New UNCITRAL Transparency Rules: the End of Confidentiality in Arbitration?
In a controversial move, government delegations at the Working Group II of the United Nations Commission on International Trade Law ("UNCITRAL") agreed during its 58th Session in February 2013 in New York City ("February 2013 Meeting") to adopt new transparency rules that will apply on a default basis to all future arbitration proceedings under bilateral investment treaties ("BITs") that use the UNCITRAL arbitration rules – unless the treaty parties expressly opt out of the new rules.
The new rules will provide for open oral hearings and the publication of key documents, including Notices of Arbitration, pleadings, transcripts, and all decisions and awards issued by the tribunal. However, the arbitrators still retain the discretion to keep some confidential information from public release. These new rules apply only to investor-state arbitrations under the UNCITRAL rules, which are the second most frequently used set of rules for solving investor-state disputes. These rules differ considerably from standard practice in commercial arbitration.
As a result of resistance toward either the automatic inclusion of these new rules or an arbitral tribunal having discretion to apply them, the delegates at the February 2013 Meeting decided that the new wording of Article 1(2) will apply to existing treaties only if the parties to a dispute all consent or where the contracting parties to a treaty have given their blessing to the application of the transparency rules under that treaty regime.
Indeed, explicit consent will be required even where an earlier treaty contains a potentially "dynamic" arbitration offer (e.g., a reference to the UNCITRAL rules as revised or amended from time to time) that provides an arguable basis for arbitrators to find that the transparency rules apply.
The impact of the new rules will depend on the political outcome as states can either make them applicable to existing treaties by way of mutual declarations or conventions, but can also opt out from the rules in their future BITs. Nonetheless, the rules are likely to be used as the United States has already voiced support for their application to existing investment treaties and the European Union trade spokesman declared them a benchmark for all the EU's future BITs. While there may be benefits to transparency in certain contexts – for example, in cases where environmental or human rights issues are in play – in other settings greater transparency may be used as a sword in order to extract a settlement. To enter into force, the rules still need to be approved by the UNCITRAL Commission in July 2013 and then by the UN General Assembly in September 2013.
Looking to the United States to Enforce a Foreign Arbitral Award? Do Not Forget About Personal Jurisdiction
Parties engage in international arbitration proceedings to obtain a final, binding and enforceable arbitral award. A strong enforcement regime, created by the United Nations Convention on the Recognition and Enforcement of Foreign Arbitral Awards (the "New York Convention"), ensures that an international arbitration award is readily enforceable in nearly 150 countries that are signatories to the New York Convention. A court in the United States petitioned to confirm a foreign award under the New York Convention "shall" do so "unless it finds one of the grounds for refusal or deferral of recognition or enforcement of the award specified in the [New York] Convention".1 Seven exclusive nonrecognition grounds are specified in the New York Convention. However, in addition to these grounds, a party opposing enforcement of an award in the United States may also raise a procedural defense that is second nature to all familiar with US litigation – lack of personal jurisdiction.
In a recent decision, the Fifth Circuit Court of Appeals answered the question of first impression in that circuit and held that a lack of personal jurisdiction is a valid defense to the enforcement of a foreign award under the New York Convention. The Fifth Circuit affirmed a Louisiana district court's dismissal of a petition to confirm an award for lack of personal jurisdiction over the defendants, and found that the dismissal was appropriate as a matter of constitutional due process. The Fifth Circuit's decision is in line with decisions from a number of other circuits, and serves as a reminder to parties and practitioners in international arbitration not to lose sight of due process requirements under the United States Constitution.
First Investment Corporation of the Marshall Islands ("First Investment") and two Chinese companies, Fujian Shipbuilding Industry Group Corp. ("FSIGC") and Fujian Mawei Shipbuilding Ltd. ("Mawei"), were parties to a number of shipbuilding contracts. In 2004, First Investment initiated arbitration in London alleging breach of contract by FSIGC and Mawei. Arbitration was conducted under the rules of the London Maritime Arbitration Association and resulted in an award of a approximately US$26 million in damages in favor of First Investment. After the Chinese court refused to enforce the award, First Investment turned to the United States District Court for the Eastern District of Louisiana. The district court dismissed the enforcement petition for lack of personal jurisdiction over the Chinese defendants.2 First Investment appealed, arguing that standard personal jurisdiction criteria do not preclude US courts from enforcing awards under the New York Convention.3 First Investment reasoned that personal jurisdiction may not block the enforcement proceedings, since it is not among the non-recognition grounds listed in the New York Convention.
The Fifth Circuit disagreed. The court noted that personal jurisdiction is "an essential element of the jurisdiction" of a district court – without personal jurisdiction, the court has no power to proceed.4 Thus, even though personal jurisdiction is not mentioned in the New York Convention or the United States Federal Arbitration Act implementing the New York Convention, personal jurisdiction is grounded in constitutional due process concerns, and therefore, takes precedence over the language of the New York Convention and its implementing statute.5
Relying on established US Supreme Court personal jurisdiction precedent, the Fifth Circuit explained that the personal jurisdiction requirement protects an individual's liberty interests.6 It guarantees that a party will not be "haled into court" and subjected to proceedings in a forum with which it has no meaningful contacts, ties, or relations.7
To satisfy the due process requirement, there must be constitutionally sufficient contacts between the defendant and the state where the court is located, and subjecting the non-resident defendant to jurisdiction must be consistent with "traditional notions of fair play and substantial justice".8 A court, in essence, determines whether the exercise of jurisdiction over a defendant would be reasonable, considering a number of factors, including the burden on the defendant, the interests of the forum state and of the plaintiff, the interest in obtaining efficient resolution of controversies, and the interest in "furthering fundamental substantive social justice".9 Hence, the decision whether sufficient minimum contacts exist involves a fact-specific inquiry, and depends on the particular circumstances of each case. The personal jurisdiction requirement may also be satisfied if the defendant consents to jurisdiction or has its principal place of business or residence in the forum. In addition, in the absence of personal jurisdiction over the defendant's person, quasi in rem jurisdiction may be exercised over the defendant's property located in the forum state, if the property is related to the dispute.10
Neither FSIGC nor Mawei had contacts with Louisiana or the United States. Hence, the arbitral award could not be enforced against them in the United States. The Fifth Circuit cited decisions from the Second, Third, Fourth, Seventh, Ninth and Eleventh circuits that have also held that personal jurisdiction over the defendant is a prerequisite to seeking confirmation of awards under the New York Convention.11
Thus, parties and practitioners looking to the United States to enforce a foreign award must be able to demonstrate a proper constitutional basis, whether arising from the defendant's residence, his conduct, the location of his property, or his consent, that would justify making the defendant subject to the court's adjudicatory and compulsory powers. The personal jurisdiction requirement may indeed impede enforcement of many arbitral awards. However, it is unlikely that this and similar decisions will make the United States a less attractive enforcement forum, especially where a defendant's assets can be located within the United States' territory.
Footnotes
1 United States Federal Arbitration Act, 9 U.S.C. § 207. Article V(1) of the New York Convention similarly provides that recognition and enforcement of the award "may be refused ... only if" one of the listed grounds is shown to exist.
2 First Inv. Corp. of the Marshall Islands v. Fujian Mawei Shipbuilding, Ltd. Of People's Republic of China, 858 F. Supp. 2d 658 (E.D. La. 2012).
3 First Inv. Corp. of the Marshall Islands v. Fujian Mawei Shipbuilding, Ltd., 703 F.3d 742 (5th Cir. 2012).
4 First Inv. Corp., 703 F.3d at 749.
5 Id. at 749-50.
6 Id. at 749 (quoting Ruhrgas AG v. Marathos Oil Co., 526 U.S. 574 (1999)).
7 Id. (quoting World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286 (1980), citing Int'l Shoe Co. v. Washington, 326 U.S. 310 (1945) and ITLInt'l, Inc. v. Constenla, S.A., 669 F.3d 493, 498 (5th Cir. 2012)).
8 Id.
9 Asahi Metal Indus. Co. v. Superior Court, 480 U.S. 102 (1987); World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286 (1980); Burger King Corp. v. Rudzewicz, 471 U.S. 462 (1985) (putting forth the seven factor test toassess the reasonableness of exercising jurisdiction); First Inv. Corp., 858F. Supp. 2d at 668-69.
10 Shaffer v. Heitner, 433 U.S. 186 (1977); Base Metal Trading, Ltd. v. OJKS "Novokuznetsky Aluminum Factory", 283 F.3d 208 (4th Cir. 2002) (merepresence of seized property in New Jersey was insufficient to assertjurisdiction where there was no relationship between the property and thecourt proceeding).
11 Frontera Res. Azer. Corp. v. State Oil Co. of Azer. Rep., 582 F.3d 393, 397-98 (2d Cir. 2009); Telcordia Tech Inc. v. Telkom SA Ltd., 458 F.3d 172, 178-79 (3d Cir. 2006); Emp'rs Ins. of Wausau v. Banco De Seguros DelEstado, 199 F.3d 937, 941 43 & n. 1 (7th Cir. 1999) (observing that personal jurisdiction would be required under New York Convention); Glencore Grain Rotterdam B.V. v. Shivnath Rai Harnarain Co., 284 F.3d 1114, 1121 (9th Cir. 2002) S & Davis Int'l, Inc. v. Republic of Yemen, 218 F.3d 1292, 1303-05 (11th Cir. 2000).
Fifth Circuit Rules that Chevron May Not Challenge Discovery in Aid of International Arbitration After It Has Sought and Obtained Such Discovery Itself
In February 2013, the Fifth Circuit became the most recent US appellate court to consider a request for discovery under 28 USC § 1782 for use in a private international arbitration. As detailed in a previous edition of this newsletter, § 1782 permits "any interested person" to petition a US district court for a discovery order directing a person located in that district to produce documents, tangible evidence and/or testimony "for use in a proceeding in a foreign or international tribunal". The Fifth Circuit had previously held, in Republic of Kazakhstan v. Biedermann Int'l, 168 F.3d 880 (5th Cir. 1999), that an international arbitration tribunal is not a "foreign or international tribunal" under § 1782.
In Republic of Ecuador v. Connor, Nos. 12-20122, 12-20123, 2013 WL 539011 (5th Cir. Feb. 13, 2013), the Fifth Circuit did not abandon its holding in Biedermann but rather found that a discovery request pursuant to § 1782 for use in an international arbitration proceeding should have been considered by the district court based on the doctrine of judicial estoppel. The case arose out of an arbitration filed by Chevron against the Republic of Ecuador under the UNCITRAL arbitration rules, as permitted by a bilateral investment treaty between the US and Ecuador (the "BIT arbitration"). Ecuador sought discovery from an individual, John Connor, and his company, GSI Environmental, in the Southern District of Texas for use in the BIT arbitration.
Chevron intervened in the district court and argued that the requested discovery was impermissible under the Biedermann precedent. The district court agreed with Chevron and denied Ecuador's requested discovery.
On appeal, the Fifth Circuit considered the fact that both Chevron and Ecuador had sought discovery orders pursuant to § 1782 in numerous US courts and that Chevron itself had obtained at least 20 such orders from other district courts. The Fifth Circuit noted that Chevron obtained these discovery orders by "contending, opposite to its current position, that the BIT arbitration is an 'international tribunal'" under § 1782. The court found that Chevron had "deliberately taken inconsistent positions on the availability of § 1782 discovery" and that "if Chevron is permitted to shield itself under Biedermann against Ecuador's current discovery request, it will have gained an unfair advantage over its adversary". Thus, the court found that Chevron should be judicially estopped from asserting a legal position contrary to that which it had successfully argued in other courts, and remanded the case so that the district court could reconsider Ecuador's request for discovery as a matter of its discretion.
UK Supreme Court Rules on Anti-Suit Injunctions
On June 12, 2013, the UK Supreme Court handed down its judgment in Ust-Kamenogorsk Hydropower Plant JSC v. AES Ust-Kamenogorsk Hydropower Plant LLP [2013] UKSC 35. The Court held that, in certain circumstances, parties who have the benefit of an English arbitration clause can obtain anti-suit injunctions from an English court even where there is no arbitration that has commenced or that is even planned. The Arbitration Act 1996 does not restrain the Court's powers under section 37 of the Senior Courts Act to grant such relief. The decision in Ust-Kamenogorsk is therefore incredibly important for parties who have the benefit of English arbitration clauses in their agreements.
The issue initially arose in 2009 and stemmed from a concession agreement relating to a hydroelectric power plant in Kazakhstan. The concession agreement contained an English arbitration clause that had been declared invalid by the Kazakh Supreme Court, and the Kazakh courts therefore refused to stop proceedings brought by the Kazakh owners against the holders of the concession. As a result, a subsidiary of AES applied for and obtained an interim injunction from the High Court in London to halt the Kazakh court proceedings in 2010. AES sought the injunction on the basis of an ICC arbitration clause in the agreement providing for arbitration in England, even though it did not plan to start an arbitration.
Ust-Kamenogorsk challenged the injunction before the English Court of Appeal, arguing that the court's discretionary powers to enjoin foreign proceedings under section 37 of the Senior Courts Act would be against the "terms, scheme, philosophy and parliamentary intention" of the Arbitration Act, which governs arbitral proceedings in the UK. The appeal was dismissed in May 2011.
Ust-Kamenogorsk then appealed to the Supreme Court on the basis that section 44 of the Arbitration Act, which lists the powers that courts can exercise in support of arbitral proceedings, limits the scope of the court's discretionary powers to grant injunctions in arbitration cases, citing the European Court of Justice's 2009 ruling in West Tankers.
Nonetheless, in a unanimous decision, the Supreme Court held that it retained the ability to enjoin foreign proceedings where such proceedings are in breach of an arbitration agreement.
Furthermore, the Supreme Court held that, while section 44 outlined areas that could require a court's intervention, and prevented courts from intervening without permission from a tribunal or the other parties to a case, this had no application in a situation where there was no arbitration proceeding afoot. The Supreme Court also ruled that section 37 of the Senior Courts Act is the sole basis for granting an anti-suit injunction and that the Arbitration Act did not "carve out" its discretionary powers in arbitrations.
New EU Regulation on Investment Treaties Comes Into Force
On January 9, 2013, a new European Regulation entered into force which clarifies the legal status of bilateral investment treaties concluded between EU member states and non-EU countries ("extra-EU BITs") and the role of the European Commission (the "Commission") in such agreements. Regulation (EU) No. 1219/2012 (the "Regulation"), issued on December 12, 2012, eliminates some of the confusion that arose after the Lisbon Treaty entered into force on December 1, 2009. The Lisbon Treaty conferred exclusive competence on the European Union over its member states regarding foreign direct investment, including extra-EU BITs. As a result, the status of the extra-EU BITs already in existence at that time was uncertain.
The Regulation governs extra-EU BITs signed both before and after the Lisbon Treaty. Extra-EU BITs signed prior to the effective date of the Lisbon Treaty on December 1, 2009, remain in force until the EU concludes replacement BITs with the non-EU countries. For extra-EU BITs signed between December 1, 2009, and the effective date of the Regulation on January 9, 2013, the Commission will authorize the maintenance or entry into force of such agreements so long as it finds that (i) the extra-EU BIT does not conflict with EU law or policies; (ii) the EU has not already decided to initiate negotiations with the non-EU country; and (iii) the extra-EU BIT will not "constitute a serious obstacle" to the EU's negotiation or conclusion of a BIT with the non-EU country. After January 9, 2013, EU member states may enter into negotiations with a non-EU country to amend existing BITs or to enter into new BITs only after notifying and receiving approval from the Commission. If approval for negotiations is granted, the member state must keep the Commission updated on the progress of the negotiations, and the Commission may request to participate in the negotiations. Before signing a new extra-EU BIT, the member state must transmit the text of the proposed BIT to the Commission, which will authorize the signature of the BIT if conditions (i) through (iii) described above are satisfied.
Any extra-EU BITs signed after the Lisbon Treaty took effect are still valid only until the EU concludes a replacement BIT with the non-EU country. If the Commission determines that either an existing or a newly made extra-EU BIT constitutes "a serious obstacle to the negotiation or conclusion" by the EU of a replacement BIT, then the member state party to that agreement and the Commission must "enter into consultations" and identify "appropriate actions to resolve the matter". The Regulation also provides for ongoing involvement of the Commission in matters relating to extra-EU BITs, and contains specific provisions regarding disputes arising under them. The member states must inform the Commission of any request for dispute resolution, and must seek the agreement of the Commission before activating any mechanism for dispute resolution, under an extra-EU BIT.
Once a dispute resolution procedure has been initiated, the member state and the Commission must fully cooperate in the conduct of that procedure, which may include active participation of the Commission.
The implementation of the Regulation means that investors can now confidently rely on extra-EU BITs, but should monitor EU countries' efforts to enter into replacement BITs. In addition, investors can expect increasing participation by the Commission in any disputes arising under extra-EU BITs.
Australian High Court Confirms Validity of Australia's Enactment of the UNCITRAL Model Law and Rights of Enforcement
In a unanimous decision, the High Court of Australia has upheld the constitutionality of Australia's International Arbitration Act 1974 (Cth) (the "Act") which gives domestic effect to the UNCITRAL Model Law on International Commercial Arbitration (the "Model Law") in Australia. The Act and the Model Law are the means by which the successful party to an arbitration can enforce its award as if it were an Order of an Australian Court. Had the challenge to the Act and the Model Law been successful, it would have led to widespread uncertainty in respect of the enforceability of arbitral awards in Australia.
Background
The plaintiff, TCL Air Conditioner (Zhongshan) Co. Ltd. ("TCL"), is a Chinese manufacturer of air- conditioners. TCL entered into an exclusive distribution agreement with an Australian company, Castel Electronics Pty Ltd. ("Castel"), for the sale of airconditioners within Australia (the Agreement"). The Agreement contained a relatively unsophisticated arbitration clause which provided for disputes arising under the Agreement to be arbitrated in Australia.1
TCL manufactured TCL-branded air-conditioners as well as others that were branded with other equipment manufacturers' brand names ("OEM"). In 2008, a dispute arose between the parties concerning the nature of the exclusivity clause under the Agreement. Castel claimed that it had been appointed as TCL's exclusive distributor in Australia for all TCL-manufactured airconditioners regardless of whether they were branded as TCL or OEM. During the term of the Agreement, TCL sold approximately 53,000 OEM-branded air-conditioners to persons other than Castel within Australia. TCL contended that the exclusivity provision in the Agreement was limited to TCL-branded airconditioners and did not restrict TCL to selling OEM-branded airconditioners exclusively to Castel. The dispute was referred to arbitration which was heard September 13-25, 2010.
The arbitral tribunal found in Castel's favor determining that the Agreement provided Castel with exclusive distribution rights within Australia in respect of all TCL-manufactured air-conditioners regardless of how they were branded. As a result, TCL was found to be in breach of the Agreement and was required to pay to Castel approximately AU$4 million (US$4.2 million) in damages and costs.
TCL refused to pay the sums owed to Castel. Castel sought to enforce the award in the Federal Court of Australia. Castel's application was made under Article 35(1) of the Model Law which provides that "An arbitral award, irrespective of the country in which it was made, shall be recognized as binding and, upon application in writing to the competent court, shall be enforced".
Article 36 of the Model Law provides an exclusive list of grounds upon which a court may refuse to recognize or enforce an arbitral award. Relevantly, Article 36(1)(b) entitles a court to refuse to enforce an award if the court finds that "the recognition or enforcement of the award would be contrary to the public policy of this State".
TCL objected to Castel's application to enforce the award and contended that the Court was entitled to refuse to enforce it under Article 36(1)(b). TCL contended that the award should be set aside because there had been breaches of natural justice and procedural fairness. The Federal Court dismissed TCL's arguments and made an Order in the terms of the award.2 TCL obtained leave to appeal the decision to the High Court.
High Court Challenge
On appeal to the High Court, TCL argued that Articles 35 and 36 of the Model Law are inconsistent with Chapter III of the Australian Constitution ("Chapter III"). Chapter III prevents any body other than a court from exercising "judicial power".3
TCL contended that by limiting the circumstances in which a court could refuse to recognize an arbitral award, the Act and the Model Law were, in effect, enabling an arbitral tribunal to exercise "judicial power" and usurping the power of the Australian courts.
Castel argued that the source of an arbitral tribunal's authority is not "judicial power" but rather a private agreement of the parties (here the arbitration agreement). Through that agreement, the parties agree that their respective rights and obligations, as owed to one another, will be resolved as described in a valid arbitral award. Following the issuance of an award, it is not open to either party to then seek recourse in the courts to determine anew those same rights and obligations.
The challenge to the Act and the Model Law was considered so significant that the Australian Attorney-General along with the Attorneys-General of five Australian states all intervened in the High Court proceedings and made submissions. Submissions were also made to the High Court by the Australian Centre for International Commercial Arbitration, the Institute of Arbitrators and Mediators Australia Ltd. and the Chartered Institute of Arbitrators (Australia).
In rejecting TCL's arguments, the High Court confirmed that the making of an arbitral award is not an exercise of "judicial power". Instead, an arbitral award operates to determine the contractual rights and liabilities of the parties. The High Court noted that "... if parties do go to arbitration and the arbitrator makes an award, the making of the award has legal significance in respect of the parties' dispute and their rights and liabilities. As the plurality in Dobbs said: 'if, before the institution of [a court] action, an [arbitral] award is made, [the award] governed the rights of the parties and precluded them from asserting in the [c]ourts the claims which the award determined.' In such a case, the arbitrator's award governs the rights of the parties because '[b]y submitting the claims to arbitration, the parties confer upon the arbitrator an authority conclusively to determine them'". 4
The High Court decision serves to reinforce the effectiveness, certainty and reliability of arbitral awards in Australia. Had the High Court determined that the Act and the Model Law were inconsistent with Chapter III, it would have created significant uncertainty in existing commercial contracts that contain arbitration clauses.
Footnotes
1 Article 12 of the Agreement provided that "[i]n case there is any breach of the provisions under this Agreement, by either party during the effective period of this Agreement ... such matters will be referred to arbitration in [Australia] for resolution". TCL Air Conditioner (Zhongshan) Co. Ltd. v.Castel Electronics Pty Ltd. [2009] VSC 553.
2 Castel Electronics Pty Ltd. v. TCL Air Conditioner (Zhongshan) Co. Ltd. (No 2) [2012] FCA 1214.
3 "Judicial power" has been held to mean "the power which every sovereign must of necessity have to decide controversies between its subjects, or between itself and its subjects, whether the rights relate to life, liberty or property. The exercise of this power does not begin until some tribunal which has power to give a binding and authoritative decision (whether subject to appeal or not) is called upon to take" (per Griffith CJ in Huddart,Parker & Co. Pty Ltd. v. Moorehead [1909] HCA 36, (1909) 8 CLR 330).
4 Dobbs v. National Australia Bank (1935) 53 CLR 643, 652-53.
The Role of Pleadings in International Arbitration
In the recent decision of PT Prima International Development v. Kempinski Hotels SA and other appeals,1 the Singapore Court ofAppeal clarified the role of pleadings in international arbitrationand highlighted the less formalistic approach taken in arbitrationcompared to that taken in litigation. In this case, where arbitrationwas commenced in respect of a breach of contract claim, andwhere a new fact arose that was both ancillary to the main claimand known to both parties (relating to a management agreementnot formally pleaded), the Court of Appeal, reversing the decisionof the High Court, held that despite the lack of formal pleadings,this did not put the new fact outside the scope of the parties'submission to arbitration.
The Singapore High Court
Among other arguments before the High Court, Kempinski argued that with regard to two of five awards handed down in the arbitration, the Arbitrator had decided issues that had not been formally pleaded, thereby acting beyond the scope of his authority (the "pleadings argument").
In respect of the pleadings argument, the High Court judge indicated that the purpose of the arbitration agreement between the parties was to "bind [the] parties to submit the disputes arising under the [management contract] to determination by arbitration ... [and] did not imply that [the] parties would be free at any time during the proceedings to raise material and unpleaded points without having first made an application to amend their pleadings". The Court went on to find that pleadings were an essential component of a procedurally fair hearing before both a court and an arbitral tribunal, and particularly so in arbitration proceedings where the right of appeal was very limited. The High Court held that the challenged awards should be set aside on the basis that the new fact, which had a significant impact on the arbitrator's decision, had not been specifically pleaded.
In reversing the decision of the High Court, the Court of Appeal considered that the High Court had erred by taking "too narrow an approach in determining the extent or scope of the Arbitrator's jurisdiction under the parties' submission to jurisdiction". Specifically, the error was the finding that simply because the new management contract had not been formally pleaded, its legal effect on Kempinski's claim in the arbitration was not within the parties' submission to arbitration. This, they held, was an error of law.
The Court of Appeal observed that pleadings are required under the UNCITRAL Model Law and the SIAC Rules (2007 edition), and that they provide a convenient way for parties to define the jurisdiction of the tribunal by setting out the nature and scope of the dispute. However, significantly, the court stated that "any new fact or change in law arising after a submission to arbitration which is ancillary to the dispute submitted for arbitration and which is known to all the parties to the arbitration is part of that dispute and need not be specifically pleaded". The Court of Appeal found that, although Prima had not formally amended its pleadings, Kempinski was not prejudiced, and the failure to do so was therefore "immaterial". This was hence not considered a basis to set aside the award.
Conclusion
This decision of the Singapore Court of Appeal avoids a formalistic approach to pleadings in international arbitration and instead considers whether the wronged party has truly been prejudiced by the acts of the other party.
Footnotes
1 [2012] SGCA 35.
Global Arbitration Updates
The following is a round-up of recent and anticipated developments in global arbitration.
Paris Arbitration Rules Launched
On April 15, 2013, at the annual conference, the Home of International Arbitration in Paris launched newly drafted Paris Arbitration Rules (the "Rules"). The Rules consist of 12 articles, which will aim to provide tribunals with broad discretion in relation to case management and procedural issues in order to provide both flexibility and efficiency. Further, the Rules set out a unique mechanism for ad hoc arbitration.
Singapore International Arbitration Centre ("SIAC") Opens Its First Overseas Office in Mumbai
SIAC has opened its first international office in Mumbai. The office is intended to market Singapore as the ideal place to resolve disputes involving Indian parties. SIAC has also said it plans to open similar offices in Seoul and the Middle East.
Istanbul Arbitration Center To Be Established
In late April 2013, Justice Minister Sadullah Ergin confirmed that a bill that will establish an arbitration center in Istanbul has been prepared and will be referred to the Parliament shortly. The bill, which has already been provided to the Office of the Prime Ministry, sets out the foundation for an autonomous independent arbitration center that will have the capacity to compete in the international arena.
2013 HKIAC Administered Arbitration Rules Released
The Hong Kong International Arbitration Centre ("HKIAC") has published the 2013 revisions to the HKIAC Administered Arbitration Rules that will come into force on November 1, 2013. HKIAC has introduced significant changes aimed at creating greater efficiency. In actuality, many of the changes clarify, but do not modify, the substance of HKIAC administered arbitration.
Myanmar Accedes to the New York Convention
On March 6, 2013, the Myanmar Parliament approved plans to sign the New York Convention on the Recognition and Enforcement of Foreign Arbitral awards (the "Convention"). While the Secretary-General has not yet issued a formal depositary notification containing Myanmar's terms of accession, it is thought that the Convention will come into force in Myanmar on July 15, 2013.
Amendments to Russian Arbitration Law Allows for Emergency Interim Measures
The lower chamber of Russian parliament passed amendments to the Russian international commercial arbitration law in January 2012. These amendments provide arbitrators with the ability to grant emergency interim measures for both foreign and domestic arbitrations.
The amendments will come into force after the upper chamber of the Russian Parliament passes a second reading, though this has not yet been scheduled.
New IBA Guidelines on Party Representation in International Arbitration
At its session of May 25, 2013, the IBA council approved the IBA Guidelines on Party Representation in International Arbitration (the "Guidelines"). The IBA's Arbitration Committee and its task force on Counsel Conduct consider that the new Guidelines will aid in the preservation of integrity and fairness of arbitration by leveling the playing field and increasing the transparency and predictability of arbitral proceedings.
The new Guidelines are not intended to replace otherwise applicable mandatory laws. Instead they are meant to address questions relating to the conduct of arbitral proceedings, including but not limited to expert evidence, confidentiality, factual and expert witness preparation and potential remedies available for misconduct.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
