Arbitration and Litigation

Authored by Arthur Dong (dongxiao@anjielaw.com) and Darren Mayberry (darren.mayberry@anjielaw.comat AnJie Law Firm                                                             

 On October 27, 2016, the Singapore International Arbitration Centre (SIAC) held its annual China Roadshow in Shanghai. SIAC is a premier global arbitration forum and institution that caters particularly to Chinese, Indian, and other ASEAN legal users. The initial panel included arbitration luminaries such as Chan Hock Seng, Steven Lim, John Zou, SIAC’s Deputy Registrar Kevin Nash, and AnJie Law Firm Partner and specialist on arbitration enforcement Arthur Dong. 

SIAC’s China Head, Sophia Feng, convened the distinguished panel to discuss SIAC’s innovations in its 2016 Rules, particularly its bold Early Dismissal provision. Rule 29 permits the Tribunal to dismiss claims or defenses which are “manifestly” either “without legal merit” or “outside the jurisdiction of the Tribunal.” Drawn from ICSID, SIAC is nonetheless the first arbitration institution to enact an Early (or Summary) Dismissal provision in its commercial arbitration institutional rules. 

The other panelists eagerly requested Arthur’s professional outlook on whether Chinese courts would be willing to recognize an Award anchored in a resolution by Early Dismissal. In short, Arthur is optimistic. Arthur noted that China is a signatory to the New York Convention. As such, China takes its obligations to enforce foreign Awards very seriously. Arthur reminded that China has a strong track record on enforcement. Furthermore, China will avoid delving into the substantive merits underlying any arbitration Award. Chinese courts respect that the Tribunal’s Award is the last word on the application of the facts to the law in any arbitration. Therefore,  Chinese courts will respect Awards where the Early Dismissal provision had a major impact.

The distinguished panelists considered enforcement issues globally. Although summary judgment features prominently in common law jurisdictions, particularly in the United States, civil law countries rarely exhibit any examples of such an early dismissal device. The panelists considered the danger of Early Dismissal in light of the New York Convention’s requirement that parties be afforded a “fair opportunity to present their cases.” Reassurance came, at least to an extent, by attention to the limiting language of Early Dismissal: the remedy of dismissal could only apply to matters of pure law or jurisdiction, and the standard required “manifest” burden. Any admixture of fact and law would require treatment of the issue under a full hearing. There was some concern about the vagueness of what might prove ‘manifest.’

In any case, SIAC Deputy Registrar Kevin Nash anticipates that few resolutions of the Early Dismissal procedure would entirely dispose of any matter, except perhaps when jurisdiction or legal grounds were facially and clearly wrong. This expectation appears sound. Early Dismissal was designed to narrow the issues before the hearing. As such, it would prove an absolute bar to only the most frivolous or mistaken claims. 

In addition to Early Dismissal, the panel discussed the Emergency Arbitrator provision. Arthur Dong pointed out that these will be useful to China-based users. Normally, interim measures are unavailable in China, unless the host institution is also based in China. Therefore, the breadth and scope of SIAC’s Emergency Arbitrator provisions may allow China-based users to accomplish what they otherwise might not through interim measures. 

Overall, Arthur Dong remains optimistic that Chinese courts will respect and enforce SIAC Awards, even when they rely on innovations under SIAC’s 2016 Rules. 

 

 

 

In a judgment handed down on 15 September 2016, the Honourable Judge Waksman QC, sitting in the High Court in London, ruled that arbitration courts could award third-party financing costs as “other costs” collectible under the Arbitration Act of 1996. The full circumstances and facts surrounding the opinion are currently unavailable, as we await release of a detailed and final decision.

Here is what we do know. The case involved a contract dispute concerning operation of an offshore drilling platform. The two parties were Norscot Rig Management and Essar Oilfield Services. Norscot applied for third-party financing to fund its action against Essar. The arbitration Tribunal awarded Norscot at least part of its third-party financing costs. 

Prior decisions in other common law jurisdictions have approved the existence and validity of third-party funding generally in the context of litigation. In Bayens v Kinross Gold Corporation, 2013 ONSC 4974, the trustee plaintiffs, acting on behalf of the Musician’s Pension Fund of Canada, moved for approval of an underlying litigation funding agreement designed primarily to protect the class counsel from the risk of an indemnity where the Defendant won an award on adverse costs. The Ontario Superior Court approved the legality of the agreement, specifying that in litigation all such arrangements would need to be disclosed and receive court approval. The recent London High Court ruling took the matter a step further, awarding some portion of the applicant’s costs for the expense of the third-party funding arrangement itself. 

As we await the final published decision, we anticipate Judge Waksman’s reasoning might in some way addresses one of the following three questions.

Questions: 

1) Since the United Kingdom is a leading ‘costs-follows-the-event’ jurisdiction, would that make its High Court justices more likely to acknowledge the reasonableness of recovery of third-party funding costs? Will higher courts from ‘bear-your-own-costs’ jurisdictions (such as the United States) wind up approaching third-party funding costs more skeptically?

2) Are third-party costs presumptively unreasonable, but only available in specific cases where the facts especially merit their recovery? Or will third-party funding costs be seen as an increasing reality in a world where transactional financing costs are already prevalent and recoverable?

3) Should a Tribunal’s award of third-party funding costs be explicitly subject to appeal, such that a party awarded third-party funding fees must know that this award will become a roadblock to immediate enforcement? And if so, should courts of the seat of the arbitration bifurcate enforcement of the ‘normal’ and special ‘third-party funding’ costs awards, and allow enforcement of the rest of the award while the third-party funding portion of the award awaits and undergoes the lengthy. and also perhaps expensive process of judicial review?

4) Will Chinese courts actively support third-party funding schemes? Third-party financing arrangements have already made an appearance, particularly in off-shore arbitrations where the fees are relatively high. Will courts view it as beneficial to resolve more commercial disputes? Or, will courts believe it would encourage more litigation/arbitration or perhaps discourage settlement?

 

Authored by Arthur Dong (dongxiao@anjielaw.com) at AnJie Law Firm

Introduction 

This paper discusses the problem of extraordinary delay in the commercial arbitration process, increased arbitration fees, and denial of the benefits of arbitration to other parties due to the abuse of procedural rights by relevant parties in commercial arbitration process. This paper proposes measures to reduce abuse of process in commercial arbitration, such as statutory mocification, judicial supervision, amendment of arbitration rules and intervention of disciplinary bodies. 

Key Words: Commercial Arbitration, Abuse of Process, Regulation

First published by Journal of Arbitration Studies (Korea)

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 Authored by Arthur X. Dong (dongxiao@anjielaw.com) at AnJie Law Firm

Background

Challenging the jurisdiction of a Chinese arbitral institution to hear a matter always requires challenging the binding force of an arbitration agreement. Article 5 of the Arbitration Law of the People’s Republic of China (‘Arbitration Law’) gives arbitral tribunals exclusive authority to hear cases when the parties ‘have concluded an arbitration agreement’. At the same time, Article 5 prevents the people’s court from accepting a case, ‘unless the arbitration agreement is null and void’.

Chinese law envisages two types of challenges to the jurisdictions of arbitral tribunals. Namely, total challenges and partial challenges to jurisdiction. A total challenge, as the name implies, is to dispute the existence or validity of the jurisdiction granting arbitration clause. Partial challenges admit the existence of an arbitration clause, but refute that the dispute is within the scope of the arbitration clause being relied upon.

First pulbised by LexisNexis

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 Authored by Arthur Dong (dongxiao@anjielaw.com) at AnJie Law Firm

In China, arbitral tribunals do not have the power to implement interim protection measures, regardless of the institutional rules to be applied to the arbitration. Moreover, the arbitral tribunals are prevented from implementing interim protection measures even if its rules would grant it such a right. In simple terms, the parties to arbitration must first make their applications for property preservation or evidence preservation to the relevant arbitration institution. From there, the arbitration institution then transfers the party’s application to the people’s court. The arbitral institution is prohibited from considering the merits of the motion. Based on the recent amendment to Civil Procedure Law of the People’s Republic of China (‘Civil Procedure Law’, the latest version become effective from 1 January 2013), parties are allowed to apply for interim measures directly with the judicial court before initiating arbitration proceedings, which is deemed a sign of pro-arbitration judicial policy.

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 Authored by Arthur Dong (dongxiao@anjielaw.com) at Anjie Law Firm

Introduction

During the past year, for those who are running international commercial activities, it is noteworthy that the Supreme People’s Court of China (the “Supreme Court”) has, through the publication of a series of official replies towards cases in lower level courts, further clarified the criteria for determining the validity of foreign-related commercial arbitration clauses. Taking into consideration relevant cases, this column will explore with its readers the issue of how to distinguish the effectiveness of foreign-related commercial arbitration clauses in China.

Authored by Arthur Dong (dongxiao@anjielaw.com) at AnJie Law Firm

The Hong Kong International Arbitration Centre (“HKIAC”) has recently revised its Model Arbitration Clause to include a choice of law provision.

"Any dispute, controversy, difference or claim arising out of or relating to this contract, including the existence, validity, interpretation, performance, breach or termination thereof or any dispute regarding non-contractual obligations arising out of or relating to it shall be referred to and finally resolved by arbitration administered by the Hong Kong International Arbitration Centre (HKIAC) under the HKIAC Administered Arbitration Rules in force when the Notice of Arbitration is submitted.

The law of this arbitration clause shall be … (Hong Kong law).

The seat of arbitration shall be …(Hong Kong).

The number of arbitrators shall be … (one or three). The arbitration proceedings shall be conducted in …(insert language)."

It’s understood that this change is aimed at advancing the efficiency and to avoid unnecessary twists and turns of arbitration proceedings. From the perspective of a Chinese practitioner, this addition is a highly sophisticated development.

Continue Reading Reflections on HKIAC’s Revised Model Arbitration Clause and Its Impact on Chinese Practice

Authored by Arthur Dong (dongxiao@anjielaw.com) from AnJie Law Firm and Li Meng

Whether foreign arbitration institutions could conduct arbitration in the People’s Republic of China (“PRC”) is a question that many industry insiders are curious about. Back in 2006, when the Wuxi Intermediate People’s Court (“Wuxi Court”) refused to recognize and enforce an arbitral award issued by the ICC Court of Arbitration in Shanghai in the Züblin case,1 many practitioners deemed that Chinese courts would decline opportunities for foreign arbitration bodies to carry out arbitration in China. However, the recently published PRC Supreme People’s Court (“SPC”) instruction in Longlide Packaging Co. Ltd. v. BP Agnati S.R.L. may suggest otherwise.

Continue Reading Does Supreme People’s Court’s Decision Open the Door for Foreign Arbitration Institutions to Explore the Chinese Market?

Authored by Arthur X. Dong (dongxiao@anjielaw.com) & Li Meng from AnJie Law Firm

For the last ten years, whether an arbitration clause such as “any disputes arising from, or in connection with, the execution of this agreement shall be resolved by arbitration” may be applied to an infringement claim has been a topic of heated discussion among the legal practitioners in China.  This is a matter of great concern to arbitration practitioners in China because the case history of Supreme People’s Court has failed to clarify whether the courts or the arbitration tribunal should have jurisdiction over the infringement claims. 

Continue Reading Is an Infringement Claim within the Scope of Arbitration Clause under Laws of PRC?

Authored by Arthur Dong

On April 8, 2014, the China (Shanghai) Pilot Free Trade Zone Arbitration Rules (the “New Rules”), which will take effect on May 1, 2014, was unveiled to the public. It is the first arbitration rules for a China’s Free Trade Zone (“FTZ”) with the purpose of speeding up commercial arbitrations to those at the international level. This article aims to discuss several unique characteristics of the New Rules. 

I. Applicability of the Rules    

Article 3.1 provides that the Pilot Free Trade Zone Arbitration Rules shall apply if: 1) the parties have agreed  to select SHIAC (“Shanghai International Arbitration Center” or “Shanghai International Economic and Trade Arbitration Commission”) as the forum for arbitration without stipulating the arbitration rules; and 2) any of the following connections exists, including 1) the parties, 2) the subject matter to a dispute, or 3) the legal facts that lead to the establishment, change, and termination of a civil and commercial relationship.

Continue Reading Ten Highlights of the China (Shanghai) Pilot Free Trade Zone Arbitration Rules