Delhi High Court agrees to enforce CIETAC arbitral award against Indian company despite CIETAC split

In its decision of 4 July 2018, the Delhi High Court (“Court“) has agreed to enforce a China International Economic and Trade Arbitration Commission (CIETAC) award against an Indian company, despite the award debtor’s arguments that the dispute should have been referred to and administrated by the now independent Shanghai International Arbitration Centre (SHIAC), which until mid-2012 was the Shanghai Sub-Commission of CIETAC (“Shanghai Sub-Commission“). The Court’s decision is interesting not only in discussing the 2012 split of CIETAC, but also because it may provide some guidance on how Indian courts may, in future, deal with structural changes to other arbitral institutions, such as the very recent termination of the joint venture between LCIA and Mauritius (the LCIA-MIAC Arbitration Centre), or the Shenzhen Court of International Arbitration (SCIETAC/SCIA) and the Shenzhen Arbitration Commission (SAC) merger at the beginning of 2018. Last but not least, this decision reinforces a pro-enforcement approach of Indian courts in relation to foreign arbitral awards.

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HONG KONG COURT OF APPEAL: COMMON LAW ACTIONS AVAILABLE TO ENFORCE ARBITRAL AWARDS

Two key developments emerge from the long-running proceedings in Xiamen Xinjingdi Group Co Ltd v Eton Properties Ltd [2016] 2 HKLRD 1106 and Xiamen Xinjingdi Group Co Ltd v Eton Properties [2018] HKCFI 910. The Hong Kong Court of Appeal (CA) has held that, when parties enter into an arbitration agreement, they make an implied promise that they will honour the terms of any subsequent arbitral award. If one party fails to honour the award, this may give rise to a separate cause of action at common law, for which the Hong Kong courts have jurisdiction to grant a full range of remedies, including damages. These proceedings also confirm that the Hong Kong Court of First Instance (CFI) has statutory powers to stay proceedings before it, pending the determination of an application for leave to appeal to the higher courts. Continue reading

Bear Creek Mining Corp. v. Peru: the potential impact on damages of an investor’s contributory action and failure to obtain a social license

In an award dated 30 November 2017 (the “Award“), an ICSID Tribunal ordered Peru to pay around US$30.4million to Canadian company Bear Creek Mining (the “Claimant“) following its finding that a 2011 decree (“Decree 032“) constituted an unlawful indirect expropriation of the Claimant’s right to operate the Santa Ana mine (the “Project“).

This post discusses the disagreement between Karl-Heinz Bockstiegel (the president of the tribunal) and Michael Pryles (appointed by the Claimant) (together, the “Majority“), and Prof. Philippe Sands QC (appointed by Peru), on the assessment of damages. Prof. Sands considered that the damages should be reduced due to contributory fault on the part of the Claimant.

The impact the Claimant’s conduct had on the Tribunal’s calculation of damages was, in any case, significant. Given the extent of, and reasons for, the opposition to the Project by the time of Decree 032, the Tribunal thought a hypothetical purchaser would not have obtained the necessary ‘social license’ to proceed with the Project. Ultimately it awarded the Claimant only a fraction of the US$522 million claimed. The reduced damages award emphasises the importance of respect for human rights and engagement with indigenous communities by investors.

The respective views expressed by the arbitrators concerning the Claimant’s conduct are also interesting in light of the broader debate about the relevance of the human rights of non-parties in investor-state arbitration.

An overview of the overall Award can be found in the post published on 16 December 2017 on the Kluwer Arbitration Blog. Continue reading

Agreeing to Arbitrate in the UAE: “Apparent Authority” and Article 25 of the UAE Commercial Companies law

It has long been believed that an arbitration clause in a contract could not be enforced against a UAE company unless the person signing the contract had specific authority to bind the company to arbitration, and not simply authority to enter into the contract. In Ginette PJSC and (1) Geary Middle East FZE and (2) Geary Limited, however, the DIFC Courts held that an arbitral award should be recognised and enforced notwithstanding that the individual who signed the arbitration agreement (which was contained in a settlement agreement) on behalf of an Award Debtor did not have express authority to bind the Company to arbitration. 

The Award Debtor, Ginette PJSC (the “Company”), sought to set aside the DIFC-LCIA arbitral award on the basis that Article 103 of Federal Law No. 8 of 1984 (the “Old UAE Companies Law”) provided that a private joint stock company could only be authorised to enter into an arbitration agreement if the power had been granted to the individual in the company’s articles of association or if authority was given by way of a shareholder resolution or a power of attorney. Although the Company’s articles of association granted its board of directors the authority to enter into arbitration agreements, the Executive Managing Director, who signed the settlement agreement on behalf of the Company was not, it claimed, a member of the board. The Company argued that the DIFC Court should set aside the award under Article 41(2)(a)(i) of DIFC Law No. 1 of 2008 (the “DIFC Arbitration Law”) because the arbitration agreement was not valid under the law.  Continue reading