Dispute Resolution Model for the

Energy Sector

Andrew Mackenzie

Chief Executive, Scottish Arbitration Centre

Secretary General, International Centre for Energy Arbitration

Scots Law and Arbitration

• Ancient legal system, independent of England and Wales

• Key differences between systems in Scotland and E&W

Common law system with civil roots

• Long history of arbitration

• Arbitration (Scotland) Act 2010

Modern world-class arbitration act

Modelled on Arbitration Act 1996 (E&W)

• Advantages over E&W

Stronger confidentiality

Limited rights of appeal

Cost advantages

Scottish Arbitration Centre

• Private company, established in 2011

• Promotes Scottish arbitration and Scotland as a

seat and venue for arbitration

• Provides arbitration suites

• Makes arbitral appointments

• Organises training and events

• Not currently administering arbitrations

View from Centre

Arbitration Suite

Energy Arbitration Focus in Scotland

• Why Scotland for Energy Arbitration?

Hybrid system

Civil law style document discovery/disclosure

Strong (but optional) statute backed confidentiality

Anonymised incidental court procedure

Limited rights of appeal

Cost advantages

Concentration of legal expertise in Scotland

Concentration of technical expertise in Scotland

Hybrid sytem

• Cultural differences

Recovery of evidence

Flexible procedure

Bridging the gap between common law

and civil law jurisdictions

Confidentiality

• Arbitration is a private

process

• In Scotland, under the

Arbitration (Scotland) Act

2010, arbitration is

confidential

• A breach of

confidentiality is

actionable

• Anonymised court

procedures

• Litigation is a public

process

• Court reports are

published online and in

legal journals

• Most other arbitral

regimes do not have

statute based

enforceable

confidentiality and

anonymity

Anonymity on appeal

• Courts on Anonymity

“In giving my decision I have tried to avoid

setting out any details which might betray the identity of the

parties.”

Lord Glennie, Arbitration Judge, Court of Session

Limited Rights of Appeal

• Arbitration under the

2010 Act

– Parties can agree to

limit appeals

– Appeals in respect of

points of law can be

excluded

– Where an appeal is

competent, consent of

the Court is required

– No appeal to London

• Litigation– An unsuccessful party

has an automatic right of appeal and

– The possibility of an appeal to the UK Supreme Court

• Arbitration Act 1996– Appeal to UK

Supreme Court possible

Cost advantages

• Limited discovery disclosure

• Limited appeal

• Lower venue costs

• Lower legal costs

Energy Law Expertise

• Cluster of Energy Law Expertise CEPMLP, University of Dundee

Centre for Energy Law, University of Aberdeen

Robert Gordon University

University of Strathclyde

University of Stirling

Various legal firms and advocates

Consultants

Members of the Scottish Arbitration Centre

Technical Energy Expertise

• Scotland Largest oil producer in the EU

Around 32% of total renewable generation in EU

Around 25% of Europe's tidal power

Around 10% of Europe’s wave power

Around 25% of Europe’s offshore wind potential

£10bn exports in supply chain services

International Centre for Energy

Arbitration

ICEA is a joint project of

www.energyarbitration.org

Background• Launched by then First Minister of Scotland, Alex

Salmond MSP

• Began work in October 2013

• Survey and consultation of energy sector in 2014

• Promotional events in Scotland and New York

• Launch of Initial Report in May 2015

Current trends and desired requirements in

respect of dispute resolution with the

energy sector

Responses

• 159 responses

• 94 from law firms

• 65 from industry

• 123 out of 159 from oil and gas sector

Initial Report: Findings

• Arbitration preferred method

• Strong support for mandatory high level

negotiation with, sanctions for failure to comply

• Strong support for and mediation, with sanctions

for failure to comply

• Support for confidentiality

• Desire for limited disclosure

• Interest in Parallel Online Blind Bidding

Specific features of a dispute process

• We asked respondents to rank key featuresof dispute resolution processes in order ofimportance, including:

expertise of decision maker

confidentiality

neutrality

enforceability

speed

Preferred method of dispute resolution

• We asked respondents to rank disputeresolution methods in order of preference,including:

arbitration

litigation

expert determination

mediation

med-arb, arb-med, etc

Factor when choosing a seat

• We asked parties to rank the factors which

influence their choice of arbitral seat in

order of importance, including:

reputation of the courts for probity

suitability of arbitration legislation

availability and reputation of local

arbitrators

Arbitral rules

• We asked respondents to rate the

importance of different features of

arbitration rules, including:

confidentiality

emergency arbitration provisions

default timetables

Confidentiality

• Confidentiality means different things indifferent jurisdictions

• We asked whether respondents favoured:

Publication of awards

No confidentiality

General confidentiality

Guaranteed enforceable confidentiality and anonymity in related proceedings

• Mandatory High Level Negotiation

• Mandatory Mediation

• Costs sanctions where failure to comply

• Restricted discovery/disclosure

• Default procedure and timetable

• Emergency arbitrator provisions

• Strong, but optional, confidentiality

• Parallel Online Blind Bidding

Proposed Dispute Resolution

Model

Next steps

• Consult on report

• Develop bespoke energy dispute rules

• Further work with sector

• Collaboration with other bodies

Andrew MackenzieChief Executive, Scottish Arbitration Centre

Secretary General, ICEA

secgen@energyarbitration.org