Singapore’s Choice of Court Agreements Bill: expanding the reach of Singaporean court judgments

On 4 April 2016, Singapore tabled the Choice of Court Agreements Bill (the Bill) paving the way for ratification of the Hague Convention on Choice of Court Agreements (the Convention).

In our previous article, we discussed Singapore's signing of the Convention on 25 March 2015 and the likely effect this would have on the Singapore International Commercial Court (SICC) and Singapore's profile as a regional and global centre for dispute resolution. Last week, Singapore took the first step towards joining the European Union and Mexico as the third signatory to ratify the Convention.

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Filed under Asia, Enforcement, EU, News, South East Asia

Hong Kong Court rejects allegation of fraud as basis for resisting enforcement of award: re-affirms high evidentiary threshold required to be satisfied in such cases.

Following a steady line of authority emphasising the high hurdle to be surmounted in applying for awards to be set aside on grounds of public policy, the Hong Kong Court of First Instance (CFI) has dismissed an application to set aside an order granting leave to enforce an arbitral award (Order) where the applicant alleged fraud on the part of the award creditor (T v C [2016] HCCT 23/2015).

On the allegation of fraud, Mimmie Chan J applied the threshold test confirmed in Karaha Bodas Co LLC v Perusahaan Pertambangan Minyak Dan Gas Bumi Negara (2009) 12 HKCFAR 84, which requires the applicant to show that it has a "real prospect of success" in persuading the judge to find that the award had been obtained by fraud.

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Filed under Arbitration laws, Awards, Challenges to awards, Enforcement, Hong Kong & China

Video Post in Observations on Arbitration series: Arbitration and the State Courts

In this short video in our Observations on Arbitration series, Mathias Wittinghofer, Partner in our International Arbitration practice, considers the role of the state courts at different stages of an arbitration. Mathias discusses how the courts can support the arbitral process in various ways, including in relation to appointing or challenging arbitrators. He also considers the role of the court in jurisdictional challenges and on enforcement of an award.

 

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Filed under Arbitration laws, Arbitration proceedings, Arbitrators, Court intervention, Video

Separability and public policy: selecting law of arbitration agreement does not disapply conflicting non-mandatory provisions of English Arbitration Act 1996 and “fresh evidence…is particularly important” for challenging an Award on public policy grounds

An arbitration agreement is understood in most, but not all, jurisdictions to be a separable or distinct agreement from the contract or agreement of which it forms part.  This is confirmed in s7 of the English Arbitration Act 1996 (the Act).

In National Iranian Oil Company (NIOC) v Crescent Petroleum Company International Ltd (CP) & Crescent Gas Corporation Ltd (CG), the English Court rejected NIOC's challenge to an award issued in a London seated arbitration on grounds of jurisdiction and public policy.

NIOC argued that the contract – which was governed by Iranian law – was procured by corruption and therefore invalid.  It also argued that this meant that the arbitration agreement was also invalid (such that the tribunal had no jurisdiction) because: (i) Iranian law applied to the question of whether the arbitration agreement was separable; and (ii) Iranian law did not recognise the separability of the arbitration.

The Court rejected this argument. As the arbitration was seated in London, s7 of the Act applied unless it was disapplied by the parties by "agreement to the contrary". While s7 is not a mandatory provision, the Court commented that an "agreement to the contrary" in relation to the specific provision is required to disapply it. The choice of Iranian law as the proper law of the contract was not an agreement to the contrary in relation to separability. Furthermore, the parties' arbitration agreement made clear that the issue of validity of the contract was to be determined by the tribunal.  The challenge to the award under s67 was rejected.

The Court also struck out NIOC's challenge based on public policy (which it brought under s68(2)(g) of the Act). NIOC argued that, whilst the tribunal found that the contract was not procured by corruption, the Court, considering English public policy, might take a different view. NIOC was found to have no reasonable prospect of succeeding in its challenge because: (i) the arbitrators had made "a very careful analysis" of the issue in question "after full consideration and evidence"; (ii) NIOC had provided no "fresh evidence"; and (iii) this was not a case of "very exceptional circumstances" that would justify the Court intervening with the arbitrators' decision.

This is a robust, pro-arbitration decision from the English court. In practical terms, it serves as a useful reminder for parties to analyse at the transactional stage the interplay between the different laws that might apply to their disputes and the impact that any conflicting provisions of those laws might have on the procedure for quickly and effectively resolving those dispute. Where potential issues are identified, they should be addressed in the drafting of the dispute resolution provisions. The case further highlights the need to disapply non-mandatory provisions of the Act in clear and specific terms.

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Filed under Arbitration Act 1996, Challenges to awards

New York-based partner Christian Leathley speaks to Law360 for a Q&A on trends and challenges in international arbitration

Herbert Smith Freehills partner Christian Leathley speaks to Law360 for an exclusive Q&A on his career as a leading practitioner in international arbitration. Christian covers a range of topics including the growing problem with "issue conflict" in investment arbitration, how he came to focus on Latin America and receiving resumes that look like Ban Ki-moon's.

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Filed under Investment Arbitration, The Americas

Hong Kong court upholds constitutionality of limits on appeal

In Wing Bo Building Construction Company Limited v Discreet Limited (HCA 146/2015) the Hong Kong Court of First Instance ("CFI") has upheld the constitutionality of s.20(8) Arbitration Ordinance, which provides that CFI decisions to stay proceedings in favour of arbitration are not subject to appeal. This decision follows the Court of Appeal ("CA") decision in China International Fund Limited v Dennis Lau & Ng Chun Man Architects & Engineers (HK) Limited v Secretary for Justice, [link to our blog post] which upheld the constitutionality of the limits on appeal in s.81(4) of the Arbitration Ordinance. That section requires leave from the CFI to appeal its decision on setting aside an arbitral award.

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Filed under Arbitration proceedings, Asia, Hong Kong & China, Jurisdiction

Hong Kong court clarifies test for security pending set aside application

The Hong Kong Court of First Instance has confirmed the test under s.89(5) Arbitration Ordinance for granting security for the award, pending an application to set aside the award at the seat. The court held that same test applies where an applications to set aside a CFI order granting leave to enforce the awards is pending under O.73, r. 10A Rules of the High Court. In applying the test, Mimmie Chan J reiterated the CFI's well-established stance in support of arbitration, namely that the Court's "primary aim" under the Arbitration Ordinance is to "facilitate the arbitral process" and "to treat the arbitral award as final."

Dana Shipping and Trading SA v Sino Channel Asia Ltd [2016] HKEC 599. Click here for a copy of the judgment.

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Filed under Arbitration laws, Awards, Hong Kong & China

Hong Kong CFI stays proceedings in favour of arbitration notwithstanding defendant’s submission to Hong Kong courts; upholds arbitration agreement contained in related contract

The Hong Kong CFI has stayed a claim under a deed of guarantee pending arbitration on the basis of an arbitration agreement in a Subscription Agreement containing the guaranteed obligations (Bluegold Investment Holdings Ltd v Kwan Chun Fun Calvin [2016] HKEC 532) – notwithstanding a non-exclusive choice of the Hong Kong courts in the Guarantee.  Applying established authority, Mimmie Chan J concluded that it was not "clear" that the dispute was outside the scope of the arbitration agreement (to the contrary, it was arguable the claim was within the scope of the arbitration agreement) and therefore stayed the claim. The court again ordered that the claimant in the Hong Kong proceedings pay costs on an indemnity basis, justified by the claimant's failure to comply with the arbitration agreement. 

This decision is a warning to consider the full suite of documents when drafting choice-of-venue clauses in a multi-contract relationship. Unless there is clear provision to the contrary (potentially an exclusive jurisdiction agreement) in the contract generating the claim, the Hong Kong courts will likely stay proceedings in favour of an arbitration agreement between the same parties.

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Filed under Arbitration clauses, Arbitration laws, Hong Kong & China

Court of Appeal clarifies the English Court’s jurisdiction under section 67 of the Arbitration Act: the Court is not required to make any order at all even if the application is well-founded

The recent decision of the English Court of Appeal in Integral Petroleum SA v Melars Group Limited considers the jurisdiction of the court under s67 of the English Arbitration Act 1996 (the Act). S67 deals with challenges to an arbitral award on the grounds of want of substantive jurisdiction. S67(3) provides that on an application by a party to an award, the court may: confirm the award; vary the award; or set aside the award in whole or in part.

The Court of Appeal made clear that the permissive nature of the word "may" in s67(3) makes it open for a judge to decide to make no order, for good reason, on any application under s67.

The Court of Appeal also held that it has no jurisdiction to grant permission to appeal the order of the lower court. Permission to appeal must be granted by the lower court itself.

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Filed under Arbitration Act 1996, Awards, Challenges to awards, Jurisdiction

The development of State and Diplomatic Immunity under English law: views and insight

Herbert Smith Freehills Partners Dominic Roughton and Andrew Cannon have given an interview to Lexis Nexis on the development of the English law of state immunity and diplomatic immunity following the English court's decision in Attiya v Jaber Al Thani [2016] EWHC 212 (QB). The article can be found on our Public International Law Notes blog.

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Filed under News, Public International Law, Sovereign Immunity