Herbert Smith Freehills sponsors XXVIth ICC Congress in Hong Kong on 5-8 May 2024

Herbert Smith Freehills is a proud sponsor of the XXVIth Congress of the International Council for Commercial Arbitration (ICCA), being held in Hong Kong from 5 to 8 May 2024. We are delighted that CEO Justin D’Agostino is Co-Chair of the Host Committee and Consultant May Tai sits on the Programme Committee.

With the theme, “International Arbitration: A Human Endeavour”, this Congress focuses on the individual as a participant in the international arbitration system. Topics will include the economics of dispute resolution, culture and semantics, the impact of technology and the art of persuasion. The programme has now been released and is available online here.

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THE USUAL SUSPECTS PROJECT: DECIPHERING DECISION-MAKING IN ARBITRATOR SELECTION

The Hong Kong International Arbitration Centre (HKIAC) and Cortex Capital have launched a collaboration called ‘The Usual Suspects Project’ with the support of a number of organisations including Herbert Smith Freehills. The project examines the decision-making process behind the selection of party-appointed arbitrators. The project will also reveal how factors such as diversity are considered in the appointment process.

During Hong Kong Arbitration Week, Cortex Capital partnered with the Hong Kong International Arbitration Centre (HKIAC) to launch a survey to explore how arbitrator appointments are understood by major arbitration players in Hong Kong, as well as the wider global arbitration community. The aim of the survey is to “unlock the black box” of party appointments, with vital input from those in the arbitral community who have a role in the decision-making process. Dr Ula Cartwright-Finch, project lead and Managing Director of Cortex Capital, says: “Picking arbitrators is a seriously spicy topic. It goes to the heart of arbitration as a process: efficacy, legitimacy, enforceability – everything. But how parties do it is such a mystery. Unpacking the decision-making process will be fascinating in its own right but it’s also an essential one if we’re serious about de-biasing those decisions.”

The survey is open to all arbitration users and arbitration counsel and takes less than five minutes to complete. To participate in the survey and share your experiences of the arbitrator appointment process, please follow this link.

For further information, please contact Simon Chapman, Partner, May Tai, Partner, Kathryn Sanger, Partner, or your usual Herbert Smith Freehills contact.

Simon Chapman KC
Simon Chapman KC
Regional Head of Practice - Dispute Resolution, Asia
+852 21014217
May Tai
May Tai
Partner
+852 21014031
Kathryn Sanger
Kathryn Sanger
Partner
+852 21014029

Hong Kong Court Clarifies Threshold for Setting Aside Awards

A Hong Kong Court recently adopted a resoundingly pro-arbitration stance in a decision which emphasised the high thresholds of irregularity that would need to be established before an arbitration award can be set aside.

In LY v HW, [2022] HKCFI 2267, the Court dismissed an application to set aside an award based on claims that the Tribunal had failed to deal with the key issues and failed to provide sufficient reasons for its decision in the award. This decision underlines the narrow manner in which grounds for refusal of enforcement are to be construed and fortifies the enforceability of arbitration awards in Hong Kong. Continue reading

HKIAC USERS GAIN ADDITIONAL ROUTE TO MAINLAND INTERIM RELIEF AND ENFORCEMENT

The Supreme Peoples’ Court of the People’s Republic of China (SPC) has recently announced that the Hong Kong International Arbitration Centre (HKIAC) is to be included in the China International Commercial Court’s (CICC) “One-Stop” Platform for Diversified International Commercial Dispute Resolution (“One-Stop” Platform).

According to the Rules of the Supreme People’s Court on International Commercial Court Procedure (Trial Implementation), the inclusion of HKIAC into the “One-Stop” Platform means that parties to cases administered by HKIAC with an amount in dispute over RMB 300 million or otherwise likely to be of significant influence, may apply for interim relief and/or the enforcement of arbitral awards directly to the CICC. While parties to HKIAC proceedings could already apply to the competent Intermediate People’s Court for interim relief, this new route is a more effective alternative (where appropriate) to the current arrangements between the Mainland and Hong Kong.

The SPC had established the “One-Stop” Platform in 2018, in order to integrate litigation, mediation and arbitration, and to facilitate parties’ involvement in the process of online dispute resolution. In December 2018, the SPC announced the first group of arbitration and mediation institutions to be included on the “One-Stop” Platform, which covered most of the leading arbitration and mediation institutions in the Mainland. The SPC’s recent inclusion of the second group of arbitration institutions on the “One-Stop” Platform was done with a view to promoting the high-quality development of the Belt and Road initiative.

This new development makes the HKIAC the first arbitral institution outside the Mainland to be included in the “One-Stop” Platform, adding yet another string to the HKIAC’s bow. In a recent press release, the HKIAC Co-chairperson, Rimsky Yuen, GBM, SC, JP, has regarded this as a “ground-breaking development”, stating that it opens new doors to obtaining interim relief and award enforcement before judges of the highest calibre on the Mainland.

For more information, please free to get in touch with any of the contacts below, or your usual Herbert Smith Freehills contact.

Simon Chapman
Simon Chapman
Partner
+852 21014217
May Tai
May Tai
Partner
+44 20 7466 2112
Helen Tang
Helen Tang
Partner
+86 21 2322 2160
Kathryn Sanger
Kathryn Sanger
Partner
+852 21014029
Weina Ye
Weina Ye
International Partner
+86 21 2322 2132
Briana Young
Briana Young
Professional Support Consultant
+852 21014214
Peijing Gong
Peijing Gong
Associate
+86 21 23222157

Inconsistent dispute resolution clauses – exploring the limits of the Fiona Trust presumption

The presumption that “rational businessmen” intend all their disputes to be resolved in the same forum may not apply where the parties clearly intended otherwise. Construing such intentions requires a “broad and commercially minded approach” to inconsistent dispute resolution clauses.

In H v G [2022] HKCFI 1327, the Hong Kong Court of First Instance set aside an arbitral tribunal’s determination that it had jurisdiction over claims under a warranty where an associated contract contained the arbitration clause, but the warranty itself provided for litigation in Hong Kong.  This decision underlines that there are limits to the Fiona Trust presumption in cases where the parties’ overall contractual arrangements give rise to agreements containing different dispute resolution provisions.

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SOUTH CHINA INTERNATIONAL ARBITRATION CENTER (HONG KONG) ARBITRATION RULES COME INTO FORCE

South China International Arbitration Center (Hong Kong) (SCIAHK) is a new Hong Kong registered arbitral institution. It is affiliated to the Shenzhen-based Shenzhen Court of International Arbitration (SCIA, also known as South China International Economic and Trade Arbitration Commission), but operates as an independent institution. SCIAHK’s Board recently approved the South China International Arbitration Center (Hong Kong) Arbitration Rules (the Rules), which came into force on 1 May 2022.

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Herbert Smith Freehills to participate in London International Disputes Week 2022 (LIDW22)

With its theme “Dispute Resolution – Global, Sustainable, Ethical?” LIDW22 will take a critical look at the future of dispute resolution and its place in the post-pandemic world, through a series of events held both physically and virtually between 9 and 13 May.

The programme for LIDW22 draws on current global issues driving the practice of dispute resolution. Drawing on London’s position as a major international disputes hub, LIDW22 will engage with international perspectives across all sectors and explore how the industry can adapt, evolve and progress in the light of current global challenges.

Our lawyers are speaking at three sessions throughout the week, outlined below. You can read more and register here: https://2022.lidw.co.uk/.

  • May Tai is speaking on the panel: London as an international disputes hub for East Asia disputes: the challenges and opportunities of East Asia’s evolving dispute resolution ecosystem (9 May, 9:00 – 10:30)
  • Daniela Paez is speaking on the panel: Latin America: delivering sustainable and ethical infrastructure across key sectors – a disputes perspective (9 May, 15:00 – 16:30)
  • Rachel Lidgate and James Robson are speaking on the panel: Back to the future: a look at the future of energy disputes in a post-covid world (13 May, 14:00 – 16:00)

 

May Tai
May Tai
Managing Partner, Hong Kong
+852 21014031
Daniela Paez
Daniela Paez
Associate, New York
+1 917 542 7829

INSIDE ARBITRATION ISSUE #13 PERSPECTIVES ON CROSS-BORDER DISPUTES

Welcome to the thirteenth issue of Inside Arbitration. 

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

2022 opened with continued uncertainty in the global fight against the Covid-19 pandemic. This has tested all of our resilience, which has never been a more important quality than over the past few years. As trusted advisors to our clients, we need to be able to anticipate the challenges and opportunities on the horizon. This issue has those themes front and centre, with a focus on adapting to and driving forward change, within different sectors, regions and the practice of arbitration.

Incorporating articles, interviews and videos from our practitioners around the network, this edition features articles and interview spotlights from across our global team in addition to recent arbitration news and developments.

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DELOS LAUNCHES OPEN ACCESS ARBITRATOR DATABASE TO IMPROVE DIVERSITY

Independent arbitration institution Delos has created a free, open access database of arbitrators, in a bid to increase the pool of arbitrators and foster diversity in appointments.

The database is open to all at no cost, and any arbitrator can post a profile – no previous appointments are required. Arbitrators can choose the information they enter, including gender, age, nationality, location, and cultural and ethnic background, alongside their experience as counsel, tribunal secretary and arbitrator, language skills, and regional, industry or other specialist expertise. To create a profile, register for free membership at www.delosdr.org, then click here to add your profile.

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Hong Kong court sets aside award for wrongful identification of party

In arbitral proceedings where the respondent was wrongly named, the Hong Kong Court of First Instance has set aside the arbitral award on the basis that the named respondent is not a party to the arbitration agreement and was not given proper notice of the proceedings. This rare example of a successful set-aside application demonstrates that the courts will be prepared to overturn an award where a statutorily prescribed ground is clearly established.

AB v CD [2021] HKCFI 327

Background

The dispute arose out of an agreement between AB Bureau and CD (Agreement). Pursuant to the arbitration clause in the Agreement, CD issued a Notice of Arbitration in April 2019. Consistent with the Agreement, the Notice of Arbitration named AB Bureau as respondent. However, after the Notice of Arbitration was issued, a series of events occurred which ultimately led to the set-aside application:

  • In July 2019, CD submitted an Amended Notice of Arbitration revising the name of respondent from “AB Bureau” to “AB Bureau also known as AB Bureau Co, Ltd”.
  • The critical event took place in November 2019, when CD applied to the sole arbitrator to “correct” respondent’s name from “AB Bureau” to “AB Engineering”. In support of its application, CD relied on AB Engineering’s website which, CD submitted, showed that AB Bureau was the predecessor of AB Engineering.
  • Following CD’s request, the sole arbitrator issued a procedural order giving effect to the name change and ordering that no further service of notice was necessary.
  • In March 2020, the final Award was issued, with AB Engineering named as the respondent. Neither AB Bureau nor AB Engineering participated in the arbitration.

AB Engineering, the award debtor, applied to set aside the Award on the basis that:

  • AB Engineering was not a party to the Agreement, and there was no valid arbitration agreement between AB Engineering and CD (Article 34 (2)(a)(i) of the UNCITRAL Model Law);
  • the Award contained decisions on matters beyond the scope of the submission to the Arbitration (Article 34(2)(a)(iii) of the Model Law); and
  • AB Engineering was not given proper notice of an arbitrator or of the arbitration proceedings (Article 34 (2) (a) (ii) of the Model Law).

It was not disputed that if AB Engineering succeeded on any of the above grounds, the Court could set aside the Award.

Decision

It became clear at the court hearing that AB Bureau and AB Engineering were at all times two separate and distinct legal entities. CD nevertheless sought to enforce the Award on the grounds that AB Engineering was a party to the agreement and was estopped from applying to set aside the Award. Mimmie Chan J rejected both arguments.

CD’s primary case was that AB Engineering was a party to the Agreement by virtue of the definition of AB. In the Agreement, AB is defined to mean “AB Bureau or any other Affiliated entity”. On a proper construction of the Agreement, the Court found that the Agreement was made between CD and AB Bureau only and there was no evidence that AB Engineering had had any role in the performance of the Agreement. This distinguished the case from Giorgio Armani SpA v Elan Clothes Co Ltd [2020] 1 HKLRD 354, where the underlying agreement was expressly made “by and between” the parent company, SpA, “together with its branch offices and Affiliates”. The Court disagreed with CD’s “self-drawn conclusion” and found that there was no statement on AB’s website capable of indicating that AB Bureau and AB Engineering were the same legal entity.

The Court further noted that, even if AB Engineering could be said to be a party to the Agreement, it had not been given proper notice of the arbitral proceedings. The two notices of arbitration were never sent to the proper registered address of AB Engineering and were in any case addressed to AB Bureau. As such, no adequate notice of the arbitration had been given to AB Engineering, the award debtor.

CD also contended that AB Engineering was estopped from applying to set aside the Award because its employees had misled CD to believe that AB Bureau and AB Engineering were the same entity. This argument was rejected by the Court on the grounds that CD had not relied on the employees’ statements. On the evidence, CD relied solely and erroneously on AB Engineering’s website rather than on the alleged misrepresentation. In this connection, the Court emphasised that “it is incumbent on a claimant and its legal advisers to identify the proper defendant/respondent and to verify its name, particularly after query has been raised. It is no excuse for CD and its legal advisers now to put the blame on employees of Bureau/AB Engineering for any misnomer in the name of the party CD seeks to bring proceedings against.

In light of the above, Chan J held that the Award should be set aside under Article 34(2)(a)(i) and (ii) of the Model Law.

Comment

It is rare for a Hong Kong court to set aside an arbitral award, but it will not hesitate to do so if the award debtor can clearly demonstrate a statutory ground for set aside and the court considers set aside is justified.

Here, the similarities in the names of companies involved, the non-participation of the named respondent, and CD’s reliance on online sources all contributed to CD naming the wrong party and, ultimately, persuaded the court that the Award should not stand.

The judgment turns heavily on its facts, rather than marking any general change to the courts’ pro-enforcement approach. However, it emphasises the need for claimants to identify each counterparty carefully before commencing arbitration, especially when a complex corporate structure is involved, or risk losing the benefit of their awards.

May Tai
May Tai
Managing Partner - Asia
+852 21014031
Simon Chapman
Simon Chapman
Partner
+852 21014217
Kathryn Sanger
Kathryn Sanger
Partner
+852 21014029
Briana Young
Briana Young
Professional Support Consultant
+852 21014214