UNCITRAL PUBLISHES EXPEDITED ARBITRATION RULES

In December 2020, we reported that the Working Group II of the United Nations Commission on International Trade Law’s (UNCITRAL) had prepared draft expedited arbitration provisions for the UNCITRAL Arbitration Rules.

UNCITRAL adopted the expedited arbitration provisions (the EAPs) in July 2021. The EAPs entered into force on 19 September 2021. The full text is available here.

UNCITRAL has also published a detailed draft explanatory note to the EAPs (the Explanatory Note). The note is expected to be finalised in the coming weeks (available here).

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INDIAN SUPREME COURT CONFIRMS ENFORCEABILITY OF INDIA-SEATED EMERGENCY ARBITRATION AWARDS

The Supreme Court of India (the “Court“) has recently handed down a significant judgment in Amazon.com NV Investment Holdings LLC v. Future Retail Ltd. & Ors. confirming that an award rendered by an emergency arbitrator (“EA“) in an arbitration seated in India is enforceable in the Indian courts. The Court’s judgment provides welcome clarity for parties seeking urgent interim relief in India-seated arbitrations. The judgment, however, does not address the enforceability of foreign-seated EA awards in the Indian courts.

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ENGLISH COURT OF APPEAL ORDERS THE PUBLICATION OF TWO JUDGMENTS IN AN ARBITRATION CLAIM BETWEEN MANCHESTER CITY FOOTBALL CLUB AND THE PREMIER LEAGUE

In Manchester City Football Club Ltd v Football Association Premier League Ltd and others [2021] EWCA Civ 1110, the English Court of Appeal considered whether to order the publication of a High Court judgment that rejected challenges to an arbitral award under sections 67 and 68 of the English Arbitration Act. Weighing the factors militating in favour of publicity against the desirability of preserving confidentiality, the Court of Appeal determined that here the balance fell clearly in favour of publication.

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ENGLISH HIGH COURT REJECTS CHALLENGES BROUGHT UNDER S67 AND 68 OF THE ENGLISH ARBITRATION ACT

In Manchester City Football Club Ltd v Football Association Premier League Ltd and others [2021] EWHC 628 (Comm), the English High Court considered Manchester City Football Club’s challenge to an arbitral award under sections 67 and 68 of the English Arbitration Act. In rejecting the challenge, the English Court provided useful guidance on construing arbitration clauses in light of rival interpretations. The judgment is also another helpful example of the practical application of the principles laid down by the UK Supreme Court in the Halliburton case (see our blog post here).

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INSIDE ARBITRATION ISSUE #12: PERSPECTIVES ON CROSS-BORDER DISPUTES

Welcome to the twelfth issue of Inside Arbitration

We are delighted to share with you the latest, new look issue of this publication from Herbert Smith Freehills’ Global Arbitration Practice.

Uncertainty has been the watchword of 2021 so far. As the Covid-19 pandemic continues to impact our work and personal lives many questions remain about the virus and our global response to it. However, since the light at the end of the tunnel does appear to be shining more brightly, we have grasped the opportunity to look forward positively in this edition of Inside Arbitration.

Incorporating videos and soundbites from our practitioners around the network, in this edition:

  • Paula Hodges QC, Andrew Cannon, Simon Chapman QC and Vanessa Naish explore whether it is possible to predict how the post-pandemic disputes landscape may look and how arbitration practice may be impacted longer term.
  • The pandemic is not the only significant force for change and development facing the world at present. Antony Crockett, Patricia Nacimiento and Dr. Alessandro Covi look at what “ESG” means for businesses, how ESG issues are being introduced into commercial contracts, and the potential impact of these trends on international arbitration.
  • Continuing the theme of change, Craig Tevendale, Chris Parker and Charlie Morgan focus on energy transition, looking at the challenges on the horizon and the potential legal disputes that may arise from the proliferation of new infrastructure projects.
  • Change has also been felt within the Herbert Smith Freehills’ arbitration practice. Our three new talented arbitration Partners Dana Kim (in Seoul), Antony Crockett (in Hong Kong) and Ivan Teselkin (in Moscow) feature in Spotlight articles introducing their differing areas of practice and sharing their views on the outlook for arbitration in their regions.
  • The recognition of the talent of our practitioners and the growth of our global practice is exciting, but so too are successes in our cases, particularly those that can be reported publicly! Simon Chapman QC and Charlotte Benton discuss a recent success in a landmark case in Hong Kong, which has confirmed that failure to comply with escalation requirements will not affect an arbitration tribunal’s jurisdiction over the dispute.
  • Looking at wider developments across the globe, Andrew Cannon and Nihal Joseph explore the significance of an important new judgment from the Supreme Court of India which decided that two Indian parties may validly agree to resolve their disputes in arbitration seated outside India.
  • Chad Catterwell and Guillermo Garcia-Perrote look at the rise of Arbitration in Australia, and how the release of the ACICA Arbitration Rules 2021 have further strengthened ACICA’s status as the pre-eminent arbitral institution in Australia.
  • In our sector-focused piece Hew Kian Heong, James Doe and Noe Minamikata take a look at the current hot topics in construction arbitration: the impact of recent materials shortages, a possible rise in construction insolvencies and the continuing effects of the Covid-19 pandemic on construction projects.
  • Our “watch this space” feature covers the latest issues and developments in international arbitration.

Previous issues can also be viewed on our website.

We hope that you enjoy reading issue #12 of Inside Arbitration and would welcome any feedback you may have.

ENGLISH HIGH COURT RESOLVES PRIMA FACIE CONFLICT BETWEEN DISPUTE RESOLUTION CLAUSES IN FAVOUR OF ARBITRATION AGREEMENT

In the recent decision in Melford Capital Holdings LLP and others v Digby [2021] EWHC 872 (Ch), the English High Court (the Court) resolved a prima facie conflict between two dispute resolution clauses in an agreement (one providing for the exclusive jurisdiction of the English courts and the other providing for arbitration) in favour of the arbitration clause. The Court interpreted the exclusive English jurisdiction clause as providing for the supervisory jurisdiction of the English courts.

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AN “EXCEPTIONAL YEAR” FOR THE LONDON COURT OF INTERNATIONAL ARBITRATION

The London Court of International Arbitration (the LCIA) has released its Casework Report for 2020. The statistics in the Report show an “exceptional year” and a continuing picture of growth for the institution. The statistics also show a gradual “internationalisation” of the LCIA’s caseload while also demonstrating the institution’s long-standing commitment towards improving the diversity of arbitral tribunals.

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INDIAN SUPREME COURT ALLOWS INDIAN PARTIES TO CHOOSE A FOREIGN SEAT OF ARBITRATION

Settling a much-litigated issue, the Supreme Court of India (“Court”) recently decided that two Indian parties can choose a foreign (non-Indian) seat of arbitration. Some courts had previously held that at least one party had to be a non-Indian person or company for such a clause to be effective. The Court clarified the position and held that an award issued by an arbitral tribunal in such circumstances would be enforceable in India and that the parties could also seek interim relief in India. The decision brings welcome certainty particularly for Indian subsidiaries of international companies that have negotiated contracts providing for offshore arbitration in jurisdictions like Singapore, London, Hong Kong and others.

Background

The judgment, in PASL Wind Solutions Private Limited v. GE Power Conversion India Private Limited, followed from an appeal from a decision of the Gujarat High Court (which we covered here). It involved two Indian companies, one a subsidiary of a French company, that had entered into an agreement for the sale of converters. The agreement provided for arbitration in Zurich under the ICC Rules and was governed by Indian substantive law. The Tribunal issued an award and GE Power applied to enforce it in Gujarat. The Gujarat High Court held that the award was enforceable notwithstanding that the two Indian parties had chosen a foreign seat, but also held that parties to such an arbitration would not be entitled to interim relief in the Indian courts. PASL Wind Solutions appealed to the Court.

The Judgment

Meaning of ‘Foreign’ Award

Part II of the Indian Arbitration and Conciliation Act 1996 (the “Arbitration Act”) applies to the enforcement of foreign awards in India. One question before the Court was how the term ‘foreign award’ should be interpreted.

The appellant argued that the definition turns on the nationality of the parties, and that an award could not be considered ‘foreign’ because it involved two Indian parties. The Court rejected this argument and held that there were four criteria for an award to be considered a foreign award: (i) the dispute must be considered to be a commercial dispute under the law in force in India, (ii) it must be made pursuant to a written arbitration agreement, (iii) the dispute must arise between “persons” (without regard to their nationality, residence, or domicile), and (iv) the arbitration must be conducted in a New York Convention country.

The Court held that these criteria were met by the award in question. Section 44 of the Arbitration Act (which defines foreign awards) was “party-neutral” and the key factor is the place of arbitration.

The appellant also argued that the term ‘foreign award’ in Part II must be understood by reference to terms used in Part I (which deals with domestic or India-seated arbitrations). The Court rejected this argument and held that it was not possible to interpret the provisions of one part of the Arbitration Act using provisions of another part, following its earlier decision in Bharat Aluminium Co. v. Kaiser Aluminium Technical Services.

Public policy

Another issue before the Court was whether an agreement between two Indian parties to arbitrate in a foreign seat was against the provisions of the Indian Contract Act 1872. In particular it was argued that this was against Section 23, which makes agreements against public policy void, and Section 28, which provides that agreements in restraint of legal proceedings are void.

On public policy, the Court found that on balance there was no harm to the public in allowing two Indian parties to resolve their disputes offshore: “The balancing act between freedom of contract and clear and undeniable harm to the public must be resolved in favour of freedom of contract as there is no clear and undeniable harm caused to the public…”. Where issues of fundamental Indian public policy where involved, the Court found that there were adequate safeguards in the Arbitration Act and under conflict of laws rules.

The Court also echoed its previous judgments which held that party autonomy was “the brooding and guiding spirit of arbitration” and that there were no grounds on which to restrict this autonomy by preventing Indian parties from arbitrating abroad.

Interim Relief

Finally, the Court overruled the Gujarat High Court’s finding that interim relief would not be available for arbitrations between Indian parties seated abroad. The Court found that this was based on an erroneous reading of the provisions of Parts I and II of the Arbitration Act.

Comment

The Court’s judgment will be a welcome clarification on an issue that has divided many High Courts in India including those in Delhi, Bombay and Gujarat. For contracts entered into before this question was widely litigated, parties will welcome the clarity. Looking ahead, for parties now negotiating contracts, the Court’s decision offers a wider menu of available forums in which to resolve their disputes, which is consistent with the global reach of Indian businesses.

For more information please contact Paula Hodges QC, Head of Global Arbitration Practice, Andrew Cannon, Partner, Nihal Joseph, Associate, or your usual Herbert Smith Freehills contact.

Paula Hodges QC
Paula Hodges QC
Head of Global Arbitration Practice
+44 20 7466 2027

Andrew Cannon
Andrew Cannon
Partner
+44 20 7466 2852
Nihal Joseph
Nihal Joseph
Associate
+44 20 7466 2212

MALAWI BECOMES 167TH CONTRACTING STATE TO THE NEW YORK CONVENTION

Malawi has become the 167th Contracting State to the 1958 New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards (the ‘Convention’). On 4 March 2021, Malawi deposited its instrument of accession to the Convention with the UN Secretary General. In accordance with article XII (2), the Convention will enter into force for Malawi on 2 June 2021.

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