity of the parties and their 

choice within the industry and assist 

legislative developments – all highly 

positive outcomes. The suggested reform 

“... the arbitral institutions need to amend 

their rules to include express provisions as 

to the publication of awards with reasons 

and also provide model clauses dealing 

with confidentiality before and after the 

award is rendered 46 . Institutions that have 

some publishing experience should publish 

guidelines for the publication of awards 

that others can follow. The efforts of the 

Milan Chamber of Commerce to that effect 

are commendable and serve as a useful 

example 47 . 

Last but not least, it would also be desirable 

for the international arbitral community to 

reach a consensus on the value of the duty 

of confidentiality and whether it presents a 

genuine obstacle to systematic publication 

of awards 48 . It is advisable that uniform 

standards for the application of the duty 

of confidentiality be developed. This can 

be done by way of guidelines. The most 

appropriate venue appears to be CIArb 49 . 

of the cornerstones of arbitration, is not 

reliable 50 ... Balancing the parties’ private 

interests with the publication of reasoned 

awards is not an easy task. But if we want 

to promote international commercial 

arbitration as an efficient and reliable 

method for settling business disputes, 

information needs to be made available to 

everyone who has an interest in it, or as 

Fouchard once put it: 

“If the international community of merchants 

aspire to give itself an autonomous system 

of law, this law has to be made known to 

all those who have an interest in it: the 

arbitrators should not resemble the ancient 

pontiflex of antique Rome, who jealously kept 

the knowledge of law for themselves and with 

it the religious and political power 51 . 

The same theme is further developed in 

another recent article by Nicholas Towers, 

who wrote 52 as follows: 

representatives and identify only the 

members of the tribunal. 

(B) Notwithstanding (1), if any party, at any 

time before the expiry of 30 days after the 

award becomes available to the parties, 

makes a request in writing to the tribunal 

asking that the award not be published, 

the award shall not be published unless 

otherwise provided for by law. 

... 

The hundreds of arbitrations in England 

each year could provide an important 

source of arbitral jurisprudence; the LCIA 

alone reported that it administered 290 

disputes in 2013 53 , but the procedural legal 

and practical knowledge contained in those 

awards is currently largely unavailable 54 . 

The London Maritime Arbitrators 

Association (LMAA) Arbitration Terms 

(2012) cl.26 encourages tribunals to release 

meritorious awards within that narrow field 

represents a pragmatic compromise 

between maximising the utility of awards 

and allowing a slightly higher level 

of confidentiality where required by 

certain users. A portion of awards would 

necessarily be sacrificed in order to avoid 

diminishing England’s role as a leading 

arbitral seat but the remainder will go on to 

contribute to an invaluable set of resources 

for participants in arbitration around the 

world.” 

Having began this article with a decision 

which cited Humpty Dumpty in a House of 

Lords’ dissenting speech, the author cannot 

resist reverting to Through the Looking 

Glass 55 , hoping that this does not turn out to 

be his epigraph: 

“The little fishes of the sea, 

They sent an answer back to me. 

The little fishes’ answer was 

‘We cannot do it, Sir, because ……….”! 

“... a possible draft... amendment [to 

for publication, but this approach is rare. 

45 E Zlatanska, “To Publish or Not To Publish, Arbitral 

Awards: That is the Question” (2015) 81 Arbitration 25. 

the Arbitration Act 1996] is as follows: 

What is proposed in this article is a 

46 Hwang and Chung, “Defining the Indefinable” (2009) 

Journal of International Arbitration 642, 644. 

47 See, eg Milan Chamber of Commerce, Guidelines for 

Anonymous Publication of Arbitral Awards (Milan: Milan 

Chamber of Commerce and Università Carlo Catteneo, 

n.d.), http://www.camera-arbitrale.it/Documents/ 

guidelines_anonym-aw-pdf [Accessed 9 December 

2014]. 

Confidentiality of the award 

(A) Unless otherwise agreed by the parties – 

50 Paulsson and Rawding, “The Trouble with 

Confidentiality” (1994) ICC Bulletin 48. 

relatively small change but one which could 

provide substantial practical benefits for 

English arbitration. In effect, the reform 

maintains the confidentiality of awards 

because the parties are not identified, 

but allows the generation of an accessible 

body of arbitration knowledge originating 

48 Kyriaki Noussia, Confidentiality in International 

Arbitration: A Comparative Analysis of the Position 

under English, US, German and French Law (Heidelberg: 

Springer 2010), p.181 

49 A full list of CIArb Guildelines, Protocols and Rules 

is available at http://www.ciarb.org/resources [Accessed 

December 9, 2014]. 

51 Klaus Peter Burger, The Creeping Codification of 

Lex Mercatoria, citing Philippe Fouchard, L’arbitrage 

commercial international (Alphen aan den Rijn: Kluwer 

Law International, 2010), p.85. 

52 N Towers, “Expanding Horizons in Commercial 

Arbitration: The Case for the Default Publication of 

Awards” (2015) 81 Arbitration 131. 

53 LCIA Registrar’s Report 2013, available online 

at http://www.lcia.org/LCIA/reports.aspx [Accessed 

February 27 2015]. 

54 LCIA Rules Art.30 makes arbitration awards 

confidential. 

55 (1872) chapter 6. 



Andrew Burr 

T: ++44 (0)20 3514 9020 

Email: andrew.burr@arbdb.com 

After spending over thirty years of his professional life as a member of Atkin Chambers, Andrew Burr took an extended editorial 

sabbatical in 2014-2015 to complete the fifth edition of Delay and Disruption in Construction Contracts (informa law from 

Routledge (ilfR)) (DDCC5) and International Contractual and Statutory Adjudication (Wiley Blackwell (WB)). 

This renewed his interest in legal writing and he has decided to leave chambers, in order to pursue a number of further 

publishing projects. In addition, he will continue to accept Direct and Public Access work as counsel and will develop his third 

party neutral practice with ArbDB Chambers, through which, he will accept any instructions to act as adjudicator, arbitrator, 

dispute board member and mediator. 

http://www.lawyerissue.com 

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