Getting the Deal Through: Arbitration 2017 – United Arab Emirates Chapter

Herbert Smith Freehills’ Robert Stephen and Joseph Bentley have contributed the United Arab Emirates Chapter to the 2017 edition of Getting the Deal Through: Arbitration.

Getting the Deal Through: Arbitration contains expert local insight into arbitration laws and institutions worldwide, providing essential 'need to know' answers to the fundamental questions facing corporations and counsel. The guide gives a comprehensive overview of the entire process, from the drafting of contractual clauses through to the enforcement of awards in local courts. It deals with laws and institutions, arbitration agreements, constitution of arbitral tribunals, arbitral proceedings, interim measures and awards.

To read the United Arab Emirates Chapter of Getting the Deal Through: Arbitration please click here: edition-arbitration-2017

For further information, please contact Robert Stephen (Senior Associate), Joseph Bentley (Associate), or your usual Herbert Smith Freehills contact.

 

Robert Stephen
Robert Stephen
Senior Associate
Email | Profile
+971 4 428 6344

Joseph Bentley
Joseph Bentley
Associate
Email
+971 4 428 6350

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English Court considers unilateral communications between arbitrator and party and anonymisation of judgments related to an arbitration

In a recent challenge to an award made under s68 of the English Arbitration Act 1996, in Symbion Power LLC v Venco Imtiaz Construction Company the English Court considered the issue of unilateral communications between a party-appointed arbitrator and its appointing party. Further, and of particular interest to parties who choose arbitration to keep the resolution of their disputes confidential, the Court also addressed the circumstances in which a judgment resulting from an application to challenge an award may be published without anonymization of the parties' names. On this point, a party seeking to maintain confidentiality will need to be able to provide evidence of the positive detriment which it will suffer if the judgment is not anonymized. 

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Filed under Arbitration proceedings, Arbitrators, Challenges to awards, Confidentiality

Important Second Circuit Decision on Enforcement of International Arbitration Awards

In a significant recent judgment, CBF Industria De Gusa S/A v. AMCI Holdings, Inc. (2d Cir. 2017), the influential U.S. Court of Appeals for the Second Circuit (the Second Circuit) considered an arbitral award's preclusive effects and its ability to bind third parties.  In the same decision, the Second Circuit also issued valuable guidance to the lower courts on the correct procedure and terminology for the enforcement of New York Convention awards issued abroad. 

The Second Circuit handed down its initial opinion in January.  However, in a rare move, the Court released a revised opinion earlier this month to "correct" its conclusion on a point of law in the first opinion.  This post, unlike much of the online commentary of AMCI Holdings, refers exclusively to the Second Circuit's later opinion.

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Filed under Awards, Enforcement, New York Convention, The Americas

New York Convention 1958 to enter force in Angola on 4 June 2017

Angola has become the 157th Contracting State to the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards. On 6 March 2017, Angola deposited its instrument of accession to the Convention with the UN Secretary General.  Under Article XII(2), the Convention will enter into force in Angola on 4 June 2017, 90 days after the deposit of its instrument of accession. Unlike many states, Angola has not made any declarations, notifications or reservations regarding the application of the Convention.  The most frequently made declarations are to apply the Convention only to: (i) recognition and enforcement of awards made in the territory of another contracting State (the so-called "reciprocity reservation"); and (ii) differences arising out of legal relationships that are considered commercial under the national law (the so-called "commercial reservation").

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Filed under Africa, Enforcement, New York Convention

Australian Court provides guidance on Art 33(3) of the Model Law, the doctrine of functus officio and when a ‘Final Award’ is not ‘final’

In Blanalko Pty Ltd v Lysaght Building Solutions Pty Ltd [2017] VSC 97, Croft J of the Victorian Supreme Court confirmed that a party is not required to rely on, or comply with the time constraint in, Art 33(3) of the Model Law to obtain a further Award in circumstances where the arbitrator has made ‘a conscious decision not to deal with an issue’.  The decision also provides useful commentary on the functus officio doctrine and the circumstances in which an Award labelled ‘Final Award’ is not, relevantly, a ‘final Award.’

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Filed under Arbitration laws, Australia, Awards, Costs, Court intervention, Stays, UNCITRAL Model Law

High Court confirms UNCITRAL Tribunal Award on jurisdiction

The High Court has confirmed an UNCITRAL Tribunal's Award on Jurisdiction, which rejected jurisdiction under an investment contract (Contract) and the 1994 Kazakh Law on Foreign Investment (FIL).

The Court placed particular emphasis on expert evidence of the principles of contractual interpretation under the Civil Code of the Republic of Kazakhstan.  It was not prepared to depart from these principles, which required a literal interpretation of the Contract and FIL.

Whilst the Court's reasoning differed in some respects from that of the Tribunal, it was broadly consistent with the Award on Jurisdiction. 

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Filed under Arbitrability, Arbitration Act 1996, Arbitration clauses, Investment Arbitration, Jurisdiction

Mixed messages to investors as India quietly terminates bilateral investment treaties with 58 countries

The Government of India says it has sent notices to terminate bilateral investment treaties (BITs) with 58 countries, including 22 EU countries.  It has been reported that many of these BITs will cease to apply to new investments from as early as April 2017. The BIT between India and The Netherlands (which had been a common route for investment into India) has already been terminated from December 2016.  Termination of the BITs would also remove protection for new investments by Indian investors into the counterparty countries. For the remaining 25 of its BITs that have not completed their initial term, and so are not ripe for termination, India has circulated a proposed joint interpretative statement to the counterparties to these BITs seeking to align the ongoing treaties with its 2015 Model BIT.  While investments made before the termination of the 58 treaties may be protected for some years under the 'sunset' clauses in those BITs, India's actions send mixed messages at a time when the Indian government is making renewed efforts to attract inbound investment with its 'Make in India' campaign, and when outbound investment by Indian companies continues to increase into both developed and developing economies. 

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Filed under Asia, India, Investment Arbitration, Trade Agreements

New Arbitration Law in Qatar

Introduction

The Emir of Qatar, Sheikh Tamim bin Hamad al Thani, issued Law No 2 of 2017 on 16 February 2017 (the "New Arbitration Law"). The New Arbitration Law has not yet been published in the Official Gazette and implementing regulations are yet to be issued, but the New Arbitration Law will come into force 30 days after this occurs.

Overview

The New Arbitration Law replaces Articles 190 to 210 of the Qatari Civil Code, which previously governed arbitration proceedings seated in Qatar. In a positive step, it is substantially based on the UNCITRAL Model Law, which is the benchmark for arbitration legislation, and will apply to all ongoing and future disputes. Although other jurisdictions in the region (such as the UAE) have considered adopting or have adopted the UNCITRAL Model law (for example, the 2005 Arbitration Regulations are heavily based on the Model Law), Qatar will be the first in the region to implement them onshore. Nevertheless, it remains to be seen how these provisions will be applied in practice and the courts' approach when asked to exercise their supervisory jurisdiction.

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Filed under Arbitration laws, Arbitration rules, Middle East, Procedures in arbitration, UNCITRAL Model Law

Urbaser v. Argentina and Burlington v. Ecuador: Investment arbitration is not over the counterclaims yet

Two recent decisions by tribunals have advanced the body of tribunal practice considering the issue of counterclaims by respondent states in investment treaty arbitration: Burlington Resources Inc. v. Ecuador, in which the tribunal awarded damages against the investor for breach of Ecuadorian environmental law in the performance of its investment, and Urbaser SA and Consorcio de Aguas Bilbao Bizkaia v. Argentina, in which the tribunal accepted jurisdiction to hear Argentina's counterclaim asserting that the investor had violated international human rights obligations. These decisions arise in the context of conceptual challenges to the pursuit of counterclaims in investment arbitration.

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Filed under Investment Arbitration, Jurisdiction, The Americas

UPDATE: Third-party funding of international arbitration now permitted in Singapore

Overview

We reported previously (here) on the Singapore Parliament's passage of the Civil Law (Amendment) Bill (Bill No. 38/2016) (Bill) on 10 January 2017.

The Bill entered into force on 1 March 2017 as the Civil Law (Amendment) Act 2017 (Act).  The framework established by the Act has been elaborated in the accompanying Civil Law (Third Party Funding) Regulations 2017 (Regulations) and related amendments to the Legal Professional Act (Cap. 161) and the professional conduct rules for lawyers in Singapore.

In summary, the Act abolishes the common law torts of champerty and maintenance and confirms that third-party funding is not contrary to public policy or illegal where it is (i) provided by eligible parties (ii) in prescribed proceedings.

The Regulations provide further detail on the reform, confirming that:

  • in order for a party to be eligible to provide funding under the Act, the funding of dispute resolution proceedings must be its "principal business" (in Singapore or elsewhere), and the third-party funder must have "a paidup share capital of not less than $5 million"; and
  • the prescribed categories of proceedings in which third party funding can be used is limited to international arbitration proceedings, and court litigation and mediation arising out of such proceedings (for example, applications for the enforcement of awards, or mediation undertaken prior to or during arbitration).

As expected, the Regulations prescribe specific eligibility requirements for funders. Notably, the requirement in the draft version of the Regulations (which was circulated alongside the Bill) for funds "sufficient to fund the dispute resolution proceedings" has been amended in keeping with the Ministry of Law's original proposals in 2011 that "[t]hird party funders should be entities with at least S$5 million in paid up capital").

Related professional conduct reform

The Act's coming into force was accompanied by related amendments to Section 107 of the Legal Profession Act (Cap. 161) (LPA) and the professional conduct rules for lawyers in Singapore (the Legal Profession (Professional Conduct) Rules 2015 (LPRCR).

Section 107 of the LPA prohibits solicitors from (i) holding any interest of any party in any suit, action or other contentious proceeding; or (ii) acting in any suit, action or other contentious proceeding on a basis which contemplates payment only in the event of success. The Act amends the LPA to clarify that the restriction in Section 107 does not prevent solicitors from:

  • introducing or referring a third-party funder to a client, provided the solicitor does not receive any direct financial benefit (excluding their usual fees, disbursement or expense for the provision of legal services to the client);
  • advising on or drafting a third-party funding contract for such client or negotiating the contract on their behalf; or
  • acting on behalf of the client in any dispute arising out of such contract.

The amendments to the LPRCR concern two principal areas:

  • Disclosure: practitioners must now disclose to the court or tribunal and to every other party to proceedings: (i) the existence of any third-party funding contract related to the costs of such proceedings; and (ii) the identity and address of any funder involved, at the date of commencement of proceedings, or as soon as practicable after the third-party funding contract is entered into; and
  • Financial interest: practitioners are prohibited from
    • holding financial or other interests in; or
    • receiving referral fees, commission, fees or any share of the proceeds from,

third-party funders which they have introduced or referred to their client(s), or which have third-party funding contracts with their client(s).

These amendments are consistent with public statements made by Singapore's Senior Minister of State for Law, Ms Indranee Rajah, in January 2017 that Singapore "will be taking a limited but targeted regulatory approach" to third-party funding, and her expectation that "industry-promulgated guidelines or best practices will emerge". In particular, the amendments relating to disclosure follow previous comments by the Ministry of Law disclosure obligations would be a "central tenet" of regulatory reform accompanying the Act. This follows general industry sentiment that any regulation of third-party funding should mainly focus on disclosure (see the 2015 International Arbitration Survey, conducted by Queen Mary University), and addresses Singapore Chief Justice Sundaresh's observation at a CIArb conference in Penang in 2013 that "there is a virtual absence of any form of regulation" in Asia in the context of third-party funders, and a need for "meaningful guidance" on issues such as conflicts of interest, influence and disclosure.

A taste of what's to come?

Under the Act and the Regulations, funding solutions outside of those arrangements described above are not possible. In particular, lawyers remain prohibited from funding proceedings themselves, under contingency arrangements or otherwise.

The Act and the Regulations are consistent with Ms Rajah's repeated statements that the limited reform effected by the Act represents a testbed for a more general roll-out of third-party funding in Singapore. The timeline for such further reform is not known, but many will follow the development of third-party funding in Singapore with keen eyes.

Meanwhile, the Act represents a significant step forward for Singapore as an international arbitration hub, and parties involved in arbitrations seated in the jurisdiction now have access to a broader and more diverse range of funding arrangements.

While the Hong Kong Legislative Council is presently in the process of a similar reform in Hong Kong, a final timeline for implementation is not yet available. We previously wrote about this in a blog post in October 2016 and will continue to monitor its progress.

For further information, please contact Alastair Henderson, Partner, Gitta Satryani, Senior Associate, Daniel Mills, Associate, or your usual Herbert Smith Freehills contact.

Alastair Henderson
Alastair Henderson
Partner
Email | Profile
+65 6 868 8000
Gitta Satryani
Gitta Satryani
Senior Associate
Email | Profile
+65 6 868 8067
Daniel Mills
Daniel Mills
Associate
Email
+65 6 868 8063

 

 

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Filed under ADR, Asia, Costs, Third Party Funding