Global developments brought to you monthly by the ITA Board of Reporters
General Editor: Roger Alford
Managing Editors: Elina Mereminskaya & Monique Sasson
Volume XVII - Issue 3
March 2019
 
 
 
 
Recent Cases and Awards (15)
 
 
Procuración del Tesoro Nacional c/ (nulidad del laudo del 20-III-09) s/ recurso directo (Annulment of Arbitral Award 20/03/2009), Supreme Court of Justice of Argentina, File No. 12732/2009/CS1, 06 November 2018
 
On November 6, 2018, the Argentine Federal Supreme Court rejected the Argentine Government’s challenge to an arbitral award, reinforcing the principle that courts can review an arbitral award only through the annulment recourse set forth under Section 760 of Argentina’s Code of Civil and Commercial Procedure.
 
Author(s): Federico Godoy, Beretta Godoy
 
Source: A contribution by the ITA Board of ReportersDate: 27 Mar 2019
 
Reporter for: Argentina
 
Argentina Full text Full text as PDF
 
 
 
 
 
Li Liandong and New Residence (Shanghai) Enterprise Development Co., Ltd. v. Shen Yi, Intermediate People's Court of Beijing, , 31 January 2019
 
It is always controversial about whether a court is empowered to set aside Settlement Agreements arising from arbitration proceedings (“Settlement Agreements”). In courts’ practice of judicial review of arbitration, opinions diverge among different courts. Some courts hold that Settlement Agreements shall follow the same criterion for judicial review of arbitration award. On the contrary, other courts are in the opinion that there is no legal ground for setting aside Settlement Agreements. Recently, Beijing 4th Intermediate People’s Court (the “Court”) has made it clear in this case that parties may not apply for setting aside Settlement Agreements (the “Application”) before the Court, because Arbitration Law of People’s Republic China (the “Arbitration Law”) does not provide any legal ground for such Application.
 
Author(s): Arthur X. Dong, AnJie Law Firm
 
Source: A contribution by the ITA Board of ReportersDate: 27 Mar 2019
 
Reporter for: China
 
China Full text Full text as PDF
 
 
 
 
 
Dickson Valora Group (Holdings) Co Ltd v. Fan Ji Qian [2019] HKCFI 482, High Court of Hong Kong, Court of First Instance, Miscellaneous Proceedings No. 1954 of 2018, 20 February 2019
 
The Hong Kong Court of First Instance has granted an anti-suit injunction restraining mainland Chinese court proceedings commenced by Fan Ji Qian on the ground that the dispute should be referred to arbitration. Although Fan was not a signatory to the contract containing the arbitration clause, he had nevertheless sought to enforce a contractual right under that agreement, such that he was also bound by any conditions integral to the exercise of this right (including the agreement to arbitrate).

This decision shows that an arbitration agreement can, in certain circumstances, bind third parties. This is something which should be considered when drafting agreements which purport to confer a benefit on non-signatories, particularly if it is intended that third parties exercising rights under the contract should also be bound by the arbitration provisions.
 
Author(s): Briana Young, Herbert Smith Freehills
 
Source: A contribution by the ITA Board of ReportersDate: 27 Mar 2019
 
Reporter for: Hong Kong
 
Hong Kong Full text Full text as PDF
 
 
 
 
 
Balram Chainrai v. Kushnir Family (Holdings) Ltd [2019] HKCFI 234, High Court of Hong Kong, Court of First Instance, High Court Action No. 1462 of 2014, 08 February 2019
 
Israel Sorin Shohat, the Third Defendant in proceedings commenced by Mr Balram Chainrai, sought to challenge the jurisdiction of Hong Kong courts to hear a matter related to an Israeli arbitral award issued in 2013. The court held that, while the deadline for challenging jurisdiction had not passed, Shohat had ultimately taken steps which indicated that he had submitted to the jurisdiction of the Hong Kong courts and therefore waived his right to challenge.
 
Author(s): Briana Young, Herbert Smith Freehills
 
Source: A contribution by the ITA Board of ReportersDate: 27 Mar 2019
 
Reporter for: Hong Kong
 
Hong Kong Full text Full text as PDF
 
 
 
 
 
CL v. SCG [2019] HKCFI 398, High Court of Hong Kong, Court of First Instance, Construction and Arbitration Proceedings No. 9 of 2018, 18 February 2019
 
The Hong Kong Court of First Instance found that enforcement of a 2011 arbitral award by CL was time barred, clarifying when a cause of action for failure to honour an award accrues and the effect of the Arrangement Concerning Mutual Enforcement of Arbitral Awards between the Mainland and the Hong Kong Special Administrative Region (the "Mainland and Hong Kong Arrangement") on time limits under the Hong Kong Limitation Ordinance.

This decision clarifies the date on which a cause of action accrues where a party fail to honour an arbitral award. In particular, it provides guidance on what will constitute a 'reasonable time for payment and performance'. It also clarifies that, despite the prohibition under the Mainland and Hong Kong Arrangement that enforcement proceedings cannot be brought in the Mainland and Hong Kong in parallel, the time continues to run in Hong Kong under the Limitation Ordinance while enforcement proceedings are before Mainland courts. This decision, together with the 2-year time limit for the application for enforcement in the Mainland and the likely duration of the enforcement proceedings in Hong Kong and the Mainland respectively should all form part of the careful consideration when the parties develop their enforcement strategy.
 
Author(s): Briana Young, Herbert Smith Freehills
 
Source: A contribution by the ITA Board of ReportersDate: 27 Mar 2019
 
Reporter for: Hong Kong
 
Hong Kong Full text Full text as PDF
 
 
 
 
 
Siemens AG v. Rotem Ampert Negev ltd. and Migdal Hevra Lebituah ldt., District Court of the Central Region of Israel, 26802-08-17, 17 September 2017
 
The claimant requests the recognition of a foreign arbitral award given in its favor on 8 May 2017. The respondents object the recognition based on the public policy ground and a violation of their right for due process in the Arbitration Law and the New York Convention. The objection was dismissed because of a narrow interpretation of public policy by the Israeli courts.
 
Author(s): Avishai Azriel, White & Case LLP
 
Source: A contribution by the ITA Board of ReportersDate: 27 Mar 2019
 
Reporter for: Israel
 
Israel Full text Full text as PDF
 
 
 
 
 
BAZ v. BBA and others and other matters [2018] SGHC 275, Supreme Court of Singapore, High Court, Originating Summons No. 490 of 2016 (Summons No. 4497 of 2016) (Summons No. 4499 of 2016); Originating Summons No. 784 of 2016 and Originating Summons No. 787 of 2016, 21 December 2018
 
1. In this case, the plaintiff, BAZ (the “Buyer”) was the buyer of some shares from 20 defendants, BBA to BBT (collectively, the “Sellers”). The Buyer obtained, ex parte, leave of Court to enforce an arbitral award in excess of S$720 million (the “Award”) against the Sellers. The Award was obtained in an ICC arbitration commenced by the Buyer against the Sellers (the “Arbitration”).

2. There were 5 minors among the Sellers who were separately represented (the “Minors”). The Minors were between 3 to 8 years old at the material time, and were only between 8 and 12 years old at the time of the Arbitration. Where it is necessary to distinguish between the Minors and the rest of the defendants, the non-minor defendants will be referred to as “Non-Minor Sellers”.

3. The Sellers opposed the ex parte leave order granted to the Buyer to enforce the Award. In this respect, the Minors and Non-Minor Sellers filed separate summons to set aside the leave order obtained by the Buyer. The Minors (by their litigation representative) and Non-Minor Sellers also filed separate applications to set aside the Award pursuant to section 24 of the International Arbitration Act (“IAA”), Article 34(2)(a)(iii) and Article 34(2)(b)(ii) of the UNCITRAL Model Law on International Commercial Arbitration (“Model Law”) as set out in the First Schedule to the IAA.

4. Belinda Ang J (“Ang J”), sitting in the Singapore High Court, dismissed the Non-Minor Sellers’ application to set aside the Award (and accordingly did not set aside the leave order to enforce the Award as against them). However, Ang J allowed the Minors’ application to set aside the Award on the ground of public policy, and accordingly varied the leave order obtained by the Buyer.
 
Author(s): Min Jian Chan, Michael Hwang Chambers LLC; Michael Hwang, Michael Hwang Chambers LLC
 
Source: A contribution by the ITA Board of ReportersDate: 27 Mar 2019
 
Reporter for: Singapore; Singapore
 
Singapore Full text Full text as PDF
 
 
 
 
 
Swissbourgh Diamond Mines (Pty) Ltd and others v. Kingdom of Lesotho [2018] SGCA 81, Supreme Court of Singapore, Court of Appeal, Civil Appeal No. 149 of 2017, 27 November 2018
 
The relevance of investor-state arbitration continues to be seen in Singapore. The Singapore Court of Appeal’s (“SGCA”) decision in Swissbourgh Diamond Mines (Pty) Ltd and others v Kingdom of Lesotho [2018] SGCA 81 (“Swissbourgh v Lesotho”) comes hot on the heels of a previous investor-state ruling in Sanum Investments Limited v the Government of the Lao People’s Democratic Republic [2016] SGCA 57. Fascinatingly, Singapore was neither the investing nor receiving state in both cases. In Swissbourgh v Lesotho, the SGCA dealt with vital questions of international investment law, including the requirement of exhaustion of local remedies and the definition of “admitted investment” and “investor”. The decision arrived in a comprehensive 116-page written judgment six months after a five-judge bench had heard the appeal. The appellate court affirmed the decision of the Singapore High Court (“SGHC”) by setting aside the award rendered by the arbitral tribunal on the merits. How did the SGCA reach the conclusion that the award should be set aside, and how does this bode for Singapore’s profile as a seat for investment arbitration?
 
Author(s): Michael Hwang, Michael Hwang Chambers LLC
 
Source: A contribution by the ITA Board of ReportersDate: 27 Mar 2019
 
Reporter for: Singapore
 
Singapore Full text Full text as PDF
 
 
 
 
 
Marty Ltd v. Hualon Corp (Malaysia) Sdn Bhd (receiver and manager appointed) [2018] SGCA 63, Supreme Court of Singapore, Court of Appeal, Civil Appeal No. 175 of 2017, 10 October 2018
 
On behalf of Hualon Corporation (Malaysia) Sdn Bhd, a Malaysian company (the “Respondent”), the receivers commenced court proceedings in the British Virgin Islands (“BVI”) against Marty Ltd, a company incorporated in the BVI (the “Appellant”), for wrongful deprivation of the Respondent’s shareholding in a Vietnam subsidiary (the “Vietnam Subsidiary”). The Vietnam Subsidiary was a company incorporated by the Respondent. Some seven months after commencing the BVI proceedings, the Respondent then commenced arbitration against the Appellant with the Singapore International Arbitration Centre (“SIAC”) alleging the same breaches. The Respondent’s explanation for arbitration was that it only discovered the arbitration clause some seven months after the BVI proceedings were commenced. At the Singapore High Court, the judge held that although the Respondent had breached the arbitration agreement by commencing the BVI action, it had commenced litigation because it was unaware of the arbitration clause and accordingly did not possess the necessary repudiatory intent for the breach to constitute a repudiatory breach. The Singapore Court of Appeal had to (a) clarify what action constituted a repudiatory breach, (b) explain how it fitted into the framework of arbitration proceedings, and (c) whether it was possible for the Respondent to evince a repudiatory intent such that it is in repudiatory breach if it was unaware of the existence of an arbitration clause.
 
Author(s): Michael Hwang, Michael Hwang Chambers LLC; Rachel Ong, Michael Hwang Chambers LLC
 
Source: A contribution by the ITA Board of ReportersDate: 27 Mar 2019
 
Reporter for: Singapore; Singapore
 
Singapore Full text Full text as PDF
 
 
 
 
 
Aqaba Container Terminal (Pvt) Co. (ACT) v. Soletanche Bachy France SAS [2019] EWHC 471 (Comm), High Court of Justice of England and Wales, Queen's Bench Division, Commercial Court, Claim No. CL-2018-000551, 01 March 2019
 
Whilst a claim that a portion of a foreign statute under which an entity was established is unconstitutional may not be arbitrable as a matter of English law, the question of whether a contract entered into pursuant to that statute is invalid is both arbitrable and was, on the facts of the case, within the ambit of the arbitration clause contained in that contract.

An anti-suit injunction based upon an exclusive jurisdiction clause will be granted unless there are strong reasons not to do so. Although the court always retains a discretion, it will grant such an injunction where it is just to do so.
 
Author(s): Nicholas Fletcher, 4 New Square
 
Source: A contribution by the ITA Board of ReportersDate: 27 Mar 2019
 
Reporter for: United Kingdom of Great Britain and Northern Ireland
 
United Kingdom Full text Full text as PDF
 
 
 
 
 
Spirit Airlines, Inc. v. Maizes, United States Court of Appeals, Eleventh Circuit, No. 17-14415, 15 August 2018
 
The United States Court of Appeals for the Eleventh Circuit held that the incorporation of the Rules of the American Arbitration Association in an arbitration agreement constituted clear and unmistakable evidence of the parties’ intent that an arbitrator decide the availability of class arbitration.  The case presented a question of first impression in the Eleventh Circuit, and the decision created a split between the Eleventh Circuit and the Third, Fourth, Sixth, and Eighth Circuits, which had all held that the inclusion of American Arbitration Association Rules was not sufficient evidence of the parties’ intent to submit the question of class arbitration to an arbitrator.
 
Author(s): Natascha Born, Debevoise & Plimpton; Megan Corrarino, Debevoise & Plimpton LLP; Jocelyn W. Lee, Debevoise & Plimpton; William H. Taft V, Debevoise & Plimpton LLP
 
Source: A contribution by the ITA Board of ReportersDate: 27 Mar 2019
 
Reporter for: United States of America; United States of America; United States of America; United States of America
 
United States of America Full text Full text as PDF
 
 
 
 
 
JPay Inc. v. Kobel, United States Court of Appeals, Eleventh Circuit, No. 17-13611, 19 September 2018
 
The United States Court of Appeals for the Eleventh Circuit held, as a matter of first impression in that circuit, that the availability of class arbitration under an arbitration agreement is a substantive, gateway question of arbitrability presumptively for a court, rather than an arbitrator, to decide.  The Eleventh Circuit thereby joined the Third, Fourth, Sixth, and Eighth Circuit Courts of Appeals, but diverged from the Fifth Circuit and the California Supreme Court.  The court also found that the parties’ arbitration agreement evinced a clear and unmistakable intent to submit arbitrability determinations to arbitration, thereby overcoming the general presumption that questions of arbitrability are for a court.
 
Author(s): Natascha Born, Debevoise & Plimpton; Line Chataud, Debevoise & Plimpton; Megan Corrarino, Debevoise & Plimpton LLP; William H. Taft V, Debevoise & Plimpton LLP
 
Source: A contribution by the ITA Board of ReportersDate: 27 Mar 2019
 
Reporter for: United States of America; United States of America; United States of America; United States of America
 
United States of America Full text Full text as PDF
 
 
 
 
 
Diag Human S.E. v. Czech Republic – Ministry of Health, United States Court of Appeals, District of Columbia Circuit, No. 17-7154, 26 October 2018
 
The United States Court of Appeals for the District of Columbia Circuit affirmed the District Court’s decision under the Convention on the Recognition and Enforcement of Foreign Arbitral Awards (“New York Convention”) to deny enforcement of an arbitral award on the grounds that it had not become binding on the parties.  The arbitration agreement provided for review of any award by a second arbitral tribunal, and such a review panel had issued a resolution discontinuing the proceedings.  The Court of Appeals looked to both the language of the resolution and Czech arbitral law in deciding that the resolution discontinuing the proceedings had invalidated the original award, applying a rarely-used doctrine that permits U.S. courts to look to the law of the rendering jurisdiction where the binding status of an award is in doubt for purposes of the New York Convention.
 
Author(s): Natascha Born, Debevoise & Plimpton; Zachary Saltzman, Debevoise & Plimpton LLP; William H. Taft V, Debevoise & Plimpton LLP; Lisa Wang Lachowicz, Debevoise & Plimpton
 
Source: A contribution by the ITA Board of ReportersDate: 27 Mar 2019
 
Reporter for: United States of America; United States of America; United States of America; United States of America
 
United States of America Full text Full text as PDF
 
 
 
 
 
General Re Life Corporation v. Lincoln National Life Insurance, United States Court of Appeals, Second Circuit, No. 17-2496-cv, 28 November 2018
 
The United States Court of Appeals for the Second Circuit joined several of its sister circuits in recognizing an exception to the doctrine of functus officio.  That doctrine ordinarily dictates that an arbitral tribunal’s authority expires after issuing a final award.  The Second Circuit joined the Third, Fifth, Sixth, Seventh, and Ninth Circuits in recognizing an exception to the functus officio doctrine where an arbitral tribunal merely clarifies, and does not substantively modify, an ambiguous award.
 
Author(s): Natascha Born, Debevoise & Plimpton; David Menon, Debevoise & Plimpton; Zachary Saltzman, Debevoise & Plimpton LLP; William H. Taft V, Debevoise & Plimpton LLP
 
Source: A contribution by the ITA Board of ReportersDate: 27 Mar 2019
 
Reporter for: United States of America; United States of America; United States of America; United States of America
 
United States of America Full text Full text as PDF
 
 
 
 
 
Outokumpu Stainless USA, LLC v. Converteam SAS, United States Court of Appeals, Eleventh Circuit, No. 17-10944, 30 August 2018
 
The United States Court of Appeals for the Eleventh Circuit held as a matter of first impression in that Circuit that a suit sufficiently “relates to” an arbitration agreement falling under the Convention on the Recognition and Enforcement of Foreign Arbitral Awards (the “New York Convention”) to establish federal subject matter jurisdiction under the Federal Arbitration Act (“FAA”), 9 U.S.C. § 205, if the agreement could conceivably affect the outcome of the lawsuit.  The court thereby joined the Fifth, Eighth, and Ninth Circuit Courts of Appeals in adopting a broad approach to federal courts’ removal jurisdiction under Section 205.    

Having established federal subject matter jurisdiction based on a lenient application of the four-factor test in Bautista v. Star Cruises, 396 F.3d 1289 (11th Cir. 2005), the court next addressed whether to compel arbitration, applying the same test under a more rigorous standard.  Applying that bifurcated analysis, despite holding that federal jurisdiction existed under Bautista because the suit sufficiently related to an arbitration agreement falling under the New York Convention, the court held that it could not compel arbitration under that agreement because: (1) the party seeking to compel arbitration, although a defined “Party” under the agreement, had not in fact signed the agreement and (2) the signatory requirement of the New York Convention could not be satisfied through the transitive property.  That is, even though the party seeking to compel arbitration had entered into a separate contract agreeing to be bound by the arbitration agreement it was seeking to enforce, and even though it was a named party to that arbitration agreement, it had not in fact signed the arbitration agreement and therefore could not enforce it. 
 
Author(s): Natascha Born, Debevoise & Plimpton; Austin Clarke, Debevoise & Plimpton LLP; Zachary Saltzman, Debevoise & Plimpton LLP; William H. Taft V, Debevoise & Plimpton LLP
 
Source: A contribution by the ITA Board of ReportersDate: 27 Mar 2019
 
Reporter for: United States of America; United States of America; United States of America; United States of America
 
United States of America Full text Full text as PDF
 
 
 
 
 
Legislation (1)
 
 
OAS Guide on the Law Applicable to International Commercial Contracts in the Americas 2019
 
The Inter-American Juridical Committee (IAJC) of the Organization of American States (OAS) approved the Guide on the Law Applicable to International Commercial Contracts in the Americas.

The Guide is the culmination of intensive research, consultations and drafting activities since 2015, in close collaboration with the OAS Department of International Law. The instrument received inputs from more than forty leading jurists and Law Professors, many of these linked to the Secretariats of the Hague Conference on Private International Law, UNCITRAL and UNIDROIT. The American Bar Association Section on International Law and the Department of Justice of Canada also advanced comments on the instrument.

Applicable law to international contracts and international arbitration are, in many aspects, intertwined. The Guide continuously addresses matters related to arbitration, taking into account the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards of 1958, the UNCITRAL Model Law on Arbitration, and several laws and arbitration rules. The Guide also relies consistently on the main instruments in force on the subject of international contracting, including Rome I (the EU regulation) and, in particular, the Mexico Convention adopted within the framework of the OAS in 1994 and the Hague Principles adopted in 2015 by the Hague Conference on Private International Law.

The Guide includes at the outset a summary of specific recommendations to legislators, adjudicators, and the parties and their counsel on international contracts. The comments of the Guide unfold according to the following structure:

Part One provides an introduction on the desired objectives, followed by its context and background (Part Two) which explains the main techniques of Private International Law and outlines the environment in the Americas and internationally.

Part Three describes the recent developments with the so-called uniform method, mostly based on the harmonization efforts undertaken by UNIDROIT and UNCITRAL, in addition to efforts by the private sector and other events in the arbitral world. In turn, Part Four describes the uniform method of interpreting international texts, both in terms of conflict of laws and uniform law.

Part Five pertains to the scope of the Guide, in terms of international commercial contracts, thereby excluding from its scope consumer and employer contracts.

Part Six deals with the complex problem of non-State law and variously related terminologies, such as uses, customs and practices, principles, and lex mercatoria. The Guide clarifies that non-State law (or rules of law in a consolidated arbitration terminology) should be generally accepted on an international, supranational or regional level as a neutral and balanced set of rules. In the current state of affairs, the applicability of the UNIDROIT Principles as non-State law if chosen by the parties clearly emerges from the Guide. The same applies to the UNCITRAL (Vienna) Convention on Contracts for the International Sales of Goods of 1980 that can be chosen even if not applicable to the case at hand under its terms. The European Principles of Contract Law (PECL) are also undoubtedly embodied in the formula as a regional instrument.

Part Seven of the Guide deals with the problem of party autonomy in international contracts, which is at the heart of the Guide, considering the almost universal recognition of the principle. The following parts of the instrument address other matters related to party autonomy. Part Eight deals with express or tacit choice of law; Part Nine with formal validity of the choice of law; Part Ten with the law applicable to the choice of law clause; Part Eleven with the arbitration severability clause; and Part Twelve with other problems of law applicable to the field of international contracts, such as amending the chosen law and renvoi, among others.

Part Thirteen of the Guide deals with the absence of choice of law by the parties; Part Fourteen with splitting of the law; Part Fifteen with flexibility to interpret international contracts; Part Sixteen with the scope of the applicable law; Part Seventeen with public policy (ordre public); and Part Eighteen with other issues, such as those related to the existence of other conventions, or to states with more than one legal system or territorial units. 
 
Author(s): José Antonio Moreno Rodríguez, Altra Legal
 
Source: A contribution by the ITA Board of ReportersDate: 27 Mar 2019
 
Reporter for: Paraguay
 
Paraguay Full text
 
 
 
 
 
Upcoming Events (2)
 
 
Washington, DC: State Parties in Contract-Based Arbitration: The Theory and Practice of Private-Public Arbitration (27 March 2019)
 
The conference examines contract-based investment and commercial arbitration between private parties, on the one hand, and states, state instrumentalities and state-owned entities, on the other. Whereas treaty-based investment arbitration has garnered significant (and often critical) attention over the past decades, the participation of public actors as parties in contract-based arbitration has largely escaped scrutiny. Yet, contract-based arbitrations with states are on the rise, driven by, among other things, concession agreements, privatization processes in infrastructure, public utility, security, and education, sovereign bond and debt restructuring processes, as well as by the conditions imposed by development finance and investment insurance providers. What is more, debates and backlash against treaty-based investment arbitration is likely to increasingly shift disputes into contract-based arbitration.
 
Author(s): Reporter ITA
 
Source: A contribution by the ITA Board of ReportersDate: 27 Mar 2019
 
United States of America Full text
 
 
 
 
 
Plano, TX: 31st Annual ITA Workshop and Annual Meeting – Expect the Unexpected: Adjudicating Changed Circumstances in Commercial and Treaty Arbitration (19-21 June 2019)
 
The ITA Workshop, held in Dallas on the third Thursday in June every year since 1989, is widely recognized as the leading conference in the field in the United States. As one participant summarized succinctly, “It is the forum in which legitimate top practitioners gather annually. Thus, the topics are sophisticated, the networking is legitimate, and the social element is valuable.” The Workshop now begins on the preceding Wednesday afternoon, with membership meetings and activities continuing into the following Friday.
 
Author(s): Reporter ITA
 
Source: A contribution by the ITA Board of ReportersDate: 27 Mar 2019
 
United States of America Full text
 
 
 
 
 
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