APPLICATION FOR EXTENSION OF TIME TO BRING SECTION 67 CHALLENGE WHICH WAS 959 DAYS LATE REFUSED BY ENGLISH COURT

The English High Court’s decision in State A v Party B [2019] EWHC 799 (Comm), handed down in January 2019 but only recently published, concerned the court’s dismissal of an application to extend the time for bringing a jurisdictional challenge under section 67 of the Arbitration Act 1996 in circumstances where the challenge was 959 days late (available here).

The decision found that where the delay is lengthy and the application for an extension is based on fresh evidence, an extension will only be justified by fresh evidence that is “transformational” or “seismic“. The decision illustrates the importance that the English court places on the timeliness of challenges to awards and the high threshold that must be met in order to obtain an extension.

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English High Court refuses to set aside order for enforcement under s103 in long-running dispute regarding ICC award

The English High Court has refused an application under s.103 of the Arbitration Act 1996 (“AA 1996“) to set-aside an order allowing for the enforcement of an ICC award in England. The decision is the culmination of a long-running dispute in which the award debtor has sought to set-aside the award and prevent enforcement in France, the Seychelles and England. The judgement is the latest illustration of the pro-enforcement approach of the English courts with respect to international arbitral awards, particularly where an award debtor has made efforts in multiple jurisdictions to prevent enforcement against it. While the outcome is not surprising, the level of attention given to the grounds raised by the award debtor, even in the face of issue estoppel, demonstrates the importance placed by the English Court on its New York Convention obligations.

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English High Court grants an anti-suit injunction and confirms that the choice of arbitral seat is “analogous to an exclusive jurisdiction clause”

In Atlas Power v National Transmission and Despatch Company Ltd [2018] EWHC 1052 the English High Court granted a final anti-suit injunction to permanently restrain a national grid company owned by the Government of Pakistan (“NTDC“) from challenging an LCIA Partial Final Award in Pakistan (or anywhere other than England and Wales).

The injunction was granted on the “entirely straightforward” basis that the seat of the arbitration was London.  Phillips J rejected NTDC’s arguments that the courts of Pakistan had concurrent jurisdiction or that the seat of the arbitration was Lahore, Pakistan, and confirmed that an agreement on the seat of the arbitration is also an agreement on the forum for any challenges to an award.  Continue reading

High Court confirms UNCITRAL Tribunal Award on jurisdiction

The High Court has confirmed an UNCITRAL Tribunal's Award on Jurisdiction, which rejected jurisdiction under an investment contract (Contract) and the 1994 Kazakh Law on Foreign Investment (FIL).

The Court placed particular emphasis on expert evidence of the principles of contractual interpretation under the Civil Code of the Republic of Kazakhstan.  It was not prepared to depart from these principles, which required a literal interpretation of the Contract and FIL.

Whilst the Court's reasoning differed in some respects from that of the Tribunal, it was broadly consistent with the Award on Jurisdiction. 

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Staying above the fray: Singapore High Court sets aside arbitral award on basis of breach of natural justice

In JVL Agro Industries Ltd v Agritrade International Pte Ltd, the Singapore High Court set aside an arbitral award on the grounds that the tribunal, in deciding the case on the basis of an issue which the defendant had not advanced, had failed to grant the claimant a fair hearing.

The decision is significant insofar as it demonstrates that whilst the grounds on which a court may set aside an award in Singapore are narrow in scope, it will not hesitate to act when the circumstances justify doing so.

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Hong Kong Court stays enforcement of award pending challenge at seat, on condition of security

In L v. B (HCCT 41/2015), the Hong Kong Court of First Instance (CFI) adjourned enforcement proceedings, on condition that security in the sum of the unpaid award, plus costs, be furnished by the losing party. Click here for a copy of the judgment.

Background

The Applicant commenced arbitration proceedings against the Respondent in the Bahamas in October 2012, claiming breach of a Non-Recourse Loan Agreement (the Agreement). Under the Agreement, the Respondent agreed to advance a loan to the Applicant against the transfer of Applicant's shares in a Hong Kong listed company, as collateral and security for the loan to be advanced. The Applicant transferred 800 million shares to the Respondent, but the Respondent only advanced loans in relation to 200 million shares transferred. The Tribunal found the Respondent liable and awarded to the Applicant damages in the total sum of approximately US$41.8 million (the Award).

On 22 June 2015, the Respondent applied in the Bahamian court to challenge the Award. The application was made under s.90 of the Bahamian Arbitration Act 2009 (the Act), to set aside the Award on the ground of serious irregularity, and under s.91 of the Act, to appeal on a question of law. On 22 September 2015, the CFI granted the Applicant leave to enforce the Award in Hong Kong. One month later, the Respondent applied to set aside the order and to stay the enforcement proceedings pending determination of the challenge to the Award. The Applicant requested dismissal of the application or, in the alternative, provision of security by the Respondent.

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Hong Kong Court of Appeal affirms partial set aside of an arbitral award for “serious” irregularity

The Hong Kong Court of Appeal ("CA") recently affirmed a decision of the Court of First Instance ("CFI"), in which an arbitral award was partially set aside due to an irregularity that the CA described as being at "the serious end". In China Property Development (Holdings) Ltd v Mandecly Ltd & Others CACV 92 & 93/2015 (click here for the full judgment), the CA agreed with the decision of the CFI (see our previous post) that the applicant had been denied an opportunity to present its case on certain issues. Interestingly, the CA went further than the CFI, finding that the award was also liable to be set aside on the ground that it dealt with a dispute not contemplated or falling within the terms of the submission to arbitration. 

The decision is a useful reminder that, whilst Hong Kong courts will generally uphold the finality of arbitral awards, they will still provide recourse in the rare situations where there is a serious irregularity in the arbitral process.

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UK Supreme Court rules on section 69 challenge to an arbitral award: do the courts plan to take a more active role in arbitration?

On 11 May 2016 the Supreme Court handed down a ruling on a challenge to an arbitral award on a point of law, under section 69 of the Arbitration Act 1996. The decision in NYK Bulkship (Atlantic) NV v Cargill International SA [2016] UKSC 20 arose from an arbitral award dated 7 February 2012 ("the Award") relating to the interpretation of an off-hire charterparty clause and raised an important legal question about agency. A decision of the Supreme Court on a challenge to an award is a relatively rare and significant occurrence, and this one comes at a time when the relationship between the English courts and arbitration is the subject of ongoing debate. The case also serves to demonstrate the bar that must be cleared for the court to intervene under section 69.

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Separability and public policy: selecting law of arbitration agreement does not disapply conflicting non-mandatory provisions of English Arbitration Act 1996 and “fresh evidence…is particularly important” for challenging an Award on public policy grounds

An arbitration agreement is understood in most, but not all, jurisdictions to be a separable or distinct agreement from the contract or agreement of which it forms part.  This is confirmed in s7 of the English Arbitration Act 1996 (the Act).

In National Iranian Oil Company (NIOC) v Crescent Petroleum Company International Ltd (CP) & Crescent Gas Corporation Ltd (CG), the English Court rejected NIOC's challenge to an award issued in a London seated arbitration on grounds of jurisdiction and public policy.

NIOC argued that the contract – which was governed by Iranian law – was procured by corruption and therefore invalid.  It also argued that this meant that the arbitration agreement was also invalid (such that the tribunal had no jurisdiction) because: (i) Iranian law applied to the question of whether the arbitration agreement was separable; and (ii) Iranian law did not recognise the separability of the arbitration.

The Court rejected this argument. As the arbitration was seated in London, s7 of the Act applied unless it was disapplied by the parties by "agreement to the contrary". While s7 is not a mandatory provision, the Court commented that an "agreement to the contrary" in relation to the specific provision is required to disapply it. The choice of Iranian law as the proper law of the contract was not an agreement to the contrary in relation to separability. Furthermore, the parties' arbitration agreement made clear that the issue of validity of the contract was to be determined by the tribunal.  The challenge to the award under s67 was rejected.

The Court also struck out NIOC's challenge based on public policy (which it brought under s68(2)(g) of the Act). NIOC argued that, whilst the tribunal found that the contract was not procured by corruption, the Court, considering English public policy, might take a different view. NIOC was found to have no reasonable prospect of succeeding in its challenge because: (i) the arbitrators had made "a very careful analysis" of the issue in question "after full consideration and evidence"; (ii) NIOC had provided no "fresh evidence"; and (iii) this was not a case of "very exceptional circumstances" that would justify the Court intervening with the arbitrators' decision.

This is a robust, pro-arbitration decision from the English court. In practical terms, it serves as a useful reminder for parties to analyse at the transactional stage the interplay between the different laws that might apply to their disputes and the impact that any conflicting provisions of those laws might have on the procedure for quickly and effectively resolving those dispute. Where potential issues are identified, they should be addressed in the drafting of the dispute resolution provisions. The case further highlights the need to disapply non-mandatory provisions of the Act in clear and specific terms.

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Court of Appeal clarifies the English Court’s jurisdiction under section 67 of the Arbitration Act: the Court is not required to make any order at all even if the application is well-founded

The recent decision of the English Court of Appeal in Integral Petroleum SA v Melars Group Limited considers the jurisdiction of the court under s67 of the English Arbitration Act 1996 (the Act). S67 deals with challenges to an arbitral award on the grounds of want of substantive jurisdiction. S67(3) provides that on an application by a party to an award, the court may: confirm the award; vary the award; or set aside the award in whole or in part.

The Court of Appeal made clear that the permissive nature of the word "may" in s67(3) makes it open for a judge to decide to make no order, for good reason, on any application under s67.

The Court of Appeal also held that it has no jurisdiction to grant permission to appeal the order of the lower court. Permission to appeal must be granted by the lower court itself.

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