Australian Corporation Act rights no bar to stay of proceedings in favour of arbitration

In Re Ikon Group Ltd (No 2) [2015] NSWSC 981, the New South Wales Supreme Court granted a stay of proceedings in favour of international commercial arbitration.  

The relevant arbitration clause was contained in an addendum to a joint venture agreement.   It referred “[a]ny and all Disputes including any question regarding the existence, validity or termination of any of the JV Documents or the Third Addendum [ … ]” to arbitration under the LCIA Rules.  It expressly revoked or amended an exclusive jurisdiction clause contained in the original joint venture agreement.   Continue reading

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Filed under Arbitration clauses, Australia, Stays

Herbert Smith Freehills arbitration lawyer reappointed to ICC International Court of Arbitration

The World Council of the Internal Chamber of Commerce (ICC) has reappointed Herbert Smith Freehills’ Vanina Sucharitkul to the International Court of Arbitration for a three-year term, effective 1 July 2015.

Based in Bangkok, senior associate Vanina has been Thailand’s member to the ICC International Court of Arbitration since 2012, and is also the youngest member appointed to the Court. Continue reading

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Filed under Asia, News

Video post in “Observations on Arbitration” series: “Introduction to Investment Arbitration”

In this video post in the “Observations on Arbitration” series, Christian Leathley provides an Introduction to Investment Arbitration, discussing the ways in which an investment arbitration can arise, explaining what bilateral investment treaties (BITs) are and outlining the nature of the obligations owed by a state to an investor under such agreements. Continue reading

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Filed under Investment Arbitration, Video

SPC clarifies jurisdiction issues arising from the CIETAC split

On 15 July 2015, the Supreme People’s Court in China (the “SPC“) issued a binding judicial interpretation on how lower courts are to handle various issues arising out of the CIETAC split (the “SPC Reply“). The interpretation responded to requests from the Shanghai High People’s Court, the Jiangsu High People’s Court and the Guangdong High People’s Court. The SPC Reply becomes effective today, 17 July 2015. 

The SPC Reply confirms the position lower courts must take regarding: (1) the validity of arbitration agreements; and (2) potential challenges to arbitral awards in setting aside or enforcement proceedings. In essence: 

  • If an arbitration agreement referring to the “CIETAC Shanghai Sub-Commission” or the “South China Sub-Commission” was concluded before the former CIETAC sub-commissions renamed themselves as a result of the CIETAC split, then the newly-formed Shanghai International Economic and Trade Arbitration Commission/Shanghai International Arbitration Centre (“SHIAC“) or South China International Economic and Trade Arbitration Commission/Shenzhen Court of International Arbitration (“SCIA“) will have jurisdiction over those disputes.
  • In all other cases, CIETAC will retain jurisdiction over disputes submitted under arbitration agreements referring to CIETAC sub-commissions. 

The SPC’s interpretations seek to take into account the historical relationship between CIETAC and its former sub-commissions, whilst also upholding parties’ intentions and promoting China as an arbitration-friendly jurisdiction. The SPC Reply ends the uncertainty on jurisdiction issues arising from the CIETAC split. Continue reading

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Filed under Asia, Hong Kong & China, Institutions, News

English Court confirms power to grant anti-enforcement injunction but application fails due to unnecessary delay

The English Commercial Court (the Court) in Ecobank Transnational Inc v Tanoh [2015] EWHC 1874 (Comm) refused to restrain the enforcement of two foreign judgments because of unnecessary delay. The application was made on the basis that the subject matter of both judgments fell within the scope of an arbitration agreement.

Although the Court dismissed the request, the judgment confirms the English courts’ jurisdiction to grant injunctive relief post-judgment (in relation to judgments of non-EU countries at least). It also gives helpful guidance on what factors the English courts will take into account in exercising their discretion to grant an anti-enforcement injunction.

The judgment confirms the risks of letting foreign proceedings play out and seeking to neutralise any unfavourable judgment at the enforcement stage only. The Court highlighted that where the applicant does not apply, pre-judgment, for an anti-suit injunction in relation to the substantive proceedings it will need to provide a good reason for the delay. Anti-enforcement injunctions are not therefore to be considered an ‘after the event’ alternative to anti-suit relief.

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Filed under Enforcement, Europe, Interim relief

Competing jurisdiction clauses in a multi-contract scenario: a potential case management solution from Hong Kong

In the recent case of CPC Construction Hong Kong Limited v Harvest Engineering (HK) Limited and another (HCA 2096/2013), a series of loan agreements set out for litigation to resolve disputes, while a broader, related subcontract, set out for disputes to be resolved by arbitration instead. 

The Hong Kong Court of First Instance reserved its position to allow the plaintiff to consider if it would like the court to stay its claim pending arbitration. This would not be the same as acting to stay the claim in favour of arbitration – rather, it would be a case management solution, avoiding a duplication of time and resources, and possible inconsistent results between the arbitration and litigation proceedings.  Continue reading

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Filed under Hong Kong & China, Jurisdiction

Attempted re-litigation of issues submitted to arbitration: English Court takes a robust approach

In Swallowfalls Limited v (1) Monaco Yachting & Technologies S.A.M. and (2) Mr Peter Landers JR, the English Commercial Court (the Court) rejected an attempt to resist summary judgment by the defendants (Monaco and L), on the basis of counterclaims for set-off in respect of alleged breaches of a construction agreement. Monaco and L had submitted the counterclaims to arbitration and the tribunal had dismissed those claims following failure by Monaco to comply with orders (including peremptory orders) for security for costs. The tribunal had not reached a decision on the merits of those claims.

In an unusually strongly worded judgment, the Court held that for Monaco and L to litigate the counterclaims that had already been the subject of an arbitration would be an abuse of process and that any other conclusion on the facts would be “offensive to justice” and “would not serve the public interest“.

This is a sensible decision: any other conclusion would have offered the defendants a second chance to prosecute claims against Swallowfalls in the court, in circumstances in which they had agreed to arbitrate them, insisted that they should be arbitrated, and agreed to be bound by the outcome of that arbitration. Whilst the tribunal had not reached a decision on the merits of the claims, the arbitration had reached a final outcome which was the dismissal of the claims given Monaco’s failure to provide security for costs.

The case demonstrates that a party must comply with orders for security for costs or risk being unable to prosecute its claims. The defendants were given a number of chances to provide security and offered a number of methods by which it could be provided. The scant reasons provided for failing to comply with the tribunal’s orders did not impress the Court. Whilst the tribunal’s course of action may seem draconian, the Court noted that proceedings in the Commercial Court would ultimately be dismissed after enduring non-compliance in the same way.

The case also shows that a party is not able to “hop” between forums, as convenience or circumstance dictate. The defendants had argued before the Court that the claims should be arbitrated, and having repeatedly failed to comply with the tribunal’s orders, the defendants were not at liberty to raise those claims as counterclaims in the litigation.  

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Filed under Arbitration Act 1996, Awards

English High Court dismisses section 68 challenge to arbitral award on basis of delay

In its recent judgment in B.V. Scheepswerf Damen Gorinchem v The Marine Institute [2015] EWHC 1810 (Comm) (available here), the English High Court (the Court) dismissed the claimant’s challenge to an arbitral award under s68 of the Arbitration Act 1996 (the Act) on the basis of delay in issuing the award. The award related to a dispute between B.V. Scheepswerf Damen Gorinchem (Damen) and The Marine Institute (TMI) about a vessel that Damen agreed to build and TMI agreed to purchase. TMI alleged that Damen’s errors in commissioning the engines had caused damage to the vessel which necessitated repairs.

The dispute was submitted to arbitration in London before a sole arbitrator under the LMAA Terms. The hearing lasted for 3 days in September 2013, but the award (which was in TMI’s favour) was not issued until September 2014. The arbitrator provided no “proper” justification for this lengthy delay.

Damen brought an application to set aside the award under section 68 of the Act, which allows the court to set aside awards on the basis of a serious irregularity affecting the tribunal, the proceedings or the award. The grounds of the application were that:

  • the lengthy delay in issuing the award amounted to a breach of the arbitrator’s general duties and the procedure agreed between the parties (the LMAA terms); and
  • the arbitrator had failed to deal with all the issues put before him.

The Court rejected the challenge that the lengthy delay, of itself, was not a sufficient ground to justify the setting aside of an award. The most that could be said was that the delay might lead the court to subject the award to greater scrutiny when considering whether it addressed all the issues put to the tribunal. In this case, however, the arbitrator had addressed all the issues.

The judgment is significant for a number of reasons. It shows that a lengthy delay, without more, will not generally support a challenge under s 68 of the Act. However, notwithstanding the outcome in this case, it also demonstrates that a substantial delay in issuing an award could nonetheless lead to additional scrutiny by the court. Further, the Court confirmed that it will not permit challenges to an arbitrator’s factual or legal findings to be “dressed up” as challenges under s68.

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Filed under Arbitration Act 1996, Awards, Challenges to awards

Arbitrations seated in Germany: Due to the dynamics within arbitral tribunals, an award can be set aside even if only one of the arbitrators was successfully challenged in the German courts and the decision was made unanimously

In a recently published decision, the German Federal Supreme Court (“Bundesgerichtshof”) ruled that an arbitral award can even be set aside if one of the arbitrators was successfully challenged in the courts only after the tribunal reached a unanimous decision and the award has been handed down. Further, the Bundesgerichtshof held that the mere possibility that the arbitral tribunal may have ruled differently without the participation of the challenged arbitrator suffices to have the award set aside. Since the relevant provisions of German law are based on the 1985 UNCITRAL Model Law on International Commercial Arbitration, this decision is potentially of general interest (decision of 11.12.2014; docket number: I ZB 23/14).

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Filed under Awards, Europe

Recent Developments in India-related international arbitration

Herbert Smith Freehills has issued the latest edition of its Indian international arbitration e-bulletin.  

In this issue, we review a number of recent arbitration-related decisions of the Indian courts, in particular a Supreme Court ruling on applicability of BALCO to an agreement varied after 6 September 2012 and a decision by the Delhi High Court issuing anti-arbitration injuction against London arbitration. We also provide an update on prospective changes to India’s investment arbitration and domestic dispute resolution landscapes.

For further information, please contact Nicholas Peacock, Head of India Arbitration Practice, Alastair Henderson, Managing Partner-SE Asia, Donny Surtani, Senior Associate, or your usual Herbert Smith Freehills contact.

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Filed under Asia, India, News, Public International Law