On 11 May 2016 the Supreme Court handed down a ruling on a challenge to an arbitral award on a point of law, under section 69 of the Arbitration Act 1996. The decision in NYK Bulkship (Atlantic) NV v Cargill International SA  UKSC 20 arose from an arbitral award dated 7 February 2012 ("the Award") relating to the interpretation of an off-hire charterparty clause and raised an important legal question about agency. A decision of the Supreme Court on a challenge to an award is a relatively rare and significant occurrence, and this one comes at a time when the relationship between the English courts and arbitration is the subject of ongoing debate. The case also serves to demonstrate the bar that must be cleared for the court to intervene under section 69.
UK Supreme Court rules on section 69 challenge to an arbitral award: do the courts plan to take a more active role in arbitration?
Beny Steinmetz Group Resources ("BSGR"), a company based in Guernsey and accused of bribery in Guinea, has been denied permission by a Magistrate Judge of the Southern District Court of New York ("SDNY") to use certain confidential documents. These documents were produced in a lawsuit before the SDNY filed by Rio Tinto, and were sought to be used by BSGR in a separate but related LCIA arbitration.
In its decision of 3 March 2016 (I ZB 2/15), published on 11 May 2016, the German Federal Court of Justice ("BGH") announced that it would request the Court of Justice of the European Union ("CJEU") to make a preliminary ruling on the validity of arbitration agreements concluded under intra-EU bilateral investment treaties pursuant to Art. 267 TFEU. While this decision takes the underlying investor state dispute to yet another level, the BGH's request for preliminary ruling by the CJEU bears the potential of becoming a turning point in the history of investor state dispute settlement in that it forces the CJEU to rule on the relationship between EU law and international investment law.
In November 2015, the Australian Centre for International Commercial Arbitration (ACICA) announced the release of its new ACICA Arbitration Rules 2016 and ACICA Expedited Arbitration Rules 2016, each of which came into effect on 1 January 2016. As this is the first time the rules have been updated since 2011, ACICA has taken the opportunity to implement substantial new measures in order to keep in step with other arbitral institutions around the globe. The key changes are discussed below.
Hong Kong court upholds validity of arbitration agreement in dispute concerning formation of underlying contract
In Chee Cheung Hing & Co Ltd v Zhong Rong International (Group) Ltd (HCA 1454/2015), the Hong Kong Court of First Instance ("CFI") stayed proceedings under s.20 Arbitration Ordinance ("the Ordinance"), which provides for referrals to arbitration where "…an action is brought in a matter which is the subject of an arbitration agreement…". The CFI considered the arbitration agreement to be "prima facie" valid and binding despite the Plaintiff's contention that the underlying contract was not validly formed.
Herbert Smith Freehills partners Justin D'Agostino and Laurence Shore have been appointed to the new Advisory Council of the Australian Centre for International Commercial Arbitration ("ACICA"). D'Agostino, head of the firm's global dispute resolution group, and Shore, a New York-based partner and arbitrator, will each serve a three-year term from 1 March 2016. They are joined on the Council by other leading arbitration practitioners from Europe, Asia, the US and Australia. The Advisory Council is tasked with counselling the Centre on the implementation of its new arbitration rules, which came into effect 1 January 2016. It will also advise on ACICA initiatives and efforts to promote Australia as a seat of arbitration. Professor Richard Garnett, a consultant at Herbert Smith Freehills' Melbourne office, has been appointed to the ACICA Rules Committee.
Sydney Disputes partner Leon Chung, also an arbitration specialist and a director of ACICA, commented: "We are delighted to see the firm's reputation as an arbitration powerhouse recognised by the appointment of two of our partners, as well as a consultant, to advise ACICA. Arbitration is a developing area in Australasia, and both Herbert Smith Freehills and ACICA are committed to remaining at the centre of those developments."
Earlier this month the LCIA released its Registrar's Report for 2015. The report, which is produced annually, gives an overview of the LCIA's casework for the year, providing detailed statistics regarding various facets of the LCIA's caseload, including the nature and subject matter of the contracts out of which its cases arise, and key figures about arbitrator appointments and the frequency of use of different procedures under the LCIA's arbitration rules.
Some of the highlights from this year's report are noted below.
Round 2 to Russia: the battle continues as the largest arbitration awards in history are set aside by the Hague District Court
In a long-awaited decision published yesterday, the Hague District Court ("Court") has set aside the US$ 50 billion awards in favour of the former majority shareholders of Yukos on the basis that the Tribunals lacked jurisdiction to hear the disputes.
The Court accepted the Russian Federation's contention that, pursuant to Article 45 of the Energy Charter Treaty ("ECT"), its decision not to ratify the ECT meant that it was only bound by provisions which were compatible with Russian law. The dispute in question, which concerned relations of a public-law nature, could not be referred to international arbitration under Russian law.
This high-profile decision may have implications on the enforcement proceedings against Russia's assets currently pending in at least seven jurisdictions and also raises questions about the effectiveness of the ECT for investors in Russia.
Gavin v Gaynor: Important further clarification on DIFC court jurisdiction and identifying place of arbitration
On 3 April 2016, the DIFC Court ordered a stay of proceedings on the basis that, in light of the existence of parallel proceedings in the Californian courts on substantially similar grounds, the Claimant's commencement of a claim before the DIFC Court constituted an abuse of DIFC Court process.
However, in reaching its conclusion, the DIFC Court gave further consideration to the application of the jurisdiction gateways provided in Article 5(A) of the DIFC Law No. 12 of 2004 (as amended) (the "Judicial Authority Law") and the Protocol of Jurisdiction between the Dubai Courts and the DIFC Courts, discussed in a different light in our previous bulletins on Bocimar v ETA and DNB Bank. In addition, the decision in Gavin v Gaynor also sets an interesting precedent in respect of the DIFC Court's interpretation of arbitration agreements, including the possibility for the DIFC Courts to imply an agreement settling the seat of arbitration as the jurisdiction with "most connection" to the claim.
Paris Court of Appeal upholds challenge to ICC treaty award and rejects third party intervention in resisting application to set aside
The Paris Court of Appeal has upheld a challenge to an International Chamber of Commerce (ICC) investment treaty award (Cour D'Appel de Paris, Pole 1 – Chambre 1, 15 March 2016, n° 14/19164). This is the latest instalment in the long-standing dispute regarding an insurance claim for damage to a textiles factory during the civil unrest that followed the Madagascan coup of 2009.
The Paris Court of Appeal set aside the sole arbitrator's decision on the grounds that he decided the case based on arguments raised of his own initiative and on which the parties did not have the opportunity to comment (ignoring the adversarial principle applicable under French law). The appeal court also rejected an attempt by an interested third party to intervene in resisting the challenge to the award, on the basis that this would flout the contractual nature of arbitration.
This decision is a rare example of a successful challenge to an arbitral award in France. It provides a helpful reminder of the Court of Appeal's supervisory role over French-seated arbitrations and its ability to annul an award where the tribunal has exceeded the scope of its powers and duties (in particular, where the tribunal failed to comply with due process and based its conclusions on arguments not raised by the parties). The judgment also shines a light on the limitations of the ICC scrutiny process.