G E T T I N G T H E D E A L T H R O U Arbitration G H A r b it r Contributing editors a t io n Gerhard Wegen and Stephan Wilske 2 0 1 7 2017 © Law Business Research 2017 Arbitration 2017 Contributing editors Gerhard Wegen and Stephan Wilske Gleiss Lutz Publisher The information provided in this publication is Law Gideon Roberton general and may not apply in a specific situation. Business [email protected] Legal advice should always be sought before taking Research any legal action based on the information provided. Subscriptions This information is not intended to create, nor does Sophie Pallier Published by receipt of it constitute, a lawyer–client relationship. [email protected] Law Business Research Ltd The publishers and authors accept no responsibility 87 Lancaster Road for any acts or omissions contained herein. The Senior business development managers London, W11 1QQ, UK information provided was verified between Alan Lee Tel: +44 20 3708 4199 November 2016 and January 2017. 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Printed and distributed by First published 2006 Encompass Print Solutions Dan White Twelfth edition Tel: 0844 2480 112 [email protected] ISSN 1750-9947 © Law Business Research 2017 CONTENTS Introduction 7 Colombia 88 Gerhard Wegen and Stephan Wilske Alberto Zuleta-Londoño, Juan Camilo Fandiño-Bravo, Gleiss Lutz Juan Camilo Jiménez-Valencia and Natalia Zuleta-Garay Dentons Cardenas & Cardenas CEA 17 José María Fernández de la Mela and Croatia 95 Fernando Cabello de los Cobos Zoran Vukić, Iva Sunko and Ana Pehar Spanish Court of Arbitration Vukić & Partners Ltd CEAC 20 Dominican Republic 103 Eckart Brödermann and Christine Heeg Fabiola Medina Garnes Chinese European Arbitration Centre Medina Garrigó Attorneys at Law Thomas Weimann Chinese European Legal Association Ecuador 111 Rodrigo Jijón Letort, Juan Manuel Marchán, DIS 25 Juan Francisco González and Javier Jaramillo Renate Dendorfer-Ditges Pérez Bustamante & Ponce DITGES PartGmbB Egypt 118 European Court of Arbitration’s Appellate Ismail Selim Arbitral Proceedings 29 Al Tamimi and Company Mauro Rubino-Sammartano European Centre for Arbitration and Mediation England & Wales 125 Adrian Jones, Gordon McAllister, Edward Norman and John Laird HKIAC 32 Crowell & Moring LLP Paulo Fohlin Magnusson Equatorial Guinea 138 Agostinho Pereira de Miranda and Sofia Martins ICSID 35 Miranda & Associados Harold Frey and Hanno Wehland Lenz & Staehelin France 144 Thomas Bevilacqua and Ivan Urzhumov LCIA 38 Foley Hoag LLP Claire Stockford, Jane Wessel and Tom Stables Shepherd and Wedderburn LLP Germany 155 Stephan Wilske and Claudia Krapfl Angola 42 Gleiss Lutz Agostinho Pereira de Miranda, Sofia Martins and Jayr Fernandes Miranda & Associados Ghana 162 Kimathi Kuenyehia, Sarpong Odame and Paa Kwame Larbi Asare Austria 48 Kimathi & Partners, Corporate Attorneys Klaus Oblin Oblin Melichar Greece 170 Antonios D Tsavdaridis Belgium 54 Rokas Law Firm Johan Billiet Billiet & Co Hong Kong 178 Simon Powell and Desmond Gan Brazil 65 Latham & Watkins Hermes Marcelo Huck, Rogério Carmona Bianco and Fábio Peixinho Gomes Corrêa Hungary 187 Lilla, Huck, Otranto, Camargo Advogados Chrysta Bán Bán, S Szabó & Partners Chile 72 Paulo Román, Marta Arias and Rodrigo Donoso India 195 Aninat Schwencke & Cía Shreyas Jayasimha, Mysore Prasanna, Mihir Naniwadekar, Rajashree Rastogi and Pinaz Mehta China 79 Aarna Law Shengchang Wang, Ning Fei and Fang Zhao Hui Zhong Law Firm 2 Getting the Deal Through – Arbitration 2017 © Law Business Research 2017 CONTENTS Indonesia 208 Singapore 307 Pheo M Hutabarat, Asido M Panjaitan and Yeremia L T Paat Edmund Jerome Kronenburg and Tan Kok Peng Hutabarat, Halim & Rekan Braddell Brothers LLP Italy 217 Slovakia 317 Cecilia Carrara Roman Prekop, Monika Simorova, Peter Petho and Juraj Kunak Legance – Avvocati Associati Barger Prekop sro Japan 224 Spain 325 Shinji Kusakabe Alfredo Guerrero, Marlen Estévez and Roberto Muñoz Anderson Mōri & Tomotsune King & Wood Mallesons Kenya 232 Sweden 332 John Miles and Leah Njoroge-Kibe Simon Arvmyren and Johan Kjellner JMiles & Co Advokatfirman Delphi Korea 239 Switzerland 339 BC Yoon, Liz (Kyo-Hwa) Chung and Joel Richardson Xavier Favre-Bulle, Harold Frey and Daniel Durante Kim & Chang Lenz & Staehelin Mexico 249 Taiwan 346 Adrián Magallanes Pérez and Rodrigo Barradas Muñiz Helena H C Chen Von Wobeser y Sierra, SC Pinsent Masons LLP Morocco 256 Thailand 353 Azzedine Kettani Kornkieat Chunhakasikarn and John Frangos Kettani Law Firm Tilleke & Gibbins Mozambique 263 Turkey 361 Sofia Martins, Filipa Russo de Sá and Ricardo Saraiva Ismail G Esin, Ali Selim Demirel, Dogan Gultutan and Miranda & Associados Yigitcan Bozoglu Esin Attorney Partnership Myanmar 269 Kelvin Poon, Min Thein and Daryl Larry Sim Ukraine 369 Rajah & Tann Singapore LLP Serhii Uvarov, Anna Vlasenko and Ilhar Hakhramanov Avellum Nigeria 275 Babajide O Ogundipe and Lateef O Akangbe United Arab Emirates 376 Sofunde, Osakwe, Ogundipe & Belgore Robert Stephen and Joseph Bentley Herbert Smith Freehills LLP Portugal 282 Agostinho Pereira de Miranda, Sofia Martins and United States 385 Pedro Sousa Uva Timothy G Nelson and Jennifer L Permesly Miranda & Associados Skadden, Arps, Slate, Meagher & Flom LLP Qatar 290 Venezuela 392 Sean Whitham and Janine Mallis Fernando Peláez-Pier and José Gregorio Torrealba Herbert Smith Freehills LLP Hoet Pelaez Castillo & Duque Romania 299 Cristiana-Irinel Stoica, Andreea Micu and Daniel Aragea STOICA & Asociaţii www.gettingthedealthrough.com 3 © Law Business Research 2017 PREFACE Preface Arbitration 2017 Twelfth edition Getting the Deal Through is delighted to publish the Twelfth edition of Arbitration, which is available in print, as an e-book and online at www.gettingthedealthrough.com. Getting the Deal Through provides international expert analysis in key areas of law, practice and regulation for corporate counsel, cross-border legal practitioners, and company directors and officers. Throughout this edition, and following the unique Getting the Deal Through format, the same key questions are answered by leading practitioners in each of the jurisdictions featured. Our coverage this year includes new chapters on Indonesia, Kenya, Mexico, and a new article on the ICSID. Getting the Deal Through titles are published annually in print. Please ensure you are referring to the latest edition or to the online version at www.gettingthedealthrough.com. Every effort has been made to cover all matters of concern to readers. However, specific legal advice should always be sought from experienced local advisers. Getting the Deal Through gratefully acknowledges the efforts of all the contributors to this volume, who were chosen for their recognised expertise. We also extend special thanks to the contributing editors, Gerhard Wegen and Stephan Wilske of Gleiss Lutz, for their continued assistance with this volume. London January 2017 www.gettingthedealthrough.com 5 © Law Business Research 2017 Gleiss Lutz INTRODUCTION Introduction Gerhard Wegen and Stephan Wilske Gleiss Lutz It is once more our great pleasure to present and celebrate what is now pacific island nation of Nauru in May 2016. Also, the number of signa- the 12th edition of Getting the Deal Through – Arbitration. This 12th edi- tory states to the Convention on the Recognition and Enforcement of tion covers an additional three jurisdictions, bringing the total number Foreign Arbitral Awards of 1958 (New York Convention) rose to 157 in to 52 chapters on jurisdictions and arbitral institutions from around the 2016 with the Convention entering into force for Angola. globe. We hope that the next year will see a further increase of con- 2016 further saw the adoption of revised Notes on Organizing tributions and that this specialist edition will continue to expand and Arbitral Proceedings by UNCITRAL, which mark the first update in diversify. As is the case every year, we truly appreciate the positive 20 years. The notes have been revised to reflect the present arbi- feedback we have received regarding past editions and hope to con- tral practices and the diversity of procedural styles and practices tinue in this manner. more accurately and are intended as a complement to the revised UNCITRAL arbitration rules as revised in 2010. UNCITRAL further Developing trends in international arbitration and overview launched a guide to the New York Convention, which contains chap- While arbitration continues to have an image problem extending ters on the application of each provision of the Convention, including from investment arbitration to commercial arbitration, it neverthe- case law from 45 contracting states spanning several decades, and will less continues to be one of the most favoured means of dispute reso- surely provide a useful tool in ensuring consistent interpretation and lution throughout most jurisdictions in 2016. From case numbers application of the Convention. The Chartered Institute of Arbitrators provided to us by the most important international arbitral institu- (the CIArb) was also busy and, at the time of writing, had already pub- tions by November 2016, we can conclude that most institutions lished nine new guidelines in 2015/2016. These guidelines are intended were able to maintain or even increase their caseload during last for international commercial arbitrations and are not based on any year. This statement holds true for institutions such as the German particular arbitration laws or rules, but instead suggest basic ground Institution for Arbitration (the DIS), the London Court of International rules on topics such as interviews with prospective arbitrators, judicial Arbitration (the LCIA), the American Arbitration Association’s challenges, application of interim measures, applications for security International Centre for Dispute Resolution (the AAA-ICDR), the of costs, document-only arbitrations, party non-participation as well as China International Economic and Trade Arbitration Commission (the drafting of arbitral awards. As usual, not all of these guidelines will find CIETAC), the Vienna International Arbitration Centre (the VIAC), the equal favour with users. Singapore International Arbitration Centre (the SIAC), the Arbitration Another interesting development that deserves mention in this Institute of the Stockholm Chamber of Commerce (the SCC) and the context is the launch of the Equal Representation in Arbitration Pledge Cairo Regional Centre for International Commercial Arbitration (the in May 2016. The pledge calls upon the international arbitration com- CRCICA), which even broke its institutional record for cases registered munity to commit itself to increase, on an equal opportunity basis, the at the centre already a month before the end of 2016. number of women appointed as arbitrators. Data suggest that only In 2016, several jurisdictions revised their laws relating to inter- 10 per cent of arbitrators are women. Hopefully, this is about to change. national arbitration, all with the proclaimed aim to further implement A development that surprised many and is likely to impact inter- arbitration as a preferable means of dispute resolution. Further, while national arbitration was the British people’s vote in June 2016 for the new arbitral institutions continued to mushroom, some prominent UK to leave the European Union (Brexit). London arbitration practi- arbitral institutions revised their arbitration rules in the past year, tioners were quick to claim that Brexit would have no negative effect on with the SIAC and the SCC leading the way. The changes in arbitra- London as a hub for international arbitration, but rather, if anything, tion laws and institutional rules in 2016 mostly focused on the trends would strengthen it. However, this is questionable at best. While it is from previous years and include the introduction of emergency arbi- true that Brexit will not have immediate legal effects that are likely to trator proceedings, improvement of cost and time-efficiency of arbitral adversely affect London as a place for international arbitration, given proceedings, enhancement of recognition and enforcement of arbi- that arbitration is exempt from EU law, it has to be kept in mind that tral awards, facilitation of multiparty proceedings and transparency the perceptions of prospective users are essential to the success of any of proceedings. What is new this year is that several jurisdictions and disputes hub. With rising xenophobia and the return to exclusively arbitral institutions also addressed the issue of third-party funding national traditions that helped pave the way towards Brexit, there of arbitral proceedings – an issue that has remained a hot topic also might be a perceived uncertainty whether, in the future, witnesses, in 2016. This is unlikely to change in 2017, given that the Third-Party lawyers and arbitrators from abroad will be able to enter the country at Funding Taskforce initiated in 2014 by the International Council for short notice, as required in many international arbitrations. Commercial Arbitration (the ICCA) and the Queen Mary University Finally, a topic that received increasing attention in 2016 is the ‘due of London is expected to present its work at the 14th Annual ITA-ASIL process paranoia’, which is defined by the 2015 International Arbitration Conference in Washington, DC, in April 2017. Survey issued by Queen Mary University of London and White & Case As in previous years, there have been a number of key deci- as a perceived reluctance of arbitrators to act decisively in certain sit- sions relating to international arbitration in 2016, with the English uations for fear of the award being challenged on the basis of a par- Commercial Court ruling on third-party funding, the case of Philip ty’s right to be heard having been violated. The issue was, inter alia, Morris v Uruguay being defeated following the example of the some- addressed by Singapore’s High Court, which observed in November what parallel case of Philip Morris v Australia decided in December 2015 2016 that parties increasingly claim to have been denied a fair hearing and the Yukos case having still not disappeared out of the headlines. with reference to procedural decisions rendered against them by arbi- The number of countries having ratified the ICSID Convention tral tribunals, thereby attempting to expand the boundaries of natural rose to 153 in 2016 with the Convention becoming effective in the justice as a ground for setting aside an award. Similarly, the Working www.gettingthedealthrough.com 7 © Law Business Research 2017 INTRODUCTION Gleiss Lutz Group on Counsel Ethics of the Swiss Arbitration Association (the challenge, the sole arbitrator should have proceeded carefully, taking ASA), which published its findings in October 2016, likewise identified into account the loss of trust that the challenged signified. The Court ‘due process paranoia’ as a problem. According to the working group, further found that the lunch meeting, rather than correspondence by the problem is the reluctance of some arbitrators to exercise their pow- email or telephone, which would have sufficed to discuss the upcoming ers to ensure orderly proceedings and the appropriate admission of event, indicated a certain personal connection that was sufficient to jus- evidence. Overly cautious procedural decisions rendered by arbitral tify at least the appearance of partiality – which is enough to warrant a tribunals may in particular include granting repeated extensions of challenge. The decision is interesting also because the Court explicitly time at the request of one party, accepting multiple amendments to a referred to the IBA Guidelines on Conflicts of Interest in International party’s written submissions and agreeing to the belated introduction of Arbitration, which underlines the fact that these are well-established a party’s new defences or claims, or of fresh evidence presented late in and widely accepted in practice. the proceedings. Indeed, it seems as if some arbitrators already under- stand the simple mention of ‘due process’ as a threat – which it may Switzerland well be in some countries, such as the UAE, where arbitrators – due to A decision that has been referred to as historic has been rendered by a recent legislative amendment – face the threat of imprisonment if the Swiss Supreme Court in March 2016, when the Court annulled an bias can be proven. In most countries, however, the risk of an award award on jurisdiction because of the failure of an Algerian claimant to being set aside or denied enforcement is considerably lower than some first comply with the mandatory pre-arbitration procedure provided arbitrators appear to believe. By granting each and every unreasonable for in the contract on which the arbitration was based. The other party request by a party, these arbitrators indeed violate the procedural rights to the contract was a company registered in the British Virgin Islands, of the other party, which is entitled to a cost and time-efficient resolu- and the contract not only contained an arbitration clause providing for tion of its dispute and an avoidance of unnecessary costs and delays. ICC arbitration in Geneva, but also the mandatory requirement that Hopefully, the current debate about ‘due process paranoia’ will create before initiating arbitration, conciliation pursuant to the ICC ADR an increased awareness of the problem, thereby helping to limit the use rules was to be attempted. When a dispute arose between the parties, of ‘guerrilla tactics’ in international arbitration. the Algerian party initiated conciliation proceedings, but then effec- tively withdrew from these proceedings and commenced arbitration Groundbreaking cases in 2016 instead. The respondent objected to the arbitral tribunal’s jurisdiction As in previous years, 2016 saw the issuance of a number of landmark invoking the missing completion of the pre-arbitration procedure, an decisions all over the globe, the most intriguing of which shall briefly objection which was rejected with an award on jurisdiction rendered be summarised below. in 2015. This award was then made the subject of set-aside proceedings by the respondent, and was now indeed annulled by the Swiss Court. England The decision somewhat came as a surprise, since in three previous A decision that has the potential to become a game-changer regard- cases since 2007, the Swiss Supreme Court declined setting aside an ing the recoverability of third party funding costs was issued by the award for failure to comply with mandatory pre-arbitration procedures. English Commercial Court in September 2016 in Essar Oilfields Services The Court did, however, not penalise the Algerian claimant by finding Limited v Norscot Rig Management Pvt Limited. The case concerned a that the claim is inadmissible and terminating the proceedings. Rather, partial arbitral award rendered by a sole arbitrator in an ICC arbitra- it ordered that the proceedings should be stayed pending recourse to tion seated in London. In his partial award, which was the fifth partial conciliation, and that the arbitral tribunal should set a time limit within award and related to interests and costs, the sole arbitrator found that which this process was to be completed. In doing so, the Court found the claimant Norscot was entitled to a reimbursement of the costs of a balance between holding the parties to what they agreed to in their the third party funding it had obtained so as to be able to initiate arbi- dispute resolution clause and avoiding an unnecessary termination of tration. According to the sole arbitrator, these costs, which amounted already initiated arbitral proceedings. to £1.94 million, were recoverable as ‘other costs’ within the mean- ing of section 59(1)(c) of the Arbitration Act 1996. The respondent, Germany Essar, subsequently initiated set-aside proceedings on the ground A German court decision to be mentioned here is considered a land- of serious irregularity. In what is thought to be the first decision of a mark ruling for sports arbitration. The decision rendered by the UK court on the issue, the English Commercial Court confirmed that German Federal Court of Justice in June 2016 concerns the ongoing third-party funding costs indeed do qualify as ‘other costs’ and are legal battle between the International Skating Union (the ISU) and as such reimbursable in arbitrations seated in England. The decision German speed skater Claudia Pechstein reported on also in last year’s has caused quite some controversy, and has even been referred to as a publication. In 2015, the Higher Regional Court of Munich had found ‘shock decision’, mainly because it stands in stark contrast to the costs an arbitration agreement between the parties to be invalid owing to a regime applicable in litigation in England and Wales, but also because breach of mandatory antitrust law, arguing that the ISU had a monop- it is expected to encourage an increasing number of claimants to seek oly in the market of international ice speed skating competitions and, recovery of their funding costs. However, the court explicitly left it up pursuant to the German Law against Restraints on Competition, was to the discretion of arbitral tribunals whether to award funding costs or thus prohibited from requiring athletes to sign arbitration agreements. not, which will make it possible to take into account the specific circum- This decision was reversed by the Federal Court of Justice, which found stance of each case – which sometimes indeed call for a reimbursement that the speed skater’s claim is inadmissible. While the Court agreed of costs incurred so as to make the arbitration possible in the first place. that the ISU has a dominant market position, it disagreed with the lower court on the abuse of the ISU’s monopoly position by requiring Austria athletes to enter into an arbitration agreement, arguing that the confer- In April 2016, the Austrian Supreme Court rendered a decision con- ral of exclusive jurisdiction on the Court of Arbitration for Sports (the cerning the proper conduct of arbitrators, and, for the first time since CAS) to hear disputes is based on the ‘mutual interests’ of ensuring that the entry into force of the new regime making the Supreme Court the sport is clean. While the decision was perceived by some as marking a first and last-instance court for proceedings regarding the challenge of ‘black day’ for athletes all across Europe, it was celebrated by others arbitrators, upheld a challenge. The decision deals with the question as confirming the legitimacy of sports arbitration. Indeed, sports arbi- of whether it gives rise to doubts concerning a sole arbitrator’s impar- tration and in particular the CAS would have looked at an uncertain tiality and independence if the sole arbitrator had lunch with a party’s future if the decision rendered by the Higher Regional Court of Munich counsel while the arbitration proceedings were still ongoing, albeit only in 2015 had been upheld. Given that consistent decisions are key to to discuss a forthcoming event unrelated to the arbitration. This was successfully combating doping, the decision is to be welcomed – but already the second challenge brought forth by the respondent in the should not distract from the fact that certain aspects of sports arbitra- underlying arbitration, with the first – based on an incomplete disclo- tion indeed require improvement. Pechstein almost instantly appealed sure of the sole arbitrator’s relationship to the claimants – having been to Germany’s Federal Constitutional Court, which means that the last dismissed by the Supreme Court in August 2014. In 2016, the Court word has likely not been spoken yet. argued that the lunch, while it did not concern the arbitration, revealed a lack of sensitivity on the part of the sole arbitrator. Given the previous 8 Getting the Deal Through – Arbitration 2017 © Law Business Research 2017 Gleiss Lutz INTRODUCTION France The third US court decision to be reported on here was rendered In a decision handed down in November 2016, the French Supreme by the US Court of Appeals for the Ninth Circuit in San Francisco in Administrative Court, the Conseil d’État, for the first time ruled on its the case of Move, Inc v Citigroup Global Markets, Inc in November 2016. power to review international arbitration awards arising from public The court set aside a Financial Industry Regulation Authority (FINRA) contracts. The Court decided that an ICC tribunal having its seat in award obtained by New York investment banking company Citigroup Paris violated a mandatory rule of French public law when it dismissed Global Markets against a Californian provider of online real estate ser- part of a claim in the case of Fosmax v STS. While award challenges are vices in 2009. The curious reason for setting aside the award was that ordinarily heard in French civil courts, the French Tribunal des Conflits the chair of the arbitral tribunal had made fraudulent misrepresenta- (jurisdictional court) had ruled that since the dispute at hand stemmed tions about his legal qualifications, alleging that he was qualified to from a public works contract, the Conseil d’État had jurisdiction to hear practise law in California, New York and Florida – thereby impersonat- the case. The Court found that the ICC tribunal had wrongly applied ing a retired California lawyer with the same name who has never acted private law to the dispute, but refused to annul the entirety of the award. as an arbitrator. The San Francisco Court ruled that the chairman had However, the Court merely set aside the portion of the award where thereby prejudiced the parties’ right to a fair hearing, which would have the arbitral tribunal dismissed a claim by Fosmax for costs incurred by included having their case heard by a panel of three qualified arbitra- hiring a third party to complete certain work, which the Conseil d’État tors, rather than an imposter. Even though Move had only initiated the considered a violation of mandatory French public law. It remains to set-aside proceedings five years after the award had been issued, the be seen whether concerns of a developing dualism on the French law court found that the application was filed in time, given that Move had regime of review of arbitral awards expressed by some practitioners only learned of the fraudulent misrepresentations in 2014. It remains are justified, or whether the decision of the Conseil d’État will remain to be seen whether other parties to arbitrations conducted by the same an exception. chairman will likewise seek to have their awards annulled. Hopefully, this decision will not be considered by parties who have lost an arbitra- United States tion in the past, to now meticulously review the CVs of their arbitrators Three interesting decisions dealing with international arbitration were and compare them to reality. issued by US courts in 2016. The first two decisions concern attempts to enforce arbitral awards previously annulled, and the exercise of the dis- Hong Kong cretion granted by the New York Convention as to whether such awards A reassuring decision was issued by the Hong Kong Court of First should nevertheless be enforced. The first decision was rendered by the Instance in the case of Sun Tiang Ling v Hong Kong & China Gas in US District Court for the District of Columbia in the dispute between September 2016. The set-aside proceedings were initiated by Sun Tiang French company Getma International and the Guinean state. Getma Ling, a Chinese individual and the former owner of a company bought had commenced arbitration against Guinea based on the termination by a subsidiary of Hong Kong & China Gas. While the former was of a concession contract in 2011, and in 2014 had obtained an award in imprisoned in a remote province of north-east China and denied con- its favour, granting it over €38 million in damages plus interest. While tact with the outside world, the latter initiated arbitration proceedings Getma commenced enforcement proceedings in the US, Guinea ini- at the Hong Kong International Arbitration Centre (the HKIAC), and in tiated set-aside proceedings before the Cour Commune de Justice et 2007 obtained an award granting it damages and confirming its right to d’Arbitrage (the CCJA) of the Organisation pour l’harmonisation en withhold payment of the purchase price. The charges against Sun Tiang Afrique du droit des affaires (the OHADA), an institution with cur- Ling were dropped in 2012, following which he relocated to the US. The rently 17 West and Central African member states, including Guinea. court has now overturned the award on natural justice grounds, find- Guinea invoked a violation of CCJA’s rules by the arbitrators, who had ing that Sun Tiang Ling, who was not represented in the arbitration and entered into a private fee agreement with the parties. The US enforce- claimed to not even have been aware of the dispute until last year, was ment proceedings were stayed pending the decision of the CCJA, which deprived of a fair opportunity to defend himself by presenting his case was handed down in November 2015 and set aside the award – a deci- in the arbitration, resulting in a lack of due process. With its decision, sion heavily criticized by the arbitrators that had rendered the decision. the court sent a strong message that the Hong Kong courts will uphold In June 2016, the US court recognised the CCJA annulment and thus the fundamental principles of natural justice, and that awards rendered refused to confirm and enforce the award. The court explained that the in disregard of a party’s right to present its case will not be enforced. Federal Arbitration Act, which incorporates the New York Convention, provides for refusal of enforcement of an award where such award has India been set aside or suspended by a competent authority of the country For the fifth year in a row, there are several Indian court decisions that in which, or under the laws of which, that award was made. The court deserve mention in this Introduction. Unlike last year, these Indian pointed out that while a court still has discretion as to whether an court decisions suggest that while the Indian judiciary may have gone annulled award should be enforced, such discretion is narrowly con- astray for a while, it may now be back on track towards a more arbi- fined, and should only be exercised where basic notions of justice or tration-friendly jurisdiction with predictable courts. The first decision morality have been violated, which the court did not find to be the case was rendered by the Supreme Court of India in May 2016 in Eitzen Bulk regarding the Getma award. A/S v Ashapura Minechem Limited, and marks the continuation of the The second US enforcement decision – which somewhat runs course set by the Supreme Court’s Balco decision reported on in the counter to the decision of the US District Court for the District of 2013 edition of this publication. With the Balco decision, the Supreme Columbia – was rendered by the US Court of Appeals for the Second Court had ruled that Indian courts have no authority to annul awards Circuit in August 2016 in the case of US construction company KBR or remove and appoint arbitrators in arbitrations seated outside India. against Mexico’s national oil company Pemex. In a decision that is This decision was perceived by many as a much needed course correc- likely to increase tendencies of forum shopping, the Court affirmed tion after the Supreme Court had previously found in its 2002 decision and enforced a US$300 million ICC award in favour of the US company in Bhatia International v Bulk Trading SA that the Indian judiciary was handed down in an arbitration seated in Mexico City in 2009 – even permitted to exercise supervisory jurisdiction over arbitrations both though the award had been set aside at the Mexican seat in the after- inside and outside of India – a door opener for unsuccessful parties to math of the arbitration. In its decision, the court relied on the Panama arbitrations seated abroad trying to have their awards vacated in Indian Convention, a regional version of the New York Convention incorpo- courts. However, the Balco decision applied only to arbitration agree- rated into the US Federal Arbitration Act, and argued that it was only ments executed after early September 2012, while arbitration agree- possible for the court to refuse enforcement of the award if one of the ments executed before that date remained subject to the principles limited reasons provided for in the Convention were at hand. While the established in Bhatia, regardless of when the dispute arose. In 2015, court acknowledged that, in principle, it also had to keep in mind the this prompted the Supreme Court to apply the Bhatia principles to an comity owed to a foreign court’s ruling, it found that in the case at hand, arbitration clause, even though the contract containing the clause had fundamental notions of what is fair and just required it not to give effect been amended after issuance of the Balco decision. As reported in the to the Mexican annulment decision. The decisive reason was that the 2016 edition, this decision was perceived by many as further adding annulment had been granted on the basis of a law passed only when the to the confusion and uncertainty regarding the usurpation of jurisdic- arbitration was already under way. tion by Indian courts in international arbitration. The decision in Eitzen www.gettingthedealthrough.com 9 © Law Business Research 2017 INTRODUCTION Gleiss Lutz Bulk A/S v Ashapura Minechem Limited is now the latest in this line of it is entitled by virtue of historic rights. With one of the most politi- decisions. The Supreme Court ruled that Part I of India’s Arbitration cally sensitive decisions of this time, the arbitral tribunal chaired now and Conciliation Act of 1996 does not apply in cases involving arbitral rejected China’s claims and decided in favour of the Philippines, which tribunals outside of India, and that the principle established in Balco had initiated the proceedings in early 2013. The tribunal’s reasoning is applies regardless of when the arbitration agreement was signed, pro- based on the finding that longstanding Chinese claims to 90 per cent vided only that it expressly stipulates a seat outside India. Accordingly, of the South China Sea within an asserted ‘nine-dash line’ are with- Indian courts no longer have the authority to set aside arbitral awards out lawful effect. According to the tribunal, any historic rights China issued by foreign seated arbitral tribunals. The decision was welcomed may have had were superseded with China’s ratification of the United by the arbitral community as reversing a development that was com- Nations Convention on the Law of the Sea (UNCLOS) in 1996, to the pletely out of step with international practice, and should mark the end extent that they are incompatible with the Convention. China did not an unfortunate chapter in the history of the Indian judiciary. participate in the proceedings, arguing that it concerned territorial The other decision that shall be mentioned in this context can like- sovereignty, to which the Convention does not apply. The case nev- wise be seen as a correction of the previous year’s decisions. In May ertheless saw two hearings, one on jurisdiction and one on the merits, 2016, the New Delhi High Court lifted two interim anti-arbitration during which the tribunal extensively questioned the Philippines, and injunctions issued within two weeks of each other in July and August was observed by the representatives of various governments interested 2015, and reported on in the 2016 edition of this publication. The two in the outcome. After issuance of the award, China was quick to issue decisions concerned two separate arbitrations seated outside of India, a statement declaring the award to be null and void with no binding which arose from the same contract. In the decision rendered in July force and underlining that it will not accept or recognise the decision. 2015 in Union of India v Videocon Industries Ltd, the New Delhi High Nevertheless, it is expected that the award will affect multiple pending Court agreed with India in finding that the arbitral tribunal did not disputes concerning the delimitation of maritime boundaries. Whether have jurisdiction to fix a hearing venue at a place that was neither fore- China will indeed refuse to comply with the award or seek a political seen in the contract nor related to the contract or the parties. In August solution with the Philippines (which seems currently more likely) – and 2015, the same Court in Union of India v Cairn India Ltd and others then what the consequences of such refusal might be – remains to be seen. dealt with the question of whether an arbitral tribunal seated outside of India has jurisdiction to assess costs related to a concluded arbitra- Revision of laws relating to international arbitration tion in subsequent proceedings, and again agreed with India, this time In 2016, once more, countries around the globe decided to revise their by finding that except for corrections and supplementary rulings that existing arbitration laws, or to issue entirely new legislation. require no further taking of evidence, tribunals lose their function upon rendering a final award, which should already include a quantifica- Russia tion of costs. Both injunctions have now been lifted by the New Delhi To begin with, the Russian Federation replaced its domestic arbitration High Court, which reaffirmed that Indian courts have no jurisdiction law and amended the international commercial arbitration provisions. to issue anti-arbitration injunctions or to grant other means of interim While President Vladimir Putin had signed the new federal law already relief in relation to arbitration proceedings seated outside of India. in December 2015, it entered into force only in September 2016. The The New Delhi High Court’s decision of May 2016 should come as a purpose of the law reforms is to make arbitration in Russia more attrac- relief to international investors. However, the fact remains that this has tive and more accessible to parties. Key changes include the mandatory not been the first time that Indian courts have issued anti-arbitration licencing of arbitration institutions to avoid ‘pocket arbitration courts’ injunctions concerning arbitrations seated outside of India, merely (ie, courts created by organisations and dealing with cases involving because the contracts on which the arbitrations were based were gov- these organisations or their subsidiaries, which have in the past repeat- erned by Indian law. It remains to be seen whether the Indian judiciary edly been criticised as lacking impartiality by the Russian Supreme will learn its lesson this time – or whether 2017 will see new troubling Commercial Court). Pursuant to the new regime, all existing arbitra- anti-arbitration injunctions. tion institutions, except for the International Commercial Arbitration Court and the Maritime Arbitration Commission, will have to be United Arab Emirates licensed by the Russian government and have their rules deposited with In May 2016, in a controversial decision that has in the meantime been the Ministry of Justice starting November 2017. Another key change is overturned, the Dubai Court of Appeal had refused the application of the introduction of a list of disputes that cannot be resolved through US-based company Fluor Transworld Services to enforce an ICC award arbitration, which is hoped to do away with the previous uncertainty against the UAE energy company Petrixo Oil & Gas in an arbitration surrounding the topic. The list includes non-business disputes, such as seated in London. The surprising reason for refusing enforcement of family or labour issues, public law disputes, certain class actions, bank- the award was that the principle of reciprocity in the UAE’s civil proce- ruptcy proceedings and certain IP disputes, such as the annulment of dure law made it impossible to enforce the award in the UAE – because patents. Further, the new regime provides for requirements that arbi- there was no evidence that the United Kingdom was a signatory to the trators have to fulfil, which apply not only to domestic, but also to inter- New York Convention. This decision was troubling for a number of national commercial arbitrations. These requirements include being at reasons. To begin with, there is no doubt that the UK validly acceded least 25 years of age, having the legal capacity to enter into contracts to the New York Convention in 1975, as can be discerned from readily and not having a criminal or disciplinary record. Government offi- available sources. Further, the New York Convention does not require a cials are excluded from the office as arbitrators. Chairpersons or sole party seeking enforcement of an award to furnish proof that the coun- arbitrators are additionally required to have a Russian law degree or try where the award was rendered is a member state. Finally, when the an equivalent law degree officially recognised by Russia. This makes UAE acceded to the New York Convention in 2006, it chose not to sign it significantly more difficult for any non-Russian to be appointed as a reciprocity reservation that would have permitted it to limit appli- chairperson or sole arbitrator in an arbitration seated in Russia. There cation to awards issued in other contracting states. In June 2016, the are also a few changes concerning Russia as the seat of arbitrations, Dubai Court of Cassation overturned the decision of the lower court including rules providing for courts to assist in appointing arbitrators and stressed that the UAE Civil Procedure Code binds the courts to or obtaining evidence. international treaties to which the UAE is a party, including the New York Convention. Additionally, it confirmed that the UK has been party Somalia to the New York Convention since the 1970s. Somalia is not a country commonly known for its commitment to arbi- tration. In 2016, however, the federal government of Somalia under- Netherlands lined its interest in signing up to the New York Convention by setting A decision not issued by a court, but an arbitral tribunal, neverthe- up an arbitration and ADR division under the auspices of the Office of less deserves mention in this context for the profound effect on the Prime Minister, as well as a New York Convention taskforce con- international law it is expected to have. In July 2016, a tribunal at the sisting of leading international arbitration practitioners. The task of the Permanent Court of Arbitration in The Hague handed down the final arbitration and ADR division is to promote the use of ADR and to over- award in the case of Philippines v People’s Republic of China. The case see the commercial and investment arbitration-related matters of all concerns maritime rights in the South China Sea to which China claims 26 ministries of the central cabinet. The arbitration and ADR division 10 Getting the Deal Through – Arbitration 2017 © Law Business Research 2017 Gleiss Lutz INTRODUCTION further aims to reform Somalia’s arbitration regime, which will include Growth and change in arbitral institutions and arbitration rule the drafting of the first Somali Arbitration Bill expected to be based frameworks on the UNCITRAL Model Law. The drafting will be supported by the 2016 saw a continuing growth of the numbers of arbitral institutions, New York Convention Taskforce, which – as the name indicates – is fur- while a series of existing arbitral institutions revised their rules. ther charged with promoting the countries accession to the New York Convention. Since 2012, Somalia is slowly rebuilding itself and found New Arbitral Institutions more stability after years of complete lawlessness and anarchy. With its AAA/ICDR initiative to promote arbitration, Somalia hopes to attract more foreign In October 2016, the International Centre for Dispute Resolution (the investment. We join Somalia in this hope. ICDR) and the American Arbitration Association (the AAA) announced the creation of the Aerospace, Aviation and National Security Panel. The Myanmar Panel will be designed for the settlement of technically complex, high- Myanmar passed a long awaited new arbitration law in January 2016, value aerospace, aviation, defence, cyber and security-related disputes. which replaces legislation from 1944. The new law is based on the UNCITRAL Model Law, with some slight differences. Myanmar’s new WESA arbitration law applies to domestic and international arbitrations alike. In November 2016, the World eSports Association (WESA) announced It provides that in domestic arbitrations, the arbitrators have to be citi- the installation of the WESA Arbitration Court. The court, which zens of Myanmar, unless otherwise agreed by the parties. In interna- will operate independently of WESA, is open to everyone involved tional arbitrations, the arbitrators have to have different nationalities in e-sports, from players, teams, organisers and publishers and is than the parties involved in the dispute. In sum, Myanmar has made designed for the resolution of a wide array of issues such as contract enormous strides in updating its arbitration laws and removing serious disputes, prize money pay out and distribution, financial misconduct uncertainties for parties wanting to initiate arbitration in Myanmar. and player representation. Following Myanmar’s ratification of the New York Convention in 2013, the next step for the country would be to sign and ratify the ICSID ISTAC Convention. It remains to be seen whether the country is willing to take As reported in last year’s publication, the Istanbul Arbitration Center that step, and what will become of the Myanmar Arbitration Centre, for (ISTAC) was established by law in January 2015. In October 2016, its which plans are already under way. rules finally entered into force. In November 2016, the Turkish Prime Minister then made a somewhat surprising attempt to jumpstart the Singapore and Hong Kong centre’s business by issuing a circular which directs private and pub- Singapore and Hong Kong have both been working on law reforms con- lic institutions to incorporate arbitration clauses providing for ISTAC cerning third-party funding. In June 2016, Singapore started circulat- arbitration as a means to resolve commercial disputes in their national ing the proposed Civil Law (Amendment) Bill 2016 and the Civil Law and international contracts. It not entirely clear what impact such (Third Party Funding) Regulations 2016 to invite feedback on the pro- circulars have under Turkish law, but while they are considered as a posed changes. The bill provides for the abolition of common law cham- mere encouragement to private parties, they are generally regarded as perty and maintenance, two doctrines aiming to preclude frivolous executive orders binding on public agencies and institutions. The prob- litigation, and legalises third-party funding for international arbitra- ably well-meant interference of the Turkish government in the matters tions. The regulations set out criteria that have to be met by third-party of ISTAC just weeks after its rules entered into force calls into ques- funders, failure to comply with which will make it impossible for the tion the impartiality and independence of the institution. Given that, funders to enforce their rights under the funding contracts. Attorneys as reported last year, ISTAC’s success will largely depend on whether will be able to recommend funders, but will be prohibited from obtain- ISTAC manages to build a reputation as a truly independent institution; ing any direct benefits therefrom. Furthermore, attorneys will have to this kind of governmental support might not necessarily be considered disclose the identity of the funder and the funding arrangement to the as helpful from an international perspective. tribunal. Singapore’s consultation follows the example of Hong Kong’s Law Reform Commission, which last year recommended changes to EMAC the legislation in order to permit third-party funding and to implement The Vice-President and Prime Minster of the UAE and Emir of Dubai appropriate ethical and financial standards that have to be met by the in April 2016 issued a degree providing for the establishment of the potential funders. In October 2016, the Commission issued its second Emirates Maritime Arbitration Centre (EMAC), an arbitral institution report. In November 2016, Singapore’s draft Civil Law (Amendment) that will specialise in maritime disputes. The arbitration institution Bill was introduced to the Singaporean parliament, and the Bill became will be housed by the Dubai International Financial Centre (the DIFC), law on 10 January 2017. These changes will bring the laws of Hong Kong and is said to have the potential to fill a gap in the international arbitra- and Singapore in line with Australia, certain European countries and tion market and meet the needs of parties operating in the maritime the United States, where third-party funding has been permitted for industry. The new commitment of the UAE to arbitration is viewed as a some time. favourable development. New Zealand Emirates Centre of Arbitration for Sports New Zealand is a rather remote jurisdiction, geographically speaking. In May 2016, the UAE Federal National Council passed a federal draft However, New Zealand has constantly been working on the promo- law that aims to establish the Emirates Centre of Arbitration for Sports, tion of the location as a seat for international arbitration, and, indeed, which will find its home in Abu Dhabi and will be run by a six-member has seen an increase of both domestic and international arbitrations council. Specific arbitration rules have not been issued yet, but the draft in the past years. Recently, the government updated the New Zealand law provides that the centre for sports arbitration will enjoy a judicial Arbitration Act of 1996. The New Zealand Arbitration Amendment Act personality, full legal capacity to fulfil its objectives and financial and 2016 received Royal Assent in October 2016, and will enter into force in administrative independence. March 2017. The new rules provide for the Minister of Justice to appoint a qualified body to resolve all issues originating from the appointment SCCA of arbitrators, which used to be the task of the High Court. Now, the These are not the only new arbitration institutions in the Middle East. In High Court can still make these appointments, provided that the body October 2016, Saudi Arabia launched the Saudi Center for Commercial to be appointed by the Minister of Justice failed or was unable to appoint Arbitration (the SCCA), which had already been established by cabinet an arbitrator within 30 days of receiving the request to do so. The new decree two years ago. The centre aims to become the preferred alterna- rules also modify the definition of what constitutes an ‘arbitral tribu- tive dispute resolution choice in the Gulf by 2030. SCCA will be over- nal’. While previously the definition only included sole arbitrators and seen by a board of directors of 10 directors all coming from the private panels of arbitrators, the definition now encompasses arbitral institu- sector. The centre’s rules are based on the UNCITRAL rules and have tions and emergency arbitrators as well. Accordingly, awards rendered been developed with the help of the American Arbitration Association’s by emergency arbitrators are now enforceable in New Zealand’s courts. International Centre for Dispute Resolution (the AAA-ICDR). The rules, which were issued already in July 2016, include features from the www.gettingthedealthrough.com 11 © Law Business Research 2017