ICC Arbitration in the Hospitality Industry
The hospitality industry is an economic sector of considerable importance and one that is in a constant state of change. Hotel operators must, for instance, adapt to the rapid expansion of online reservation platforms and alternative offers of accommodation.
Such a highly competitive economic context is fertile ground for disputes, some of which have been referred to ICC arbitral tribunals. ICC has thus decided to publish 15 awards from 11 hospitality cases, which provide a wealth of information on the issues in dispute and the positions taken by arbitral tribunals. This article gives an overview of the various trends that have emerged. It begins with procedural matters, then looks at disputes relating to the validity, performance and termination of hotel management agreements. In addition, it describes the approach taken by arbitral tribunals when it comes to assessing the damages likely to be claimed in this field.
The overview shows that arbitral tribunals are careful to take account of the specificities of this industry. The matters they have been required to address include the validity of hotel management agreements in the light of requirements laid down in the law of the state where the hotel is located, and disagreements over the characterisation of hotel management agreements. They have also ruled on allegations of mismanagement levelled against managers and on interference by owners in the management of hotels. Further, these awards are very instructive regarding the application of the termination clauses that are often found in hotel management agreements, and they provide useful information on the assessment of loss of profit in the event of early termination of an agreement, as well as on the duty parties have to look for alternative projects in order to mitigate their damage. Lastly, some of the awards provide interesting information on the repair of harm done to a company’s image, which is a crucial asset for hotel operators.
Click here for summary of the awards