In its recent decision in Union of India v Hardy Exploration and Production (available here), the Supreme Court of India found that a contractual clause stipulating Kuala Lumpur as the ‘venue’ of arbitration did not amount to a choice of juridical seat. While the Indian courts’ jurisdiction to hear set-aside applications will be excluded if the seat of the arbitration is outside India, the Supreme Court found that in this case there was no chosen seat (and the tribunal had not determined a seat), notwithstanding the choice of Kuala Lumpur as the venue for the arbitral proceedings, and the fact that the award was signed in Kuala Lumpur. Since this was a case where the arbitration agreement pre-dated 6 September 2012 (the date of the key Supreme Court ruling in BALCO), it appears that the Court did not find it necessary to positively determine that the seat was in India; the fact that an overseas seat had not been established appears to have been sufficient for the Indian courts to have jurisdiction to hear the application.
Tag: challenges to awards
In Reliance Industries Limited & Ors v The Union of India  EWHC 822 (Comm) the English commercial court (the Court) considered a number of challenges to parts of an arbitration award brought under sections 67, 68 and 69 of the Arbitration Act 1996 (the Act).
The decision provides useful guidance regarding the requirements to be satisfied should a party wish to challenge an award due to a “serious irregularity” under the Act. In particular, the Court confirmed that the general duty under s33 of the Act to give each party a reasonable opportunity to present its case was satisfied if the “essential building blocks” of the tribunal’s analysis and reasoning were in play in relation to an issue, even where the argument (in this case on a point of construction) was not articulated in the way adopted by the tribunal.
In addition to the issues discussed in this blog post, the Court considered the foreign act of state doctrine. This challenge is discussed in a post on our Public International Law Notes blog here.
The HKIAC has recently published its case statistics for 2017, showing a continued healthy demand for its services. The HKIAC saw a 15.7% increase in its caseload compared to 2016, with the total amount in dispute in HKIAC arbitrations doubling since last year. The statistics demonstrate that HKIAC maintains its position as one of the world’s leading arbitral institutions, serving parties throughout Asia and beyond. Continue reading
In two recent judgments, the Delhi High Court (the “Court“) dismissed challenges to arbitral awards and emphasised its reluctance to interfere with decisions of arbitral tribunals, except in limited circumstances. In NHAI v M/S. Bsc-Rbm-Pati Joint Venture, the Court strongly criticised unnecessary challenges to awards, especially by public sector undertakings, noting that it wasted valuable judicial time. Carrying on with the sentiment to not interfere, in Delhi Metro Rail Corporation Limited v Delhi Airport Metro Express Private Limited, the Court stated that it would not interfere with an arbitral decision if the view taken by a tribunal was plausible, even where an alternative view was possible.
A brief summary of both cases can be found below.
In the long running Astro/First Media (also known as Lippo) enforcement dispute, First Media has failed to obtain leave to appeal to the Court of Final Appeal in Hong Kong in respect of First Media's recent loss in the Court of Appeal (Astro v First Media CACV 272/2015). As a result, First Media must pay to Astro sums due under five Singapore arbitration awards. Having failed to obtain leave from the Court of Appeal on 29 March 2017, it is not yet known whether First Media will seek leave to appeal directly from the Court of Final Appeal.
The UK Supreme Court has overturned a Court of Appeal decision requiring Nigerian National Petroleum Corporation ("NNPC") to provide US$ 100m in security while the case was remitted to the Commercial Court to decide on IPCO (Nigeria) Limited's ("IPCO") challenges to enforcement of an award. The Supreme Court held that while the English courts had the express power to make such orders for security under section 103(5) of the Arbitration Act 1996 (the "Act") in the context of an adjournment pending a challenge to the award in the jurisdiction where it was made, the present proceedings rather concerned a challenge to the enforcement of the award under section 103(3) of the Act. As such, no power to order security was available under the Act or the scheme of the New York Convention 1958 (the "Convention").: IPCO (Nigeria) Limited v Nigerian National Petroleum Corporation  UKSC 16.
The Supreme Court also provided guidance on the relationship between the Act and the New York Convention (the "Convention"), on which the relevant sections of the Act are based.
In September 2014, Gold Reserve won a significant arbitral award ("Award") worth more than US$760 million (and counting, because of post-award interest) against Venezuela for breach of investor-protection standards under the Canada-Venezuela bilateral investment treaty ("Treaty"). In the arbitration, Gold Reserve successfully argued that Venezuela's revocation of certain licenses for gold extraction held by Gold Reserve's subsidiary violated the fair and equitable treatment, full protection and security and expropriation standards of the Treaty. (For further background to the case, see our earlier blog post here.)
Subsequently, two proceedings were filed before the Paris Court of Appeal, being the court at the seat of the arbitration. When Venezuela applied to have the award set aside, Gold Reserve countered that application with a petition to confirm the award. The two procedures differ in scope and length. Although the Paris Court confirmed the award (as previously reported in our blog here), the decision on Venezuela's application to set aside the award remains pending, since the set-aside proceeding entails a more detailed review of the Tribunal's decision-making.
While the set-aside proceeding continues in Paris, Gold Reserve has sought to enforce the award elsewhere, including in Luxembourg and Washington, D.C. The Luxembourg court granted a stay of the enforcement request pending the completion of the Parisian proceedings. However, on November 20, 2015, the U.S. District Court for the District of Columbia granted Gold Reserve's request for enforcement in Washington, D.C. The U.S. District Court, in line with the general pro-enforcement approach of the U.S. courts in their application of the New York Convention, found that Venezuela could neither establish any procedural defects in the arbitration nor prove that enforcement of the Award would violate public policy. Accordingly, Gold Reserve is able to satisfy the Award against Venezuela's assets in Washington, D.C., without waiting for the completion of Venezuela's set-aside proceeding in Paris.
The principal lessons from the U.S. District Court's decision are:
- The Court will give "substantial deference" to the Tribunal's determination on the scope of its jurisdiction.
- Failure to raise an issue squarely and distinctly during the arbitral proceedings may constitute a waiver of the right to raise the same issue before an enforcing court.
- In order to argue successfully that the inequitable allocation of time to the parties led to a due process violation, it is necessary to show exactly what extra time was required for and how the denial of extra time prevented a party from presenting its case.
- The public policy exception to the enforcement of arbitral awards under the New York Convention, as applied by the U.S. courts, is extremely narrow.
- The U.S. courts, and the U.S. District Court for the District of Columbia in particular, have been willing to enforce foreign awards despite parallel proceedings challenging these awards before the courts at the seat of the arbitration.
Each of these points is discussed below.
In KB v S (HCCT 13/2015), Mimmie Chan J of the Hong Kong Court of First Instance dismissed and struck out an application to set aside an order to enforce an arbitral award, where the application was submitted out of time and without a proper supporting affirmation.
In her judgment, Chan J sets out ten general principles that the Hong Kong courts will apply when dealing with enforcement of arbitral awards. The principles endorse the need for minimal judicial intervention, as established by the leading case Grand Pacific Holdings Ltd v Pacific China Holdings Ltd  4 HKLRD 1 (CA). Herbert Smith Freehills acted for the successful award creditor in that case.
In the case of The Secretary of State for the Home Department and Raytheon Systems Limited  EWHC 311 (TCC) and  EWHC 4375 (TCC), the English Court has set aside an arbitral award for serious irregularity under s68(2)(d).
Mr Justice Akenhead found that the Tribunal in question had failed to consider two important issues (one of liability and another of quantum) such that a serious irregularity had occurred which had caused substantial injustice to the claimant. In a later hearing, the judge considered the appropriate relief for that serious irregularity, concluding that the case was one in which it was appropriate to set aside the Award and for the case heard by a new Tribunal.
The two decisions add to the relatively sparse caselaw on these two provisions of the Act. The first is one of very few to consider and make a finding of serious irregularity under s68(2)(d). In grappling with when it is “inappropriate” to remit a matter back to the original arbitral tribunal, the second decision provides helpful parameters for when set-aside is the correct relief for such a finding. Continue reading
In a decision handed down recently, the Supreme Court of India found that the Delhi High Court had overstepped its powers and wrongly set aside a domestic arbitration award. In the process, the Supreme Court has clarified the scope of the “public policy ground” to set aside awards under Section 34(b)(ii) of the Arbitration and Conciliation Act (Act).
The Supreme Court was critical of the Delhi High Court re-opening an arbitrator’s award on merits by reviewing evidence considered by the arbitrator and even considering evidence above and beyond that which the arbitrator had the opportunity to consider. The Supreme Court advocated giving due weight and recognition to a determination by an arbitration – especially on issues of fact. The court recognized that an award could only be set aside on grounds of public policy in very limited circumstances, such as where an award was arbitrary, capricious or such that it would shock the conscience of the court.