Introduction to Arbitration
Examination of January 22, 2016
Construzioni Industriali Chiavi In Mano SA (Construzioni) company based in Perugia, Italy, concluded with International Wagen, Gmb, (IW) company headquartered in Munich, Germany, a works contract for the construction of a factory in Viana do Castelo, Portugal. In this contract, written in English and signed on January 22, 2014, the Portuguese law is applicable.
The contract contains the following arbitration clause:
"1. All disputes arising out of or in connection with this contract, shall be finally settled by arbitration according to the Rules of Arbitration of the Commercial Arbitration Centre of the Portuguese Chamber of Commerce and Industry (Commercial Arbitration Centre), by three arbitrators appointed in accordance with the Rules.
2. The place of arbitration shall be Lisbon, Portugal. "
During the construction, Construzioni, due to an internal reorganization, decided to assign its contractual position in the contract to Sopca, another construction company, based in Portugal. The assignment contract was signed on 22 January 2015. The IW authorized the assignment.
During the works, there was a serious problem in the industry foundations, that wasonly discovered after factory was finished. For that reasonthe fabric could not begin to operate. IW knows that the foundations were in charge of Subemp., SA, a company contracted for this task by Construzioni. But IW has no contract with Subemp. This subcontract was also assigned by Construzioni to Sopca.
IW initiated the arbitration against Construzioni and Sopca. Only Sopca appoints an arbitrator, whereas Construzioni is silent about this issue.
1. Explain how the arbitral tribunal is constituted in this situation. (3 points)
2. Can the proceedings be brought against Sopca? (3 points)
Sopca also required, in its reply, the intervention of Subemp. The contract between Construzioni and Subemp (that IW is not part) contains an arbitration clause exactly the same as the main contract (transcribed above).
3. Is the intervention admissible and, if yes, what are the consequences for the constitution of the arbitral tribunal? (4 points)
The arbitrator appointed by IW is at the present presiding another arbitration. In that case, one of the co-arbitrators is IW’s lawyer in this case. The two cases are not at all related.
4. Should the arbitratordisclose this fact? Failing to do so, should Sopca challenge him? Explain, in any case, how to process the challenge. (3 points)
The parties request the production of expert evidence to ascertain the cause of the damage. The tribunal believes, however, that it is not necessary. It further decides to limit the production of testimonial evidence to 8 hours for each part.
5. Are these decisions in accordance with the law? What can the parties do to challenge them? (3 points)
The tribunal also decides to first determine if the Repondents areliable and only after settle the damages (process bifurcation). After the presentation of evidence, the tribunal issues a partial award condemning Sopca, Construzioni and Subemp as jointly liable. They all express their displeasure, because they understand that there are procedural and merit errors in the award, but do nothing right away. The process continues for the assessment of damages and at the end an award in damage is issued condemning all the Respondents on the claim as demanded by IW.
6. Can the Respondents challenge the award? On what grounds? (4 points)
Good luck!