Julian Copeman and Anita Phillips discuss the Global Pound Conference and what to expect at the upcoming Hong Kong event

Hong Kong Lawyer has published an article by Julian Copeman, partner, and Anita Phillips, professional support consultant, discussing commercial dispute resolution in Hong Kong and what the Global Pound Conference series has highlighted for change at other events across the globe to date. The article can be accessed here.

The Global Pound Conference on 23 February at the Convention and Exhibition Centre is a timely opportunity for all stakeholders (users, lawyers, advisors, experts, judges, arbitrators, mediators, academics, government bodies and dispute resolution institutions) to reflect on what is working in Hong Kong and what needs to change. With a keynote address from the Secretary for Justice, closing remarks from the Chief Justice, and the Solicitor General discussing the responsibilities of each stakeholder group in shaping the future of dispute resolution, there will be fervent debate. With third-party funding of arbitration and the promotion of mediation (including through apology legislation) high on the Hong Kong legislature’s agenda, the time is ripe for a conversation that covers all dispute resolution processes and provides a clear framework for quantitative and qualitative outputs.

The full programme can be found here. Register to attend the event here.

 

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China extends access to offshore arbitration

On 30 December 2016, China's Supreme People's Court (SPC) issued a notice aimed at strengthening judicial support for the development of pilot free trade zones in China. The notice includes a number of pro-arbitration guidelines that, to some extent, could be deemed an attempt to liberalise and internationalise China's current arbitration regime within range of the pilot free trade zones. In particular, companies incorporated in the Shanghai Free Trade Zone can, in certain circumstances, now agree to arbitrate disputes among themselves outside mainland China. The Opinion may also allow such companies to apply the rules of non-Chinese arbitral institutions, or to hold ad hoc arbitrations (which are otherwise not permitted in mainland China). However, the position here is less clear.

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UPDATE: Singapore passes law to legalise third-party funding of international arbitration and related proceedings

On 10 January 2017 the Singapore Parliament passed amendments to the Civil Law Act legalising third-party funding in arbitration and related proceedings in Singapore (the "Amendments"). Following a year of positive developments for arbitration in Singapore, this latest development will open up a significant new market for funders worldwide, further asserts Singapore's eminence as an arbitral centre and paves the way for further and deeper reform.

Overview

We previously reported on the introduction of the Civil Law (Amendment) Bill in our blog posts of July 2016 and November 2016. The key features of the Bill were to:

  • abolish the common law torts of champerty and maintenance (which currently restrict the use of third party funding);
  • confirm that third party funding is not contrary to public policy or illegal, if used by eligible parties in prescribed categories;
  • confirm that the prescribed categories of proceedings in which third party funding can be used include international arbitration proceedings and court litigation and mediation arising out of international arbitration; and
  • prescribe the qualifications that a third party funder must satisfy in order to fund an arbitration, including a proviso that the funding of dispute resolution proceedings must be the "principal business" of the third party funder.

While the legislation makes the broad legal amendments necessary to facilitate third-party funding, the finer details – such as the precise scope of the permitted arrangements and accompanying regulatory changes – will be dealt with by subsidiary legislation and regulations by the Minister of Law.

Interestingly, early reports of Ministers' comments on the legislation, indicate that the Amendments – currently limited to international arbitration and related proceedings – are very much a first step toward broader reform. Singapore's Senior Minister of State for Law, Ms Indranee Rajah, reportedly stated that "We want to have [third-party funding] tested in a limited sphere … If the framework works well, as and when appropriate, the prescribed categories of proceedings may be expanded". This will be of significant interest to funders and practitioners alike, as it clearly positions Singapore as a growth market.

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Filed under Arbitration laws, Asia, South East Asia, Third Party Funding

SIAC Investment Arbitration Rules

The Singapore International Arbitration Centre (SIAC) has announced the release of its Investment Arbitration Rules (the Rules), which came into force on 1 January 2017.  This release follows the earlier public consultation in February 2016, when practitioners were invited by SIAC to review and comment on the draft of the Rules.

The Rules are the first of a kind. While private arbitral institutions often administer both commercial and investment arbitration, such as the ICC or the Stockholm Chamber of Commerce, SIAC is the first private institution to introduce a specific set of arbitration rules for investment arbitrations.  In creating a dedicated set of rules, SIAC has adopted innovative approaches to address some of the key procedural issues commonly encountered in investment arbitration.  

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Filed under Arbitration proceedings, Arbitration rules, Asia, Institutions, Investment Arbitration, ISDS, South East Asia, Third Party Funding

EU launches consultation on multilateral reform of the investor-state dispute resolution system

The EU Commission (the Commission) has launched a public consultation on the multilateral reform of the investment dispute settlement system.  The survey is found here and responses are due by 15 March 2017.  The consultation is the next step in furtherance of the Commission's objective to develop a multilateral system for the resolution of international investment disputes and, amongst other things, seeks to explore views on its proposal to develop a permanent multilateral investment court system.

The development of the Commission's position over the last couple of years and the Commission's introduction to the consultation both suggest a determination to pursue wholesale change to the system of resolution of investor-state disputes, rather than a more nuanced approach in evaluating the perceived flaws in the current system under which investor-state disputes are largely resolved by ad hoc arbitration (often under the auspices of ICSID, part of the World Bank).  However, notwithstanding its clearly stated objective, the Commission's survey also countenances in the alternative the establishment of a Multilateral Appeal Tribunal which would consider appeals from the decisions of ad hoc investment arbitration tribunals established under the current system. 

The responses to the consultation will be significant in terms of the future of the Commission's objective to establish a Multilateral Investment Court. In particular, it will be crucial that a constructive and positive response is received from the third party states who are asked to partner with the Commission in developing the Multilateral Investment Court system.  However, it remains to be seen whether the survey will elucidate clear responses which will assist the Commission in considering further its proposals for the future of investor-state dispute settlement: the majority of the survey questions treat as interchangeable the two different approaches (the establishment of a Multilateral Investment Court system and the establishment of a Multilateral Appeal Tribunal) and the survey does not seek responses on the development of a Multilateral Appeal Tribunal alongside reform of the current system of ad hoc arbitration.  It is not clear whether this option continues to be considered by the Commission.

The issues and controversies surrounding the resolution of investor-state disputes are complex and any changes to the system pursued by the Commission would ideally be based on clearly expressed views from a range of stakeholders.  It is to be hoped therefore that respondents to the survey take the opportunity offered by the Commission to clarify their responses by way of uploading a position paper. 

With unprecedented growth in foreign direct investment, issues concerning substantive investment protection and the way in which investor-state disputes are resolved both now and in the future are significant for both states and investors.  If you would like to discuss these issues or the Commission's consultation, please contact: Larry Shore, Partner, Dominic Roughton, Partner, Christian Leathley, Partner, Andrew Cannon, Partner, Iain Maxwell, Of Counsel, Vanessa Naish, Professional Support Consultant, Hannah Ambrose, Professional Support Consultant or your usual Herbert Smith Freehills contact. 

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Filed under Advice on State Contracts and Disputes, EU, Europe, Investment Arbitration, ISDS, Public International Law, Trade Agreements

First CIETAC HK award enforced in mainland China

On 13 December 2016, the Nanjing Intermediate People's Court of Jiangsu Province (the "Nanjing Court") issued its decision in Ennead Architects International LLP v. Fuli Nanjing Dichan Kaifa Youxian Gongsi (2016) Su 01 RenGang No.1 (the "Decision"). The Decision marks the first time that a Chinese court has enforced a CIETAC Hong Kong Arbitration Center ("CIETAC Hong Kong") arbitral award in mainland China.

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Filed under Awards, Enforcement, Hong Kong & China

Advocate General issues opinion that the EU does not have exclusive competence to conclude the EU-Singapore Free Trade Agreement

In an opinion issued on 21 December 2016, EU Advocate General Eleanor Sharpston QC has concluded that the EU-Singapore Free Trade Agreement (EUSFTA) will need to be finalised by the European Union and the Member States acting jointly, i.e. entered into by the EU and all of its Member States (as a so-called "mixed agreement"), not just by the EU alone. Although the opinion does not bind the CJEU, the court tends to follow the approach adopted by the Advocate General. The CJEU is expected to issue its own judgment in 2017.

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Filed under Asia, Brexit, Europe, Investment Arbitration, ISDS, Public International Law, Trade Agreements, Uncategorized

CETA UPDATE: CETA is signed; Provisional application of CETA and Brexit; First government-to-government meeting to discuss establishing the multi-lateral investment court system

On 30 October 2016, the EU and Canada signed the Comprehensive Economic and Trade Agreement (the CETA).  As explained in our blog post here, the text of the CETA, which was originally agreed in 2014, was subjected to "legal scrubbing" in February 2016 which led to the inclusion, at the instigation of the EU, of an Investment Court System (an ICS) in place of the ad hoc investor-State arbitration provisions which had originally been included in CETA, and are included in roughly 3200 international investment agreements and other treaties. 

On 13 and 14 December 2016, the European Commission (the Commission) and the Canadian Government met in Geneva to engage in "exploratory discussions" with government representatives from around the world on the establishment of the multilateral ICS. It will have been the first meeting at government-to-government level on this initiative since the ICS was first proposed by the Commission in its Concept Paper of May 2015. For the multilateral ICS to succeed in the way envisioned by the Commission, broad global support will be required.

The CETA will be provisionally applied in advance of its ratification. However, as discussed below, provisional application will not extend to certain of the substantive investor protections, nor to the ICS. The exclusion of certain provisions from provisional application raises a number of questions as to how the agreement will operate in practice. 

Interestingly, whilst the UK has indicated that it intends to provisionally apply the CETA, the exclusion of the ICS from the provisional application has been described by the UK Government as its "main ask" of the EU in this context. The UK Government has also concluded that, even though CETA is being put forward as a "mixed agreement" and ratified by all the Member States, the UK will not automatically benefit from CETA's provisions after the UK leaves the EU.

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Filed under EU, Europe, ISDS, Public International Law

ICC report on financial institutions and international arbitration: a condensed overview of a gradually changing landscape

This autumn, the ICC Commission on Arbitration and ADR published a report on Financial Institutions and International Arbitration (the "Report"). The Report offers a detailed analysis of the use of international arbitration in specialist sectors of the banking and finance industry, from derivatives and sovereign finance to advisory matters and asset management. The Report is based on interviews with over 50 financial institutions from across the globe, data received from 13 arbitration institutions and a review of relevant awards, internal policies and scholarly writing. Overall, the Report finds that despite a recent gradual shift towards more arbitration in the finance and banking industry, the use of arbitration by financial institutions remains limited. It concludes that this appears to be due to a lack of awareness of the benefits of international arbitration, combined with the traditional view that arbitration does not meet the needs of specialist financial disputes. In order to tackle these two findings, the Report seeks to give specific recommendations on how to tailor arbitration to the needs of the finance industry.

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Filed under Arbitration clauses, Arbitration proceedings, Arbitration rules, Banking and Finance, Institutions

Middle East arbitration highlights from 2016 and trends for 2017

The last 12 months have seen a number of important developments in arbitration practice in the Middle East, some comforting to the arbitration community, some controversial. Here, we present a summary of the key themes from 2016, and give our thoughts on what to expect in 2017.

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Filed under Arbitration laws, Arbitration proceedings, Arbitration rules, DIFC, Middle East