English Court finds no jurisdiction to grant freezing orders against non-party foreign subsidiaries of the award debtor in English-seated arbitration

The Commercial Court has held that it has no jurisdiction to make a freezing order to aid the enforcement of a London-seated arbitration award against subsidiaries of the award debtor who have no presence or assets within the jurisdiction, who were not party to the arbitration agreement or the arbitration proceedings and against whom no substantive claim is asserted (decision of 11 November 2014, Cruz City 1 Mauritius Holdings v. Unitech Limited et al. [2014] E.W.H.C. 3704 (Comm.)).

This is a significant decision as it shows the limits of how far the English court is willing to go in order to assist in the enforcement of an arbitral award. Parties seeking enforcement of an arbitral award in England and Wales against a counterparty with foreign subsidiaries who are not a party to the arbitration will most likely be unable to obtain a freezing order against those subsidiaries to aid enforcement.

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Filed under Awards, Enforcement, Europe

Going global: CIETAC introduces new Arbitration Rules 2015

The China International Economic and Trade Arbitration Commission (“CIETAC“) has recently published its revised Arbitration Rules, which come into force on 1 January 2015. The 2015 Rules are available on CIETAC’s website.

According to the Secretary General of CIETAC, the changes are designed to improve the efficiency of CIETAC arbitral proceedings and bring the CIETAC Rules further into line with international best practice. The new rules also aim to address the confusion and ambiguity that followed the so-called “CIETAC split” in the wake of the 2012 Rules update, when CIETAC’s former Shanghai and Shenzhen sub-commissions broke away from the Beijing commission and declared their independence as separate arbitral commissions.

Key amendments include:

  • Extended grounds for consolidating arbitrations into a single arbitration, in addition to consolidation with the consent of all parties;
  • Where disputes arise out of or in connection with multiple contracts, the Claimant may commence a single arbitration under certain circumstances;
  • Addition of a mechanism for joining an additional party to the arbitration;
  • Mechanism for appointing emergency arbitrators under the applicable law or by agreement of the parties;
  • Increased threshold for applying the summary procedure ;
  • Introduction of special provisions in relation to arbitrations administered by the CIETAC Hong Kong Arbitration Center, including Hong Kong as the default seat and Hong Kong law as the applicable law of the arbitral proceedings, power for Hong Kong seated tribunals to order interim relief, and separate provisions for administrative and arbitrator fees; and
  • Further improvement or clarification of procedural matters, including methods for serving arbitration documents, and increased powers to the presiding arbitrator of the tribunal.

1. Administration of cases following the CIETAC “split” (Article 2)

Article 2 of the new Rules clarifies the structure of CIETAC, including its “arbitration center” (ie the CIETAC Hong Kong Center) and sub-commissions, following the 2012 secession of the former Shanghai and Shenzhen sub-commissions from CIETAC Beijing.

Article 2(6) states expressly that, “where the sub-commission/arbitration center agreed upon by the parties does not exist or its authorization has been terminated, or where the agreement is ambiguous, the [CIETAC Beijing] Arbitration Court shall accept the arbitration application and administer the case. In the event of any dispute, a decision shall be made by CIETAC“. This provision aims to address the confusion and ambiguity that followed the split,, which left parties doubtful as to the efficacy of their CIETAC clauses, particularly those clauses that provided for arbitration to be administered by CIETAC Shanghai or CIETAC Shenzhen.

2. Consolidation of related arbitration proceedings (Article 19)

The current CIETAC rules provide a mechanism for parallel proceedings to be consolidated into a single arbitration upon the agreement of all parties. Article 19 of the 2015 Rules further provides that, at the request of a party, CIETAC may consolidate arbitrations into a single arbitration if:

  1. all claims in these arbitrations are made under the same arbitration agreement; or
  2. the claims in the arbitrations are made under multiple arbitration agreements that are identical or compatible and
    • the arbitrations involve the same parties and the legal relationships are “of the same nature“; or
    • the multiple contracts involved consist of a principle contract and its ancillary contracts.

3. Single arbitration concerning multiple contracts (Article 14)

The 2015 Rules codify CIETAC’s approach to disputes arising out of or in connection with multiple contracts. The Claimant may initiate a single arbitration concerning multiple contracts if all the conditions below are met:

  1. the contracts consist of a principal contract and ancillary contract(s), or the contracts involve the same parties as well as “legal relationships of the same nature”;
  2. the disputes arise out of the same transaction or the same series of transactions; and
  3. the arbitration agreements in such contracts are identical or compatible.

4. Joinder of additional parties (Article 18)

The 2015 Rules introduce a mechanism for joining additional parties to an ongoing arbitration . A party wishing to join an additional party may file a request at CIETAC, on the basis that the arbitration agreement prima facie binds the additional party. The request for joinder is determined by CIETAC.

5. Emergency arbitrator (Article 23 and Appendix III)

In line with other international arbitral institutions, CIETAC has introduced an emergency arbitration procedure. The procedure allows parties to apply for an emergency arbitrator to grant urgent relief, either with the agreement of the parties or in accordance with the law applicable to the arbitration (i.e. the law of the arbitral seat). The emergency arbitrator’s powers cease on appointment of the arbitral tribunal, and the existence of emergency proceedings does not preclude a party from applying to any competent court for interim relief. Detailed procedures are set out in Appendix III of the 2015 Rules.

In mainland China, the Arbitration Law is yet to provide for emergency arbitrators. Under the current regime, a party seeking emergency relief must apply to a Chinese court for appropriate conservatory measures (see our post of 3 October 2012). The new provisions are therefore understood to apply principally to arbitrations administered by the CIETAC Hong Kong Arbitration Center (see section 6 below). According to the Arbitration Ordinance of Hong Kong, any emergency relief granted by an emergency arbitrator under the relevant arbitration rules, whether in or outside Hong Kong, is enforceable in Hong Kong in the same manner as an order or direction of the court.

6. Summary procedure (Article 56.1)

Under the current CIETAC Rules, unless otherwise agreed by the parties, the summary procedure applies to any cases where the amount in disputes does not exceed RMB 2 million. The 2015 Rules increase the threshold for applying summary procedure to RMB 5 million. This change, which aims to increase efficiency, is in line with the practice of other major institutions (see, e.g., 2013 HKIAC Rules Article 41, which increased the threshold for expedited arbitration almost tenfold, by comparison to the 2008 HKIAC Rules).

7. Special provisions for Hong Kong arbitration (Articles 73-80)

The current CIETAC Rules came into effect before CIETAC set up its Hong Kong Arbitration Center in September 2012. In the 2015 Rules, a new chapter is introduced for special provisions applicable to arbitrations administered by CIETAC Hong Kong. In particular:

  1. unless otherwise agreed by the parties, the seat of an arbitration administered by CIETAC Hong Kong shall be Hong Kong, the law applicable to the arbitral proceedings shall be the arbitration law of Hong Kong, and the arbitral award shall be a Hong Kong award (Article 74);
  2. in contrast to CIETAC tribunals in mainland–seated arbitrations, CIETAC Hong Kong arbitral tribunals have power to order interim relief (Article 77);
  3. CIETAC’s administrative fee and the arbitrator fees will be charged separately, in keeping with international practice (Article 82.1 and Arbitration Fee Schedule III). By contrast, under the existing CIETAC rules, arbitrators’ fees are usually included as part of the arbitration fees charged by CIETAC, although in special circumstances arbitrators’ “special remuneration” may be charged separately.

By publishing revised rules less than three years after its previous rules, CIETAC has demonstrated its continuing commitment to internationalisation and best practice, confirming its status as the leading Chinese arbitral commission for foreign-related cases.

The 2015 Rules, like the rules of other major institutions including the ICC, LCIA, HKIAC and SIAC, increasingly recognise and reflect the reality and complexity of modern international arbitration, and aim to provide effective mechanisms to address them, in order better to serve the end-users of the CIETAC arbitral process.

Should you wish to discuss any of the issues outlined above, or if you have questions, please contact: Justin D’Agostino, Jessica Fei, Brenda Horrigan, May Tai or Simon Chapman.


Jessica Fei
Jessica Fei
Email | Profile
+86 10 6535 5080
Brenda Horrigan
Brenda Horrigan
Email | Profile
+86 21 2322 2112
May Tai
May Tai
Email | Profile
+852 2101 4031
Simon Chapman
Simon Chapman
Email | Profile
+852 2101 4217
Briana Young
Briana Young
Registered Foreign Lawyer, Professional Support Lawyer
+852 2101 4214

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Filed under Arbitration rules, Asia, Hong Kong & China

Paris Court of Appeal considers scope of arbitrator’s obligation to disclose any potential conflicts of interest

 The Paris Court of Appeal has overturned a judgment granting exequatur (order for enforcement) of an arbitral award as a result of the sole arbitrator’s failure to disclose a potential conflict of interest. At the time of his appointment in September 2009, the arbitrator had disclosed that “a partner in my firm’s Toronto office has represented” the sole shareholder of one of the parties to the arbitration “over a number of years“. However, in December 2010, the firm published a report that it had advised that same shareholder on a recently concluded transaction.

The case is a reminder of the burden on arbitrators to provide a full disclosure of any potential conflicts, and to update such disclosure should new conflicts arise during the course of an arbitration. (S.A. Auto Guadeloupe Investissements (AGI) c/ Columbus Acquisitions Inc, Cour d’appel de Paris, Pôle 1 – Chambre 1, n° 13/13459 (14 October 2014).)

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Filed under Arbitrators, Enforcement, Enforcement - Europe, Europe, Uncategorized

CMAC opens its Hong Kong Arbitration Centre

The China Maritime Arbitration Commission (CMAC) inaugurated its Hong Kong Arbitration Centre on 19 November 2014, its first centre outside Mainland China. The inauguration ceremony was coupled with an international maritime arbitration seminar, to discuss latest trends in maritime arbitration and to promote the use of maritime legal and dispute resolution services in Hong Kong. The seminar was organised by the Department of Justice of Hong Kong SAR, CMAC, HKIAC and the Hong Kong Trade Development Council. Both the seminar and the inauguration ceremony formed part of the 2014 Asian Logistics and Maritime Conference in Hong Kong.

In addition, the new arbitration rules of CMAC will take effect on 1 January 2015. Earlier this year, CMAC appointed its new panel of arbitrators, consisting of a total of 279 arbitrators, of whom 24 are from Hong Kong, Macau or Taiwan and 39 from overseas.

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Filed under Asia, Hong Kong & China

Procedural fairness as a ground for setting aside awards: what’s fair is fair

In its recent decision in Triulzi Cesare SRL v Xinyi Group (Glass) Co Ltd [2014] SGHC 220, the Singapore High Court considered the grounds on which an arbitral award may be set aside for procedural unfairness and, in doing so, reaffirmed that the Singapore courts will be reluctant to interfere with a Tribunal’s case management powers unless strictly necessary for the proper administration of justice. The Court emphasised that whilst procedural fairness and affording each party a reasonable opportunity to be heard are core principles, a balance must be struck with the needs of procedural efficiency and economy. In particular, it noted that Tribunals must not “sacrifice all efficiency in order to accommodate unreasonable procedural demands by a party“. Rather, the Court should take into account the materiality of the alleged procedural breach, including evidence of prejudice or a reasonable chance of prejudice as a result of a Tribunal’s conduct.

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Filed under Arbitrators, Awards, Challenges to awards, Enforcement, South East Asia, Uncategorized

The future of investor-state arbitration

We live in interesting times for investment arbitration. There is wider public engagement with investment protection than there has ever been, prompted by the European Commission’s public consultation on the proposed Transatlantic Trade and Investment Partnership (TTIP) between the EU and the US, and the agreement in principle of the text of the Comprehensive Economic Trade Agreement (CETA) between the EU and Canada.

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Filed under Investment Arbitration, Public International Law, Uncategorized

Exploiting the advantages of an English arbitral seat? Commercial Court confirms the validity of an arbitration agreement and tribunal’s substantive jurisdiction whilst parallel proceedings continue in Italy

The English Commercial Court has granted an application under section 32 of the English Arbitration Act 1996 (the Act), determining that a tribunal appointed by the Refined Sugar Association has substantive jurisdiction to hear a dispute that has arisen out of a sugar sale between Toyota Tsusho Sugar Trading Limited (Toyota) and Prolat S.R.L. (Prolat). Section 32 provides that, if certain conditions are satisfied, a court may determine any question as to the substantive jurisdiction of the tribunal.

The application arose because Prolat had brought proceedings against Toyota in the Italian courts contending, among other things, that there was no arbitration agreement. Toyota had started arbitration proceedings in London against Prolat on the basis that the parties had concluded an agreement to arbitrate.

The Court first considered its jurisdiction to consider the question of the existence of the arbitration agreement given that Prolat had commenced proceedings in Italy, and the relevance of the Brussels Regulation (and the Recast Brussels Regulation to take effect on 10 January 2015 – see our blog post). It concluded that the existence of the Italian proceedings did not encroach on its jurisdiction to make a determination on the issue of the tribunal’s jurisdiction as arbitration fell outside the Brussels Regulation and it was not being asked to interfere with the Italian proceedings which fell within the Brussels Regulation.

The Court focused on an analysis of the contract and the arbitration clause and found that (a) on the facts, the contract and the arbitration clause were valid and governed by English law; and (b) the dispute between the parties fell within the scope of the arbitration clause.

This case highlights the possibility, provided by section 32 of the Act, of creating a “shield” judgment to try to prevent enforcement in England of a judgment made in Member State court proceedings brought in breach of an arbitration agreement.

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Filed under Arbitration Act 1996, Brussels Regulation, Jurisdiction

International Arbitration Internship (Singapore): Applications Now Open

Herbert Smith Freehills is now accepting applications for short-term internships with the firm’s international arbitration group in Singapore.  Three paid positions are open for two to three month periods each (not extendable), the first starting in January 2015, the second starting in April 2015 and the third starting in July 2015.

Interns will work alongside our international arbitration team and will have a varied workload, including assisting with current arbitrations and other client work; arbitration-related research; writing papers and journal articles; producing arbitration-related internal know-how and similar projects.

For more details please refer to our LinkedIn post or the HSF Careers page.

Applications must be submitted online via the HSF Careers page on or before 5 December 2014.

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US District Court for the Southern District of New York confirms interim arbitration award

In Companion Property and Casualty Insurance Company v Allied Provident Insurance, Inc. (2014 U.S. Dist. LEXIS 136473), District Judge Nathan in the Southern District of New York (SDNY) confirmed an interim arbitration award ordering payment of security for certain contractual amounts. The judgment usefully summarizes the court’s power to review, confirm or vacate interim arbitration awards, and its power to order arbitrator replacements when one arbitrator is unable to discharge his duties due to illness.

The decision also raises important arbitration agreement drafting points, and exhibits the robust approach of New York courts in upholding the integrity of the arbitral process.

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Filed under Arbitration clauses, Awards, Challenges to awards, Enforcement, The Americas

NAFTA tribunal considers issues of res judicata and the customary international law minimum standard of treatment

In Apotex Holdings Inc. and Apotex Inc. v United States of America, (ICSID Case No. ARB(AF)/12/1), a NAFTA chapter eleven tribunal considered issues of res judicata and the customary international law minimum standard of treatment.

In a case notable for its discussion of res judicata and the customary international law minimum standard of treatment, a NAFTA Chapter Eleven tribunal has allowed jurisdictional objections over a significant part of the alleged claims. With respect to the claimants’ remaining claims, the tribunal concluded, on the merits, that the US had not breached any of its commitments under international law.

The tribunal analysed international jurisprudence on res judicata in detail, applying a flexible approach to the question of when claims will be precluded by a prior decision. Following previous NAFTA awards, the award explored the complex relationship between the customary international law minimum standard and the guarantee of fair and equitable treatment and full protection and security contained in NAFTA Article 1105(1).

It did so in the context of the claimants’ novel claims about the status of due process among the protections required by the customary international law minimum standard of treatment. However, the tribunal left for a future tribunal to decide whether NAFTA’s guarantee of most-favoured-nation (MFN) treatment can be used to expand the substantive protections under Article 1105 – a critical topic, in the light of all NAFTA states’ unanimous opposition to that interpretation. (Apotex Holdings Inc. and Apotex Inc. v United States of America, (ICSID Case No. ARB(AF)/12/1).)

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Filed under Investment Arbitration, The Americas