Warrant for committal after failure to appear on enforcement hearing

In Navig8 Chemical Pools Inc v Inder Sharma, HCMP 2885/2016, 17 January 2017, the Hong Kong Court of First Instance issued a warrant for committal against a Defendant who repeatedly refused to appear before the court for examination relating to enforcement of an arbitral award. Because the Defendant had blatantly ignored prior court orders to appear, Anthony Chan J saw no other option than to find him in contempt of court and issue a warrant for committal to ensure his orders were obeyed.

Background

The Defendant was the sole director of Nu Tek, an Indian Telecom company. On 4 June 2015, the Plaintiff obtained an Award against Nu Tek and subsequently started enforcement proceedings in Hong Kong. The enforcement court ordered the Defendant to attend court for an examination, but despite being properly served, the Defendant failed to appear on two separate occasions. On 5 December 2016, the Defendant was served for a third and final time, but refused to accept the documents. The process server then threw the documents on the ground before the Defendant.

Given the circumstances, Justice Chan considered this a proper notice of hearing and deduced that the Defendant had consciously chosen not to appear. In his consideration, Justice Chan took note of the fact there was already an order of an English Court from July 2016 committing the Defendant to 18 months of imprisonment for contempt, for failing to comply with an asset disclosure order in relation to enforcement of the same Award.

Contempt

To establish contempt of court for breach of a court order, it is sufficient to prove that the defendant's conduct was intentional in the sense that it was conscious and voluntary. The court's order to attend for examination was straightforward and self-explanatory. There was no doubt as to what the Defendant was required to do; he had to attend court for examination. Thus the Defendant's failure to appear could only be intentional. In addition, the Defendant had backdated NuTek's records to make it appear that he was no longer a director of the company on the relevant dates, probably to insulate him from enforcement proceedings, thus demonstrating that he was a person of "low commercial morality".

Imprisonment for civil contempt is a remedy of last resort. However, in this case, the Defendant had demonstrated little respect for the law. In addition, a fine would be very difficult to enforce in India, because it would be a mere penalty imposed by the court as opposed to a judgement. Justice Chan thus had little option in terms of an appropriate penalty. In all the circumstances, an immediate custodial sentence measured in months would be appropriate. Taking into account the strong public interest in administration of justice, Justice Chan issued a warrant for committal to have the Defendant arrested and brought before the court as soon as possible. The Defendant was ordered to pay costs on the indemnity basis, to be taxed if not agreed.

Comment

This judgment is a reminder of the important role that national courts play in supervising arbitral proceedings, and of the fact that the Hong Kong courts take that role seriously. When necessary, the courts are willing to exercise their powers to the full, to ensure that parties to arbitration do not evade their obligations under the award.

 

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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
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Senior Associate
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Joseph Bentley
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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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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