OHADA CCJA court annuls €38 million arbitral award against Guinea

In a highly unusual decision, the Cour Commune de Justice et d'Arbitrage (CCJA), the court created by the Organisation pour l'Harmonisation en Afrique du Droit des Affaires (the Organisation for the Harmonisation of Commercial Law in Africa or OHADA) Treaty, signed by 17 African States*, has ruled that an award should be set aside on the grounds that the arbitrators had entered into a separate fee agreement with the parties to the arbitration. The CCJA held that, in so doing, the Tribunal had exceeded its mandate and deliberately excluded the mandatory provisions of OHADA arbitration rules providing that the parties are bound by the fees set by the CCJA.  In response to the CCJA's decision, the three arbitrators in question have taken the equally unusual step of writing an open letter to the arbitration community and the CCJA, publicly criticising the decision and calling for their colleagues' support. The CCJA's decision has the potential to have important and far-reaching consequences for arbitration in the OHADA region and the willingness of international arbitrators to sit as arbitrators in arbitrations governed by the CCJA rules in future. The decision and its implications are discussed further below.

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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 consider Indian court decisions on the arbitrability of fraud and the enforceability and execution of a foreign award against a "sick" Indian company.  We also provide updates on changes to India's legislative framework for dispute resolution and on recent news about BIT and other treaty claims against India.

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

ICC Court announces new policies to foster transparency and ensure greater efficiency

On 5 January 2016, the ICC Court announced two new policies aimed at enhancing the efficiency and transparency of ICC arbitration proceedings.   The first aims to promote transparency for users and stakeholders in ICC arbitration by publishing the names and certain details of arbitrators sitting in ICC cases.  The second aims to encourage the prompt submission of awards by arbitrators to the ICC Court for scrutiny, by tying the arbitrators' remuneration to the time taken to submit the award.

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The ICSID convention enters into force in Iraq

The ICSID Convention entered into force in Iraq on 17 December 2015.  This comes after Iraq signed the ICSID Convention and deposited its instrument of ratification on 17 November 2015 to become the Convention's 160th signatory State. Craig Tevendale, Craig Shepherd and Anees Naim consider the implications of this step on the investment climate in Iraq on our Public International Law blog, here

Subscribers to our Arbitration Notes blog may also wish to subscribe to our Public International Law Notes blog for regular updates, analysis and comment on state immunity, investment treaty cases, investment protection, free trade agreements and other public international law issues. To subscribe to the Public International Law Blog, please click here, and enter your email in the “subscribe” box.

For further information, please contact Craig Tevendale, Partner, Craig Shepherd, Partner, Anees Naim, Associate or your usual Herbert Smith Freehills contact.

Craig Tevendale
Craig Tevendale
Partner
Email | Profile
+44 20 7466 2445
Craig Shepherd
Craig Shepherd
Partner
Email | Profile
+971 4 428 6304
Anees Naim
Anees Naim
Associate
Email
+44 20 7466 2737

 

 

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Filed under Enforcement, Middle East, News

French Supreme Court declares inadmissible appeal of Court of Appeal’s decision to seek an opinion from the CJEU

In Cass. Civ. 1re, 18 novembre 2015, n°14-26.482, the French Supreme Court considered an appeal from a Court of Appeal decision seeking an opinion from the CJEU on the applicability of European competition law in the context of proceedings to set aside an ICC award.

On 18 November 2015, the Cour de Cassation (French Supreme Court) held that an appeal against the lower court’s decision to seek a ruling from the Court of Justice of the European Union (CJEU) was inadmissible.

The applicant (Genentech) sought to set aside an International Chamber of Commerce (ICC) award ordering it to pay sales royalties due under a biotechnology licence. It did so on the basis that the award breached European competition law (and therefore international public policy). In a preliminary decision dated 23 September 2014, the Paris Court of Appeal stayed the proceedings and referred the question to the CJEU. The respondents appealed to the Supreme Court against the Court of Appeal's decision to seek a ruling from the CJEU. 

In declaring the appeal to be inadmissible, the Supreme Court also found that the Court of Appeal had not carried out a review of the award under Article 1520 5° of the French Code of Civil Procedure, but had simply exercised its right, under Article 267 of the Treaty on the Functioning of the European Union, to refer a question on the "interpretation of the Treaties" to the CJEU.

This decision confirms that the French courts retain the right to refer questions on the interpretation of treaties to the CJEU, even when exercising their supervisory jurisdiction over international arbitrations seated in France. It will be interesting to see how the Court of Appeal deals with Genentech's application to have the award set aside, if the CJEU eventually rules that the award breaches European competition law. (Cass. Civ. 1re, 18 novembre 2015, n°14-26.482)

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Filed under Awards, EU, EU Law, Europe

Myanmar passes highly-anticipated new arbitration law

We understand that on 5 January 2016, the Arbitration Law (Union Law No. 5/2016) was adopted by the Myanmar Union Parliament.  The legislation builds upon the country's recent accession to the New York Convention [see our earlier blog post here] and signals a potentially significant development in boosting support for foreign investment and marking the start of country's participation in the international arbitral community.  Assuming the enacted legislation retains the scope of the draft Arbitration Bill, this new law should introduce provisions governing international as well as domestic arbitrations based on the UNCITRAL Model Law.  The statute as enacted is currently only available in the Myanmar language (available here) , but we will provide a further update analysing the legislation once a translation is available.

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Filed under Arbitration laws, New York Convention, South East Asia

Breakfast panel with TPP negotiators on 7 January 2016: Investor-state dispute settlement under the trans-pacific partnership

Join us for a panel discussion on the dispute resolution system in the Trans-Pacific Partnership (TPP), presented by experts in international arbitration, as well as members of TPP government negotiating teams from Peru and Mexico. They will discuss the controversies arising out of the TPP's adoption of investor state arbitration.

Date: Thursday, January 7, 2016

Time: Registration will begin at 8:30am. Breakfast will be served. The panel discussion will begin at 9am.

Venue: Yale Club of New York, 50 Vanderbilt Avenue, New York, NY 10017. Please click here to view map.

Registration: To register please contact Rochelle.Eades@hsf.com or Danielle.Schultz@hsf.com

For more information and the list of speakers, please see below.

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Filed under Asia, Australia, Events, Investment Arbitration, ISDS, Japan, Public International Law, South East Asia, The Americas, TPP

Hong Kong constitutionality challenge – leave to appeal denied

The Hong Kong Court of Appeal (CA) has rejected an application for leave to appeal to the Hong Kong Court of Final Appeal from its previous judgment that upholds the constitutionality of s.81(4) of the Arbitration Ordinance (Cap. 609), under which a party who wishes to appeal a Court of First Instance (CFI) decision on setting aside an arbitral award must obtain leave to appeal from the CFI.

In its 18 December judgment (HCMP2472/2014), the CA decided that it is not reasonably arguable that section 81(4) of the Arbitration Ordinance is unconstitutional.  It did not regard itself as wrong to have had regard to the alternative scheme in Schedule 2 of the Arbitration Ordinance and the existence of the residual jurisdiction in assessing the proportionality of section 81(4).  The CA repeated that, viewed in light of the overall statutory scheme of the Arbitration Ordinance, section 81(4) clearly comes within the range of reasonable options to achieve the legitimate aims of the Arbitration Ordinance.

This judgment confirms the limited rights of appeal in arbitration cases and the constitutionality of the relevant provisions. It is now clear that there will be only one chance for a losing party in an application to set aside an arbitral award to apply for leave to appeal, subject to the residual jurisdiction of the CA to review the process of the CFI in refusing leave (which will be rarely invoked).

Herbert Smith Freehills acted for the successful Respondent in the arbitration and court proceedings.

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

U.S. District Court allows Gold Reserve to enforce its award against Venezuela in Washington, D.C.: Gold Reserve Inc., v. Bolivarian Republic of Venezuela

In September 2014, Gold Reserve won a significant arbitral award ("Award") worth more than US$760 million (and counting, because of post-award interest) against Venezuela for breach of investor-protection standards under the Canada-Venezuela bilateral investment treaty ("Treaty"). In the arbitration, Gold Reserve successfully argued that Venezuela's revocation of certain licenses for gold extraction held by Gold Reserve's subsidiary violated the fair and equitable treatment, full protection and security and expropriation standards of the Treaty. (For further background to the case, see our earlier blog post here.)

Subsequently, two proceedings were filed before the Paris Court of Appeal, being the court at the seat of the arbitration. When Venezuela applied to have the award set aside, Gold Reserve countered that application with a petition to confirm the award. The two procedures differ in scope and length. Although the Paris Court confirmed the award (as previously reported in our blog here), the decision on Venezuela's application to set aside the award remains pending, since the set-aside proceeding entails a more detailed review of the Tribunal's decision-making.

While the set-aside proceeding continues in Paris, Gold Reserve has sought to enforce the award elsewhere, including in Luxembourg and Washington, D.C. The Luxembourg court granted a stay of the enforcement request pending the completion of the Parisian proceedings. However, on November 20, 2015, the U.S. District Court for the District of Columbia granted Gold Reserve's request for enforcement in Washington, D.C. The U.S. District Court, in line with the general pro-enforcement approach of the U.S. courts in their application of the New York Convention, found that Venezuela could neither establish any procedural defects in the arbitration nor prove that enforcement of the Award would violate public policy. Accordingly, Gold Reserve is able to satisfy the Award against Venezuela's assets in Washington, D.C., without waiting for the completion of Venezuela's set-aside proceeding in Paris.

The principal lessons from the U.S. District Court's decision are:

  1. The Court will give "substantial deference" to the Tribunal's determination on the scope of its jurisdiction.
  2. Failure to raise an issue squarely and distinctly during the arbitral proceedings may constitute a waiver of the right to raise the same issue before an enforcing court.
  3. In order to argue successfully that the inequitable allocation of time to the parties led to a due process violation, it is necessary to show exactly what extra time was required for and how the denial of extra time prevented a party from presenting its case.
  4. The public policy exception to the enforcement of arbitral awards under the New York Convention, as applied by the U.S. courts, is extremely narrow.
  5. The U.S. courts, and the U.S. District Court for the District of Columbia in particular, have been willing to enforce foreign awards despite parallel proceedings challenging these awards before the courts at the seat of the arbitration.

Each of these points is discussed below.

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Filed under Awards, Challenges to awards, Enforcement, Investment Arbitration, ISDS, New York Convention, Regions, The Americas

Yemen: Managing disputes arising out of the current instability

Yemen is currently suffering severe political, military and economic instability. The humanitarian impact of the conflict in Yemen is considerable and the vast majority of the Yemeni people have been left without full access to basic services and commodities.  The economic situation also looks bleak, and revenue from oil exports is decreasing due to falling prices and regular attacks from hostile forces on oil pipelines. 

In this short article, Herbert Smith Freehills disputes partners with expertise in the region consider the difficult decisions which are faced by those who operate within the Yemen and how they may protect their interests. 

For further information, please contact any of the partners named in the article or your usual Herbert Smith Freehills contact.

 

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Filed under Middle East