The ICC standard arbitration clause potentially invalid in Russia

According to Russian media, the ICC has recently applied to the Russian Supreme Court (“SC“) asking that it clarify the approach of Russian courts to the ICC standard arbitration clause demonstrated in one of their cases (No. A40-176466/17). In this case the Moscow Arbitrazh Court and appeal courts (including the SC), found that a reference to the arbitration rules of an arbitral institution was not sufficiently clear evidence that the parties had agreed on that specific institution to administer the resolution of their disputes.

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“We will pay for delays” – ICC clampdown on its award scrutiny process

On 13 July 2016, the International Chamber of Commerce ("ICC") issued its revised Practice Note allowing for a reduction in ICC administrative fees of up to 20% for unjustified delays in the ICC's award scrutiny process. The revised Practice Note also sets out the exact steps the scrutiny process entails. Reflecting on the amendments, ICC Court President Alexis Mourre noted that "as a world leader in commercial dispute resolution, it is imperative for ICC to lead by example and take steps to improve transparency and accountability wherever appropriate".

An overview of both the scrutiny process and the changes are provided below.

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French Supreme Court declares inadmissible appeal of Court of Appeal’s decision to seek an opinion from the CJEU

In Cass. Civ. 1re, 18 novembre 2015, n°14-26.482, the French Supreme Court considered an appeal from a Court of Appeal decision seeking an opinion from the CJEU on the applicability of European competition law in the context of proceedings to set aside an ICC award.

On 18 November 2015, the Cour de Cassation (French Supreme Court) held that an appeal against the lower court’s decision to seek a ruling from the Court of Justice of the European Union (CJEU) was inadmissible.

The applicant (Genentech) sought to set aside an International Chamber of Commerce (ICC) award ordering it to pay sales royalties due under a biotechnology licence. It did so on the basis that the award breached European competition law (and therefore international public policy). In a preliminary decision dated 23 September 2014, the Paris Court of Appeal stayed the proceedings and referred the question to the CJEU. The respondents appealed to the Supreme Court against the Court of Appeal's decision to seek a ruling from the CJEU. 

In declaring the appeal to be inadmissible, the Supreme Court also found that the Court of Appeal had not carried out a review of the award under Article 1520 5° of the French Code of Civil Procedure, but had simply exercised its right, under Article 267 of the Treaty on the Functioning of the European Union, to refer a question on the "interpretation of the Treaties" to the CJEU.

This decision confirms that the French courts retain the right to refer questions on the interpretation of treaties to the CJEU, even when exercising their supervisory jurisdiction over international arbitrations seated in France. It will be interesting to see how the Court of Appeal deals with Genentech's application to have the award set aside, if the CJEU eventually rules that the award breaches European competition law. (Cass. Civ. 1re, 18 novembre 2015, n°14-26.482)

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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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Cukurova v Sonera: Privy Council dismisses backdoor attempt to challenge tribunal’s findings at the enforcement stage

In the case of Cukurova Holdings AS v Sonera Holding BV [2014] UKPC 15, the Privy Council considered an appeal from the Court of Appeal of the BVI. The appellant (Cukurova) argued that permission to enforce an ICC arbitration award as a judgment should be set aside on the following grounds: (i) the tribunal lacked jurisdiction to grant the relief awarded to the claimant (Sonera); (ii) Cukurova was unable to present its case; and (iii) enforcement of the award would be contrary to public policy of the BVI.

In a pro-enforcement decision, the Privy Council dismissed Cukurova’s appeal on all three grounds and restated that the role of an enforcing court is not to evaluate whether or not, based on the reasons given, the arbitral tribunal got it right.

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Hong Kong Court of Final Appeal Confirms Principle of Indemnity Costs for Unsuccessful Set Aside Application

In the latest instalment of Pacific China Holdings Ltd (in Liquidation) v Grand Pacific Holdings Ltd, the Hong Kong Court of Final Appeal has confirmed that parties who unsuccessfully challenge arbitral awards will generally be ordered to pay costs on the indemnity basis. This decision reinforces, once again, the respect of the Hong Kong courts for the finality of the arbitral process.

The Appeal Committee’s decision on 16 August 2013 means that the Hong Kong Court of Appeal’s decision on costs now stands as the law in Hong Kong on the usual basis for costs in unsuccessful set aside applications. The Court of Appeal’s judgment highlighted that, given that the parties had agreed to arbitration, applications to set aside an arbitral award or to resist enforcement should be exceptional events.

Along with the substantive decision in Grand Pacific, which confirmed that the Hong Kong courts will be slow to interfere with both the procedural decisions of arbitral tribunals and arbitral awards, these decisions are an important reminder that disappointed parties should consider the potential costs consequences before launching challenges to arbitral awards in Hong Kong.

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India liable under BIT for extensive judicial delays

An UNCITRAL tribunal in Singapore has held that the Republic of India breached its obligation under the India-Kuwait bilateral investment treaty (BIT) to provide investors with an “effective means of asserting claims and enforcing rights” through undue delay in the Indian court system.  White Industries Australia Limited (White) had spent nine years attempting to enforce an ICC Award in India, but was subjected to prolonged delays.  It therefore brought a claim under the Australian–Indian BIT but successfully relied on the BIT’s “most-favoured nation” clause to take advantage of the more favourable investor protections in the India-Kuwait BIT.

The UNCITRAL award adds to the developing jurisprudence suggesting that an arbitral award may be treated as a continuation of an investment and, as such, may be subject to such protections afforded to investments by a BIT.  The jurisdictional aspect of this case is also particularly topical given the consolidated appeal in Bhatia International v. Bulk Trading that began in the Supreme Court of India on 10 January 2012, which is considered likely to limit the ability of Indian courts to intervene in arbitrations seated outside India.

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