BLC and Ors v. BLB and Anor [2014] SGCA 40 – the Singapore Court of Appeal sets out its approach to setting aside applications premised on allegations of awards made infra petita

In the recent decision in BLC and ors v. BLB and anor [2014] SGCA 40 (“the BLC decision”), the Singapore Court of Appeal reversed the decision of the High Court to set aside part of an arbitration award (“Award”) on the ground of a breach of natural justice. The court also provided valuable guidance on Articles 33(3) and 34(4) of the UNCITRAL Model Law on International Commercial Arbitration (“Model Law”).

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Filed under Asia, Challenges to awards, South East Asia

French Supreme Court refuses to set aside ICC award in favour of the Congo

In GroupAntoine Tabet c/ la République du Congo, Cass. Civ. 1re, n° 11-16444 of 25 June 2014, the French Supreme Court (Cour de cassation) considered an application to have an award set aside on the grounds that the President of the tribunal had failed to disclose a relationship that was capable of raising doubts as to his independence.

The French Supreme Court upheld the award rendered at the International Court of Arbitration of the International Chamber of Commerce (ICC) in favour of the Republic of the Congo. The court refused to set aside the award, finding that there was no conflict of interest giving rise to a risk that the President of the tribunal might not have been independent and impartial. The court rejected the argument that the assessment of the arbitrator’s independence and impartiality should have involved an investigation into the substantive reasons behind the conclusion of certain contracts.

The judgment provides a welcome reminder of the limits to the court’s supervisory function, offering a clear indication that the role of the courts does not extend to independent investigation of the facts at issue. The decision also contributes to the ongoing development of French law in respect of arbitrators’ obligations of disclosure.

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Filed under Arbitrators, Challenges to awards, Europe

Craig Shepherd and Mike McClure to edit a TDM special on arbitration in the Middle East – a call for papers

Craig Shepherd and Mike McClure from the HSF office in Dubai are co-editing a TDM (Transnational Dispute Management) Special entitled “Arbitration in the Middle East – expectations and challenges for the future”.

The volume of international business either in the Middle East or with a Middle Eastern element is increasing and many of the contracts being used provide for arbitration.  While arbitration (“tahkim” in Arabic) has long-standing religious and cultural roots in the Middle East, there are a number of differences and tensions between the Western perception of arbitration and certain Islamic legal principles.

The TDM Special will aim to collect views of experienced practitioners, academics, and policymakers in the region. In particular, the Special will look at some of the differences between the Western and Middle Eastern perceptions of arbitration, and will also consider expectations for the future.  Some potential topics include: (a) the legislative framework to support arbitration, including new arbitration laws and regional arbitral centres; (b) whether the modern concept of arbitration can resolve Shari’a disputes; (c) the role public policy should play in relation to judicial involvement with the arbitral process and enforcement or arbitral awards; (d) whether arbitral processes or arbitral laws could or should be reformed so that arbitration better suits the needs of today’s Middle Eastern users; and (e) claims under international investment treaties arising out of regional regime change, particularly in North Africa.

If you are interested in contributing or would like to know more about the forthcoming Special, please contact the editors. Papers should be submitted directly to the editors on or before 30 September 2014 – craig.shepherd@hsf.com and mike.mcclure@hsf.com – with a copy to info@transnational-dispute-management.com.

This call for papers can also be found on the TDM website here:

http://www.transnational-dispute-management.com/news.asp?key=527

Craig Shepherd
Craig Shepherd
Partner
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+971 4 428 6304
Mike McClure
Mike McClure
Senior Associate
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+971 4 428 6364

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Filed under Middle East, News

The largest Arbitration Awards in history: Three Majority shareholders in Yukos awarded total damages of over $50bn from the Russian Federation

On 18 July 2014, the Claimants in three related arbitrations administered under the 1994 Energy Charter Treaty and the 1976 UNCITRAL Arbitration Rules prevailed against the Russian Federation.  The Claimants[1] were former shareholders of the OAO Yukos Oil Company (“Yukos”), which had emerged in the early 2000s as the largest private oil company in post-Soviet Russia.

Although the arbitrations were brought separately by each Claimant and not consolidated, the Parties appointed the same arbitrators to each Tribunal (collectively, the “Tribunals”) and the Tribunals proceeded to hear and decide the claims together in three substantially similar awards (the “Awards”).  The Tribunals found that the Russian Federation had unlawfully expropriated the assets of Yukos, in contravention of its obligations under international law, through a series of targeted measures taken between 2003 and 2007.  Put together, in monetary terms the arbitration Awards are by far the largest ever made public, as the Tribunals awarded total damages to the Claimants of more than US$ 50 billion. The Tribunals also ordered Russia to reimburse the Claimants for arbitration costs of € 4.2 million and costs of representation of more than US$ 60 million.

Of particular note in the Awards is the Tribunals’ consideration of the doctrine of “unclean hands” in international law, along with the application of the doctrine of contributory fault. The Tribunals’ decision to reduce to Claimants’ recovery by 25%, following the same approach adopted in the recent case of Occidental Petroleum and another v Ecuador, is likely to attract significant attention and may set a precedent for future investment treaty cases. However, the Tribunals’ extensive analysis of the Parties’ submissions concerning valuation, damages, and the awarding of interest will also add to the body of jurisprudence available to practitioners and arbitrators faced with similar questions.

The decision could prompt other Claimants (including some of the over 50,000 other minority shareholders in Yukos) to move forward with claims against the Russian Federation. For claimants from ECT signatory states, the Tribunals’ decision to uphold the continued application of the substantive protections of the ECT, at least for qualifying investments made before Russia withdrew from the ECT in August 2009, is likely to make the ECT an attractive option under which to bring such claims.

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Filed under Costs, Damages, Europe, Investment Arbitration

Dueling limitation periods: time-limit under the US Federal Arbitration Act trumped by state law on enforcement of foreign judgments

The US Court of Appeals for the District of Columbia Circuit rules that state law governing the limitation period for enforcing a foreign judgment that confirmed an arbitral award overrides the Federal Arbitration Act’s limitation period on award enforcement.

On July 11, 2014, in the latest decision in the long-running dispute between Commission Import Export (“Commisimpex”) and the Republic of Congo (the “Congo”), the US Court of Appeals for the District of Columbia Circuit[1] held that the three-year limitation period on enforcement of foreign arbitration awards specified by the US Federal Arbitration Act (“FAA”) does not pre-empt the limitation period permitted by local state laws with respect to enforcement of foreign judgments confirming an arbitration award. Award creditors may therefore be able to enforce an award in the form of a foreign judgment after the limitation period for enforcement of the underlying award itself has passed.

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

TTIP: EU Commission publishes statistical report on responses to the public consultation on ISDS and investment protection

On 18 July, the EU Commission published its Preliminary Report (statistical overview) on the responses to its consultation on investment protection and ISDS in the TTIP (for discussion of the consultation, see our previous blog post).

The Preliminary Report demonstrates that there was considerable interest in the consultation, with a total of 149,399 online replies. The greatest number of replies came from the UK at 34.8%, with 22.59% from Austria and 21.76% from Germany. The high proportion of responses from Germany in particular is unsurprising, given that the German Government’s approach to ISDS has received considerable coverage in both the legal and mainstream press.

Significantly, over 99% of responses were submitted by individuals (with only 569 by organisations, many of which were NGOs). 42% of the respondents agreed that their contribution can be made public and the Commission will publish those responses in due course.

The Commission will now analyse the responses, a task which it says is unlikely to be completed before November. It remains to be seen how the response analysis will influence the EU’s approach to negotiations of these issues with the US.

For further information, please contact Christian Leathley, Partner, Hannah Ambrose, Professional Support Lawyer, or your usual Herbert Smith Freehills contact.

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Filed under Europe, Investment Arbitration

EU publishes legislation imposing sectoral sanctions on Russia

Herbert Smith Freehills has published the latest edition of its Sanctions Update e-bulletin on new EU regulations, published on 30 and 31 July 2014, that expand sanctions against Russia in response to the situation in Ukraine. These regulations enact the measures announced by the EU on 29 July 2014.

This briefing provides a summary of the legislation, in particular providing further detail in respect of the following:

  • Restrictions on certain Russian banks’ access to EU capital markets;
  • Trade restrictions relating to the Russian energy and defence industries;
  • Trade restrictions on Crimea and Sevastopol; and
  • Additional individuals and entities designated under the EU asset freezing provisions.

For further information, please contact Rod Fletcher, Partner, Susannah Cogman, Partner, Daniel Hudson, Partner, Elizabeth Head, Associate, or your usual Herbert Smith Freehills contact.

Rod Fletcher
Rod Fletcher
Partner
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+44 20 7466 2411
Susannah Cogman
Susannah Cogman
Partner
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+44 20 7466 2580
Daniel Hudson
Daniel Hudson
Partner
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Elizabeth Head
Elizabeth Head
Associate
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+44 20 7466 7555

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Filed under Europe, Sanctions

US issues new Ukraine-related sanctions and additional guidance

Herbert Smith Freehills has published the latest issue of its Corporate Crime e-bulletin. This edition covers the new sanctions designations issued by the US Office of Foreign Assets Control (OFAC) in response to the situation in Ukraine, as well as OFAC’s additional guidance regarding the scope of US Ukraine related sanctions.

For further information, please contact Scott Balber, Partner, Susannah Cogman, Partner, Jonathan Cross, Counsel, or your usual Herbert Smith Freehills contact.

Scott Balber
Scott Balber
Partner, US head of investigations and financial services litigation
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+1 917 542 7810
Susannah Cogman
Susannah Cogman
Partner
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+44 20 7466 2580
Jonathan Cross
Jonathan Cross
Counsel
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+1 917 542 7824

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Filed under Europe, Sanctions, The Americas

Sanctions Update: EU extends sanctions against Russia

Herbert Smith Freehills has published the latest edition of its Sanctions Update e-bulletin. This edition covers the new sanctions regime agreed by the EU against Russia, including:

  • the introduction of “phase 3″ sanctions affecting key sectors of the Russian economy such as the banking and energy industries;
  • trade restrictions relating to Crimea and Sevastopol; and
  • expansions to the EU’s asset freeze.

For further information, please contact Rod Fletcher, Partner, Susannah Cogman, Partner, Daniel Hudson, Partner, Elizabeth Head, Associate, or your usual Herbert Smith Freehills contact.

Rod Fletcher
Rod Fletcher
Partner
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+44 20 7466 2411
Susannah Cogman
Susannah Cogman
Partner
Email | Profile
+44 20 7466 2580
Daniel Hudson
Daniel Hudson
Partner
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+44 20 7466 2470
Elizabeth Head
Elizabeth Head
Associate
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+44 20 7466 7555

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Filed under Europe, Sanctions

English Commercial Court rejects challenge to “conditional” award

In the latest decision relating to the arbitration between U&M Mining Zambia Ltd (“U&M”) and Konkola Copper Mines plc (“KCM”), the Commercial Court in London rejected challenges to an award made under s67 and s68 of the Arbitration Act 1996 (the “Act”).

The award included an order for KCM to pay certain invoices unless KCM “showed cause, supported by evidence, within 14 days of the Award, why such an order should not be made”. Amongst other grounds, KCM relied on the fact that the award was “conditional” and therefore “legally defective” as a ground to challenge the award under s68. The Commercial Court disagreed, stating that an award can be final and conclusive in its terms where it provides for “specific relief […] which only bites at one point in the future”.

(U&M Mining Zambia Ltd v Konkola Copper Mines plc [2014] EWHC 2374 (Comm))

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Filed under Challenges to awards, Enforcement, Europe, New York Convention