Date: 27th January 2022
The inclusion of the English language in Greek arbitration clauses could unlock overseas expertise for local companies. Partner Sotiris Dempegiotis assesses this and other recent trends in arbitration.
What trends in arbitration are you seeing in Greece and how are they affecting clients?
SD: One can see in the last couple of years that arbitration clauses agreed upon between private entities, as well as between private entities and the State, provide for arbitration conducted in English. That is a new trend.
Such arbitration clauses frequently result in the State and private entities using foreign law firms as counsel, with the three members of the arbitral tribunal all being foreigners. And such an arbitral tribunal will have to resolve a dispute which is governed by Greek Law, on which the tribunal will need to be educated by the parties and their counsel – so it is kind of interesting. It’s a market trend that changes market standards to an extent.
To the extent the State is involved in such clauses, it is rooted in the Government’s efforts to attract investors. Investors feel more comfortable having the arbitration in English and, in particular, having overseas tribunal members. They may not have the same level of knowledge of Greek law, but with foreigners you bring into play a higher level of neutrality, which is critical for disputes involving a State.
We also see Greek firms making agreements with foreign firms as co-counsel. The usual setting is that the global firms act as lead counsel, and the Greek firms as co-counsel.
The cost factor aside, this trend does not change much for our clients. If anything, it benefits them. If we partner with a law firm with a calibre and expertise in arbitration, that is in the interests of our client. It is also beneficial for the Greek law firms, which have the chance to be involved in big disputes and truly international cases.
Are there any sectors in particular where you see an increased amount of arbitration?
SD: I see an increased amount of arbitration in the finance sector, as they are starting to trust arbitration more and more.
In addition, since 2018, the General Data Protection Regulation (GDPR) has imposed an obligation on data controllers to have special agreements with their data processors. Normally, and especially when it comes to multinational corporations, these two are not based in the same country. So, most of these agreements I see contain arbitration clauses. We are not seeing a volume of arbitrations there yet, but I think the privacy and data protection sector will give birth to an increased number of arbitrations in the future.
Data Processing Agreements are highly technical and content specific. Because fines are calculated in reference to the companies’ turnover, a lot is at stake. Very few would trust local courts, especially Greek ones. We certainly advise clients to include arbitration clauses in their Data Processing Agreements with their data controllers or processors.
Greece operates a dualist system with differences for domestic and international arbitration. What are some of the key differences and why are they important?
SD: There are indeed certain differences between the two sets of rules. To mention two important ones: Firstly, under domestic rules, the tribunal does not have the power to order interim measures, which is very important in some cases. If you want something urgent, you have to go to Greek courts. That’s something you don’t want and it’s why you’ve gone to arbitration in the first place.
This can discourage parties, especially in cases that have the element of emergency, cases that are sensitive factually or evidentially, or when you know you’ll need intermediary measures. This may encourage parties away from arbitration in such cases because they know, at the end of the day, that they will have to go to Greek courts anyway so they go from the outset.
What we advise clients in that regard is they can choose institutional arbitration rules providing for emergency arbitrators or similar mechanisms that can serve as alternative or even run in parallel to the Greek courts. In my experience, when companies really need to sort an interim or urgent issue quickly, they will willingly turn to an emergency arbitrator or other similar tools.
Secondly, domestic rules impose certain caps on arbitrators’ fees. Again, this may discourage stellar arbitrators from accepting nominations in high-stake and important domestic cases.
Has the pandemic affected the arbitration landscape?
SD: We see and will continue to see Covid related disputes; maybe not directly related but in the sense that the pandemic has resulted in financial difficulties in companies, especially in certain sectors.
So, more often than not, we will see force majeure, frustration, material adverse change, hardship, change of circumstance or similar provisions that may excuse performance in contracts being triggered by the parties and finally being brought before arbitral tribunals.
I believe in the next months or so, many disputes on these subjects will arise. There are companies that have been building their cases or theories of harm and are now ready to pull the trigger, including against the State.
Assuming we continue to emerge from the pandemic, this wave of disputes and arbitrations will be counterbalanced by the fact that new money is coming into the Greek market. You see a lot of money coming into real estate, to the banking sector, into construction and infrastructure etc. And this new money will, in turn, lead to new disputes; but, that’s the way it is, I suppose.
LLF is delighted to announce that Sotiris Dempegiotis is joining the firm as partner in its leading Tier 1 Arbitration and Dispute Resolution practice
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