UNCLOS Annex VII Tribunal decides Bangladesh-India maritime boundary dispute

On 7 July 2014, an Arbitral Tribunal constituted under Annex VII of the United Nations Convention on the Law of the Sea 1982 (the Convention) issued its award in the Bay of Bengal Maritime Boundary Arbitration between the People’s Republic of Bangladesh and the Republic of India, granting approximately 106,613km2 to Bangladesh and 300,220 km2 to India, out of a total relevant area of 406,833km2. The Award provides much needed clarity on the maritime entitlements of both Bangladesh and India.

Like the 2012 decision of the International Tribunal for the Law of the Sea (ITLOS) in the Bangladesh/Myanmar case, a consequence of the delimitation was the creation of a small “grey area” creating potential overlapping entitlements of Bangladesh, India and Myanmar (which was not a party to the arbitration).

While in deciding larger uncertainties over the entitlements of Bangladesh and India the Tribunal created new (albeit smaller) uncertainties over competing sovereign rights in the grey area, the Tribunal’s encouragement of the parties to cooperate in the exercise of their sovereign rights is to be welcomed. There are a number of precedents where states have shared rights in maritime areas to achieve a favourable solution for all parties.

The Award also provides an excellent precedent for the peaceful settlement of maritime boundary disputes and shows how States can de-politicise sovereignty issues and cooperate to achieve political and commercial certainty.

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Filed under Asia, Boundaries and Delimitation, India, Public International Law

“A Delicate Matter”: English Court considers enforcement of awards set aside by the courts of the seat and ability to claim post-award interest in those circumstances

In the case of Yukos Capital SARL v OJSC Rosneft Oil Company [2014] EWHC 2188 (Comm) the English Court considered two preliminary issues relating to the long-running dispute between Yukos Capital SARL (“Yukos Capital”) and OJSC Rosneft Oil Co. (“Rosneft”). The issues were as follows:

  1. Whether enforcement of arbitral awards that have been set aside by the courts of the seat is precluded under common law; and
  2. whether, in principle, interest could be recovered on such arbitral awards under either Russian and/or English law.

In relation to the enforcement issue, the Court considered the “test” was whether it could (in particular and identifiable circumstances) treat an award as having effect notwithstanding a later decision of a court annulling the award. The Court found that, as a general position, it would be unsatisfactory and contrary to principle if a Court were bound to recognise a decision of a foreign court which offended against basic principles of honesty, natural justice and domestic concepts of public policy.

It is clear therefore that, in general terms, the Court has the power to enforce the Awards at common law notwithstanding the set-aside decisions of the courts of the seat. However, it now remains for Yukos Capital to prove the allegations which it has made as to why those set aside decisions should not be recognized by the English Court.

Whilst the claim to interest under Russian law was unsuccessful (as a matter of Russian law), the Court concluded that, in principle, interest on the sums claimed in the English proceedings could be recovered under Section 35A of the Senior Courts Act 1981, notwithstanding the fact that interest had not been awarded by the tribunal.

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Filed under Enforcement, Enforcement - Europe, Europe, New York Convention

Chinese Supreme People’s Court issues five-year reform plan to enhance judicial independence

Background

The Supreme People’s Court of China (“SPC“) issued its fourth five-year reform plan for courts on 9 July 2014.   The reform is one of the top priorities of President Xi Jinping’s administration, and has the stated aim of strengthening judicial independence and professionalism by giving judges more authority in making their rulings and autonomy from interference by local governments.

The reform is in line with the judicial reform decisions taken at the third plenary session of the 18th Communist Party Central Committee earlier this year, which pledged to ensure the lawful and independent use of judicial authority to enhance transparency and credibility.

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English Commercial Court rejects application by U&M Mining Zambia Ltd for security for sums due under award pending challenge

In Konkola Copper Mines Plc v U&M Mining Zambia Ltd [2014] EWHC 2146 (Comm), the English Commercial Court considered two related applications on behalf of U&M Mining Zambia Ltd (U&M) for security for costs and a payment into court, under sections 70(6) and 70(7) of the Arbitration Act 1996 (the Act), in relation to challenges made by Konkola Copper Mines Plc (KCM) under sections 67 and/or 68 of the Arbitration Act 1996 to an arbitration award dated 6 January 2014.

Eder J upheld U&M’s application for security for costs under section 70(6) of the Act; however, he rejected U&M’s application for a payment into court of US$41,259,274.47 under section 70(7) of the Act.

The case highlights the need for an applicant under section 70(7) in particular to put before the Court not only evidence that there is a real risk of dissipation of assets that could be used to satisfy the award, but also evidence that the challenges to the award would prevent, hinder or prejudice enforcement of the award.

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Filed under Challenges to awards, Enforcement, Enforcement - Europe, Europe

English High Court: requirement to engage in time limited “friendly discussions” before arbitration is enforceable

In the 1 July 2014 decision in Emirates Trading Agency LLC v Prime Mineral Exports Private Limited [2014] EWHC 2104 (Comm), Teare J considered whether the parties’ agreement to first seek to resolve a dispute by “friendly discussion” constituted an enforceable condition precedent to arbitration.

In a decision which gives more ‘bite’ to a “friendly discussion” clause than has previously been the case in English authorities, Teare J ruled that holding a “friendly discussion” acted as a condition precedent to arbitral jurisdiction. The English courts have so far generally not enforced an agreement to negotiate (see Walford v Miles [1992] 2 AC 128 and Cable & Wireless v IBM [2002] EWHC 2059 (Comm)) or an agreement to settle disputes amicably (see Sulamerica CIA Nacional de Seguros SA and others v Enesa Engenharia SA and others [2012] EWCA Civ 638). This judgment represents a stark change in the English courts’ position on the enforceability of agreements to negotiate in dispute resolution clauses.

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Filed under ADR, Arbitration clauses, Australia, Europe

Towards a Treaty on Business and Human Rights?

The Human Rights Council has adopted a resolution establishing a new working group with a mandate to elaborate “an international legally binding instrument on transnational corporations and other business enterprises with respect to human rights”. In this note, we briefly summarise the background to the resolution and its implications for the future of the business and human rights agenda at the UN.

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Filed under International Human Rights, Public International Law

Commencing court proceedings in breach of an arbitration agreement: The risk of indemnity costs

In the recent decision of Pipelines Services WA Pty Ltd v ATCO Gas Australia Pty Ltd [2014] WASC 10 (S), his Honour Chief Justice Martin of the Supreme Court of Western Australia ordered Pipeline Services WA Pty Ltd (Pipeline) to pay, on an indemnity basis, the costs incurred by ATCO Gas Australia Pty Ltd (ATCO) in applying for a stay of proceedings under section 8 of the Commercial Arbitration Act 2012 (WA) (2012 Act).

In making this order, his Honour confirmed the application in Western Australia of the principle in the English case of A v B [2007] EWHC 54 that indemnity costs will generally be awarded where a party commences legal proceedings in breach of a contractual obligation to refer a dispute to arbitration.

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Filed under Australia, Costs

New ruling of the French Cour de cassation in the Tecnimont judicial saga on challenge of an arbitrator

In Avax v Tecnimont (Civ. 1ère, 25 June 2014, pourvoi n° 11-26.529) the French Supreme Court reviewed the Paris Court of Appeal’s decision regarding the effect of the time limits in institutional rules on the judge reviewing the award. 

On 25 June 2014, the French Supreme Court (the Cour de cassation) held that a party that had failed to exercise its right to challenge an arbitrator within the time limit specified by the applicable arbitration rules is deemed to have waived its right to have the award set aside on that ground. In other words, the French Supreme Court held that the arbitration rules that have been chosen by the parties to govern the arbitration have a legal effect on the judge reviewing the award and cannot be disregarded once the arbitral award has been rendered. The decision reversed a controversial decision rendered by the Reims Court of Appeal in 2011.

This is the latest decision in the now long-running judicial saga of the 2007 ICC award in Avax v Tecnimont. The Paris Court of Appeal initially annulled the award in 2009, on the ground that the chairman of the tribunal had failed to disclose his law firm’s representation of companies affiliated to one of the parties during the arbitration proceedings. That decision was then reversed on a procedural ground by the French Supreme Court in November 2010. The case was then referred to the Reims Court of Appeal, which set aside the award again, this time for a failure to disclose conflicts of interests and to take into account the impact of the ICC rules on challenging arbitrators.

In the latest decision, the French Supreme Court ruled on the same case for the second time, but on a different legal issue, reversing the Reims Court of Appeal decision only on the question of the legal authority of the ICC Rules. It did not rule on the second question addressed to it, which concerned the scope of the arbitrator’s duty of disclosure. The French Supreme Court has sent the case back to the Paris Court of Appeal, which will issue another decision on the case (although it will be dealt with by a different chamber of the Paris Court of Appeal).

The decision is a reminder to parties to consider promptly their rights under any agreed institutional arbitration rules and, more importantly, to heed the time limits imposed by those rules.

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Filed under Arbitrators, Awards, Europe

Going South …. Singapore High Court diverges from English Court’s position on governing law of the arbitration agreement

The recent decision of the Singapore High Court in FirstLink Investments Corp Ltd v. GT Payment Pte Ltd and others [2014] SGHCR 12 highlighted the importance of making an express choice as to the law governing an arbitration agreement, in addition to stating the governing law of the remainder of a contract. The decision raised some interesting questions as to the determination of the parties’ implied choice of proper law, in the absence of an express choice, and diverged from the English decision of SulAmerica Cia Nacional De Seguros S.A. and others v Enesa Engenharia S.A..

The Singapore High Court found that, in the absence of indications to the contrary, parties will have impliedly chosen the law of the seat as the proper law to govern the arbitration agreement, in a direct competition between the chosen substantive law and the law of the chosen seat of arbitration.

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Filed under Arbitration clauses, Arbitration laws, South East Asia

Sanctions Update: EU and US introduce further sanctions in response to the situation in Ukraine; EU amends sanctions against Libya, Central African Republic and Syria

Herbert Smith Freehills has published its latest Sanctions Update e-bulletin, on the latest developments in sanctions regimes in Ukraine, Libya, Central African Republic and Syria.

Both the EU and US have introduced limited additional sanctions in light of the current situation in Ukraine, and Australia has announced its list of Ukraine-related designated persons.  The EU has also announced amendments to its sanctions against Libya, the Central African Republic and Syria.  Of these developments, the most significant is a ban on the import into the EU of goods from Crimea and Sevastopol, and any associated financing or re/insurance by EU persons.

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

Susannah Cogman
Susannah Cogman
Partner
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+44 20 7466 2580
Elizabeth Head
Elizabeth Head
Associate
Email
+44 20 7466 7555

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Filed under Africa, Australia, EU Law, Europe, Middle East, Sanctions, The Americas