Practical Aspects of Arbitrating EC Competition Law · · 2016-10-07Practical Aspects of Arbitrating EC Competition Law. ... Arbitrability and EC Competition Law ... The second

Tobias Zuberbühler

Christian Oetiker (Eds.)

Practical Aspects of Arbitrating EC Competition Law

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Preface

In the not too distant past, it was often questioned whether or not EC competition law was at all arbitrable. This issue arose in numerous arbitrations within and outside of the EC in which defendants tried to fend off contractual obligations, arguing that such obli-gations violated EC competition law (the so called Euro-defense). While there may still be some issues pending final resolution, it is nowadays widely accepted that arbitral tribunals are in a position to decide upon EC competition law questions.

�ery recently, the EC Commission has started, within the framework of the ongoing modernisation of enforcement, an initiative to facilitate and thereby encourage private enforcement of EC competition law. On 19 December 2005, the EC Commission adopted a green paper and a commission staff working document on damages actions for breach of the EC antitrust rules and started a public consultation on the issue. It is clear that the strengthening of private enforcement of EC competition law in general will also increase the importance of arbitration as alternative dispute resolution mechanism for such en-forcement.

In addition, the EC Commision increasingly uses arbitration as means of private moni-toring and enforcement of commitments given by parties in the framework of public antitrust or merger control proceedings.

The present publication is the product of the joint working session of the International Arbitration and the Antitrust Commissions of AIJA (Association International des Jeunes Avocats, www.aija.org) at its Annual Congress 2006 (22–27 August) in Geneva. The dif-ferent contributions are aimed at focussing on a number of issues of arbitrating EC com-petition law which are, in our view, of most relevance in practice.

Zurich / Basel, January 2007

Tobias Zuberbühler & Christian Oetiker

� Preface

Table of Contents

�II

Table of Contents

Preface............................................................................................................................. �

Table of Contents ................................................................................................... �II

List of Editors and Authors ............................................................................ X�

List of Abbreviations ........................................................................................... X�II

Bibliography .............................................................................................................. XIX

§ 1 Basis for Application of Competition Law in Arbitration Proceedings..................................................................... 1

Phillip Landolt

I. Introduction ..................................................................................................... 1

1. A �ariety of Approaches ................................................................................. 1

2. What Happens in Practice .............................................................................. 1

3. The Proper Approach ....................................................................................... 4

II. Mandatory norms ........................................................................................ 4

1. Applicable law – General ................................................................................ 4

2. Justification for the Application of Mandatory Norms ........................ 5

3. Application of Mandatory Norms by Courts ............................................ 6

(a) General .......................................................................................................... 6

(b) The Rome Convention ............................................................................. 6

(c) Art. 19 of the Swiss PILS .......................................................................... 10

(d) Art. 7 of Rome Convention as reflective of generally accepted principles .................................................................................. 11

(e) Spatial Criterion of Application ............................................................ 12

4. Application of Mandatory Norms by Arbitral Tribunals ...................... 12

(a) Treatment of Applicable Law by Arbitral Tribunals – General . 12

(b) Mandatory Norms before Arbitral Tribunals ................................... 14

III. Competition Law .......................................................................................... 16

1. Mandatory Norms ............................................................................................. 16

2. Spatial Criterion.................................................................................................. 17

3. De minimis Requirements – a Practical Limitation on the Application of Competition Law .......................................................... 22

IV. Conclusion ........................................................................................................ 23

Table of Contents

�III

§ 2 Characterization of Competition Law as public policy ................................................................................................. 25

Max C. van Leyenhorst / Isabelle P.M. van den Nieuwendijk

I. Introduction ..................................................................................................... 25

II. Legal Framework .......................................................................................... 26

1. Introduction......................................................................................................... 26

2. Enforcement of Arbitral Awards .................................................................. 26

(a) Enforcement of Awards in the Netherlands .................................... 26

(b) Other European Countries ..................................................................... 26

(c) New York Convention; Recognition and Enforcement of Foreign Arbitral Awards .......................................................................... 27

3. Setting Aside of Arbitral Awards .................................................................. 28

(a) The Netherlands ........................................................................................ 28

(b) Other European Countries ..................................................................... 29

III. Application of EC Competition Law in ordinary court proceedings ..................................................................................................... 30

1. Introduction......................................................................................................... 30

2. The Van Schijndel judgment .......................................................................... 30

IV. Application of EC Competition Law in Arbitral Proceedings .................................................................................. 33

1. Introduction......................................................................................................... 33

2. The Eco Swiss / Benetton judgment .............................................................. 33

V. Reasons for distinction ............................................................................. 36

VI. Arbitrability and EC Competition Law ............................................ 39

1. Introduction......................................................................................................... 39

2. Arbitrability and public policy ...................................................................... 39

3. Arbitrability and EC competition law ........................................................ 40

VII. Conclusion ....................................................................................................... 41

§ 3§ Application of competition Law ex officio .......................... 43

Niko Hukkinen

I. Introduction ..................................................................................................... 43

II. The legacy of Benetton .............................................................................. 43

1. Benetton in brief ................................................................................................. 43

2. Dispute around the Benetton judgement................................................. 45

(a) The clash of Benetton with the principle of judicial passivity and the �an Schijndel judgement ...................................................... 45

Table of Contents

IX

(b) Opposite view: no ex officio rule arises from Benetton ............. 46

(c) Conclusions ................................................................................................. 49

III. Scope of the requirement to apply EC Competition Law Ex Officio ................................................................................................. 49

1. Provisions of the EC Treaty............................................................................. 49

2. Other provisions of EC competition law ................................................... 51

IV. Practical considerations related to the Ex Officio application of EC Competition Law .................................................. 52

1. Exclusion of EC competition law by the parties ..................................... 52

2. Effect of the nature of the infringement of EC competition law ...... 53

3. Ex officio application of EC law outside the EEA ..................................... 56

V. Conclusions ...................................................................................................... 57

Bibliography .................................................................................................... 58

Decisions ............................................................................................................ 59

§ 4 Application of Block Exemptions and Art. 81(3) EC by Arbitral Tribunals ............................................ 61

Christian Steinle / Martin Beutelmann

I. Introduction ..................................................................................................... 61

II. Typical constellations in Legal Practice ......................................... 61

III. The old regime under Regulation No. 17/62 .............................. 62

IV. Legal Exception under Regulation No. 1/2003.......................... 63

V. Block exemptions: Safe Harbour And Black and Grey Clauses .................................................................................................... 65

VI. Individual exemption: Guidance by the European Commission .................................................................................................... 67

VII. Burden of proof ............................................................................................. 70

VIII. Conclusion ........................................................................................................ 71

§ 5 Parallel Proceedings .............................................................................. 73

Daniel Marugg / Sabine Burkhalter Kaimakliotis

I. Introduction ..................................................................................................... 73

II. Cooperation between an arbitral tribunal, national Courts and the commission ............................................... 75

1. Introduction......................................................................................................... 75

2. The possibility for an arbitral tribunal to apply for preliminary rulings by the ECJ .............................................................................................. 75

Table of Contents

X

3. The obligation of an arbitral tribunal to submit a case for a preliminary ruling in Switzerland ............................................................. 77

4. Summary............................................................................................................... 78

III. Parallel proceedings .................................................................................. 79

1. Influence of an evaluation or a judgment of the Commission to an arbitral tribunal ....................................................................................... 79

2. Is a preliminary arbitration award binding for the Commission? .... 81

3. Suspension of the arbitral proceedings while proceedings are pending before the Commission ......................................................... 82

4. Intervention of the Commission in pending arbitral proceedings . 82

IV. Future Developments as regards the interrelation in parallel proceedings before arbitral tribunals and national instances ....................................................................................... 83

§ 6 Access of an Arbitral Tribunal to Competition- related Data and Documents ......................................................... 85

Sari Hiltunen / Michaela Ramm-Schmidt / Anders Forss

I. Introduction ..................................................................................................... 85

II. Documents in ihe possession of the parties ............................... 88

1. General .................................................................................................................. 88

2. Request to Produce .................................................................................. 89

(a) Relevance as Evidence ............................................................................ 90

(b) Sufficiently Identified Documents ...................................................... 91

(c) In the Possession, Custody or Control of the Party ....................... 92

(d) Objections to the Request to Produce .............................................. 93

(e) Production of documents at the Initiative of the Arbitral Tribunal ......................................................................................... 94

3. Coercive Measures ............................................................................................ 95

(a) Negative Inferences.................................................................................. 95

(b) Court Assistance ........................................................................................ 96

III. Documents in the possession of third parties ........................... 97

IV. Data compiled by the EC Commission ............................................ 98

V. Summary and a view to the future .................................................... 100

§ 7 Expert Determination of Competition Issues ................. 103 Paul Peyrot

I. Introduction ..................................................................................................... 103

1. Different Forms of Experts ............................................................................. 104

Table of Contents

XI

2. A brief outline of the process of expert determination ....................... 104

(a) Expert Determination Compared with Arbitration ....................... 104

(b) Contractual Character ............................................................................. 105

(c) Procedural Aspects of Expert Determination ................................. 106

II. Why expert determination instead of arbitration? ................ 107

III. A case for experts: Monitoring the commitments of parties ............................................................................................................ 107

1. General .................................................................................................................. 107

2. Arbitration or Expert Determination? ........................................................ 109

IV. The commission as expert to an arbitral tribunal? ................. 110

V. Conclusion ........................................................................................................ 112

§ 8 Awards Conflicting with EC Competition Law ............... 113 Carsten �ennemann

I. Assessment of consent awards under art. 81 EC ...................... 113

1. Introduction......................................................................................................... 113

2. Refusal by the Arbitrator To Sign ................................................................ 114

3. Possibility To Make Suggestions For Modification................................ 114

4. Can The Arbitral Tribunal Design A Consent Award Consistent With Competition Rules? ................................................................................ 116

5. Liability of Arbitrators ...................................................................................... 117

II. Interference by the European Commission ................................. 121

1. How Will The European Commission Be Involved In A Matter Which Is Pending At An Arbitral Tribunal? ............................ 122

2. Who Is In Control Of The Commission Proceeding? ............................. 122

III. Conclusion ........................................................................................................ 124

§ 9 Characterization Of Competition Law as public policyand the enforcements of arbitral awards ........... 127

John Gaffney / Shai Wade

I. Introduction .................................................................................................... 127

II. Enforcement conventions and treaties ..................................................... 127

1. The New York Convention and UNCITRAL Model Law ........................ 127

2. Other Conventions ............................................................................................ 128

III. The second look doctrine ........................................................................ 130

1. U.S. Jurisprudence – Mitsubishi v. Soler ..................................................... 130

IV. Eco Swiss ............................................................................................................. 134

V. A third look doctrine? ................................................................................ 137

Table of Contents

XII

VI. The response to the second look doctrine .................................. 138

VII. The "second look doctrine" in practice – recent cases .......... 140

1. EC cases ................................................................................................................. 140

(a) Dirland v. Viking .......................................................................................... 140

(b) Thalès v. Euromissile ................................................................................. 141

(c) Marketing Displays International Inc. ................................................... 143

2. U.S. cases ............................................................................................................. 144

3. Switzerland .......................................................................................................... 145

VIII. Trends .................................................................................................................. 146

IX. Strategic considerations .......................................................................... 149

1. Future disputes .................................................................................................. 149

2. Existing disputes ................................................................................................ 150

3. Enforcement ........................................................................................................ 151

X. Conclusions ...................................................................................................... 151

§ 10 Arbitration Clauses Proposed by the EU Commission in Antitrust and Merger Procedures – Current Approach and Deficiencies ................................................................................................... 153

Dieter A. Hofmann / Oliver M. Kunz

I. Introduction ..................................................................................................... 153

1. Basic outline of the merger procedure ...................................................... 154

2. Commitments, conditions and obligations ............................................. 155

(a) In general ..................................................................................................... 155

(b) Structural and behavioural commitments ....................................... 156

(c) Commitments "offered by the undertakings" ................................ 157

(d) The use of arbitration clauses as "conditions and obligations" 157

3. The use of arbitration clauses in infringement proceedings (Art. 85/86 EC Treaty) ....................................................................................... 158

II. Arbitration clauses in ec merger control in general .............. 159

1. Purpose of arbitration clauses in merger control .................................. 159

2. Admissibility of arbitration clauses ............................................................. 160

III. Specific content of ec merger regulation arbitration clauses ................................................................................................................. 162

1. Institutional arbitration or ad hoc arbitration ......................................... 162

2. Seat of the arbitration ...................................................................................... 163

3. Arbitrator(s) ......................................................................................................... 165

Table of Contents

XIII

(a) Appointment .............................................................................................. 165

(b) Arbitrator(s) fees ........................................................................................ 168

(c) Sole arbitrator or arbitral tribunal ...................................................... 170

(d) Qualifications of the arbitrator(s) ........................................................ 170

4. Procedural issues ............................................................................................... 170

(a) Settlement negotiations before instituting the arbitration ...... 170

(b) Language ..................................................................................................... 171

(c) Other procedural issues .......................................................................... 172

5. Evidence ................................................................................................................ 173

6. Right to request information/obligation to provide information ... 174

7. Confidentiality .................................................................................................... 175

8. Interim Measures ............................................................................................... 177

9. Time frame and deadlines and fast-track procedure ........................... 178

10. Scope of the arbitration clause .................................................................... 180

11. Notification requirement ................................................................................ 183

12. Substantive law applicable to the arbitration......................................... 183

13. Particular proceedings..................................................................................... 185

14. Involvement of the Commission in the arbitration .............................. 185

(a) Information of the Commission ........................................................... 185

(b) Assistance and participation ................................................................. 186

(c) Parallel proceedings ................................................................................. 188

15. Means of complaint .......................................................................................... 190

IV. Conclusion ........................................................................................................ 191

V. Decisions (in chronological order) .................................................... 191

§ 11 The French Approach to Arbitrating EC Competition Law in the light of the Paris Court of Appeal’s Decision in SNF vs Cytec Industries .............. 193

Pierre Heitzmann / Jacob Grierson

I. Introduction ..................................................................................................... 193

II. The SNF Case ................................................................................................... 194

1. The Arbitral Proceedings ................................................................................ 194

2. The Criminal and Administrative Proceedings Commenced by SNF After the Arbitral Award .................................................................. 195

3. The Enforcement Proceedings and the Recognition of the Award ..................................................................................................................... 196

Table of Contents

XI�

III. International arbitrators can and should be trusted to apply article 81 EC ................................................................................. 198

1. Arbitrators May Declare a Contract Null If and When Appropriate or Grant Exemptions ........................................................................................ 198

2. Arbitrators Should Be Trusted to Raise Sua Sponte the Issue of the �alidity of a Given Contract Under Article 81 of the EC Treaty ............................................................................................................... 204

3. Arbitrators Should Be Trusted to Decide EC Competition Law Issues Without the Need to Consult Any Antitrust Authority .. 206

IV. The review of awards dealing with competition law issues should be limited unless a violation of antitrust law is "flagrant, effective and concrete" ..................... 209

1. The SNF Case Confirms the Limited Scope of Review of Awards at the Enforcement Stage ......................................................... 209

2. Reconciling the Limited Review of Awards to Flagrant, Effective and Concrete �iolations of International Public Policy Rules is Consistent with the Eco Swiss Case ............................................................. 212

V. Parties alleging a violation of article 81 may seek additional remedies through administrative or criminal proceedings ................................................................................. 219

1. The Possibility For Parties To Start Parallel Proceedings Before Administrative Antitrust Authorities or Before Criminal Courts ................................................................................................... 219

2. Parallel Proceedings Before Administrative Antitrust Authorities or Criminal Courts Should Not Interfere with the Resolution of Contractual Disputes ................................................................................. 221

VI. Conclusion ........................................................................................................ 222

List of Editors and Authors

X�


Editors

Tobias ZuberbühlerLustenberger Glaus & PartnerSempacherstrasse 158032 Zurich, [email protected]

Dr. Christian Oetiker�ISCHERAeschenvorstadt 44010 Basel, [email protected]

Authors

Dr. Martin Beutelmann Gleiss Lutz Maybachstrasse 6 70469 Stuttgart, Germany [email protected]

Dr. Sabine Burkhalter KaimakliotisGHR RechtsanwälteBahnhofstrasse 648021 Zurich, [email protected]

Anders Forss Castrén & Snellman Erottajankatu 5 A 00131 Helsinki, Finland [email protected]

John Gaffney O'Flynn Exhams 58, South Mall Cork, Ireland [email protected]

Jacob GriersonJones Day120, rue du Faubourg Saint-Honoré75008 Paris, [email protected]

Pierre HeitzmannJones Day120, rue du Faubourg Saint-Honoré75008 Paris, [email protected]

Sari Hiltunen Castrén & Snellman Erottajankatu 5 A 00131 Helsinki, Finland [email protected]

Dieter A. Hofmann Walder Wyss & Partners Seefeldstrasse 1238034 Zurich, Switzerland [email protected]


X�I

Niko Hukkinen Roschier Holmberg Keskuskatu 7 A 00170 Helsinki, Finland [email protected]

Oliver M. KunzWalder Wyss & Partners Seefeldstrasse 1238034 Zurich, Switzerland [email protected]

Dr. Phillip Landolt Tavernier Tschanz 11-bis, rue Toepffer 1206 Geneva, Switzerland [email protected]

Daniel Marugg Gloor & SiegerUtoquai 378024 Zurich, [email protected]

Dr. Paul Peyrot Wilms & Peyrot Holbeinstrasse 31 8032 Zurich, Switzerland [email protected]

Michaela Ramm-Schmidt Castrén & Snellman Erottajankatu 5 A 00131 Helsinki, Finland [email protected]

Dr. Christian Steinle Gleiss Lutz Maybachstrasse 6 70469 Stuttgart, Germany [email protected]

Isabelle P.M. van den Nieuwendijk Nauta DutilhP.O. Box 1110 3000 BC Rotterdam, The Netherlands [email protected]

Max C. van Leyenhorst Nauta Dutilh P.O. Box 1110 3000 BC Rotterdam, The Netherlands [email protected]

Carsten �ennemann Heuking Kühn Lüer Wojtek 140 Avenue Louise 1050 Brussels, Belgium [email protected]

List of Abbreviations

X�II


ArbInt Arbitration International, London

Arbitration The Journal of the Chartered Institute of Arbitration, London

ASA Association suisse de l'arbitrage (Swiss Arbitration Associa-tion)

ASA Bull ASA Bulletin, The Hague

DFT Decisions of the Swiss Federal Tribunal (= Federal Supreme Court)

DRJ Dispute Resolution Journal, London

EBLR European Business Law Review

EC EC Treaty

ECLA European Competition Law Annual

ECLR European Competition Law Review

ELR European Law Review

IALR International Arbitration Law Review

IAR Mealey's International Arbitration Report, Wayne PA (US)

IBA International Bar Association

IBA Rules IBA Rules on the Taking of Evidence in International Com-mercial Arbitrations, adopted by the IBA Council on 1 June 1999

IBL International Business Lawyer, London

IBLJ International Business Law Journal

ICC International Chamber of Commerce

ICC Rules ICC Rules of Arbitration effective as from 1 January 1998

ICC Bull The ICC International Court of Arbitration Bulletin, Paris

ICCA International Council for Commercial Arbitration

ICCA Handbook ICCA International Handbook on Commercial Arbitration, The Hague/London/Boston

ICCA Yearbook ICCA Yearbook of Commercial Arbitration, Deventer (UK)

IntALR International Arbitration Law Review, London

JIntArb Journal of International Arbitration, Geneva

LCIA London Court of International Arbitration

LCIA Rules LCIA Arbitration Rules in force as from 1 January 1998

NYC United Nations Convention on the Recognition and Enforce-ment of Foreign Arbitral Awards (New York Convention; New York, 10 June 1958)


X�III

PILS (Swiss Federal) Private International Law Statute of 18 De-cember 1987 (SR 291)

RDAI Revue de droit des affaires internationales

Rev.arb. Revue de l'arbitrage, Paris

Schieds�Z Zeitschrift für Schiedsverfahren (German Arbitration Journal), Munich/Frankfurt/Basel/Geneva

Swiss Rules Swiss Rules of International Arbitration in force as from 1 Jan-uary 2004

TDM Transnational Dispute Management

UNCITRAL Notes UNCITRAL Notes on Organizing Arbitral Proceedings (1996)

UNCITRAL Rules UNCITRAL Arbitration Rules effective as from 15 December 1976

UNIDROIT Principles UNIDROIT Principles of International Commercial Contracts (1994/2004)

WIPO World Intellectual Property Organization

WIPO Rules WIPO Arbitration Rules effective as from 1 October 2002

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komninos Assimakis, Arbitration and the modernisation of European competi-tion law enforcement, World Competition 2/2001, 211–238

kühn� Wolfgang, Arbitrability of Antitrust Disputes in the Federal Republic of Germany, ArbInt 3/1987, 226–239

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103

§ 7 Expert Determination of Competition Issues

Paul Peyrot

I. Introduction

According to the parties and the nature of the claim, competition law disputes can be categorized as follows:1

• Contractual disputes between partners of either a horizontal or vertical nature: these claims include disputes on pricing, exclu-sivity, territory or termination;

• Disputes between buyers and sellers that arise on a transac-tion-by-transaction basis: these claims include price discrimina-tion, tie-ins, resale or use restrictions, refusals to deal or other monopoly abuses;

• Disputes arising when a party to a business relationship coop-erates with third parties to inhibit competition and damage the first party: these claims include price-fixing, market division and boycotts; and

• Disputes between competitors involving claims that one com-petitor has been injured by the other through predatory pric-ing, refusal to deal, monopolistic abuse, price discrimination, exclusive dealings, unfair competition and anti-competitive takeovers.

Obviously, arbitration of EC competition law matters can involve highly techni-cal questions regarding economics, accounting and technology. Additionally, competition law is very close to public policy issues. An arbitrator dealing with these issues needs not only a deep understanding of the relevant markets and their practices, but also special training for example in econometrics. As arbitral tribunals are almost exclusively composed of lawyers who might lack the nec-essary expertise to deal with these matters, obviously the tribunal or the parties might want to call on an expert in the field.

1 bAker�/�stAbile, 395.

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1. Different Forms of Experts

In arbitral proceedings, experts can be used for two distinct functions. In order to avoid confusion, the following two meanings of the term are distinguished:

a) Where an expert is appointed by the arbitral tribunal or the parties and his report or testimony is used by the tribunal as evidence. For example, Article 47 of the Swiss Cartel Law ex-pressly provides that the cartel commission can render expert opinions for government authorities including courts. Issues connected with this topic are not dealt with.

b) Where an expert may give a decision which the parties accept as binding. In this case, the expert becomes an adjudicator and the process of expertise comes close to being one of arbi-tration.2 In the following, we will focus on expert determina-tion in this sense.

2. A brief outline of the process of expert determination

(a) Expert Determination Compared with Arbitration

Expert determination as mentioned sub 1.b) above usually fulfils a quasi-arbi-tral function, in that the expert determines only a limited number of questions related to a dispute. Arbitral tribunals in the contrary decide on the whole of a dispute. Arbitration is a formal adjudication process that fulfils the require-ments of due process and results in an award that is enforceable.

Expert determination usually falls outside the scope of the national laws gov-erning arbitration and is purely a matter of the contractual provisions made by the parties. Contrary to arbitration, the decision reached in expert determina-tion is not directly enforceable. Enforcement against the defaulting party thus requires an additional order by an arbitral tribunal or state court. Additionally, and this is important to note, there might be only very limited rights to formally challenge the opinion rendered by the expert.3 The procedures to challenge and set aside an arbitral decision do not apply in the case of expert determina-tion.

The subject matter to be decided in expert determination can be questions of fact and, under certain circumstances, even questions of law. Expert determi-

2 redFern�/�hunter, 49. 3 blessing, Introduction, 310; sAchs, Interaction, 239.

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nation is used frequently in connection with construction contracts, merger & acquisition transactions (e.g. for valuation issues) or sales of goods (e.g. for quality monitoring). Expert determination can also be used for adapting a con-tract to changed circumstances (e.g. adjustment of the contract price accord-ing to the conditions of the markets). In general, the parties will opt for a bind-ing expert opinion if they wish that the expert’s findings, solutions or conclusions should not be subject to challenge before a court called upon to make a final legal disposition of the case.4 This would mean that the expert’s opinion stops short of resolving legal issues or fashioning remedies to the dis-pute, but rather leaves this to the court that has the authority to decide on the merits of a dispute. Expert determination in this sense is the binding determi-nation of a legally material fact. It usually is a pre-arbitral solution. However, it potentially has great impact on the decision of the arbitral tribunal and maybe could even make it unnecessary for such tribunal to deal with the matter. It should, however, be noted that, if an arbitral tribunal is called to decide a dis-pute, it must not delegate this competence to experts.

The parties are free to go beyond these limitations and entrust the expert with more powers to make binding decisions. Sometimes it becomes, therefore quite difficult to distinguish which role the expert has in a given case.5 How-ever, the distinction is necessary, as more procedural rules will likely apply to binding expert determination. If an expert opinion serves as evidence to an ar-bitral tribunal, the application of extended procedural rules to the expert pro-cedure would make them overly legalistic, inflexible and inefficient. On the other hand, if the expert’s determination should be binding on the parties, it is necessary to observe minimal procedural standards in order not to jeopardize the binding effect of the expert’s finding. Thus, when referring to an expert in an arbitration clause, the parties should make clear what kind of expert deter-mination they have in mind and provide for adequate procedural rules.

(b) Contractual Character

In several jurisdictions, expert determination with binding effects on the par-ties is expressly recognized by law, such as the German Schiedsgutachten, the

4 crAig�/�PArk�/�PAulsson, 702. 5 As blessing, Merger Control, 208, points out, the Commission itself seems not to be

totally aware of the differences between arbitration and expert determination, as it has used clauses like "arbitration by mutually agreed independent experts" on sev-eral occasions.

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Italian arbitraggio, the Dutch bindend advies or the English valuation or expert determination.6

In general, as expert determination is a contractual concept. All issues regard-ing the expert determination itself are matters of the law applicable to the con-tract. It has been noted that although the treatment of expert determination under the various national laws is similar, considerable differences in the dog-matic approach and in practical terms exist.7 Accordingly, the drafting of a clause that provides for expert determination requires much care. Of special importance are the clear demarcation between the expert determination pro-ceedure and the arbitration proceedings, the definition of the interaction be-tween the two proceedings and a clear definition of the precise task and pow-ers of the expert, the standards to be applied and the applicable rules of due process.

Nevertheless, as the parties contractually agree the expert determination to be binding, it is generally assumed that the arbitral tribunal or state courts lack jurisdiction to the extent that the matter has been referred to expert determi-nation.8

(c) Procedural Aspects of Expert Determination

As expert determination is distinct from arbitration, its adoption requires differ-ent contractual provisions.9 In order to avoid confusion with arbitration, such a clause could expressly state: "The expert shall act as an expert (e.g. as Schieds-gutachter within the meaning of § 317 of the German Civil Code) and not as an arbitrator."10

In order to give more certainty to expert proceedings, the ICC has established the International Centre for Technical Expertise in 1976 and the ICC Rules for Expertise in 1993. It is up to the parties to define the role of the expert, meaning that they can ask for him to give an opinion either as evidence for the court or as a binding decision. The rules can be applied in both cases. Art. 12 (3) of the rules states that, unless otherwise agreed by the parties, the findings of the ex-

6 crAig�/�PArk�/�PAulsson, 705. 7 sAchs, Interaction, 239. 8 This is the case not only in civil law jurisdictions, but also in common law; see sAchs,

Interaction, 236. 9 See blessing, Introduction, 309, for a list of the points to be considered for an expert’s

mission.10 sAchs, Interaction, 237.

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pert shall not be binding upon them. Given the fact that the ICC has established procedural rules that can be applied in expert determination, one would as-sume that the centre should have been used frequently in EC competition law matters. However, this seems not to have been the case until now.

II. Why expert determination instead of arbitration?

Given the fact that expert determination has some shortcomings compared to arbitration, why should competition matters be dealt with by expert determi-nation?

Expert determination is considered to be very suited for cases where the issue is limited to specific questions that are of such a nature that an arbitral tribunal would also need the help of an expert to resolve the issue. This is even more so if the expert would be in a position to render an opinion which could resolve the dispute. In such cases, parties might want to rely on very specific know-how of an expert and avoid arbitration proceedings that are more time-consuming and costly. In arbitration, the parties need decisions that are enforceable. There-fore, the proceedings and the expert procedure itself must fulfil minimal re-quirements of due process, which makes the proceedings slower and less flex-ible. Therefore, if the factual prerequisites are given, a swift and flexible expert determination will often be more adequate.

The hesitance of many parties to opt for binding expert determination, instead of arbitration, may be explained with the fear that they might be left with open legal issues after the rendering of the expert’s decision. This will it make neces-sary to start an arbitration, so that the advantages of expert opinion disappear.

III. A case for experts: Monitoring the commitments of parties

1. General

As far as EC competition law is concerned, the Commission has opted for the use of arbitration in quite a large number of decisions.11 These decisions con-cern merger cases, where the merging parties make commitments to the Com-mission regarding their market behaviour.

11 blessing, Merger Control, 154.

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The main reason seems to be that the Commission often expects a very swift fast-track procedure, in which the award can be rendered within a few months only. Additional reasons for entrusting an arbitrator instead of state courts with monitoring the commitments are: concerns about judicial independence of the national courts, the necessity to translate all documents into the national language and concerns about the availability of effective interim relief.12

The need for dispute resolution typically arises when a third party wants to make use of the commitment by a merging party. Such a commitment is mostly incorporated into the decision of the Commission and offers any third party wishing to make a claim against the merged party, to enter into negotiations about the terms of the cooperation the merging party has committed to. Should the merging party not be willing to fulfil the third party’s demands, a dispute resolution procedure can be started.

A good example for such a commitment containing a clause providing for arbi-tration proceedings is the Commission Decision re Vodafone Airtouch/Mannes-mann.13 The decision describes the commitments of �odafone made in con-nection with the merger:

"In order to respond to the Commission’s serious doubts regard-ing the market for the provision of advanced mobile telecommu-nications services to internationally mobile customers, �odafone Airtouch has submitted undertakings aiming at enabling third party non-discriminatory access to the merged entity’s integrated network so as to provide advanced mobile services to their cus-tomers. These undertakings cover exclusive roaming agreements, third parties’ access to wholesale arrangements, standards and SIM-cards and a set of implementing measures aimed at insuring their effectiveness. In particular, �odafone Airtouch has proposed to set up a fast-track dispute resolution procedure in order to solve disagreements between the merged entity’s group and third parties on third parties’ access to roaming arrangements, third parties’ access to wholesale arrangements, standards and SIM-cards."

According to these commitments, a third party could demand the appoint-ment of an arbitral tribunal deciding in a fast-track procedure, if e.g. �odafone rejects its request to make available wholesale services or if the terms offered

12 blessing, Merger Control, 204.13 Decision of 12 April 2000, Case Comp./M. 1795; see blessing, Merger Control, 164.

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seem discriminatory or if a dispute arises over technical standards and require-ments.

2. Arbitration or Expert Determination?

In the Vodafone Airtouch / Mannesmann case, the Commission’s decision only mentions a fast-track dispute resolution procedure. This could be either arbi-tration or expert determination. Only in the annexes to the opinion it becomes clear that an arbitration procedure is meant. However, this need not necessarily be the case. Expert determination could be a viable alternative to an arbitral tribunal. Given the fact that procedures of expert determination can be faster, more flexible and cheaper than arbitral proceedings, they might be better suited. In fact, time is of the essence in such cases and the Commission has on several occasions required that the arbitral process be accomplished within one month.14 If the arbitral tribunal needs to rely on the services of an expert because of the factual issues or the special knowledge needed, it makes even more sense to adopt expert determination whenever this is feasible.

Appointing an expert in cases where the issue is the compliance of the merg-ing party with the commitments it made to the Commission and to decide un-der which commercial and technical terms the merging party has to cooperate with a third party, also seems quite appropriate. Expert determination is not a judicial function - in these cases the necessary decisions on the law should al-ready have been made by the Commission and resulted in a detailed opinion of the Commission. The merging party has submitted a letter of commitment. The determinations to be made are mainly factual. The legal questions arising out of the interpretation of the Commission’s decision and of the merging party’s commitment letter should play only a minor role. If any legal questions arise, they are most likely to be concerned with the correct implementation of the commitment. The expert does not have to render an opinion on a fully blown competition law case. He simply has to apply the letter of commitment and the Commission’s decision to the facts of a given case. If the Commission’s opinion and the merging party’s commitment are well drafted, this should not give rise to legal problems that an expert could not handle.

The main argument against expert determination is that the decision might not be enforceable due to the lack of due process in the procedure. But as men-tioned above, in these cases it might not be necessary at all to have an enforce-able decision. Accordingly, the procedure does not need to adhere to strict

14 blessing, Merger Control, 212.

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procedural rules. Should a party to the procedure feel aggrieved by the expert’s determination, it can call upon the Commission for redress. As the Commission is in charge of enforcement of EC competition law in the first place, it would have to take on the enforcement if the merging party does not adhere to its commitments.

IV. The commission as expert to an arbitral tribunal?

Given the fact that the European Commission has often the best knowledge of a case and of the relevant markets, the question can be raised whether an arbi-tral tribunal could seek assistance from the Commission in order to establish the facts or the law in a specific case.

However, up to now, the Commission has been reluctant to commit itself for-mally to official cooperation with arbitral tribunals. So far, for example, arbitra-tors have not been given the right to refer questions to the Commission like the state courts can in application of Article 234 EC. On the other hand, the Com-missions does informally answer requests for information from arbitral tribu-nals.15

Thus it appears that it is possible for an arbitral tribunal to obtain the assistance of the Commission in the application of EC competition law. As arbitration has established itself as an alternative judicial forum and the Commission itself has opted for arbitral tribunals to monitor commitments made by market players, it is self-evident that it is in the best interest of the Commission to cooperate with such tribunals. It would also serve the Commission’s purpose to further the pri-vate enforcement of EC antitrust law. In cooperating with arbitral tribunals, the Commission could draw analogies to the cooperation with national state courts and use the mechanisms provided for in the Notice on Cooperation between Na-tional Courts and the Commission in Applying Articles 85 and 8� of the EEC Treaty.16 It has been noted, that the Commission already has treated arbitral tribunals in the same way as national state courts under the Notice on Cooperation.17

It seems viable that an arbitral tribunal could make use of the Commission’s expertise and access to information in a specific case. However it is not obvious that it could do so without specific instructions from the parties to the arbitra-tion. The parties might have appointed the arbitral tribunal with the exact pur-

15 bAudenbAcher, in: Atanasiu/Ehlermann, 355; komninos, in: Atanasiu / Ehlermann, xxxviii.16 OJ C39/5 [1993]; komninos, in: Athanasiu / Ehlermann, 381.17 komninos, in: Atanasiu / Ehlermann, 381.

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pose of not having the EC authorities decide on their case. Additionally they might fear that additional confidential information, submitted to the tribunal, could be disclosed to the Commission. In this case they would be strongly op-posed to any consultations with the Commission taking place. The question whether the arbitral tribunal is competent to call upon the Commission is a question of the arbitration agreement and the law governing the arbitral proc-ess.18 This would not be an issue in the merger control cases mentioned above. Because, the Commission has to approve the wording of the arbitration clause as part of the merging party’s commitment, it can easily make sure itself that it plays a role in the arbitral process.

Which exact role could the Commission have in the arbitral proceedings? Even if it is not per se impossible, it is not very practical to appoint the Commission as an expert in an expert determination procedure. The exact reason for de-volving the application of the EC competition law is that the Commission would be too slow to decide on the case and that it would be procedurally easier and much faster to have an arbitral tribunal decide on the matter instead. Addition-ally the parties preferred arbitration over state court proceedings because of the flexibility and the privacy of the arbitral process. If the case is made for pri-vate enforcement of EC competition law by arbitral tribunals, it is nonsensical to involve Commission in the decision making process as an expert. Thus hav-ing the Commission’s assistance by way of expert determination only appears feasible in very specific cases, where the arbitral tribunal does the bulk of the work (e.g. monitoring the parties’behaviour over a long period; deciding on most issues), but leaves only some pivotal questions for decision by the Com-mission.

It thus seems more likely that the Commission could assist the arbitral tribunal by providing non-binding assistance,19 e.g. by supplying information on the markets or certain documents the arbitral tribunal cannot make available itself. This assistance by the Commission would not be substantially different from what the state courts could request: it could provide factual information as sta-tistics, market characteristics and economic analyses. Additionally it might of-fer its (non-binding) opinion on legal issues of EC competition law. If the Com-mission provides a reasoned opinion on a legal issue it could – although formally not binding for the arbitral tribunal – be of such weight and persua-siveness that the arbitral tribunal could find it difficult exercise its own discre-tion and judgment.

18 komninos, in: Atanasiu / Ehlermann, 381.19 Then again the result is not "expert determination" in the meaning discussed here

(binding decision), but only evidence to the court. See I.2.(a) above.

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Arbitral tribunals should in their dealings with the Commission always be very careful to make them fully transparent to the parties. Informal communications with the Commission could lead to a serious lack of transparency and jeopard-ize procedural fairness.

V. Conclusion

Expert determination is a valuable alternative to arbitration in competition law disputes. One can expect a market for experts to develop. It seems unlikely, however, that parties will appoint the EU Commission as an expert or that they will approve of involving the Commission as a witness in arbitral proceedings.

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§ 7 N 30 PAul�Peyrot