The Asia-Pacific Arbitration Review: Published by Global Arbitration Review in Association With

The Asia-Pacific
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gar
The Asia-Pacific
A Global Arbitration Review Special Report
Reproduced with permission from Law Business Research Ltd

This article was first published in June 2019
For further information please contact Natalie.Clarke@lbresearch.com

The Asia-Pacific Arbitration Review 2020
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Publisher David Samuels
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The Asia-Pacific
A Global Arbitration Review Special Report
Published in association with:
Clayton Utz
Debevoise & Plimpton LLP
Desierto & Desierto Law
Dzungsrt & Associates LLC
Economic Laws Practice
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KL Partners
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Shanghai International Economic and Trade Arbitration Commission

(Shanghai International Arbitration Center)
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Contents
Preface�� vi
Overviews Country chapters
DCF: Gold Standard or Fool’s Gold?�� 7

Montek Mayal and Alex Davie Australia�� 60
FTI Consulting Doug Jones, Frank Bannon, Dale Brackin,
Steve O’Reilly and Clive Luck
Distinction and Connection: Hong Kong and Clayton Utz
Mainland China, a View from the HKIAC�� 13
Sarah Grimmer China�� 68
Hong Kong International Arbitration Centre Zhang Shouzhi, Huang Tao and Xiong Yan
Enforcement of Arbitral Awards in the Asia-
Pacific�� 19 India�� 77
Andre Yeap SC and Kelvin Poon Naresh Thacker and Mihika Jalan
Rajah & Tann Singapore LLP Economic Laws Practice
Financial Arbitration in China: Actuality and Japan�� 85

Development�� 26 Yoshimi Ohara
Shanghai International Economic and Trade Nagashima Ohno & Tsunematsu
Arbitration Commission (Shanghai International
Arbitration Center)
Korea�� 89
Beomsu Kim, Young Suk Park and Keewoong Lee
KL Partners
Innovating the Future: Recent Changes and
Developments in Global and Regional Arbitral
Malaysia�� 94
Institutions�� 29
Andre Yeap SC and Avinash Pradhan
Sue Hyun Lim
KCAB INTERNATIONAL
Philippines�� 104
Investment Treaty Arbitration in the
Jan Vincent S Soliven and Camille Ross G Parpan
Asia-Pacific�� 35
Tony Dymond and Z J Jennifer Lim
Singapore�� 112
Alvin Yeo SC, Chou Sean Yu and Lim Wei Lee
Oil and Gas Arbitration in the Asia-Pacific
WongPartnership LLP
Region�� 45
Duncan Speller, Jonathan Lim and Justin Li
Vietnam�� 119
Nguyen Ngoc Minh, Nguyen Thi Thu Trang
and Nguyen Thi Mai Anh
Singapore Chamber of Maritime Arbitration�� 56
Shi Yan Lee
www.globalarbitrationreview.com v
Preface
Welcome to The Asia-Pacific Arbitration Review 2020, a Global Arbitration Review special
report. Global Arbitration Review is the online home for international arbitration specialists,
telling them all they need to know about everything that matters.
Throughout the year, GAR delivers pitch-perfect daily news, surveys and features, organises
the liveliest events (under our GAR Live banner) and provides our readers with innovative tools
and know-how products.
In addition, assisted by external contributors, we curate a range of comprehensive regional
reviews – online and in print – that go deeper into developments in each region than our
journalistic output is able to. The Asia-Pacific Arbitration Review, which you are reading, is part
of that series. It contains insight and thought-leadership inspired by recent events, written by
pre-eminent practitioners from around Asia.
Across 16 chapters spanning 128 pages, this edition provides an invaluable retrospective,
executed by 34 leading figures. All contributors are vetted for their standing and knowledge
before being invited to take part.
Together, our contributors capture and interpret the most substantial recent international
arbitration events of the year just gone, with footnotes and relevant statistics. Other articles
provide valuable background so that you can get up to speed quickly on the essentials of a
particular country as a seat.
This edition covers Australia, China, Hong Kong, India, Japan, Korea, Malaysia, the
Philippines, Singapore and Vietnam, has overviews of developments in energy arbitration,
investment treaty arbitration, and enforcement, and includes a discussion of the pros and cons
of discounted cash-flow as a method of valuing a growth business.
Among the nuggets it contains:
• a description of how China has extended its reporting system – whereby lower courts must
notify the Supreme People’s Court before taking decisions that may affect awards or
arbitrations – to include domestic cases;
• statistics showing a boom in arbitration in Vietnam, plus a review of the most recent cases
on annulment and enforcement;
• a full review of all the significant court decisions from Indian in the past year;
• how Malaysia has made it easier for foreign counsel to appear in international arbitrations
there; and
• remarkable statistics from Korea showing the growth of international cases at the Korean
Commercial Arbitration Board and the extent of the government’s development plans.
The review also looks to answer speculative questions facing arbitration in the Asia-Pacific. The
retrospective on the Hong Kong International Arbitration Centre on the occasion of the HKIAC’s
35th birthday answers ‘will Hong Kong will be seen as neutral territory vis-à-vis the mainland
in the future?’, while ‘DCF – gold standard or fool’s gold?’ questions how arbitrators might
attempt to value Spotify Technology were it expropriated by Sweden.
If you have any suggestions for future editions, or want to take part in this annual
project, my colleague and I would love to hear from you. Please write to
insight@globalarbitrationreview.com.
David Samuels
Publisher
May 2019
vi The Asia-Pacific Arbitration Review 2020

DCF: Gold Standard or Fool’s Gold?
Montek Mayal and Alex Davie
FTI Consulting
Introduction Damages are typically calculated by preparing a calculation of

In disputes in which the claimant has suffered substantial eco- the financial position the claimant would have been in, but for
nomic losses, for example the loss of a valuable business or of an the wrongful act of the respondent, and comparing that with the
ongoing stream of cash flows, questions arise as to how to quan- financial position the claimant actually is in, given the wrong-
tify that loss. In investment treaty arbitration the appropriateness ful act. The monetary difference between the claimant’s ‘but for’
of the use of discounted cash flow (DCF) analysis as a basis for and ‘actual’ financial positions will be the amount of money that
calculating such losses is often at issue. re-establishes ‘the situation which would, in all probability, have
DCF analysis is a widely adopted business valuation approach existed if that act had not been committed’.
among investors, business managers and corporate finance pro- Many treaty arbitration claims concern the expropriation of an
fessionals. However, tribunals in investment treaty disputes are asset. In that case, the corresponding framework for the damages
sometimes reluctant to rely on it. Conversely, cost-based valua- calculation is straightforward. But for the expropriation, the claim-
tion methods are rarely used in valuation practice while tribunals ant would have owned a potentially valuable business. Given the
frequently make awards of damages based on them. expropriation, it does not own the business.The difference between
In this article, we consider the usefulness of each of DCF these two is the value of the business that has been expropriated.
analysis and cost-based approaches as valuation methods and as
tools for quantifying losses. We then explore the reasons for the The fair market value standard
apparent divergence between the attitudes of tribunals and inves- What do we mean by ‘value’ in these circumstances? Many bilat-
tors to the two approaches, recognising that this is at least in part eral investment treaties (BITs) refer to ‘fair market value’ (FMV)
a matter of law. as the appropriate measure of compensation for expropriation.
First, we consider the purpose of an award of damages. For instance, the Singapore–Germany BIT states that, in the event
Second, we consider the concept of fair market value (FMV) of expropriation, there should be ‘just and equitable compensa-
and methods typically deployed to estimate it, focusing on DCF tion which represents the fair market value of the investment
analysis and cost-based methods. Third, we consider how an expropriated’.2
investment treaty tribunal might consider damages for a hypo- The treaties tend not to define FMV. FMV is a term that origi-
thetical expropriation of Spotify Technology SA (Spotify), a large nates in the US tax system and is defined in somewhat different
but currently unprofitable music-streaming service, and contrast ways by different authorities, although the key features are com-
this with the valuation of Spotify by investors implied by its share mon to many definitions. By way of example, the tribunal in Bear
price. Fourth, we consider whether the certainty with which Creek v Peru defined FMV in a way consistent with the standard
invested costs can typically be quantified is the reason tribunals definitions as follows:3
often prefer to rely on them.
[T]he price, expressed in terms of cash equivalents, at which property
The purpose of an award of damages would change hands between a hypothetical willing and able buyer and a
It is useful first to consider the purpose of an award of damages. hypothetical willing and able seller, acting at arms-length in an open and
It is necessary to look to the relevant law to do so, but we make unrestricted market, when neither is under compulsion to buy or sell and
the following comments as experts in matters of valuation rather when both have reasonable knowledge of the relevant facts.
than the law.
In our experience, damages in investment treaty arbitration The important features of FMV that are common to most defini-
are often calculated by reference to the principle set out in the tions, including those adopted by tribunals in investment treaty
judgment in the Chorzow Factory case, wherein the Permanent arbitration, are the following.
Court of International Justice (PCIJ) stated that:1 • FMV is the price paid in a transaction between hypothetical
buyer and seller. This means that the particular circumstances
Reparation must, as far as possible, wipe out all the consequences of the of the actual owner of the asset are not reflected in the valu-
illegal act and re-establish the situation which would, in all probability, ation. For example, a business may be particularly valuable to
have existed if that act had not been committed. Restitution in kind, its current owner due to synergies only that owner can derive.
or, if this is not possible, payment of a sum corresponding to the value The incremental value of those synergies is not reflected under
which a restitution in kind would bear; the award, if need be, of dam- the FMV standard.
ages for loss sustained which would not be covered by the restitution in • FMV is the price paid in a hypothetical transaction, assum-
kind or payment in place of it – such are the principles which should ing that the asset had been properly marketed and that the
serve to determine the amount of compensation due for an act contrary parties to the transaction are well informed. For example, it
to international law. is not appropriate to discount a FMV valuation to reflect a
forced sale.
www.globalarbitrationreview.com 7
We note in passing that under most BITs, FMV is the relevant of capital which should reflect the relevant risk in those
measure of compensation in the event of legal expropriation.4 cash flows.
Many investment treaty claims concern illegal expropriation, for
which the relevant standard of value is not defined in the BIT. This means that DCF analysis can, in principle, be applied to any
In those circumstances, parties often refer back to the Chorzow cash-generating asset for which it is possible to prepare a cash
Factory principle. flow projection. Cash flow projections can be adjusted to take
It is possible that the amount of money required to put the into account all of the relevant characteristics and circumstances
claimant in the position it would have been in but for an expro- of the business. It is this flexibility that explains its common adop-
priation is different from the FMV of the expropriated asset. For tion in valuation practice. The broad adoption of DCF analysis is
example, an asset may have value to the claimant that others in illustrated by a 2014 survey of European valuation practitioners
the market would not be able to access, such as synergies, and so which showed that almost 80 per cent used DCF analysis in busi-
are not be reflected in FMV. This means there are circumstances ness valuation.8
in which the amount of damages appropriate under the Chorzow This flexibility extends as far as early stage businesses for
Factory principle will be different from the FMV of the business. which market valuation approaches are difficult to apply. Professor
It is not uncontroversial that FMV is the appropriate standard Aswath Damodaran of New York University’s Stern School of
of value in investment treaty disputes and the correct standard is a Business, who is often cited by valuation experts and tribunals
matter of law. 5 However, for the purposes of this article we assume in investment treaty disputes, argues that ‘Discounted cash flow
it is the relevant measure. models can be used to value [young or start-up] firms’.9 The
widely read valuation textbook Valuation: Measuring and Managing
Valuation methods in practice the Value of Companies by McKinsey states ‘The best way to value
In investment treaty arbitration, the following groups of valuation high growth companies is with a classic DCF valuation. . .’.10
methods are often used to value businesses: Perhaps the main drawback of DCF analysis is its sensitivity to
• income methods, such as DCF analysis, under which projec- uncertain inputs.To prepare a projection of a business’s cash flows,
tions are made of the stream of cash flows a business will it is necessary to make numerous explicit assumptions about the
generate.That stream of cash flows is then discounted back to future of that business and the markets it operates in. For example,
the valuation date at an appropriate rate; it is necessary to form a view as to the rate at which cash flows
• market methods, under which prices paid in transactions in will grow after the explicit forecast period, typically five to 10
businesses similar to the subject of the valuation are used to years after the valuation date. Anyone who has been involved in
determine its value;6 and making budgets for their own practice can attest to the difficulties
• cost-based methods, under which the value of the subject asset of forecasting accurately the financial performance of their own
is determined by reference to its cost.7 business over the next 12 months. Making a reasonable assump-
tion as to growth after five years’ time is commensurately more
The value of a cash-generating asset essentially depends upon difficult. Nonetheless, the results of a DCF valuation are often
expectations about the size and timing of its cash flows in the sensitive to the assumption as to terminal growth.
future and the relevant risk those cash flows are exposed to. The That uncertainty of appropriate inputs is compounded in the
appropriate valuation method in any particular circumstance will case of early stage businesses where there is no track record of
depend on considerations such as the nature of the asset and avail- steady historical cash flow generation which can be used to cali-
ability of relevant information. brate projections of future cash flow.
In the remainder of this article, we focus on the relative appro- In our view, the fact that DCF analysis of an early stage busi-
priateness of DCF and cost-based valuation methods, which is ness can give rise to a range of outputs from a reasonable range
often a source of dispute in investment treaty arbitration. As we of input assumptions does not undermine the case for seeking to
explain further below, in our view, there is sometimes divergence undertake DCF analysis where the information allows. Rather,
between the views of tribunals in investment arbitration as to the it demonstrates that the value of an early stage business is inher-
usefulness of the DCF method and the views of those undertaking ently somewhat uncertain. In our view, it is generally preferable
valuation practice outside the disputes arena. to perform DCF analysis and to compare its results to those of
other valuation methods or to other evidence of value than to
DCF in practice ignore it altogether.
Under DCF analysis: Put another way, the fact that the results of DCF analysis are
• a central estimate of the cash flows a business will generate sensitive to uncertain inputs simply reflects that the value of a
over some explicit forecast period is prepared, which should business is sensitive to uncertain future events. This can be dem-
take into account the growth opportunities and risks to which onstrated by looking at the extent to which the share prices of
the business is exposed. Typically, some assumption is then even large, well-established businesses operating in stable markets
made as to how those cash flows will grow after the explicit can vary – sometimes substantially – over short periods of time.
forecast period into perpetuity; and
• those expected future cash flows are discounted back to the Cost-based valuation methods
valuation date, reflecting that a dollar in a year’s time is worth There are circumstances in which the cost of an asset is a useful
less than a dollar today, due to the time value of money (one guide to its value. Cost-based valuation methods proceed from
could invest the dollar today over the next year and earn a the intuitive proposition that someone would not pay more for
return on it) and risk (uncertainty around the amount that something than it would cost them to build it themselves. If you
the investor will ultimately receive; that is, the amount actu- were to buy a loaf of bread, it would be counter-intuitive to argue
ally received could be more or less than a dollar). Typically, that the value of that loaf of bread immediately afterwards was
cash flows are discounted at the business’s opportunity cost anything other than the amount you just paid for it.
8 The Asia-Pacific Arbitration Review 2020

But the following day, that loaf of bread will be less fresh and operating profitably. In Metalclad v Mexico, in which the damages
its value may have declined. Alternatively, the baker’s oven may were to be assessed based on the FMV of a landfill operation, the
break, resulting in a local bread shortage and its value may rise.The tribunal rejected the use of the DCF methodology:14
bread may be served in a restaurant and sold on to a customer at
a substantial mark-up to its cost. Or perhaps it will turn out that • Normally, the fair market value of a going concern which has a his-
the bread was contaminated in the baking and it is now known tory of profitable operation may be based on an estimate of future
to be inedible and worthless. profits subject to a discounted cash flow analysis.
When considering the value of a business, or the value of • However, where the enterprise has not operated for a sufficiently long
a business asset, similar principles apply, although the analysis time to establish a performance record or where it has failed to make
becomes more complicated. If an investor acquired an empty fac- a profit, future profits cannot be used to determine going concern or
tory, then the day after the acquisition the amount paid for the fair market value . . . .
asset is likely to be a good guide to its value.11 A year later its value
may have changed – the investor may have installed machinery Similarly, in Bear Creek v Peru, the tribunal noted that ‘there was no
allowing the production of goods the investor has established a evidence to support a track record of successful operation or prof-
market for, causing its value to rise. Alternatively, the value of the itability in the future’ and concluded that the project ‘remained
factory may have fallen due to changes in the local market for too speculative and uncertain to allow [the DCF] method to be
industrial property. Or, in breach of the representations and war- utilised’. The tribunal in Franck Charles Arif v Moldova stated that
ranties in the sale and purchase agreement, the factory may turn ‘the DCF methodology is not appropriate for a business that never
out to have been built on contaminated land causing it to require operated and where a satisfactory basis for its projected revenues
to be abandoned and the factory to have no value. has not been demonstrated. Use of a DCF methodology in these
Cost can therefore be a helpful indicator of value in circum- circumstances gives an excessively speculative outcome.’15 The
stances where there have been limited changes either to the asset tribunal in Rusoro v Venezuela laid out a list of criteria that must
in question since it was acquired or in the market for the asset. be fulfilled for DCF analysis to be appropriate, including that
In practice, those circumstances do not always arise and so cost is ‘the enterprise has an established historical record of financial
often not the most appropriate valuation methodology. performance’.16
To put it in the terms of the FMV definition we cite above, In summary, tribunals in investment arbitration appear to be
a hypothetical buyer will focus on the value of the economic somewhat more reluctant to rely on DCF analysis than do inves-
benefits they expect to arise from acquiring an asset. In many cir- tors and corporate finance professionals. Tribunals appear to be
cumstances, the initial cost of that asset will not be a good guide to particularly reluctant to do so when the investment in question
the value of those economic benefits. Consider an unexplored oil has no track record of profitability.
field purchased for US$1 million five years ago. In the interven-
ing five years, the oil price has doubled and petroleum engineers Spotify: an illustration of the divergence between FMV and
have established there are good prospects for the production of invested costs for a business with no track record of profitability
substantial quantities of oil from the field. A hypothetical buyer Spotify is a well-known music-streaming service based in
will likely focus on the quantity of the oil they can now expect Stockholm but which operates globally. It is fast-growing but cur-
to extract from the field and the price they can sell it at given oil rently makes substantial losses and has never made a profit at the
price expectations today.The cost of that oil field five years ago is level of earnings before interest, tax, depreciation and amortisation
unlikely to be a good measure of its value today. (EBITDA; a measure of profits commonly used in valuation) since
That is not to say cost should be ignored in valuation: if DCF starting operations in 2008.17 At the date of writing this article,
analysis suggests a substantially different conclusion on the value equity analysts covering Spotify do not expect it to earn positive
of an asset to the amount that asset cost, the valuer should seek EBITDA before 2021.There are debates as to the extent to which
to understand whether there are good reasons for the divergence consumers will be prepared to subscribe to music streaming ser-
to exist, where the circumstances and available information allow. vices and the amount they will pay, causing substantial uncer-
Having done so, the valuer should amend their valuation analysis tainty as to the revenue and profits Spotify will ultimately be able
if necessary. to achieve.
Consider, for the purposes of considering the relevant valu-
DCF and cost in investment arbitration ation issues only, a thought experiment in which the Swedish
In our experience, DCF is relied on proportionately less by invest- government decided to expropriate Spotify and foreign Spotify
ment arbitration tribunals than in typical business valuation prac- shareholders were to bring a claim under one of Sweden’s BITs.
tice, and cost-based methods are relied on more.This is illustrated As we explain above, a number of investment treaty tribunals
by PwC’s analysis of arbitration awards, principally those relating appear to have adopted a principle under which the appropriate
to investment treaty disputes, which showed that in the period measure of damages is wasted costs in circumstances in which a
1990 to 2017, tribunals used DCF as their primary approach to business does not have a track record of operating profitably.
the quantification of damages in approximately 40 per cent of A hypothetical tribunal considering Spotify might therefore
published awards and historical cost or wasted costs in around look to the costs invested in Spotify. According to the website
32 per cent.12 According to PwC, the rejection of the DCF meth- Dealroom, Spotify has raised around US$2.6 billion from investors
odology has largely been in the cases where the tribunal ‘consid- since its inception.18
ered the result to be too uncertain or speculative’.13 These figures However, Spotify’s shares happen to be listed on the New York
are in contrast to the prevalence of the two methods in valuation Stock Exchange (NYSE). Transactions in shares on the NYSE
practice described above. are likely to be substantially similar to the hypothetical transac-
Tribunals appear to be particularly reluctant to rely on DCF tion envisaged under the FMV standard we outline above. That
analysis when the subject of the valuation has no history of means it is likely that the price those shares currently trade at is
a reasonable representation of their FMV at any particular point It should be noted again that the question is not whether [currently
in time. On 26 March 2019, Spotify’s shares traded at US$138.02, loss-making early-stage businesses] can be valued – they cer-
implying a valuation of 100 per cent of the equity of Spotify of tainly can – but whether we are willing to live with noisy estimates of
US$25.7 billion.19 value . . . much of this noise stems from real uncertainty about the future.
The price of Spotify’s shares on the NYSE is set by investors
buying and selling those shares. How do investors form their views This ‘noise’ is again illustrated by Spotify. On 7 February 2019,
as to the value of those shares? A review of investment research equity analysts at Morgan Stanley published research which val-
on Spotify, published by equity analysts, suggests that investors do ued shares in Spotify at US$170, based in part on DCF analysis.
indeed rely on DCF to value it, among other valuation methods. However, they also prepared a ‘bear case’ valuation, in which they
This means that a tribunal that adopted the principles as to made less optimistic assumptions about Spotify’s future progres-
the appropriateness of DCF summarised above and had decided to sion, of US$80, and a ‘bull case’ valuation with more optimistic
make an award of damages by reference to invested costs instead, underlying assumptions of US$275.24 The range of potential out-
would award 11 per cent of what is, effectively, the directly observ- comes of DCF analysis for Spotify is wide.
able FMV of the asset subject to expropriation. We sympathise with tribunals given the task of making
In practice, of course, a tribunal seeking to determine the awards of damages in relation to early-stage businesses where
FMV of Spotify would be unlikely to ignore its listed share price.20 future prospects, and so value, are uncertain. In investment treaty
However, businesses like Spotify exist that do not happen to be arbitration this uncertainty is sometimes compounded due to
listed and indeed shares in Spotify itself were only listed on the the location of the relevant investment in a developing country.
NYSE in 2018. The example of Spotify therefore illustrates that The attraction of awarding damages by reference to wasted costs
invested cost can substantially underestimate the FMV of busi- which can usually be measured reliably is clear. It may be that
nesses, including those which have yet to generate a track record of the prevalence of cost-based damages awards in investment treaty
profitability and whose financial outlook is substantially uncertain. arbitration arises because tribunals are not ‘willing to live with
We note that a number of large technology businesses have noisy estimates of value’.
been listed on stock exchanges or have raised money at substantial However, as we explain above, cost might not be a good
valuations in the US recently. If this trend continues, the issue of guide to FMV. An award of damages made by reference to wasted
divergence between value and invested cost of loss-making busi- costs allows the tribunal to put the claimant in the position it
nesses may increase in relevance, particularly if such businesses would have been in had it never made the investment in ques-
become the subject of investment treaty disputes. tion with some certainty. It is less clear that such an award puts
the claimant in the position it would have been in but for the
DCF, cost and certainty expropriation of that investment with any more certainty than
As we understand it, under English law a claimant can choose DCF analysis allows.
to claim damages for a breach of contract as an ‘expectation loss’ In our view as valuation experts, it may be helpful for parties
or a ‘reliance loss’.21 Similar provisions exist under other forms to have in mind the distinction between the following arguments
of common law. An expectation loss award of damages should that damages should be awarded by reference to invested costs:
put the claimant in the position it would have been in but for • an argument that FMV is the correct measure of damages,
the breach of contract – effectively it should do the same job as and that cost is the appropriate measure of FMV;25 and
an award of damages under the Chorzow Factory principle, as we • an argument that invested costs is the correct measure
understand it. of damages.
However, English law recognises that in certain circumstances
an expectation loss will be difficult to establish or prove. For the Under the first argument, the question of the appropriateness
same reasons that a DCF can give rise to a broad range of results, of cost as a measure of FMV is a matter of valuation judgment.
an expectation loss calculation may depend on assumptions about Under the second, the appropriateness of cost as a measure of
uncertain variables. damages is largely a matter of law.
In those circumstances, a claimant can elect to make a ‘reliance
loss’ claim, under which it claims the costs wasted in reliance on Conclusions
the contract, rather than the profits it would have earned but for DCF is a versatile valuation tool that can, in principle, be used to
the breach. As McGregor on Damages puts it, in a reliance loss claim, value any cash generating asset. It is widely deployed in practice.
‘a claimant is claiming not to be put into the position he would However, uncertainty as to the appropriate input assumptions
have been in had the contract been performed, but to be put into gives rise to uncertainty in the results of DCF analysis. As we
the position he would have been in had it never been made’.22 understand it, it is generally for the claimant to prove its loss and
Similarly, it is sometimes argued in investment treaty disputes there are circumstances in which investment treaty tribunals have
that the appropriate measure of damages should be damnum emer- considered that the results of DCF analysis are not sufficiently
gens, or sunk investment costs, rather than the FMV of the asset certain for claimants to reach the appropriate evidential threshold
expropriated.23 to do so.
As we explain above, Professor Damodaran is an advocate Invested costs are sometimes a poor guide to FMV. When
of the use of DCF to value early stage businesses, in contrast considering the appropriateness of cost as a measure of FMV,
to the approach often adopted by tribunals. However, Professor valuers should consider the characteristics and circumstances of
Damodaran recognises that the results of DCF analysis for early the asset in question, how those characteristics and circumstances
stage businesses will be uncertain – although that uncertainty is have changed since acquisition and how the market for the asset
inherent in the early-stage business rather than just DCF analysis has changed since acquisition.
as a valuation technique: There is a separate legal question as to whether FMV or
invested costs should be the appropriate measure of damages

on which we offer no opinion. However, practically speaking, results are from a survey of ‘valuation experts across 10 European
it is helpful to have the answer to this question in mind before countries with CFA or equivalent designation’. The participants
embarking on a damages calculation. included portfolio managers (23 per cent), financial analysts (22 per
In our view, it is best practice to seek all available valua- cent), investment bankers (19 per cent) and valuation practitioners
tion evidence in relation to an asset. Depending on the asset, (16 per cent).
the circumstances and the information available, that evidence 9 Investment Valuation, 2nd ed, Aswath Damodaran, p 638.
may include DCF analysis, cost, market valuation evidence and 10 T Koller, M Goedhart and D Wessels, Measuring and Managing the
evidence arising from transactions in the subject matter of the Value of Companies, 4th edition, 2005, p 655.
valuation itself. Having done so, the valuer should seek to arrive 11 The terms and context of any particular transaction may have a
at valuation conclusions that are consistent with the evidence. bearing on whether the transaction price is representative of FMV,
even ignoring the passage of time. For example, a transaction
The authors would like to thank Somya Sharma of FTI Consulting in price agreed between related parties may differ from the price an
New Delhi for her assistance in the preparation of this chapter. unrelated party would be prepared to pay for an asset. However,
information about detailed transaction terms is not always available.
The views expressed in this article are those of the authors and not neces- 12 PwC, ‘International Arbitration damages research 2017 update’,
sarily the views of FTI Consulting, its management, its subsidiaries, its December 2017, p 6.
affiliates or its other professionals. 13 PwC, ‘International Arbitration damages research 2017 update’,
December 2017, p 6.
Notes 14 Metalclad Corporation v The United Mexican States, ICSID Case No.
1 The Chorzów Factory Case Germany v Poland, 13 September 1928, ARB(AF)/97/1, Award, 30 August 2000, paragraphs 119–122.
PCIJ, Series A No. 17 (substantive issue), paragraph 125. 15 Mr Franck Charles Arif v Republic of Moldova, ICSID Case No.
2 Bilateral investment treaty between the Federal Republic of ARB/11/23, Award, 8 April 2013, paragraph 576.
Germany and Singapore, dated 3 October 1973: article 4 (1). 16 Rusoro Mining Limited v The Bolivarian Republic of Venezuela, ICSID
3 Bear Creek Mining Corporation v Republic of Peru, ICSID Case No. Case No. ARB(AF)/12/5, Award, 22 August 2016, paragraph 759.
ARB/14/21, Award, 30 November 2017, paragraph 597. The definition 17 Fortune, ‘Spotify Trounces Apple Music in Competition for Streaming
can be found at H E Johnson, ‘Business Valuation’, 2012, p 34. Music Service Paid Subscribers’, 6 February 2019.
4 S H Nikièma, ‘Compensation for Expropriation – Best Practices Series 18 US$1.0 billion of the amount raised by Spotify is in the form of
- March 2013’, International Institute for Sustainable Development, debt, which it may be appropriate to ignore for the purposes of
2013, pp 9 and 10. establishing wasted investment costs, leaving US$1.6 billion of equity
5 Mark Kantor notes that ‘Market value is the dominant valuation invested.
principle for assessing injuries to businesses. In the context of 19 In practice, it may not be reasonable to infer the value of
investment treaty disputes, however, fair market value measures 100 per cent of the equity of Spotify in proportion to the prices
have been rejected in a number of cases in favour of compensation at which small packets of shares trade on the NYSE due to, for
based on sunk investment costs’. Kantor: Valuation for Arbitration, example, differences in liquidity and control.
p 50. 20 For example, the tribunal in Rusoro v Venezuela considered Rusoro’s
6 Or sometimes transactions in the subject asset itself. share price when determining its value (Source: Rusoro Mining
7 We distinguish here between ‘cost-based’ valuation methods, under Limited v The Bolivarian Republic of Venezuela, ICSID Case No.
which the value of an asset is measured simply by reference to the ARB(AF)/12/5, Award, 22 August 2016, paragraphs 708 to 714, 767,
cost of acquiring or constructing it, and other asset-based valuations 777 to 780).
that can be more sophisticated and take into account the market 21 McGregor on Damages, 20th ed, 4-025.
or replacement value of the underlying assets rather than simply 22 McGregor on Damages, 20th ed, 4-025.
their cost. We confine this article to a consideration of ‘cost-based’ 23 Kantor: Valuation for Arbitration, p 50.
valuation methods. Our colleagues Mark Bezant and David Rogers 24 Morgan Stanley: Leaning Into Content– Reiterate OW; 7 February
contributed a useful chapter to GAR’s The Guide to Damages in 2019.
International Arbitration titled ‘Asset-Based Approach and Other 25 For example, in Bear Creek v Peru, the parties and tribunal agreed
Valuation Methodologies’, which considers other forms of asset- that FMV was the relevant measure of damages and the tribunal
based valuations in more detail. made an award of damages by reference to invested costs.
8 Bancel and Mittoo: ‘The Gap between Theory and Practice of (Source: Bear Creek Mining Corporation v Republic of Peru, ICSID
Firm Valuation: Survey of European Valuation Experts’, 2014. The Case No. ARB/14/21, Award, 30 November 2017, paragraph 596, 604)
Montek Mayal Alex Davie

FTI Consulting FTI Consulting
Montek Mayal is a senior managing director in FTI’s economic Alex is a managing director in the economic and financial con-
and financial consulting practice in India. Montek founded and sulting practice of FTI Consulting. He is a chartered accountant.
now leads FTI’s economic consulting practice in India. Montek Alex joined the practice in 2011 and has 10 years of experience
joined FTI in November 2009 as a research analyst. providing financial advice in the context of disputes.
Montek’s primary area of focus is in the assessment of quan- Alex’s practice has focused on the provision of expert financial
tum, financial, economic and valuation issues in contentious and advice in the context of international arbitration and litigation.
non-contentious matters. He has a broad range of experience in Typically, this involves the quantification of lost profits, assess-
issues including valuation of businesses and shares, calculation of ments of wasted costs, business or intellectual property valuation,
lost profits, spectrum auctions and market and economic analy- or advice relating to accounting matters.
sis, research and study. He has developed and designed a num- Alex has been appointed as expert or has led the preparation of
ber of quantitative models to value and forecast different aspects expert reports in proceedings before the English High Court, US
of businesses. courts, arbitral forums including tribunals under the rules of the
His industry experience encompasses telecommunications, International Chamber of Commerce and the London Court of
media, oil and gas, financial services, industrial gases, travel, con- International Arbitration, and in bilateral investment treaty cases.
sumer and branded goods, petrochemicals, diversified and indus- Alex also has experience of valuation work in non-conten-
trial materials and aviation. tious circumstances, including in the context of corporate restruc-
Montek has acted as or is currently acting as sole or joint turing or transactions.
expert for separate parties in domestic and international arbitra- Alex is named in the Who’s Who Legal Arbitration: Future Leaders
tions and in competition matters in India. Montek was listed in – Expert Witnesses 2019 list. According to Who’s Who Legal, Alex
the Who’s Who Legal 2016, 2017 and 2018 Consulting Experts presents ‘high-quality, carefully reasoned and well-drafted analyses’
guides in the field of ‘Quantum of Damages’. and ‘his work has always been thorough and he provides confi-
Montek has also advised leading telecommunication and cable dence that nothing has been missed’.
operators on bidding strategy and provided support on issues con- Alex has particular experience in the leisure and hospitality,
cerning game theory, auction design and rules and bidding behav- technology and energy industries.
iour in major telecommunications auctions, globally. Alex regularly presents on damages and valuation issues to
disputes lawyers.
14th Floor, Eros Corporate Tower FTI Consulting, Inc is a global business advisory firm dedicated to helping organisations protect and
Nehru Place enhance enterprise value in an increasingly complex legal, regulatory and economic environment.
New Delhi 110019 FTI Consulting professionals, who are located in all major business centres throughout the world, work
India closely with clients to anticipate, illuminate and overcome complex business challenges in areas
Tel: +91 11 6658 2202
such as investigations, litigation, mergers and acquisitions, regulatory issues, reputation management
and restructuring. The FTI Consulting economic and financial consulting practice provides detailed
Montek Mayal
montek.mayal@fticonsulting.com damages and valuation calculations for arbitration or litigation. Our work is based on economic,
accounting and finance evidence, that we analyse in order to quantify the financial effects of the
Alex Davie alleged actions of the parties. Our reports are prepared in a fashion that is easily understood by
alexander.davie@fticonsulting.com judges and arbitrators. From 2013 to 30 September 2018, our senior experts have submitted more
than 1,400 expert reports and have collectively testified more than 425 times.
www.fticonsulting.com Our testifying experts have significant experience in delivering clear and concise opinion evi-
dence in arbitral and judicial hearings. We have extensive industry experience in oil and gas, electric
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More information can be found at www.fticonsulting.com.

Distinction and Connection: Hong Kong and Mainland
China, a View from the HKIAC
Sarah Grimmer
Introduction appointing authority powers under the Hong Kong Arbitration

In 2020, the Hong Kong International Arbitration Centre Ordinance (then Cap 341). Such a devolution of powers from
(HKIAC) turns 35 years old, a good time for reflection. On the the courts to a specialist institution is found only in a handful of
occasion of the HKIAC’s 35th anniversary, this article reflects on national arbitration laws.2 This led to increased cases, particularly
the evolution of the Centre since its establishment in 1985. It in later years. From early on, the HKIAC’s caseload included an
focuses on Hong Kong’s status as the connecting jurisdiction for important number of Sino–foreign disputes.
dispute resolution between parties from mainland China and the
rest of the world. What changes has the institution observed over The contemporary HKIAC
the years? Do Hong Kong and the HKIAC remain neutral choices The HKIAC’s caseload has evolved. In addition to construction,
for Sino–foreign disputes 23 years on from the 1997 handover? maritime, commodity and general international trade and com-
How have the Hong Kong courts dealt with arbitrations involv- mercial matters, the HKIAC administers an increasing number
ing mainland Chinese government entities? How is Hong Kong’s of high-value disputes arising out of various corporate ventures,
distinction from and connection to mainland China relevant today mergers and acquisitions, and banking and financial arrangements.
and in the future? In 2018, the amount in dispute in such cases was US$4.9 billion.
Most of those cases included at least one party incorporated in
The early years mainland China or the Cayman or British Virgin Islands, the
The HKIAC was created in 1985 as a result of efforts of the local latter of which often involved Chinese interests in the corpo-
and international business and legal communities. At the time, rate structure.
the city was establishing itself as an international financial centre, Another evolution is that now the HKIAC counts more
mainland China was opening up and cross-border transactions cases under its administered arbitration rules or the UNCITRAL
were flourishing with the growth of Asian economies.1 Within Procedures (55 per cent in 2018) than it does ad hoc proceedings.
Hong Kong itself, mega infrastructure projects were underway That shift happened in 2017. The origin lies in the promulgation
including construction of the cross-harbour tunnels and the mass by the HKIAC of the 2013 Administered Arbitration Rules (the
transit railway. The volume of disputes was growing and arbitra- 2013 Rules). They contain a suite of provisions for multi-party,
tion was considered a preferred method of resolution. For inter- multi-contract situations (which in 2018 constituted one-third
national cases, it offered the enforcement advantage; in domestic of all cases). In addition to appointing authority work (including
cases, it offered specialist arbitrators and a faster process than the determining challenges and appointing emergency arbitrators),
courts. With the support of the Hong Kong government and the the 2013 Rules mandate the HKIAC to decide whether to grant
legal and business communities, the HKIAC was established. expedited proceedings, consolidate cases, or join additional par-
All arbitral institutions are the repositories of vast amounts of ties. The Proceedings Committee – a specialist body comprised
information. Institutional caseloads provide a glimpse into broader of international arbitration specialists – was created to determine
commercial trends and cycles – what deals have been struck and (inter alia) such issues under the 2013 Rules and has been doing so
how they have come undone. Since 1985, the HKIAC has pro- now for more than six years. In 2018, the HKIAC issued the 2018
vided administrative support in over 10,000 cases. How has its Administered Arbitration Rules, which expand upon the multi-
caseload evolved and what trends has it seen? contract, multi-party provisions of the 2013 Rules3 and introduce
In its first five years, the HKIAC typically serviced up to 50 new tools for parties and tribunals.4
arbitrations annually. By the early 1990s, that had doubled and Mainland Chinese parties remain one of the most frequent
by the mid-1990s the HKIAC was providing support in up to users of HKIAC arbitration. In 2018, 35.5 per cent of cases
200 matters a year. Early on, the HKIAC’s larger cases were pre- involved at least one mainland Chinese party. Also, in any given
dominantly Hong Kong-based construction matters, although year at the HKIAC, 7 to 15 per cent of the mainland Chinese
numerically it had a high proportion of shipping, commodity and parties are Chinese state-owned entities. Since 2015, approxi-
general trade disputes which were almost entirely international. mately 20 per cent of cases have been conducted in Chinese only
All cases were ad hoc arbitrations, which meant the HKIAC’s or in Chinese and English, and Chinese law is the third-most
involvement was variable, ranging from appointing authority frequently designated governing law after Hong Kong law and
services to other support (such as fundholding). In 1986, the English law. The significance of Chinese elements in Sino–foreign
HKIAC issued procedures to govern its role in cases under the cases, whether in the form of language or governing law, reflects
UNCITRAL Arbitration Rules (the UNCITRAL Procedures). the bargaining power enjoyed by Chinese parties in international
Over the years it has issued various other rules largely inspired deals and aligns with the general narrative around projects con-
by the UNCITRAL set, as well as administered arbitration rules cluded under China’s Belt and Road Initiative.
(2008, 2013, 2018) featuring more occasions for decisions to be Since its announcement in September 2013 by President Xi,
taken by the institution. In 1997, the HKIAC was entrusted with the Belt and Road Initiative is now well into its implementation
Distinction and Connection: Hong Kong and Mainland China, a View from the HKIAC
phase and disputes under it have arisen. HKIAC currently admin- from the arbitral tribunal, an emergency arbitrator, or the courts.
isters Belt and Road disputes.5 The Belt and Road Initiative is Interim measures issued by a tribunal are enforceable as if they
significant to Hong Kong’s future as a dispute resolution venue. were an order or direction of the Hong Kong courts. Hong
Financing of Belt and Road projects (often infrastructure pro- Kong’s legislation supports security for costs and emergency
jects in emerging jurisdictions) comes from, albeit not exclusively, arbitration. Hong Kong courts are expressly empowered to grant
Chinese sources: particularly Chinese state-owned enterprises, interim measures in support of arbitral proceedings seated outside
Chinese policy banks and Chinese-backed sovereign wealth funds. of Hong Kong and case-law demonstrates the courts’ willing-
The Asian Infrastructure and Investment Bank – a multilateral ness to do so, including in respect of proceedings on the main-
development bank led by and in which China holds the larg- land. In Chen Hongqing v Jingtian & Others, dated 27 June 2017,
est shareholding – also finances projects linked to the Belt and Justice Mimmie Chan ordered interim relief in support of China
Road Initiative, although that is not its mandate per se. Given the International Economic and Trade Arbitration Commission arbi-
provenance of financing, it is unsurprising that the Chinese party tration proceedings through the appointment of receivers to exer-
to a Belt and Road deal holds strong bargaining power. This has cise voting rights over shares in a Hong Kong holding company.14
led some commentators to ask whether, rather than an interna- Hong Kong courts may enforce foreign-seated interim measures.
tional option, foreign counter-parties will be forced to opt for In 2018, the Hong Kong courts enforced an award issued by
Chinese courts or mainland Chinese arbitral commissions; options an emergency arbitrator in a case administered by the Beijing
that many foreign counter parties are reluctant to accept in Belt Arbitration Commission between two Hong Kong companies,
and Road deals or otherwise. This is where Hong Kong’s distinc- a Cayman Islands asset management company and its controlling
tion from but connection to mainland China in terms of dispute shareholder – a mainland Chinese citizen.15
resolution is critical. Just as its distinction from mainland China is important for
Hong Kong’s dispute resolution role, so too is its connection to
Hong Kong’s distinction from and connection to mainland China. Hong Kong is a special administrative region of
mainland China China with a high degree of autonomy and a separate legal sys-
Arbitration in mainland China differs significantly from arbi- tem. Mainland Chinese parties accept arbitration in Hong Kong
tration in Hong Kong. For example, under Chinese arbitration and frequently agree to it in foreign transactions. The Chinese
legislation, ad hoc arbitration with a seat in mainland China is government recognises Hong Kong as an international legal and
generally not permitted (except arguably between companies dispute resolution centre, particularly in the context of the Belt
incorporated in a pilot free-trade-zone).6 Arbitration in mainland and Road Initiative and the Greater Bay Area.16 The Hong Kong
China must be administered by a mainland Chinese arbitral com- courts operate in both English and Chinese and Hong Kong leg-
mission; it cannot be administered by an international or ‘foreign’ islation is enacted in both languages.The city boasts a large pool of
arbitral institution (such as HKIAC) except where the parties are bilingual professionals. Over 30 mainland Chinese law firms have
wholly-foreign owned entities incorporated in a pilot free-trade- branches in Hong Kong and many mainland Chinese counsel and
zone.7 The principle of competence-competence is not adopted arbitrators are experienced in Hong Kong arbitral proceedings.
by Chinese arbitration law; if a party raises jurisdictional objec- Travel between the two jurisdictions is fast, now faster thanks to
tions to a Chinese court, the court will generally consider itself a high-speed railway linking Hong Kong to the mainland grid
competent to make the determination and stay the arbitration and a 55-kilometre bridge-tunnel system – the longest in the
while doing so.8 In mainland China, parties may not seek interim world – connecting Hong Kong to the southern Chinese city of
measures from an arbitral tribunal; they may only seek them from Zuhai via Macau.
a Chinese court.9 If an arbitration has been commenced, the par- For foreign parties, Hong Kong is an important choice for
ties cannot submit their application to the court directly but must effective enforcement of awards in mainland China. Hong Kong
submit it via the arbitral commission administering the case.10 In awards enjoy an excellent record of enforcement in the main-
addition, emergency arbitration is not recognised under Chinese land under the Arrangement Concerning Mutual Enforcement
arbitration law, although some commissions have included it in of Arbitral Awards between the Mainland and Hong Kong (the
their rules.11 Chinese law is silent on the issue of security for costs Arrangement), which took effect in 2000. The grounds for refus-
and there is no reported case of a tribunal seated in China having enforcement of Hong Kong awards under the Arrangement are
ing granted it.12 There is also no legal basis for a Chinese court the same as those set out in article V of the New York Convention.
to enforce interim measures issued by a foreign arbitral tribunal While there is a general perception that enforcement of awards
or court. With two exceptions there is also no basis for a Chinese under the New York Convention by Chinese courts has improved
court to issue interim measures in support of foreign arbitration.13 in recent years as a result of the reporting system, parties still expe-
The first exception applies to foreign maritime arbitration since rience difficulties (the reporting system requires the approval of the
2003. The second exception derives from a bilateral arrangement Supreme People’s Court for any lower court’s decision to refuse
concluded in 2019 between mainland China and Hong Kong enforcement of a foreign or foreign-related award. It has helped
under which (inter alia) Chinese courts may issue interim relief to standardise the implementation of the New York Convention
in support of institutional arbitration seated in Hong Kong. This but is not an entirely transparent process; parties may not know
constitutes a significant new development for Hong Kong and is whether their award has been ‘reported up’ or how long the process
discussed in more detail at the end of this section. may take and there is no opportunity for a party to make submis-
By contrast, Hong Kong’s arbitration legislation enshrines the sions as the case progresses).
principle of competence-competence and the paramountcy of Given the continued challenges in enforcing in mainland
party autonomy. Ad hoc and institutional arbitration are com- China, parties also look to other jurisdictions where enforce-
mon in Hong Kong. In 2011, Hong Kong became the first major ment may be possible. Many mainland Chinese parties – includ-
Asian jurisdiction to enact the 2006 version of the UNCITRAL ing Chinese state-owned enterprises – have assets in Hong Kong.
Model Law. In Hong Kong, interim relief in arbitration is available Counterparties that seek enforcement in Hong Kong can rest

assured that their awards will be enforced as a matter of course by As regards institutions, the scope of their decision-making in
the Hong Kong courts, barring egregious circumstances.17 Hong any given case is typically limited and the process well-governed.
Kong courts are strict when it comes to respecting arbitral agree- In proceedings under its auspices, the HKIAC’s role includes
ments and enforcing arbitral awards. In a 2015 judgment of the appointing arbitrators (including emergency arbitrators), confirm-
Hong Kong Court of First Instance, Justice Mimmie Chan listed ing designations of arbitrators made by parties or co-arbitrators,
10 principles that form the bedrock of Hong Kong’s supportive fixing arbitrators’ fees by default, deciding challenges (via fully
approach to safeguarding the arbitration process and enforcing reasoned decisions) and determining a limited range of proce-
awards.18 One of those principles is that ‘[e]nforcement of arbitral dural matters (some of which were listed earlier). At the HKIAC,
awards should be “almost a matter of administrative procedure” and those decisions are made by specialist bodies comprised of diverse
the courts should be “as mechanistic as possible”.’19 Also, in Hong international dispute resolution experts upon the recommenda-
Kong, the indemnity costs rule – whereby a party that unsuccess- tions of an international secretariat. Those functions occur under
fully challenges an arbitration agreement or award will be ordered the oversight of the HKIAC Council, itself composed of diverse
to pay costs on an indemnity basis – is applied by default barring international arbitration and industry specialists. The HKIAC’s
special circumstances. decisions are made on the basis of the applicable rules with the
goal of ensuring efficient proceedings and an enforceable award.
Interim measures available from Chinese courts for Hong Arbitral proceedings in Hong Kong, including arbitration-related
Kong institutional arbitration court proceedings, are protected by broad confidentiality provi-
As mentioned above, there has recently been an important devel- sions in the legislation and the HKIAC’s rules. No information
opment between the jurisdictions concerning interim meas- that may identify ongoing or concluded proceedings is available
ures. On 2 April 2019, the government of Hong Kong and the from the HKIAC.
Supreme People’s Court of the People’s Republic of China The Hong Kong courts may affect the outcome of an arbitra-
(PRC) signed the Arrangement Concerning Mutual Assistance in tion in their supervisory role as the courts at the seat or as the
Court-Ordered Interim Measures in Aid of Arbitral Proceedings courts at the place of enforcement. It is thus essential to under-
by the Courts of the Mainland and of the Hong Kong Special stand the Hong Kong court system, which is unique. Under
Administrative Region. Under it, any party to arbitral proceed- Hong Kong’s constitutional instrument, the Basic Law, the Hong
ings seated in Hong Kong and administered by a qualified Hong Kong courts have powers of final adjudication except in matters
Kong-based dispute resolution institution (such as the HKIAC) of defence and foreign affairs. Its highest court – the Court of
may, before the arbitral award is issued, apply to the relevant main- Final Appeal (CFA) – is comprised of Hong Kong judges and
land Chinese courts for interim measures in relation to the arbitral eminent judges from certain Commonwealth jurisdictions: the
proceedings in accordance with the relevant laws and regulations United Kingdom, Australia, Canada and New Zealand. The most
of mainland China.20 Thus, for the first time, a legal mechanism recent appointments in 2017 to the CFA were Baroness Brenda
has been introduced to allow mainland Chinese courts to issue Hale, President of the Supreme Court of the United Kingdom
interim relief in support of an arbitration seated in a jurisdiction and Beverley McLachlin, former Chief Justice of Canada.
outside of mainland China.This only applies to Hong Kong.This International commercial courts have emulated the approach that
makes Hong Kong a unique and important venue for parties that has long-been Hong Kong’s norm by populating their benches
wish to have access to interim relief from a mainland Chinese with leading international jurists. In Hong Kong’s lower courts,
court but do not wish to seat their arbitration in mainland China. arbitration matters are referred to the construction and arbitra-
tion list, which as of writing is headed by an arbitration specialist
Is Hong Kong a neutral and independent venue for cases (former partner of a global law firm), originally from Brunei,
involving mainland Chinese parties? Justice Mimmie Chan.
The question is sometimes asked whether Hong Kong remains When the Hong Kong courts have been asked to enforce
a neutral venue for arbitration proceedings that involve a main- awards against Chinese government entities, they have done so.
land Chinese party, whether private or governmental. The short There exist two important judgments relevant to this point: first,
answer is yes, for reasons that follow. Hua Tian Long,21 a case decided in 2010 by then-Justice William
First, when answering this question, one must ask which Stone QC, in respect of an order to execute an award against the
entity within the arbitration system can affect the outcome of an assets of a mainland Chinese public authority operating under the
arbitration? Apart from the parties, the answer is the tribunal, any direct control of the Chinese Ministry of Communications. The
administering institution (to a limited extent), the supervisory public authority claimed that it was immune from execution by
courts and the courts at the place of enforcement. virtue of the doctrine of crown immunity. Justice Stone ordered
As regards the tribunal, typically the parties participate in the execution of the award. He found that, while the public
its constitution by agreeing a sole arbitrator or appointing co- authority was entitled in principle to invoke crown immunity, on
arbitrators and the co-arbitrators jointly selecting the presid- the facts, it had waived the defence.22 That a Chinese state organ
ing arbitrator (often in some consultation with the parties). can claim crown immunity in Hong Kong is a function of Hong
Accordingly, to a large extent the parties determine who will Kong’s constitutional status as a special administrative region of
decide their dispute. Where agreed or necessary by default, an China and the transfer of the status of ‘crown’ from the British
institution will appoint arbitrators. Arbitration rules and legis- government to the Chinese Central People’s Government (CPG)
lation require arbitrators to be independent and impartial and in 1997. The doctrine of crown immunity is found, and typically
contain mechanisms under which arbitrators may be challenged codified, in many common law jurisdictions.
if they fall short on that score. Most institutional arbitration rules The second case, TNB Fuel Services SDN BHD v China
(including the HKIAC’s) contain safeguards to ensure that the National Coal Group Corporation23 was decided in 2017. There,
sole or presiding arbitrator will not share the nationality of any the Hong Kong Court of First Instance (HKCFI) ordered the
of the parties except where all parties agree or do not object. execution of an award against the assets of a mainland Chinese
state-owned enterprise (SOE) controlled by the State Asset There have also recently been developments in respect of
Supervision and Administration Commission (SASAC) of the investment relations between mainland China and Hong Kong.
CPG.24 The Secretary for Justice of Hong Kong obtained and On 28 June 2017, the two territories updated their Closer
submitted to the HKCFI a letter from the Hong Kong and Macau Economic Partnership Arrangement with an investment agree-
Affairs Office of the State Council of the CPG indicating that ment (the Agreement) to promote and facilitate investments by
SOEs are independent legal entities carrying out activities on mainland Chinese and Hong Kong investors within their recip-
their own with no special status or interests superior to other rocal territories. It provides for, among other things, substan-
enterprises and that they should not be considered to be part tive obligations on both sides to protect qualified investors and
of the CPG save for in ‘extremely extraordinary circumstances’ covered investments, including fair and equitable treatment, full
where they were acting on behalf of the state. Justice Mimmie protection and security, national treatment, most-favoured treat-
Chan declined the SOE’s claim of crown immunity, finding that ment and lawful expropriation.The Agreement includes multiple
it enjoyed operational autonomy and extensive independence in mechanisms for settling disputes between an investor and the host
carrying out its business and that the powers of SASAC were akin government of which arbitration is not one. Rather, in addition
to those of a normal shareholder.These two judgments clarify the to administrative or judicial options in each territory, an investor
tests applied by the Hong Kong courts to claims of crown immu- may submit an investment dispute to a mediation commission
nity by Chinese state entities. The second case provides a strong comprised of three individuals chosen from a list previously des-
indication that commercially active, operationally independent ignated by the host government and agreed to by the other gov-
SOEs under SASAC supervision – of which there are more than ernment. The HKIAC’s mediation division has been designated
one hundred and some of which are active in the Belt and Road as one of two institutions in Hong Kong authorised to administer
Initiative – are unlikely to be entitled to crown immunity against disputes between a mainland Chinese investor and the govern-
execution of awards in Hong Kong. ment of Hong Kong.
New developments in investment arbitration and Conclusion

mediation in Hong Kong and at HKIAC The HKIAC’s caseload reflects the evolving nature of interna-
In Hong Kong and at the HKIAC, business continues and evolves tional business and the growing participation in it of mainland
in new and important directions. In 2018, the HKIAC was Chinese parties. Hong Kong’s separate legal system, independ-
requested to administer two arbitrations arising under investment ent judiciary and modern arbitration legislation make it an
treaties, one seated in Hong Kong, the other elsewhere. In both important dispute resolution venue in the region. In addition
cases, the investor and respondent state agreed to HKIAC admin- to the high volume of Sino-foreign economic activity that
istration under the UNCITRAL Arbitration Rules. As already flows through Hong Kong, the fact that Hong Kong’s arbi-
mentioned, the HKIAC has administered UNCITRAL Rules tration system is both distinct from and connected to that of
arbitrations since the mid-1980s.The procedural rules it designed mainland China is key to its success. As an UNCITRAL Model
to govern its administration of such cases in 1986 were updated Law jurisdiction, Hong Kong functions in an internationally
in 2015. The HKIAC’s most recent administered arbitration rules recognised and predictable manner. Meanwhile, Hong Kong’s
may also be adopted for investment treaty arbitrations. special arrangements with mainland China ensure the effec-
The HKIAC has built a staff of international commercial tive enforcement of awards between the two jurisdictions and
and investment treaty arbitration specialists. They have worked the availability of interim measures from mainland Chinese
at the Permanent Court of Arbitration, the International Centre courts for Hong Kong-seated HKIAC-administrated arbitra-
for Settlement of Investment Disputes and top tier international tion. As Sino-foreign transactions grow with the Belt and Road
law firms active in investment treaty arbitration representing both Initiative, the Greater Bay Area project, and more general com-
investors and states. HKIAC Council and Standing Committee merce, so too does Hong Kong’s importance as a neutral, well-
members frequently appear as counsel or serve as arbitrators in trusted dispute resolution venue.
investment treaty arbitrations. HKIAC staff are available to serve
as tribunal secretaries, a service commonly used in investor-state Notes
arbitration. In 2018, the number of appointments of HKIAC 1 Michael Moser, Chiann Bao, A Guide to the HKIAC Arbitration Rules,
tribunal secretaries more than doubled compared to the total Oxford University Press (2016), paragraph 3.04.
of any previous year. In 2016, the HKIAC released an initiative 2 Other jurisdictions that have devolved default appointment powers
under which its hearing facilities on the 38th floor of a cen- to specific institutions in their legislation include Malaysia (Director of
tral Hong Kong building (with stunning views over Victoria the AIAC), Peru (Chamber of Commerce of the place of arbitration
Harbour) are provided to parties free-of-charge where they agree or the Lima Chamber of Commerce), Singapore (SIAC), Ukraine
to any administrative support from HKIAC and the case involves (President of the Ukrainian Chamber of Commerce and Industry),
a state listed on the Organisation for Economic Co-operation Nigeria (Secretary General of the PCA), and Mauritius (PCA).
and Development’s Development Assistance Committee list. 3 In the 2018 Rules, the provisions for the commencement of a single
Of the states along the Belt and Road, 70 per cent are eligible arbitration under multiple contracts have been aligned with the
for this initiative. One case has been covered by this offering; it consolidation provisions such that they no longer require that ‘all
involved the contractual claim in a dispute that was first aired in parties to the arbitration are bound by each arbitration agreement
an ICSID proceeding. giving rise to the arbitration’ (article 29).
Hong Kong continues to conclude investment promotion and 4 The 2018 Rules introduce, among other things, an early
protection agreements (IPPAs) with foreign states, as it is empow- determination procedure (article 43), a time limit for the issuance of
ered to do under article 151 of the Basic Law. Currently, 25 such awards (article 31.2), concurrent proceedings in cases involving a
agreements are in force with an additional six having been suc- common question of fact or law and the same tribunal (article 30),
cessfully negotiated and awaiting signature. and provisions on third-party funding.

5 For information on the Belt and Road, visit the Chinese government’s Trade Group Co, Ltd v Sinotide Holdings Limited & Ke Junxiang,
official Belt and Road Portal website at https://eng.yidaiyilu.gov.cn Guangzhou Intermediate People’s Court (2014) Sui Zhong Fa
(last accessed 22 March 2019). Min Si Chu Zi No. 42; Helen Shi, ‘Have PRC Courts Ordered Interim
6 Article 16, PRC Arbitration Law; Opinion of the Supreme People’s Relief Measures in Support of HKIAC Arbitrations without an
Court on Providing Judicial Safeguards for the Construction of Pilot Express Legal Basis: What Lies Ahead?’, Kluwer Arbitration Blog, 26
Free Trade Zones (No. 34 [2016]), paragraph 3, article 9. Also, note August 2018, available at http://arbitrationblog.kluwerarbitration.
article 4, Judicial Interpretation of the Supreme People’s Court, 8 com/2018/08/26/have-prc-courts-ordered-interim-relief-measures-
September 2006 which states that if the arbitration clause refers to a in-support-of-hkiac-arbitrations-without-an-express-legal-basis-what-
set of rules and the rules require the involvement of an institution, the lies-ahead/ (last accessed 22 March 2019).
clause may be considered valid. 14 [2017] HKCFI 1148.
7 Opinion of the Supreme People’s Court on Providing Judicial 15 Wei Sun, ‘First Emergency Arbitrator Proceeding in Mainland China:
Safeguards for the Construction of Pilot Free Trade Zones (No. 34 Reflections on How to Conduct an EA Proceeding from Procedural
[2016]), paragraph 1, article 9, Siemens Int’l Trading (Shanghai) Co, and Substantive Perspectives’, Kluwer Arbitration Blog, 1 September
Ltd v Shanghai Golden Landmark Co, Ltd. 2018, available at http://arbitrationblog.kluwerarbitration.
8 Article 20, PRC Arbitration Law; Ning Fei, Jing Liu, Sheng Chang com/2018/09/01/first-ea-proceeding-mainland-china-reflections-
Wang, International Arbitration 2018: China, available at https:// conduct-ea-proceeding-procedural-substantive-perspectives/ (last
www.globallegalinsights.com/practice-areas/international- accessed 10 May 2018).
arbitration-laws-and-regulations/china (last accessed 22 March 16 The Greater Bay Area is a megalopolis consisting of nine cities and
2019). the two special administrative regions of Hong Kong and Macau
9 Articles 28, 46 and 68, PRC Arbitration Law. in southern China. It has been accorded key strategic status for
10 Note that article 101 of the Civil Procedural Law allows a party to an regional and national economic development, https://www.
arbitration agreement to apply directly to a mainland Chinese court bayarea.gov.hk/en/about/overview.html (last accessed 22 March
for an order to preserve assets in support of an arbitration seated in 2019).
China before commencing the arbitration. 17 KB v S and others [2015] HKCFI 1787. Regarding alleged breaches
11 Appendix III to the 2015 CIETAC Rules; article 63 of the 2015 Beijing of due process, the court has said that ‘the conduct complained of
Arbitration Commission Arbitration Rules; Chapter III of the 2014 “must be serious, even egregious”, before the court would find that
Shanghai International Arbitration Centre China (Shanghai) Pilot there was an error sufficiently serious so as to have undermined due
Free Trade Zone Arbitration Rules; article 26 of the 2019 Shenzhen process’.
Court of International Arbitration Arbitration Rules. 18 KB v S and others [2015] HKCFI 1787.
12 Ning Fei, Jing Liu, Sheng Chang Wang, International Arbitration 2018: 19 KB v S and others [2015] HKCFI 1787.
China, available at https://www.globallegalinsights.com/practice- 20 See https://www.info.gov.hk/gia/general/201904/02/
areas/international-arbitration-laws-and-regulations/china (last P2019040200782.htm.
accessed 22 March 2019). 21 (No. 2) [2010] HKLRD 611.
13 Notwithstanding this, in 2014 a mainland Chinese court issued interim 22 [2010] HKLRD 611.
measures in support of an HKIAC arbitration in a non-maritime 23 [2017] HKCFI 1016.
case: Civil Ruling regarding Guangdong Yuehua International 24 [2017] HKCFI 1016.
Sarah Grimmer
Hong Kong International
Arbitration Centre
Sarah Grimmer is secretary-general of Hong Kong International

Arbitration Centre. She was formerly a senior legal counsel at
the Permanent Court of Arbitration (PCA) where she served as
tribunal secretary in multiple investor-state arbitrations and was
appointed registrar in several interstate arbitrations. Prior to join-
ing the PCA, Sarah served for three years as Assistant Counsel at
the ICC International Court of Arbitration in Paris. She was also
a member of the international arbitration group at Shearman &
Sterling LLP in Paris, prior to which she worked in private prac-
tice in Auckland. She has an LLM from Cambridge University
and an LLB and BA (Criminology) from Victoria University
of Wellington. She is admitted to practice law in New Zealand.
38/F Two Exchange Square The Hong Kong International Arbitration Centre is a company limited by guarantee and a non-profit
8 Connaught Place organisation established under Hong Kong law. It is one of the world’s leading dispute resolution
Central organisations, specialising in arbitration, mediation, adjudication and domain name disputes resolu-
Hong Kong tion. The HKIAC also offers state-of-the-art hearing facilities, which have been ranked first worldwide
Tel: +852 2525 2381
for location, value for money, IT services and helpfulness of staff.
Fax: +852 2524 2171
Sarah Grimmer
sgrimmer@hkiac.org
www.hkiac.org

Enforcement of Arbitral Awards in the Asia-Pacific
Andre Yeap SC and Kelvin Poon
Arbitration in Asia continues to be on the rise. In 2018, the permanent anti-suit injunction to restrain a party from re-litigat-
Singapore International Arbitration Centre (SIAC) received over ing in a foreign court matters that have been fully resolved in a
400 new cases from parties in 65 jurisdictions. Compared to 2017, final award issued pursuant to an arbitration seated in Singapore.
the SIAC also saw an increase in the total sum in dispute for all In this case, Hilton commenced ICC arbitration proceedings,
new case filings, to US$7.06 billion.1 In Hong Kong, a total of 532 claiming damages for Sun Travels’ termination of a hotel man-
new cases were filed at the Hong Kong International Arbitration agement agreement between them. Hilton obtained a favourable
Centre (HKIAC).2 As further testament to the importance of outcome in the arbitration and commenced enforcement pro-
Asia in arbitration, 2018 also saw the International Chamber of ceedings against Sun Travels & Tours (a Maldivian entity) before
Commerce (ICC) Court case management team begin opera- the Maldivian courts. Not only did Sun Travels & Tours resist
tions in Singapore. This is the second ICC office in Asia.3 This the enforcement proceedings in Maldives, it went on to com-
continued rise may be explained by a number of factors, includ- mence proceedings in the Maldivian courts against Hilton, seek-
ing growth in the region, the relatively low costs of conducting ing relief that would, in essence, reverse the arbitration awards.The
an arbitration in the Asia-Pacific (as opposed to, for instance, in Maldivian courts found against Hilton and Hilton appealed against
America or Europe)4 and the proliferation (and continued devel- the Maldivian judgments. Thereafter, Hilton made an application
opment and advancement) of arbitral institutions in Asia.5 before the Singapore High Court for an anti-suit injunction to
One further factor – which perhaps explains the popularity restrain Sun Travels & Tours from participating in the Maldivian
of arbitration (as compared to litigation) in general – is the rela- appeal. Hilton also sought declarations from the High Court that
tive ease with which arbitral awards (as compared to court judg- would confirm the valid and binding effect of the arbitration
ments) may be enforced worldwide.6 But is this really the case? awards and that Sun Travels & Tours had breached the arbitra-
Have countries in Asia generally tended to be arbitration-friendly tion agreement by commencing the claim against Hilton in the
or arbitration-averse? We consider recent developments in a few Maldivian courts.The High Court did not grant Hilton’s applica-
jurisdictions – Singapore, India and Australia – to examine if con- tion for a permanent anti-suit injunction. Rather, the High Court
vergence toward or divergence from a uniformed approach in the granted an injunction that would restrain Sun Travels & Tours
enforcement of international arbitral awards has been the order from taking any steps in reliance on the first instance Maldivian
of the day. judgment or any decision that would uphold the first instance
Maldivian judgment.The High Court also granted the declaratory
The Model Law reliefs sought by Hilton. On appeal, the Court of Appeal differed
The UNCITRAL Model Law was designed to ‘assist states in from the High Court on the decision to grant what it termed to
reforming and modernising their laws on arbitral procedure so as be an ‘anti-enforcement’ injunction in view of Hilton’s delay in
to take into account the particular features and needs of interna- making the application before the Singapore courts. Hence, while
tional commercial arbitration’7 in a bid to achieve uniformity of the Court of Appeal agreed with the High Court’s view that the
the law of arbitral procedures across jurisdictions.8 Of particular foreign proceedings were ‘brought in breach of the arbitration
importance for the purposes of this article, the Model Law pro- agreements and amounted to vexatious and oppressive conduct
vides guidelines on the setting aside and enforcement of arbitral on the part of [the defendant]’, the pending appeal before the
awards. This is found in articles 34, 35 and 36 of the Model Law. foreign courts meant that ‘the dispute [had] been taken out of the
Legislation based on the Model Law has been adopted in 74 hands of the Singapore courts’.13 The Court of Appeal empha-
states, with two Asian states – Korea and Myanmar9 – adopting it sised that anti-enforcement injunctive relief will only be granted
as recently as 2016. Even though there remain countries in the in exceptional circumstances and that such exceptional circum-
region – such as Indonesia – that have yet to adopt the Model stances entailed notions of unconscionability such as fraud or the
Law, these countries typically nevertheless enact domestic legis- lack of a party’s knowledge of the foreign proceedings until deliv-
lation that broadly tracks the Model Law provisions in relation ery of the foreign judgment. The Court of Appeal did not find
to enforcement.10 such exceptional circumstances in the present case. Nevertheless,
the Court of Appeal affirmed the High Court’s decision to grant
Singapore declaratory relief which affirmed the final and binding nature of
Singapore is a Model Law country that has enacted local legisla- the arbitration award.
tion (the International Arbitration Act (IAA) and the Arbitration Article 5 of the Model Law was considered from two differ-
Act) that gives effect to the Model Law (with seeming exceptions ent angles in this case. In its decision, the High Court considered
that are discussed below). Three recent cases bear mention. whether such an injunction was governed by the Model Law
In Sun Travels & Tours Pvt Ltd v Hilton International Manage because ‘if a matter is governed by the Model Law, the court’s
(Maldives) Pvt Ltd (Hilton (CA)),11 the Court of Appeal partially intervention is restricted to the extent provided for in the Model
allowed an appeal against a High Court’s decision12 to grant a Law and nothing else’. In the event, the High Court concluded
that article 5 of the Model Law did not prevent the court from was a tribunal established under the auspices of the SADC Treaty,
issuing a permanent anti-suit injunction as the granting of a per- which Lesotho and 14 other Southern African states are party
manent injunction or other remedy is not a matter governed by to. However, before the appellants’ claim against Lesotho could
the Model Law.14 The Court of Appeal also considered the effect be determined, the SADC Tribunal was dissolved due to a series
of article 5 of the Model Law on its power to grant declaratory of steps collectively taken by parties to the SADC Treaty. As a
relief. In this regard, the Court of Appeal noted that there was no result, it was impossible for the appellants to continue to pursue its
specific provision in the IAA or the Model Law which addressed claims against Lesotho. In June 2012, the appellants commenced
the specific declarations sought by the applicant. Accordingly, PCA arbitration against Lesotho. This time, the appellants alleged
there was nothing in the IAA or the Model Law that circum- that Lesotho had breached its obligations under the SADC Treaty
scribed the court’s power to grant the declaratory relief. The by contributing to the dissolution of the SADC Tribunal. The
Court of Appeal agreed that there was a ‘compelling basis for Singapore-seated PCA tribunal issued an award in favour of the
relief ’ as the declarations would have value as a persuasive tool in appellants. It found that Lesotho breached its obligations and gave
the foreign proceedings and to ‘uphold the integrity of the arbitra- directions for the constitution of a new arbitral tribunal to hear the
tion agreements and the [arbitration awards] rendered on the basis underlying expropriation claims which the appellants had against
of these agreements’.15 Lesotho. Lesotho thus commenced an application under article
Two recent decisions are examples of how Singapore courts 34(2)(a)(iii) of the Model Law to set aside the award in its entirety.
will set aside an arbitral award if an applicant is able to satisfy At first instance, the Singapore High Court allowed Lesotho’s
the relevant set aside grounds in article 34 of the Model Law. In application.The appellants’ appeal was dismissed. Quite apart from
BAZ v BBA,16 the High Court set aside an arbitral award against the fact that this is the second investor-state arbitration-related
minors who were parties to the arbitration agreement. The case matter that has gone before the Singapore courts, the decision
involved a share sale and purchase agreement, pursuant to which is also significant because the Court of Appeal agreed that it had
the buyers purchased shares in a company that were held by the jurisdiction to hear the setting aside application pursuant to article
sellers (five of whom were minors between the ages of three and 34(2)(a)(iii) of the Model Law, which states that an award may
eight years old). Pursuant to an arbitration agreement in the share be set aside if it ‘deals with a dispute not contemplated by or not
sale and purchase agreement, the buyers commenced ICC arbitra- falling within the terms of the submission to arbitration’ even
tion proceedings against the sellers, claiming that the sellers con- though the applicant was contesting the existence of the tribunal’s
cealed a report on regulatory transgressions. The arbitral tribunal jurisdiction to hear and determine the claim referred to it. As such:
found against the sellers and held that the sellers (including the
minors) were jointly and severally liable in damages for a sum of a dispute that is referred to arbitration by an investor who purports to rely
about S$720 million. The minors (through litigation representa- on the arbitration clause contained in the investment treaty, but which is
tives) applied to the Singapore High Court to set aside the award found to fall outside the scope of that clause . . . should be considered to
on the ground that the award would violate the public policy of fall outside the scope of the arbitration agreement and ‘the terms of the
Singapore. Given that the effect of the arbitral award would have submission to arbitration’ under Article 34(2)(a)(iii).
been to enforce an agreement against the minors, the High Court
agreed and took the view that enforcement of the arbitral award Having found in the case that the dispute referred to arbitration
would violate the protections given to minors in contractual rela- fell outside the scope of the arbitration clause contained in the
tionships under Singapore law.17 In the circumstances, the High material investment treaty, the Court of Appeal affirmed the High
Court concluded that: Court’s decision to set aside the award.
It is apparent from these recent decisions that the Singapore
an award against [minors] that saddles them with legal liability for an courts have steered a course in line with the Model Law20 –
amount exceeding S$720 million shocks the conscience, and it violates upholding the principle of double control yet intervening in a
Singapore’s most basic notion of justice to find [minors] liable under a principled manner (again in line with the Model Law regime) in
contract that was entered into when they were only between three to eight exercising their supervisory jurisdiction.
years old at the material time.18
Australia
The High Court therefore set aside the award against the minors In a recent decision by the Court of Appeal of Western Australia,
pursuant to article 34(2)(b)(ii) of the Model Law. Duro Felgura Pty td v Trans Global Projects Pty Ltd (in liq),21 the court
In Swissbourgh Diamond Mines (Pty) Ltd and others v Kingdom took an expansive view of the court’s power to grant interim
of Lesotho,19 the Court of Appeal affirmed a High Court decision orders in aid of international arbitration proceedings.Trans Global
to set aside a Permanent Court of Arbitration (PCA) award issued Projects sought a freezing order against Duro Felgura before
in an investor-state arbitration. The dispute between the parties arbitration proceedings had commenced. The freezing order was
in this case spans almost 30 years. In 1988, the first appellant, granted at first instance, and it required Duro Felgura to hold
Swissbourgh, was granted mining leases in regions in Lesotho. assets of at least A$20 million in Australia. The freezing order was
Swissbourgh is owned by the second to fourth appellants. The to be effective ‘until further order’, that is, after the constitution
fifth to ninth appellants were Lesotho-incorporated companies of the arbitral tribunal. The Court of Appeal dismissed the appeal
that entered into licensing agreements with Swissbourgh for the and upheld the orders granted at first instance. Notably, the Court
sub-lease of the mining leases and were the operating companies of Appeal agreed that the orders ought to be upheld in view of
for the mining operations in Lesotho. In the early 1990s, the gov- the ‘danger that a prospective judgment based on an arbitral award
ernment of Lesotho allegedly took steps to unlawfully expropriate will be wholly or partly unsatisfied because [Duro Felgura’s] assets
the mining leases. As such, the appellants commenced arbitra- might be dealt with’.22 The Court of Appeal also agreed that the
tion proceedings against Lesotho before the Southern African freezing order ought to continue ‘until further order’; and that
Development Community (SADC) Tribunal.The SADC Tribunal on the facts of the matter, it was an appropriate case for such an

order to be granted, given that on appeal, there was no dispute This was because it ‘did not decide all issues put to the arbitrator
that Trans Global Projects had a good arguable case.23 The case is a within the arbitrator’s mandate and did not involve an order or
reminder that the Australian courts continue to have a significant direction that might be characterised as an invalid delegation of
role in supporting international arbitration proceedings, especially power to a third party’.30
to ensure that a party is able to satisfy an award at the conclusion The court also gleaned from the UNCITRAL Secretarial
of proceedings. Notes that a party is not constrained by the 30-day time limit
In another recent arbitration decision by the Supreme Court in section 33(5) of the CAA (and in general article 33 of the
of Victoria, Blanalko Pty Ltd v Lysaght Building Solutions Pty Ltd,24 Model Law) to seek a further award where, as was the case in
the court provided guidance on what was a final award and this instance, the arbitrator made ‘a conscious decision not to deal
whether an arbitrator was functus officio. Although the court’s with an issue’.31 Necessarily, the court found that the arbitrator’s
determination was in relation to the Commercial Arbitration Act mandate in respect of costs of the court proceedings commenced
2011 (CAA) (that is, a ‘domestic statute in the State of Victoria’),25 in 2012 remained.32
the Supreme Court itself noted that ‘it should be interpreted in What is noteworthy about the judgment for the purposes of
conformity with international norms with respect to the Model this article is twofold. First, the court emphasised from the outset
Law, “so far as practicable”’. In this regard, the Supreme Court’s the need to interpret the CAA in line with the Model Law. Second,
analysis would be relevant to the other states in Australia and other the court thereafter conducted a rigorous analysis relying not only
Model Law jurisdictions in general.26 on local authorities but court decisions from neighbouring Model
The parties in this case were embroiled in two sets of proceed- Law jurisdictions (including New Zealand33 and Singapore)34 as
ings, as outlined below. well as the UNCITRAL Analytical Commentary35 and the Model
In the first set of proceedings, Blanalko alleged Lysaght Law drafting history.36 Both signal steps toward convergence.
breached a design and construction contract. This led to court More directly, on the topic of enforcement, the Victorian
proceedings beginning in 2012, which culminated in a settlement Court of Appeal in Gutnick and another v Indian Farmers Fertiliser
deed.Through the settlement, part of the dispute was resolved and Cooperative Ltd and another37 upheld an arbitration award,38 dis-
the remaining part was directed to arbitration. In the arbitration, missing an application to resist enforcement on the basis of pub-
the arbitrator delivered an interim award on 15 June 2016, which lic policy.
resolved most of the dispute and invited parties to make submis- There, the arbitral award declared certain agreements involv-
sions on, among other things, costs. A further award, which was ing the sale of shares to be rescinded and ordered the return of
named a final award, was delivered on 9 August 2016. In this, the the purchase price with interest and costs.39 By then, the shares
arbitrator found that he had the jurisdiction to consider the matter had already been transferred pursuant to the agreements but no
of costs of the court proceedings but did not go on to decide the provision was made in the award for the return of the shares. The
issue because he did not have the requisite information. Neither applicants argued the award should not be enforced in Australia
party thereafter requested an additional award under section 33(5) because enforcement would be contrary to public policy. This
of the CAA, which is substantially similar to article 33(3) of the was based on section 8(7)(b) of the International Arbitration Act
Model Law: 1974 (Cth),40 which is materially similar to article 36(1)(b)(ii) of
the Model Law.41
Unless otherwise agreed by the parties, a party, with notice to the other The crux of the applicants ‘public policy’ argument was
party, may request, within 30 days of receipt of the award, the arbitral as follows:
tribunal to make an additional award as to claims presented in the • the award permits ‘double recovery’ as the award allows the
arbitral proceedings but omitted from the award. respondents to have their money back and keep the shares
(which had already been transferred pursuant to the agree-
Blanalko thereafter applied to court for an order that Lysaght ments); and
pay its costs of the court proceedings that commenced in 2012. • double recovery was contrary to public policy (and that there-
Lysaght applied to stay Blanalko’s application on the basis it should fore enforcement of the award should not be allowed).42
be arbitrated (pursuant to section 8 of the CAA, which is substan-
tially similar to article 8 of the Model Law). The court ruled that there was no risk of double recovery in that
In the second set of proceedings, Blanalko filed an applica- case, thereby dismissing the appeal. The pertinent portions of the
tion to set aside the arbitral award on the basis that the arbitrator judgment are as follows:
had no power to determine the question of costs the way that he
did (which was, in Blanalko’s submission, tantamount to ‘permit- 29. It needs to be recalled that the applicants are contending that the
ting the parties to make application to the Supreme Court for award should not be enforced because it would fundamentally offend
it to determine the question ’).27 This was brought pursuant to principles of justice and morality.We accept the contention of the respond-
section 34(2)(a)(iii) of the CAA, in other words, that: ents that the effect [the orders in the award], was that both [agree-
ments] were set aside ab initio and that the parties were restored to the
the award deals with a dispute not contemplated by or not falling within positions that they were in before the agreements were entered into.As the
the terms of the submission to arbitration, or contains decisions on matters applicants themselves conceded, the effect of the order that the agreements
beyond the scope of the submission to arbitration, provided that, if the ‘are rescinded’ was to revest equitable title in the shares in the applicants.
decisions on matters submitted to arbitration can be separated from those We also accept the contention of the respondents that for the applicants
not so submitted, only that part of the award which contains decisions to have made good the proposition that enforcement of the award would
on matters not submitted to arbitration may be set aside. be contrary to public policy, they would have had to have established
that the primary declaration of rescission would or should not have been
The court dismissed the setting aside application28 and found that made under the domestic law of Australia or England without express
the ‘final award’, despite its label, was not in fact a final award.29 consequential orders providing for the revesting of the shares.
30. When the tribunal made its award declaring that the agreements be uniformly applied across the Indian courts. Eschewing a literal
had been rescinded, it did not declare that the respondents were entitled interpretation that would do violence to what the Supreme Court
to retain ownership of the shares; nor did it say anything that implied recognised to be the legislature’s intention behind the passing of
such an entitlement. It is plain from the award that the respondents the Amendment Act (to make India an arbitration-friendly juris-
case was a conventional claim for rescission involving the return of what diction), the Supreme Court held that arbitration-related applica-
was purchased with a refund of the purchase price. The arbitral tribunal tions filed in court after the coming into force of the Amendment
accepted those claims and made an award and order accordingly. As the Act will be governed by its provisions even if the underlying arbi-
judge put it, ‘the declaration of rescission in the award necessarily entails tration proceedings were commenced before the Amendment Act
the avoidance of the transactions from the beginning and the restoration came into force. The Supreme Court arrived at such a conclusion
of the parties to their previous positions’.With respect, we agree. Far from by reading the last phrase in section 26 (‘this Act shall apply in
being contrary to public policy, we consider that the award conforms with relation to arbitral proceedings commenced on or after the date
the public policy of Australia. of commencement of this Act’) to mean that the Amendment Act
shall apply to any court proceeding ‘in relation to arbitral proceed-
In short, the court’s approach was consistent with the notion of ings’ commenced on or after the commencement of the act.Thus,
minimal curial intervention43 (particularly in the arena of resisting even if the underlying arbitration proceedings had commenced
enforcement on the basis of public policy) marked clearly in the prior to the Arbitration Act, the act will apply so long as the appli-
portion quoted above (Gutnick at (29)) by the court’s acknowl- cation to the Indian court was made after the Amendment Act
edgement of the high threshold the applicants needed to meet. came into force.50
Incidentally, this strict approach to considering public policy-based In light of the BCCI case, it would appear that the Indian
applications to resist enforcement – or to set aside – has been courts will have power to entertain applications for interim meas-
adhered to by the Singapore courts as well.44 ures in support of foreign arbitral proceedings commenced prior
In line with this approach of being a pro-arbitration jurisdic- to the coming into force of the Amendment Act if the court pro-
tion, 2017 also saw the Federal Court of Australia in Lahoud v ceedings were filed post the Amendment Act coming into force.
Democratic Republic of Congo45 enforcing two investment arbitration While a proviso to section 2 of the Amendment Act states that
awards for the first time. applications for interim measures will apply even where the arbi-
tration was seated outside India, the confusion surrounding the
India proper interpretation of section 26 of the Amendment Act has
In a previous edition of The Asia-Pacific Arbitration Review,46 we meant that some applications for interim measures in aid of foreign
referred to India’s amendment, in December 2015, to its domestic arbitrations commenced before the Amendment Act came into
arbitration legislation (the Arbitration and Conciliation Act 1996) force were refused on the basis that the Amendment Act did not
as manifesting India’s ambition to be a pro-arbitration jurisdiction. govern such applications.
Despite the coming into force of the Arbitration & Conciliation The second main amendment to the Arbitration and
Amendment Act 2015 (the Amendment Act ), there had been con- Conciliation Act 1996, perhaps more directly relevant to the theme
fusion as to whether its provisions would apply to arbitration proof this article, was the provision relating to enforcement of awards.
ceedings which pre-date the Amendment Act. Specifically, issues The key amendment in the Amendment Act was the addition of a
have arisen as to whether the Amendment Act governs applications provision, section 36(2) and 36(3), which stipulate that an applica-
relating to arbitration proceedings that were commenced before tion to set aside an award would not automatically stay any appli-
the Amendment Act came into force for: cation to enforce the same.This was a departure from the original
• interim measures to support such arbitrations that were seated act that provided for such stays being automatically granted upon
outside of India; and a petition to set aside the award being filed. Rather, under the
• petitions filed under section 34 of the 1996 Act to set aside Amendment Act, whether a stay would be granted would be a
awards emanating from arbitration proceedings, and whether matter for the court’s discretion, and may be subject to ‘conditions
a stay on enforcement would be granted automatically once as it may deem fit’. This, it has been noted, could curb or control
such a petition is filed. the undue delays faced by successful parties attempting to enforce
their awards.
These issues have arisen largely because of the way section 26 of In another recent decision of M/s Emkay Global Financial
the Amendment Act is framed. It states: Services Ltd v Girdhar Sondhi51 (Emkay Global Financial Services),
the Indian Supreme Court ruled that a challenge to an arbitral
Nothing contained in this Act shall apply to the arbitral proceedings com- award under section 34 of the Arbitration and Conciliation Act
menced, in accordance with the provisions of section 21 of the principal 1996 should ordinarily be determined only by reference to the
Act, before the commencement of this Act unless the parties otherwise agree arbitral tribunal’s record. However, the Supreme Court added that,
but this Act shall apply in relation to arbitral proceedings commenced on if there are additional factual matters not contained in the arbitra-
or after the date of commencement of this Act. tion record (and that are relevant to the determination of issues in
the challenge to the award), parties may bring this to the court’s
While the Bombay High Court had ruled that the Amendment Act attention by way of affidavits. Cross-examination of the deponents
would apply to proceedings in court filed after the Amendment Act will not be allowed unless absolutely necessary. In reaching its deci-
came into force,47 there were decisions in other high courts of India sion, the Indian Supreme Court had regard52 to a recent report on
going in the opposite direction,48 which added to the confusion. the review of the institutionalisation of arbitration mechanism in
A recent judgment of the Indian Supreme Court in Board of India, 2017, in which the committee expressed concern about the
Control for Cricket in India v Kochi Cricket Pvt Ltd49 issued on 15 ‘inconsistent practices in some High Courts’ that have led to ‘sec-
March 2018 (the BCCI case), may have finally put these issues to tion 34 proceedings being conducted in the manner as a regular
rest even though it remains to be seen whether this decision will civil suit’. In light of this, the committee proposed an amendment

to section 34(2) of the Arbitration and Conciliation Act 1996, Conclusion

which would ensure that the proceedings under section 34 are From the foregoing, the trend in Asia towards convergence, based
‘conducted expeditiously’. In particular, the committee proposed on the countries surveyed, continues unabated. That said, parties
that section 34(2)(a) be amended to make it clear that challenges (and parties’ counsel) may still face practical challenges in enforce-
to an award under this section should be established on the ‘basis ment, whether as a function of needing to familiarise themselves
of the arbitral tribunal’s record’. The Arbitration and Conciliation with the nuances (convergence not being complete) of a foreign
(Amendment) Bill of 2018 (Bill No. 100 of 2018) also contains an jurisdiction (where enforcement is being considered) or being
amendment in line with the committee’s proposal: dissuaded as a matter of perception.56 It is apparent (or perhaps it
has always been) that the endgame of arbitration is recourse to the
In section 34 of the principal Act, in sub-section (2), in clause (a), for the courts whether through applications for setting aside or resisting
words ‘furnishes proof that’, the words establishes on the basis of the record enforcement. And although courts can go far in ensuring these
of the arbitral tribunal that shall be substituted.53 processes are not abused (as the courts above have), as the continu-
ing saga of Yukos epitomises,57 efforts at convergence will often
The Supreme Court’s decision in this case is significant. Not only be challenged by divergent interests.
is it consistent with the proposed amendments to the Arbitration
and Conciliation Act 1996, it has also paved the way for speedier Alessa Pang, a senior associate with the International Arbitration
resolution of applications to challenge an arbitral award by stream- Construction & Projects practice group at Rajah & Tann Singapore LLP
lining the procedure for such applications. No doubt, this decision assisted with the drafting of this article.
is in the right direction given India’s ambition to be a pro-arbitra-
tion jurisdiction. Notes
1 See http://www.siac.org.sg/images/stories/press_release/2019/
Developments in ASEAN [Press%20Release]%20SIAC%202018%20Cases%20Exceed%20400%20
There have also been developments in the arbitration laws of other for%20Second%20Year%20Running.pdf.
countries in the Association of Southeast Asian Nations (ASEAN). 2 See www.hkiac.org/about-us/statistics.
Legislative reform in Malaysia took place through the Arbitration 3 See https://iccwbo.org/media-wall/news-speeches/icc-court-case-
(Amendment) (No. 2) Act 2018 (No. 2 Amendment Act).The No. management-team-begins-operations-singapore/.
2 Amendment Act came into force in May 2018 and is geared 4 See, for example, www.legalbusinessonline.com/reports/arbitration-
towards the objective of ensuring that Malaysian arbitral law asia-next-generation.
remains progressive. It has been described as having the effect of 5 www.jonesday.com/files/Publication/d5d0b710-b68a-4254-9abf-
‘heralding the new era of Arbitration in Malaysia’.54 The amend- c97d9209fd40/Presentation/PublicationAttachment/d14c7619-75be-
ments follow the revisions made to the UNCITRAL Model Law 4258-b7f9-cde1c6d98a10/Intl%20Com%20Arb%20in%20Asia.pdf.
in 2006 and ensures that it is consistent with leading jurisdictions. 6 It remains to be seen if the reception of the Hague Convention
The amendments are extensive and include: on Choice of Court Agreements around the world – which would
• extending the definition of an arbitral tribunal to include an typically entail lowering the bar to recognition and enforcement of
‘emergency arbitrator’. This ensures that decisions and awards foreign judgments – would make court judgments more attractive.
issued by emergency arbitrators can be enforced under the In the Singapore context, the convention was ratified in June
Malaysian Arbitration Act 2005; 2016: see www.mlaw.gov.sg/content/minlaw/en/news/press-
• clarifying that a party to arbitral proceedings can be represented releases/singapore-ratifies-hague-convention-on-choice-of-court-
by ‘any representative’ appointed by the party. This means that agreement.html.
a party does not necessarily have to be represented by a lawyer 7 See http://www.uncitral.org/uncitral/en/uncitral_texts/
in arbitration proceedings; arbitration/1985Model_arbitration.html.
• clarifying that the Malaysian courts have power to look into the 8 See paragraph 2 of Resolutions adopted by the General Assembly
subject matter of the dispute when deciding on its arbitrability; at the 112th plenary meeting, 11 December 1985.
• amending the definition of an ‘arbitration agreement’ to 9 We discussed Myanmar’s new arbitration act in our previous
include agreements made or recorded by electronic means; and article: http://globalarbitrationreview.com/insight/the-asia-pacific-
• amendments to ensure that the Malaysian Arbitration Act 2005 arbitration-review-2017/1036984/arbitration-in-asia.
is aligned with the UNCITRAL Model Law 2006, by intro- 10 In the case of Indonesia, see generally: http://
ducing a framework for interim measures that can be issued by globalarbitrationreview.com/chapter/1036908/indonesia.
the tribunal and the Malaysian court. By way of example, the 11 [2019] SGCA 10.
amendments empower the Malaysian court to grant interim 12 Hilton Manage (Maldives) Pvt Ltd v Sun Travels & Tours Pvt Ltd [2018]
relief in support of foreign arbitration proceedings that are not SGHC 56 (Hilton (HC)).
seated in Malaysia. 13 See Hilton (CA) at [125].
14 See Hilton (HC) [44] and [46].
The examples cited above are, of course, not exhaustive. 15 See Hilton (CA) at [142].
Nevertheless, it is apparent from these amendments that they 16 [2018] SGHC 275.
will have the effect of reforming and modernising arbitration law 17 BAZ at [180].
in Malaysia. These amendments, together with the renaming of 18 BAZ at [180].
the Kuala Lumpur Regional Centre for Arbitration as the Asian 19 [2018] SGCA 81.
International Arbitration Centre (Malaysia)55 bear testament to 20 On a separate note, see http://kluwerarbitrationblog.
Malaysia’s commitment to developing its reputation as an arbitra- com/2016/12/07/uncertainty-of-enforcement-of-emergency-
tion hub. awards-in-india/, where it was noted the ‘legislative and judicial
trend worldwide is to bring municipal arbitration laws to recognise
and enforce emergency awards’, and the position in Singapore was 42 See Gutnick at [3].
cited as an example. 43 For a similar analysis on this point, see www.twobirds.com/en/news/
21 [2018] WASCA 174. articles/2017/australia/enforcement-of-foreign-arbitral-awards-in-
22 Duro Felguera at page 37. australia.
23 Duro Felguera at page 43. 44 See Aloe Vera of America, Inc v Asianic Food (S) Pte Ltd and
24 [2017] VSC 97. another [2006] 3 SLR(R) 174 at [75]-[76]; AJU v AJT [2011] 4 SLR 739
25 Blanalko at [10]. at [38]; BLB and another v BLC and others [2013] 4 SLR 1169 at [100]
26 This point was similarly made in http://hsfnotes.com/ (the point was undisturbed on appeal – BLC and others v BLB and
arbitration/2017/03/16/australian-court-provides-guidance-on-art- another [2014] 4 SLR 79 at [50]).
333-of-the-model-law-the-doctrine-of-functus-officio-and-when-a- 45 [2017] FCA 982.
final-award-is-not-final/. 46 See http://globalarbitrationreview.com/insight/the-asia-pacific-
27 Blanalko at [45]. arbitration-review-2017/1036984/arbitration-in-asia.
28 For the court’s detailed reasoning, see in particular [47]–[50]. 47 BCCI v M/s Rendezvous Sports World and BCCI v Kochi Cricket
29 Blanalko at [66]. Private Ltd (Justice Smt RP SondurBaldota).
30 Blanalko at [66]. 48 Ministry of Defence, Govt of India v Cenrex SP ZOO & Ors, (Justice
31 Blanalko at [25]. Mr Valmiki Mehta.
32 Blanalko at [66]. 49 (Appeal (Civil), 2879-2880 of 2018).
33 Blanalko at [22]. 50 BCCI case [para 23,25].
34 Blanalko at [35], [51], [53] and [58]. 51 (Civil Appeal No. 8367 of 2018).
35 Blanalko at [31]. 52 Emkay Global Financial Services Ltd at [18].
36 Blanalko at [32]. 53 Section 34(2)(a) of the Arbitration and Conciliation Act, 1996
37 [2016] VSCA 5. currently provides ‘An arbitral award may be set aside by the court
38 The arbitration was seated in Singapore; English law applied only if and the party making the application furnishes proof that’.
(Gutnick at [6]). 54 See https://www.aiac.world/news/254/The-Arbitration-
39 Full orders set out in Gutnick at [7]. (Amendment)-(No.-2)-Act-2018-Comes-Into-Force--%E2%80%93-The-
40 Section 8(7)(b) provides: ‘In any proceedings in which the New-Era-of-Arbitration-in-Malaysia.
enforcement of a foreign award by virtue of this Part is sought, 55 See https://www.aiac.world/About-AIAC.
the court may refuse to enforce the award if it finds that and to 56 See generally www.ft.com/content/b08965b4-c675-11e6-8f29-
enforce the award would be contrary to public policy’. For a 9445cac8966f.
general introduction to the International Arbitration Act 1974 (Cth) 57 See generally http://kluwerarbitrationblog.com/2016/05/13/theus50-
(and section 8 in particular), see www.lexology.com/library/detail. billion-yukos-award-overturned-enforcement-becomes-agame-of-
aspx?g=58063fca-b0fe-4c05-9080-12be459d4806. russian-roulette/.
41 In fact, the similarity – and the relationship between the International
Arbitration Act 1974 (Cth) and the Model Law – was highlighted at
footnote 2 of Gutnick (and further at [17]).

Andre Yeap SC Kelvin Poon

Rajah & Tann Singapore LLP Rajah & Tann Singapore LLP
Andre Yeap SC is Rajah & Tann Singapore’s senior partner and Kelvin Poon is a partner in the international arbitration, construc-
heads its international arbitration practice. Apart from interna- tion and projects practice group of Rajah & Tann Singapore LLP.
tional arbitration work, where he has also represented various state He has represented clients in a broad range of construction, com-
interest in investor-state disputes, Andre has developed a broad- mercial and insolvency disputes before the Singapore courts and
based corporate, commercial and insolvency-related litigation in numerous arbitrations.
practice, which includes banking, securities, shareholder disputes, Kelvin has been cited and recommended in various publica-
fraud, breach of fiduciary duties, trust and estate matters, often tions for construction and international arbitration including the
with strong cross-border elements. Many of his cases are landmark The Legal 500 Asia Pacific and Best Lawyers. Kelvin is a fellow of
cases, setting precedent for various areas of the law. The Legal the Chartered Institute of Arbitrators. He is also a panel arbitrator
500 Asia Pacific has stated, ‘Andre Yeap SC is a pillar of strength of the Asian International Arbitration Centre.
in commercial matters’. He has been consistently recognised as
a leading lawyer in arbitration and dispute resolution by various
publications, including Global Arbitration Review, Chambers Global,
Chambers Asia-Pacific and AsiaLaw Profiles. Andre is a member of
the Energy Market Authority Board and was previously deputy
chairman of the Income Tax Board of Review and a member of
the Competition Appeal Board.
9 Battery Road Rajah & Tann Singapore is one of the largest full-service law firms in Singapore and South East Asia.
#25-01 Over the years, the firm has been at the leading edge of law in Asia, having worked on many of
Singapore 049910 the biggest and highest-profile cases in the region. The firm has a vast pool of talented and well-
Tel: +65 6535 3600 regarded lawyers dedicated to delivering the very highest standards of service across all the firm’s
Fax: +65 6225 9630
practice areas.
The firm entered into strategic alliances with leading local firms across South East Asia and this
Andre Yeap SC
andre.yeap@rajahtann.com led to the launch of Rajah & Tann Asia in 2014, a network of more than 600 lawyers. Through Rajah
& Tann Asia, the firm has the reach and the resources to deliver excellent service to clients in the
Kelvin Poon region including Cambodia, China, Indonesia, Lao PDR, Malaysia, Myanmar, Philippines, Singapore,
kelvin.poon@rajahtann.com Thailand and Vietnam. The firm’s geographical reach also includes Singapore-based regional desks
focusing on Japan and South Asia. Further, as the Singapore member firm of the Lex Mundi Network,
www.rajahtannasia.com the firm is able to offer its clients access to excellent legal support in more than 100 countries around
the globe.
Financial Arbitration in China: Actuality and
Development
Shanghai International Economic and Trade Arbitration Commission
(Shanghai International Arbitration Center)
Outlook of financial arbitration compared to courts.Taking Shanghai as an example, from 2013 to

With the development of China’s economy, the opening of 2017, the number of financial cases accepted by Shanghai courts
Chinese financial markets and the emergence of innovative prod- grew at an average annual rate of 51 per cent. In the past five years,
ucts and ways of transactions, financial disputes correspondingly a total of 478,000 financial cases were concluded. It can be seen
continue to increase. As an alternative dispute resolution (ADR) that, as a way of dispute resolution in financial industry, arbitration
method, arbitration plays an increasingly important role in the field still has a very broad space for prospective development in China.
of financial dispute resolution in China.
The caseload and the subject matter of the disputes handled by The advantages of arbitration for financial dispute resolution
arbitration in domestic arbitration institutions of China continues Commercial arbitration has outstanding advantages compared to
to increase, with the statistics showing that more than 540,000 the litigation, especially regarding professionalism, confidentiality,
arbitrations have been accepted and administrated in 2018, includ- flexibility and internationally enforceability.
ing more than 120,000 financial cases. While resolving disputes relating to finances such as securi-
The Shanghai International Economic and Trade Arbitration ties, futures, insurance and trust, arbitrators shall have professional
Commission Shanghai International Arbitration Center (SHIAC), and comprehensive knowledge and career backgrounds. One of
pioneer of the foreign-related commercial arbitration institutions the characteristics of arbitration is that parties can choose industry
in China, accepted 381 financial cases in 2018, accounting for 34 experts to hear the case. If the arbitrator has both financial and legal
per cent of the total cases received. The disputed amount reached knowledge, it would be beneficial to accurately grasp the nature
7.888 billion yuan, accounting for 39.2 per cent of the total. of the transaction, clarify the controversies of the dispute and find
The types of disputes, which cover a broad range, include stocks, a proper solution to the dispute. The current 965 arbitrators of
bonds, funds, futures, insurance, trusts, financial leasing, financial the SHIAC are from 74 countries and regions around the world.
derivatives, entrusted asset management, commercial factoring, There are 514 arbitrators with a financial background, accounting
settlement and collection of credit card account, internet finance, for more than 53.2 per cent, of which 62 per cent are from main-
bank loans, equity entrustment, and value adjustment mechanism, land China and 38 per cent from abroad (foreign countries, Hong
among others. Nevertheless, in terms of quantity, traditional lend- Kong, Macao and Taiwan). The specialities of arbitrators cover all
ing disputes still account for a large proportion. traditional and emerging financial industries.
Taking London and Hong Kong, two globally recognised Confidentiality means the whole arbitration is proceeded in a
international centres of finance and arbitration, as the sample of a private and confidential way. Unless with the consent of both par-
comparative study, 20.55 per cent of the cases accepted by London ties, any third party is excluded from the hearing, documentations,
Court of International Arbitration (LCIA) in 2016 were bank- opinions of the parties and the arbitral awards. Confidentiality lim-
ing and financial cases, while 29.3 per cent of the cases accepted its the collateral damage of disputes, especially in financial transac-
by the Hong Kong International Arbitration Centre (HKIAC) in tions where the counterparty of the transaction is non-specific and
2016 were financial cases. Thus, financial disputes accounted for have special needs for trade secret protection, such as private equity
substantively large proportions in the these two centres. investment and family wealth management.
Although we have mentioned the concept of financial cases, For international financial disputes, arbitral awards are recog-
there is neither a unified definition nor classification of the finan- nised and enforced under New York Convention, the procedure
cial cases by researchers or practitioners. It is worth noting that of which is simpler compared to enforcing a judgment overseas.
the latest provisions of the Supreme People’s Court (SPC) on the Moreover, the arbitral procedure is more flexible and efficient than
Jurisdiction of Shanghai Financial Court, issued on 7 August 2018, litigation, with parties of cross-border financial disputes being able
can, to a certain extent, be seen to be the Chinese judicial organs’ to get rid of complicated and lengthy court litigations.
understandings of ‘financial cases’, which was of great significance When focusing on China, the emergence and development of
nationwide. According to the these provisions, disputes relating two major types of financial disputes is striking. One is the financial
to securities, futures, trusts, insurance, mercantile papers, letters of leasing case.The SHIAC began accepting the first financial leasing
credit, financial loan contracts, bank cards, financial leasing con- arbitration case in 2009 and received nearly 100 cases to 2016.The
tracts, entrusted asset management contracts, pawns, among others, amount in dispute was close to 400 million yuan. The data for
have been deemed as traditional financial disputes. Independent the past five years shows an upward trend. More than 10 financial
guarantees, commercial factoring, private equity funds, non- bank leasing companies involved in such cases are currently foreign-
institutions’ online payment, online lending and online crowd invested enterprises with considerable scales and influences in the
funding for equities have been deemed as new types of finan- industry. The amount of financial leasing cases in China has kept
cial disputes. increasing while the laws and regulations of financial leasing has
Although arbitration has been promoted to a certain extent grown out of nothing to become a relatively mature law system.
in the financial field, the function and role thereof is still limited In such development, the SHIAC had realised that the new born

Financial Arbitration in China: Actuality and Development
financial leasing market is in urgent need for protection by legisla- Support for financial arbitration from China’s judiciaries
tion and should also keep an eye on the phenomena of breach of Through a set of laws, regulations, judicial interpretation and
contract and lack of good faith. From the principle of maintaining other documents, the Chinese judiciary is gradually improving
stable performance of transactions and orderly development of the the system of financial dispute litigation and alternative dispute
industry, the relevant cases have been properly handled according resolution solutions.
to the laws in effect at that time. Deutsche Leasing (China) Co, Ltd, The Shanghai Financial Court was established on 20 August
established in China by Stadt Sparkasse, one of the world’s largest 2018. By the end of 2018, the Shanghai Financial Court had
banking groups, commented in its in-house briefing several years accepted 1,897 cases, with a total amount of 25.2 billion yuan.
ago: ‘Although China’s financial leasing legal system is not perfect, The main types of disputes covered misrepresentation in securi-
it is gratifying that [the] SHIAC has made a fair award and has been ties transactions, loan, corporate bond transactions, stock pledge-
effectively enforced by Chinese courts’. style repurchase, financial leasing and business trust disputes,
The other type of dispute is asset management. In recent years, among others.
with the increasing understanding and acceptance of finance, the The Shanghai Financial Court is responsible for judicial
asset management business has grown and been diversified in reviews on financial arbitration awards of domestic and foreign
China. Asset management products include trust plans, asset man- arbitration institutions, including the SHIAC. It accepts applica-
agement plans by security brokers, asset management by special tions for judicial review on financial arbitration and the appli-
accounts, bank financial plans and insurance asset management cation for recognition and enforcement of foreign financial
plans, among others.The final target assets involved include stand- arbitration awards. The establishment of the Shanghai Financial
ardised and non-standardised debt assets, equity assets and so on. Court is facilitated for the centralised jurisdiction of financial arbi-
Moreover, with the rapid development of information technology, tration judicial review cases and is to apply a unified standard of
the asset management business has formed a geographically broad application of laws in the issues of setting aside, non-enforcement
financial network with a complex structure through global and of arbitral awards and relevant issues thereof in a more support-
regional financial centres and a large number of offshore finan- ive attitude towards arbitration while still fulfil its power of legal
cial markets. supervision, which is a practical way of fulfilling obligations under
The emergence of asset management disputes has brought New York Convention.
many new problems and thinking to arbitration practitioners.The
SHIAC accepted an arbitration in which a fund company claiming Shanghai’s efforts to become international dispute
against a securities company for the breach of pledge-style repur- resolution centre
chase agreement contract. The securities company filed a lawsuit Finance is the core function of Shanghai and to build Shanghai
challenging the validity of the arbitral clause by arguing that the into an international financial centre has been set as a national
arbitral clause should only bind assets management plans raised by goal. In order to meet the actual demand of a financial centre,
the fund company, instead of the fund company itself. Ultimately, Shanghai promulgated the ‘Shanghai Action Plan to implement
the Shanghai Financial Court confirmed that the disputed arbitral the National Measures for Further Enlarging Opening up Policy
clause should be valid and bind the fund company and the securi- and Accelerating the Establishment of a New and Open Oriented
ties company. However, as to the trading practices showed in the Economy’ and formed 32 specific measures in six aspects of the
case, the fund company, fund products and the investors may have opening up of the financial industry. Meanwhile, the goal to
cross-claims against the other parties under the breach of contract build Shanghai into the global asset management centre has also
issues, thus the issue of jurisdiction may become a topic that causes been mentioned.
discussions in the arbitration fields. In 2015, the Chinese State Council proposed in the Shanghai
Free Trade Zone Plan for Deepening Reform, to accelerate the
7-8/F, Jinling Mansion Established in 1988, the Shanghai International Economic and Trade Arbitration Commission (SHIAC)
28 Jin Ling Road (also Shanghai International Arbitration Center, previously the China International Economic and
Huangpu District Trade Arbitration Commission Shanghai Commission) has been providing independent, impartial,
Shanghai 200021 effective and professional arbitration services for commercial disputes from its inception.
China
In October 2013, the SHIAC founded the China (Shanghai) Pilot Free Trade Zone Court of
Tel: +86 21 6387 5588
Arbitration and enacted the China (Shanghai) Pilot Free Trade Zone Arbitration Rules in line with inter-
Fax: +86 21 6387 7070
info@shiac.org national practice. In August 2014, the SHIAC established the first aviation arbitration platform in the
world: the Shanghai International Aviation Court of Arbitration, providing a significant approach for
www.shiac.org settling international aviation disputes. In October 2015, the SHIAC established the first dispute resolu-
tion platform for the Brazil, Russia, India, China and South Africa (BRICS): the BRICS Dispute Resolution
Center Shanghai, offering dispute resolution mechanisms for settling cross-border disputes among the
BRICS countries. In November 2015, the SHIAC set up the first dispute resolution platform for disputes
arising between Chinese and African countries: the China-Africa Joint Arbitration Centre Shanghai,
providing the business entities of China and Africa with convenient dispute resolution services.
The SHIAC is dedicated to actively giving full play to the important role of arbitration among
diversified dispute resolution methods and continues to devote itself to building Shanghai to be the
arbitration centre in the Asia-Pacific region and the world as a whole.
Financial Arbitration in China: Actuality and Development
process of Shanghai becoming the bellwether of Asia-Pacific arbi- In order to accelerate the establishment of Asia-Pacific arbi-
tration serving the global market. tration centre serving the global market, deepen the construction
In August 2016, the Shanghai municipal government issued a of the Shanghai International Commercial Dispute Resolution
clear plan for the construction of the Shanghai International Trade Center and build an international-oriented commercial dispute
Center during the 13th Five-Year Plan period and announced resolution platform, the SHIAC initiated the establishment of
to build an Asia-Pacific international commercial dispute resolu- the Shanghai International Dispute Resolution Center in 2018.
tion centre.To cultivate widely-recognised commercial arbitration Based on this new platform, the SHIAC will invite well-known
and mediation institutions in Shanghai, increase the professional foreign mediation and arbitration institutions to gather together
service capabilities and international influence, attract and gather and simultaneously promote China’s practice of diversified dispute
internationally renowned commercial dispute resolution insti- resolution mechanisms including mediation and arbitration. It is
tutions, the plan mentioned building an international-oriented foreseeable that such a new platform will promote a pro-business
commercial dispute resolution platform. environment with rule of law insurance in Shanghai and help
In October 2017, Shanghai issued its action plan in the service to resolve international commercial disputes including finan-
of the national ‘Belt and Road’ scheme and announced to build a cial disputes.
Shanghai Belt and Road international arbitration centre.

Innovating the Future: Recent Changes and
Developments in Global and Regional Arbitral Institutions
Sue Hyun Lim
KCAB INTERNATIONAL
Introduction International Arbitration Centre (AIAC) and thereafter launched

The past few years brought to light a noticeable increase in the a new set of rules.4 The change came in light of the KLRCA’s
frequency and range of proposed innovations and developments 40th year.5
among arbitral institutions. Such developments varied from the The Japan Commercial Arbitration Association also rolled
adoption of new rules to the introduction of novel concepts out an amendment to its two current sets of arbitration rules at
geared towards improving practice.These changes appeared glob- the end of 2018, which would take effect early in 2019.6 At the
ally – similar in some respects, while more innovative in others. same time, it introduced an additional set of new rules with the
Witnessing these developments raised interesting questions: aim of providing a more efficient and cheaper arbitration pro-
what lies behind these changes and what do these mean for the cedure (often called interactive rules) that draws on some civil
future of international arbitration? law-type approaches.7
In 2017, the Chinese Arbitration Association, Taipei (CAA),
The recent bloom of arbitration centers launched a new set of rules specifically for arbitrations seated out-
Reinventions side of Taiwan as it revealed plans to set up shop in Hong Kong in
In recent years, arbitral institutions around the world have taken it hopes of attracting cases related to China’s belt and road initiative.
upon themselves to update, add to and modernise their rules. Some In 2018, it revised its arbitration rules and passed new instruments
institutions have even changed their organisational structures. as it renamed and rebranded the Chinese Arbitration Association
In the case of the Korean Commercial Arbitration Board International to the CAA International Arbitration Centre.8
(KCAB), changes came about in the form of a significant restruc- In 2017, the Bahrain Chamber for Dispute Resolution
turing of the institution and an extensive upgrade of the interna- launched a new set of arbitration rules, following Bahrain’s
tional case administration and promotion staff. adoption of the UNCITRAL Model Law on International
In 2018, an important decision was taken by the respective Commercial Arbitration for both domestic and international dis-
boards of KCAB and the Seoul International Dispute Resolution putes back in 2015.9 The rules include new provisions on chal-
Center (SIDRC), which resulted in the two organisations joining lenges to arbitrators, summary dismissal of claims, and the nature
forces.1 Specifically, the international case administration functions and timing of requests for arbitration, responses, statements of
of KCAB were carved out to a separate and newly-formed divi- claim and statements of defence.10
sion named KCAB INTERNATIONAL, headed by the former The changes among arbitration institutions are not limited
chair of the SIDRC and run by a full-time secretary general who to Asia.
was formerly an arbitration partner with the largest arbitration The German Arbitration Institute (DIS) also introduced
practice firms in Korea. Since then, KCAB INTERNATIONAL sweeping changes in the DIS Arbitration Rules in 2018.11 The
has been staffed by legal professionals with international and mul- rules were revised to account for developments in domestic and
tilingual backgrounds. international arbitration as well as practical experiences with the
The decision also resulted in the consolidation, expansion previous version of the rules.12
and modernisation of KCAB and SIDRC’s hearing facilities. Earlier this year, the Chamber of Conciliation, Mediation,
Consolidating SIDRC into KCAB INTERNATIONAL also and Arbitration CIESP/FIESP, in São Paulo, Brazil, promulgated
meant that the latter’s international cooperation work could draw a new rule regarding Interim Arbitrator Proceedings.13 With this,
from the existing profile and brand power built over the years by parties will have access to remedies in cases of emergency and
the former since its establishment in 2013. imminent need, even prior to the issuance of the final award.
Other regional arbitration institutions that revamped their
New rules rules over the past three years are the Thai Arbitration Institute
Most of the momentum seems to be building up in the Asia- (TAI)14 in 2017 and the Vienna International Arbitral Centre
Pacific region, perhaps reflecting the rapid growth of the regional (VIAC)15 in 2018.
economy and the vitality of the arbitration communities in
these regions. Innovations and initiatives
In 2018, the Hong Kong International Arbitration Centre The onward progress shown by different arbitration institutions
(HKIAC) finally completed its rules revision process, announcing to upgrade themselves and promote arbitration in general have
the new rules at the HK Arbitration Week in November 2018.2 appeared in various forms of innovations and initiatives.
This improved upon the 2013 Administered Arbitration Rules by
introducing, among others, features facilitating the use of third- Automation and digitisation
party funding.3 The Center for Arbitration and Mediation of the Chamber of
Earlier in 2018, the Kuala Lumpur Regional Centre for Commerce Brazil–Canada (CAM–CCBC) forwarded the stream-
Arbitration (KLRCA) officially rebranded itself as the Asian lining initiative of fully automating a portion of the arbitration
Innovating the Future: Recent Changes and Developments in Global and Regional Arbitral Institutions
proceedings, specifically the administrative phase prior to the con- Arbitration in the world of mobile applications
stitution of the court.16 This is merely the first step towards the goal In 2018, CAM-CCBC launched its own exclusive mobile appli-
of further digitising arbitration procedures in the coming years. cation platform that makes it easier to access data such as the list
On the other hand, the VIAC has implemented an electronic of in-house arbitrators and mediators, regulations, infrastructure,
case management system that allowed it to administer cases in a code of ethics, resolutions, contacts of its employees and the table
paperless manner.17 of expenses.27
The application will also be a means for greater interaction
Protocol on video conferencing during conferences, as it will allow the audience to individually
KCAB INTERNATIONAL has recently revealed a draft ver- respond to a question posed by the speaker.28
sion of its Draft Protocol on Video Conferencing in International
Arbitration.18 This arose due to the increasing acceptance of video Specialised panels
conferences as a cost-effective alternative to court hearings.While The HKIAC recently initiated a proactive measure that seeks to
parties have been free to agree to such a method, the draft protocol persuade a special sector to engage more in arbitration. In 2018,
does away with the potentially lengthy and incomplete negotia- a panel of arbitrators specialising in financial services disputes was
tions on the matter, as it is basically a guide for best practices on set up.29
the use of video conferences in arbitration.19 The panel is composed of experienced arbitrators, senior
counsel, former judges and former in-house counsel of major
Greater transparency financial institutions. Collectively, they can offer their expertise
The bid for greater transparency has also been a milestone for across various disputes arising from financial services, such as: ‘dis-
some institutions such as the Arbitral Institute of the Stockholm putes in relation to structured financing, sovereign lending, forex
Chamber of Commerce (SCC). In 2017, the SCC released its trading, derivatives, asset management, interbank and banking
policy on how it appoints arbitrators – a policy that was first regulatory matters’.30 This earned the HKIAC the nomination
introduced 11 years prior to this release.20 This effort to offer for the 2019 GAR Awards for best innovation.31
greater transparency to its users outlines in six points the fac-
tors the SCC considers when making such appointments, such as Increasing inclusivity in the world of arbitration
arbitration experience, having a law degree, having a background Recently, many arbitral institutions have made great strides
in either civil or common law, nationality, specialisation and gen- in advancing gender equality. The Equal Representation in
der diversity.21 Arbitration Pledge that was launched in 2016 added to this
Other arbitral institutions in Europe have also made simi- momentum.32 However, this was not the only or the last of
lar efforts for greater transparency. The International Chamber these efforts.
of Commerce (ICC) International Court of Arbitration, Milan Some regional arbitration institutions took great steps forward.
Chamber of Arbitration, and VIAC have also started publishing the In 2018, the HKIAC launched a new group that promotes women
names of arbitrators serving on tribunals.22 arbitration practitioners in China, the Women in Arbitration.33
The group seeks to provide an avenue wherein women in arbitra-
Cross-institutional consolidation tion can discuss issues, grow networks, build business relationships
Towards the end of 2017, the Singapore International Arbitration and help develop the next generation of female practitioners.This
Centre (SIAC) unveiled a novel proposal for cross-institution con- is one of many steps that the HKIAC has taken to advance gender
solidation of related international arbitration proceedings.23 The equality in international arbitration.
SIAC proposal envisions various institutions to put down a pro- In the same year, the VIAC also announced its first all-female
tocol for consolidating related disputes administered by different panel.34 The VIAC’s arbitrator appointments reflect its efforts for
bodies, which would theoretically replicate the cost-efficiency of female empowerment – out of the four appointments it made
conventional consolidation on a wider scale. It has yet to be seen in 2017, two of them were women.35 This contrasts with the
whether other institutions will join this interesting effort in ear- appointments made by the parties during the same year, wherein
nest and incorporate it as part of its practices, but in any event out of the 17 appointments, only two were women.36
this innovation has earned SIAC a nomination in the 2018 GAR Achievements such as these show that the international arbi-
Awards for the best innovation category.24 tration community has come a long way from where it began.
Nevertheless, a lot more has to be done in terms of inclusivity,
China’s first appellate procedure in arbitration proceedings especially in the other aspects of diversity, such as ethnicity, legal
The Shenzhen Court for International Arbitration (SCIA) recently backgrounds and nationality.
introduced an optional appellate procedure for arbitration pro-
ceedings – the first in China.25 Normally, a tribunal’s award would Possible causes
be final and unappealable, which is often a hallmark distinction Aside from knowing how regional arbitration centers have rein-
between regular court proceedings and arbitration proceedings vented themselves or initiated innovations, knowing why they
that would save both time and money. did so could prove useful for maintaining, accelerating or rec-
However, the SCIA noted that this comes at the cost of the reating these growth spurts across the globe. No single cause
losing party lacking an adequate remedy in case an unjust award is could be attributed to the same, so what follows are a handful of
issued by the tribunal. While parties could refer the matter to the likely triggers.
courts, they would often be restricted to procedural issues.
The introduction of this optional appellate procedure is seen Changes brought about by state governments
as a middle ground for these trade-offs that would help ensure that Even though the field of international arbitration is inherently
justice is correctly served to all parties involved. It earned the SCIA international, there still exists inevitable ties and relationships with
a nomination in the 2019 GAR Awards for best innovation.26 governments of each jurisdiction. Developments in arbitration can

be triggered by government commitments and policies to support The anticipation from the One Belt One Road initiative
it, including the passage of legislation. (BRI) is one such example. The ICC and HKIAC have been
In 2015, Russia revised its national arbitration laws with the particularly prominent in their proposals for initiatives aimed at
goal of improving and modernising the country’s arbitration disputes connected to China’s BRI projects.The ICC, for its part,
regime.37 The transition period since then has resulted in four created the Belt and Road Commission to drive the development
institutions obtaining the necessary licences as of 2018, namely, of the ICC’s existing procedures and infrastructure to support
the International Commercial Arbitration Court, the Maritime BRI disputes.45 The HKIAC has also maximised this opportunity
Arbitration Commission, the Arbitration Center at the Russian by introducing a series of BRI-dedicated services, including the
Union of Industrialists and Entrepreneurs, and the Russian launch of the Belt and Road Advisory Committee and the hosting
Arbitration Center at the Institute of Modern Arbitration.38 of outreach programmes.46 Similarly, the CAA’s plans to expand
Korea revised its Arbitration Act on November 2016 to align to Hong Kong was known to be triggered by the BRI and the
its national legislation with the 2006 UNCITRAL Model Law.39 disputes that may arise therefrom.47
Notably, this includes the court’s ability to enforce the interim
measures ordered by an arbitral tribunal. In 2017, the Korean Technological advances
National Assembly enacted the Arbitration Industry Promotion The world today is ever more connected and significant changes
Act, designed to provide the legal basis for the government’s sup- have come along with these fast-paced technological advances.
port of the arbitration industry.40 Specifically, it allows the govern- Some institutions have taken things a step further by integrating
ment to support efforts to expand arbitration dispute resolution technology into its processes, such as CAM-CCBC’s full automa-
facilities, cultivate experts and professionals in the area of arbitration of a portion of the arbitration proceedings48 and the VIAC’s
tion, and support research and development in the arbitration electronic case management system.49
field.The enactment of this special act is often cited as the catalyst In KCAB INTERNATIONAL’s case, the Draft Protocol on
that brought about the restructuring of KCAB and the launch of Video Conferencing in International Arbitration came in response
KCAB INTERNATIONAL. to the realisation that such avenues for conducting proceedings
Singapore and Hong Kong passed their third-party funding have become more and more prevalent in recent years.50
legislations in 2017 and 2018, respectively.41 These legislations A task force was even created to address the issues of data
aim to abolish the common law torts of maintenance and cham- protection through use of electronic devices. The International
perty. Such improvements raise expectations that a more liberal Council for Commercial Arbitration (ICCA) and the International
use of third-party funding could herald a new boom in the num- Bar Association (IBA) recently joined forces to establish the Task
ber of arbitration cases filed around these regions. Force on Data Protection in International Arbitration Proceedings,
The Thai government recently introduced the SMART Visa which is charged with creating guidelines on how data protection
programme that streamlined the application process and provided issues impact the arbitration process and arbitration participants.51
incentives that would encourage highly-skilled foreigners to live It can be expected that these developments could also impact, to
and work in the country.42 It is hoped that this will raise the oppor- some degree, the practices and protocols put in place by arbitral
tunity for Thailand to attract more foreign arbitrators. The TAI institutions in the future.
held discussions on a government resolution that would authorise
it to certify the qualifications, expertise and working status of Parallel promotions of arbitration
foreign arbitrators in relation to the SMART Visa application.43 The proliferation of networking and conference opportunities
also act as a cue that sparks further cross-pollinations of ideas
Stimuli provided by similar institutions and initiatives within the arbitration community, which in turn
Another reason that could account for the recent change of rules stimulates the promotional efforts of the institutions.
is the recognition that other international arbitration bodies have
also updated their rules in recent years.44 Cultivating the next generation of practitioners
Updating rules may be a natural necessity that few institu- Initiatives from various institutions provide platforms to engage
tions could avoid altogether, as they must react proactively to user the younger generation of practitioners in the arbitration com-
feedback regarding the efficiency or clarity of current rules. It also munity, such as the Young ISTAC, DIAC 40 and KCAB Next.
reflects the desire of each institution to stay on par with the stand- One of the recent additions, KCAB Next, is a voluntary
ards set by institutes considered to be industry leaders. Whether member-driven group launched in November 2018.52 It serves
they are leaders or followers, it is common that all institutions as an ongoing platform where ideas are exchanged and profes-
strive to stand out by actively seeking ways to improve existing sional friendships are nurtured among the most active and visible
procedures through rules revisions. younger members of the arbitration community in Korea. With
The innovations implemented by other institutions some- its 13-strong steering committee members – selected on the basis
times embolden other institutions to follow suit. When another of their professional reputation in the Korean arbitration market
institution – usually a closely-watched industry leader or another and which represent the diversity that exists in the field in terms
similarly situated institution – revises its rules or introduces inno- of gender, nationality and legal backgrounds – the new group’s
vations, it is easier for the other institutions to create the internal basic role is to organise or support events in which young arbitra-
justification or momentum to initiate a project that strives to do tion practitioners can network, learn and collaborate in long-term
something similar, if not outperform the other institutions. projects relevant to arbitration.
Global economic developments Introducing law students to arbitration

It is to be expected that arbitration institutions would also be More and more law students and future legal practitioners are
motivated to supplement existing services in response to eco- becoming aware of arbitration through moot competitions such
nomic developments – another reason behind recent activities. as the Willem C Vis Moot, Vis Moot East and Foreign Direct
Investment Moot Competition, each of which are facilitated by Possible trend: more divergence than convergence
various arbitration institutions. among institutions?
The AIAC and ICC jointly hosted the Pre-Moot Competition Whether these new developments signal a trend of increasing
for the Willem C Vis International Commercial Arbitration convergence among institutions (since a good idea in one institu-
Moot for the fifth time this year, while the Beijing Arbitration tion is caught up by others) or a trend of divergence (as each insti-
Commission supported the Vis Beijing Pre-Moot again, follow- tution is trying to persuade users that it is different from others),
ing the previous two years. Seoul has its own pre-vis moot com- is a matter that is left to be seen. But the answer may well be that
petition jointly hosted by the Seoul National University, KCAB we are moving towards diversity, which is a concept distinguish-
INTERNATIONAL and the Korean Council for International able from divergence.
Arbitration. In February 2019, the competition drew 10 teams Divergence suggests a lack of harmony among institutions
from five different jurisdictions. with regards to the acceptable level of standards of fairness and
Seoul is likely to become the centre stage for a major global efficiency. In contrast, diversity suggests that while all institutions
competition in 2020, as it is poised to host the global rounds of share a common understanding of what are the expected and
the FDI Moot Competition – the first time in history where the desirable features of international arbitration, there is no need for
global rounds would be hosted in Asia. one model to serve all cases disregarding the different needs of
Other institutions in Asia, such as the TAI and the Thailand each dispute.
Arbitration Center also hold various orientations specifically for This might be the realistic approach as the types and sizes of
law faculty and students from various local universities. disputes, as well as the expectation of the parties, are ever trans-
forming and diverse. This diversity of cases and users is enough
Major conferences to call for the innovations and reinventions of even the smaller
Annual conferences or groups of conferences have gradually regional arbitration centers. And by incessantly finding innova-
become a fixed feature in the international arbitration landscape. tive ways to make arbitration more user-friendly for each specific
The annual HK Arbitration Week has long since been a periodic cases, these institutions might as well be stimulating the others
annual event in Asia53 and so has the China Arbitration Summit, to improve so that arbitration as a whole continues to improve,
which usually takes place in September.54 The SIAC hosts it develop and innovate into the future.
biennial congress every even years, along with a host of other
international conferences.55 Notes
In Korea, the annual celebration called Seoul ADR Festival 1 ‘[Press Release] Launch of KCAB INTERNATIONAL and Expansion
is hosted every year in collaboration with UNCITRAL, the of Seoul IDRC,’ KCAB INTERNATIONAL website, available:
Ministry of Justice and the ICC. In 2018, it celebrated the http://www.kcabinternational.or.kr/user/Board/comm_notice.
seventh ADR Conference, which was kicked off by a keynote do?BD_NO=169&CURRENT_MENU_CODE=MENU0025&TOP_MENU_
speech by Neil Kaplan and was attended by over 200 delegates CODE=MENU0024, 18 May 2018.
from various parts of the world.56 2 Knight, Sian, ‘The HKIAC in action to issue updated Administered
Similarly, Thailand hosted its first International ADR Rules 2018,’ Holman Fenwick & Willan website, available: http://
Conference last May57 and Malaysia annually hosts the Asia ADR www.hfw.com/The-HKIAC-in-action-to-issue-updated-Administered-
Week.58 Taiwan has also been hosting its celebration of the arbi- Rules-2018-Oct-18, 31 October, 2018.
tration day, the Taipei International Conference on Arbitration 3 Id.
and Mediation, which is usually around August.59 4 Ross, Alison, ‘Newly named AIAC to launch new rules,’ Global
Discussions and dialogue created through these conferences Arbitration Review, available: https://globalarbitrationreview.com/
bring diverse groups of participants together and provide them article/1166180/newly-named-aiac-to-launch-new-rules, 28 February
with platforms to highlight recent positive developments in other 2018.
jurisdictions. This rich intellectual exchange often spurs another 5 Id.
round of similar or even more innovative initiatives by institu- 6 Gilmore, David, Ribeiro, John, Beer, Sam, & Jolley, Ben, ‘New 2019
tions in other jurisdictions. JCAA Rules: Is Three a Crowd?,’ Kluwer Arbitration Blog, available:
http://arbitrationblog.kluwerarbitration.com/2019/02/08/new-2019-
Conclusion: implications for the future of arbitration jcaa-rules-is-three-a-crowd/, 8 February 2019.
Possible trend: departure from the one-size-fits all model 7 Id.
The heightened visibility of activities by regional arbitration cen- 8 ‘CAAI Revised its Arbitration Rules and Passed New Instruments,’
tres, as well as the innovations introduced by the more established Chinese Arbitration Association, Taipei website, available: http://
names, suggest that arbitration has matured to a stage that many en.arbitration.org.tw/news_into.php?id=66, 21 November 2018.
realise that no one model of dispute resolution fits all disputes. 9 Sanderson, Cosmo, ‘Bahrain chamber unveils new rules,’ Global
In face of increasing pressures to address the issue of mount- Arbitration Review, available: https://globalarbitrationreview.com/
ing costs and delays, arbitral institutions are making room to cre- article/1150074/bahrain-chamber-unveils-new-rules, 13 November
ate more diverse options for the users to choose and tailor it for 2017.
their own needs. Some cases will need the complex and highly 10 Id.
structured procedures, while others need more hand-holding and 11 Bates, Jr, Albert, ‘International arbitration experts provide overviews,
flexibility in the conduct of the proceedings. Some may need analysis of updated arbitration rules,’ Pepper Hamilton LLP
more regional focus. In any event, no single dispute is identical Attorneys at Law website, available: https://www.pepperlaw.com/
and this opens the doors for different dispute management mod- publications/international-arbitration-experts-provide-overviews-
els. This in turn creates the justification and momentum for new analysis-of-updated-arbitration-rules-2018-10-01/, September 2018.
institutions to innovate and increase their profiles to new markets. 12 Id.

13 ‘Chamber Ciesp/Fiesp Launches its Interim Arbitrator Proceeding,’ 30 Id.

Chamber of Conciliation, Mediation, and Arbitration – CIESP / FIESP 31 ‘GAR Awards 2019 – the first shortlist,’ Global Arbitration Review,
website, available: http://www.camaradearbitragemsp.com.br/ available: https://globalarbitrationreview.com/article/1180488/gar-
en/noticias/20190107_Chamber_Launches_Interim_Arbitrator_ awards-2019-%E2%80%93-the-first-shortlist, 25 February 2019.
Proceeding.html, 7 January 2019. 32 See: http://www.arbitrationpledge.com/about-the-pledge.
14 ‘Arbitration Rules 2017, The Thai Arbitration Institute,’ Thai Arbitration 33 Roddy, Laura, ‘HKIAC launches women’s group for China,’ Global
Institute website, available: https://tai-en.coj.go.th/th/content/ Arbitration Review, available: https://globalarbitrationreview.com/
category/detail/id/7751/iid/124760, 30 December 2016. article/1159142/hkiac-launches-women%E2%80%99s-group-for-
15 ‘VIAC releases case data and announces first all-woman tribunal,’ china, 19 February 2018.
Global Arbitration Review, available: https://globalarbitrationreview. 34 Supra, note 17.
com/article/1166753/viac-releases-case-data-and-announces-first- 35 Id.
all-woman-tribunal, 22 March 2018. 36 Id.
16 ‘Numbers, actions and transparency. The growth of the CAM- 37 Klimov, Yaroslav & Panov, Andrey, ‘Russian arbitration law reform:
CCBC in 2018,’ Arbitration and Mediation Center of the Chamber A new regulatory landscape,’ Norton Rose Fulbright International
of Commerce Brazil-Canada website, available: https://ccbc.org. Arbitration Report Issue 7, available: https://www.nortonrosefulbright.
br/cam-ccbc-centro-arbitragem-mediacao/en/noticias-cam- com/-/media/files/nrf/nrfweb/imported/international-arbitration-
ccbc/novidades-cam-ccbc/cam-news/numeros-acciones-y- report---issue-7.pdf?la=en&revision=2b95e882-b426-4aa1-952e-
transparencia-el-crecimiento-del-cam-ccbc-en-2018/, 28 February 6270bebf896b, September 2016.
2019. 38 Ivanov, Dmitry & Hines, Jon, ‘Arbitration: Russia,’ Getting the Deal
17 Horvath, Günther and Fremuth-Wolf, Alice, ‘Preface,’ VIAC Annual Through, available: https://gettingthedealthrough.com/area/3/
Report 2018, available: https://www.viac.eu/images/documents/ jurisdiction/26/arbitration-russia/, February 2019.
Jahresbericht_2018.pdf, March 2019. 39 Lim, Sean, Han, Yewon, & Kim, Saemee, ‘South Korea,’ The Baker
18 ‘Seoul ADR Festival 2018: Innovating the Future of Dispute McKenzie International Arbitration Yearbook 2016-2017, available:
Resolution,’ KCAB INTERNATIONAL LinkedIn Profile, available: https:// https://globalarbitrationnews.com/wp-content/uploads/2017/06/
www.linkedin.com/pulse/seoul-adr-festival-2018-innovating-future- South-Korea.pdf, 2017.
dispute-4-9-international/, 14 December 2018. 40 Id.
19 ‘KCAB Releases Draft Protocol on Video Conferencing,’ 41 Decker, Marla, ‘Third-Party Funding In Asia: Arrived, And Set To
Herbert Smith Freehills website, available: https://hsfnotes.com/ Thrive,’ Above the Law website, available: https://abovethelaw.
arbitration/2018/11/28/kcab-releases-draft-protocol-on-video- com/2018/12/third-party-funding-in-asia-arrived-and-set-to-thrive/,
conferencing/, 28 November 2018. 12 December 2018.
20 Yong, Lacey, ‘SCC publishes policy on appointing arbitrators,’ 42 Mendiola, John, ‘Thailand’s SMART Visa: A Quick Guide,’ Silk Legal
Global Arbitration Review, available: https://globalarbitrationreview. website, available: https://silklegal.com/thailands-smart-visa-a-
com/article/1150719/scc-publishes-policy-on-appointing-arbitrators, quick-guide/, 11 December 2018.
20 November 2017. 43 ‘Discussion concerning the cabinet resolution to revise qualifications,
21 Id. criteria and privileges of Smart Visa applicants,’ Thai Arbitration
22 Id. Institute website, available: https://tai-en.coj.go.th/th/content/
23 Ross, Alison, ‘SIAC unveils new protocol for consolidation between category/detail/id/7747/iid/126980, 15 March 2019.
institutions,’ Global Arbitration Review, available: https:// 44 Supra, note 10.
globalarbitrationreview.com/article/1151892/siac-unveils-new- 45 See: https://iccwbo.org/dispute-resolution-services/belt-road-
protocol-for-consolidation-between-institutions, 19 December 2017. dispute-resolution/belt-and-road-commission/.
24 ‘GAR Awards 2018 – best innovation by an individual or 46 ‘HKIAC announces Belt and Road Programme,’ Hong Kong
organisation,’ Global Arbitration Review, available: https:// International Arbitration Center website, available: http://www.
globalarbitrationreview.com/article/1166837/gar-awards-2018- hkiac.org/news/hkiac-announces-belt-and-road-programme, 26
%E2%80%93-best-innovation-by-an-individual-or-organisation, 20 April 2018.
March 2018. 47 Supra, note 8.
25 ‘Shenzen center introduces appellate procedure,’ Global 48 Supra, note 18.
Arbitration Review, available: https://globalarbitrationreview.com/ 49 Supra, note 19.
article/1178592/shenzhen-centre-introduces-appellate-procedure, 3 50 Supra, note 20.
January 2019. 51 ‘ICCA and IBA establish task force on data protection,’ International
26 Supra, note 26. Council for Commercial Arbitration website, available: https://www.
27 ‘Access information about CAM-CCBC on your mobile phone,’ arbitration-icca.org/news/2019/418/icca-and-iba-establish-task-
Arbitration and Mediation Center of the Chamber of Commerce force-on-data-protection.html, 2019.
Brazil-Canada website, available: https://ccbc.org.br/cam- 52 ‘[KCAB NEXT] A New Platform for the Next Generation of
ccbc-centro-arbitragem-mediacao/en/noticias-cam-ccbc/ Arbitrators,’ KCAB INTERNATIONAL website, available: http://www.
novidades-cam-ccbc/cam-news/access-information-about-cam- kcabinternational.or.kr/user/Board/comm_notice_view.do?BBS_
ccbc-on-your-mobile-phone/, 19 December 2018. NO=401&BD_NO=169&CURRENT_MENU_CODE=MENU0025&TOP_
28 Id. MENU_CODE=MENU0024, 8 February 2019.
29 ‘HKIAC launches financial services disputes panel,’ Global 53 ‘Hong Kong Arbitration Week 2018,’ Hong Kong International
Arbitration Review, available: https://globalarbitrationreview.com/ Arbitration Center website, available: http://www.hkiac.org/events/
article/1169290/hkiac-launches-financial-services-disputes-panel, 10 hong-kong-arbitration-week-2018, 29 October 2018.
May 2018. 54 ‘[17 September 2018, Beijing] 2018 China Arbitration Summit,’
UNCITRAL Regional Center for Asia and the Pacific website,

available: http://uncitralrcap.org/en/17-september-2018-beijing-
2018-china-arbitration-summit/, 23 August 2018.
55 ‘SIAC Year in Review 2018,’ Singapore International Arbitration
Center website, available: http://www.siac.org.sg/, January 2019. Sue Hyun Lim
56 Lim, Sue-Hyun, ‘7th Asia Pacific ADR Conference Review: Innovating KCAB INTERNATIONAL
the Future of Dispute Resolution,’ Kluwer Arbitration Blog, available:
http://arbitrationblog.kluwerarbitration.com/2018/12/20/7th-asia- Sue Hyun Lim is the secretary general of the new international
pacific-adr-conference-review-innovating-the-future-of-dispute- division of the Korean Commercial Arbitration Board, KCAB
resolution/, 20 December 2018. INTERNATIONAL. Among her various responsibilities Ms
57 ‘2nd International ADR Conference 2019,’ Thailand Arbitration Lim oversees KCAB’s international arbitration case management
Center website, available: https://thac.or.th/seminar/register/12, process, ensuring the efficiency and cost-effectiveness of the pro-
2019. cedures under the KCAB INTERNATIONAL Rules, as well as
58 ‘Asia ADR Week 2018: A platform for Asian-centric ADR trends leading the public relations efforts to further enhance the standing
and economic developments,’ Asia Law Portal, available: https:// of KCAB INTERNATIONAL – and Seoul as a seat of arbitra-
asialawportal.com/2018/05/02/asia-adr-week-2018-a-platform-for- tion – among international users.
asian-centric-adr-trends-and-economic-developments/, 2 May A Korean licensed attorney, and also admitted to the New
2018. York State bar, Ms Lim was a partner at Bae, Kim & Lee LLC,
59 Ma, Winnie Jo-Me, ‘2018 Taipei International Conference: where she advised and represented clients in numerous interna-
Competitive, Collaborative or Cooperative Relations between tional arbitration cases as well as in international litigation mat-
Litigation, Arbitration and Mediation?,’ Kluwer Arbitration ters. In 2010–2011 Ms Lim studied at the New York University
Blog, available: http://arbitrationblog.kluwerarbitration. School of Law (LLM) after which she worked as visiting lawyer
com/2018/10/23/2018-taipei-international-conference-competitive- in Debevoise Plimpton LLP.
collaborative-cooperative-relations-litigation-arbitration-mediation/, Featured in Who’s Who Legal: Arbitration Future Leaders 2018,
23 October 2018. she has actively and continuously spearheaded efforts to pro-
mote international arbitration of Korea. Ms Lim has written and
co-written a number of published pieces, and is a contributing
author to Arbitration Law in Korea: Practice and Procedure (Juris
Publishing, 2012), the 2016 edition of Arbitration, Practice and Law
(Parkyoungsa, 2016), and most recently the Global Practice Guide for
Litigation in South Korea (Chambers and Partners, 2017).
43rd FL Trade Tower KCAB INTERNATIONAL was established on 20 April 2018 as an independent division of the Korean
511 Yeongdong-daero Gangnam-gu Commercial Arbitration Board to meet the growing demand for cross-border commercial dispute
Seoul resolution. KCAB INTERNATIONAL specialises in international arbitration to ensure that disputes are
Korea 06164 resolved in a cost-effective and time-efficient manner within a streamlined process. Constituting of
Tel: +82 2 551 2026
leading experts and professionals with abundant experience and expertise in international dispute
Fax: +82 2 551 2030
resolution, KCAB INTERNATIONAL will further enhance the standing of Korea as a premier international
Sue Hyun Lim dispute resolution center in Asia and beyond.
suehyun.lim@kcab.or.kr Founded in 1966, the Korean Commercial Arbitration Board is the sole arbitral institution in Korea
that is statutorily authorised to settle disputes under the Korean Arbitration Act, under the auspices of
www.kcabinternational.or.kr the Ministry of Justice. Over the past 50 years, the Korean Commercial Arbitration Board has handled
about 7,000 arbitration cases and 15,000 conciliation cases marking itself as a leading alternative
dispute resolution center.

Investment Treaty Arbitration in the Asia-Pacific
Tony Dymond and Z J Jennifer Lim
Introduction embracing BITs. BITs were intended to encourage cross-border

Despite lingering discontent in certain regions of Asia with inves- investment by extending various protections to foreign invest-
tor-state dispute settlement (ISDS), Asian countries are playing ments, such as promises of non-discrimination and fair and equi-
an increasingly significant role in the development of ISDS law table treatment, as well as by granting foreign investors the right
and policy. This is in part due to Asia’s rising global economic to bring their claims directly against host states through access to
prominence, with foreign direct investment (FDI) flows into and ISDS mechanisms.3
out of Asia hitting historic highs. As China, Japan and the broader BITs thus proliferated in Asia over the past half-century.
Asia-Pacific region emerge as major sources of outbound FDI in Although there were fewer than 30 BITs in the 1970s, this figure
particular, Asian countries have a growing interest in protecting had nearly doubled by the 1980s.4 BIT activity then exploded in
the rights of their nationals who invest in other countries. the 1990s and 2000s, with 21 East Asian and Pacific countries sign-
Rather than rejecting ISDS or investment protections whole- ing 369 BITs in the 1990s and a further 234 BITs in the 2000s.5
sale, countries in Asia are exploring ways to address what they This boom mirrored growth in the number of BITs concluded
perceive as problems with the current investment treaty regime worldwide.6
and ISDS mechanisms. Some of these efforts have resulted in After 2010, however, the number of new BITs being signed fell
a shift in emphasis from traditional bilateral investment treaties dramatically.7 This may be explained in part as a reaction to invest-
(BITs) to multilateral agreements with investment chapters, which ment treaty claims being brought against countries in the Asia-
contain or propose (to the extent they are still being negotiated) Pacific region, generating a backlash against ISDS. For example, in
their own specific provisions on ISDS. In addition, private arbitral response to an increase in investor claims between 2004 and 2014,
institutions in Asia are innovating by adopting new arbitration Indonesia announced a plan to terminate its BITs and renegotiate
rules specially geared towards investor-state arbitration. new ones that would limit its exposure to claims.8 Similarly, and as
China’s One Belt One Road initiative, the signing of landmark discussed in further detail below, India issued termination notices
trade deals such as the Comprehensive and Progressive Agreement to more than 80 per cent of its BIT counterparties in the aftermath
for Trans-Pacific Partnership (CPTPP), and the legalisation of of the White Industries case, the first publicly known investment
third-party funding (TPF) in Hong Kong and Singapore all make treaty ruling against India, and also adopted a narrower Model
it likely that the need for ISDS in the Asia-Pacific region will only BIT.9 Australia also denounced ISDS and sought to exclude it in
grow. As a result, Asian countries can be expected to continue to all future investment treaties when it faced its first investment treaty
experiment with new ideas in an attempt to make ISDS work for case as a respondent state in Philip Morris,10 although it has softened
them, contributing to the development of investment treaty law its position since and would now consider ISDS provisions ‘on a
and practice throughout the world. case-by-case basis in light of the national interest.’11
This article provides a brief overview of the current state of In the past few decades, many countries in Asia have also
ISDS in Asia, and is structured as follows: emerged as significant exporters of capital. China and Japan, for
• the first section summarises the historical development of example, are two of the world’s largest capital exporters, with FDI
investment treaty arbitration in Asia; outflows in 2017 exceeding US$124 billion and US$160 billion.12
• the second section describes the multilateral treaties being As their outbound FDI increases, countries in Asia would increas-
concluded or negotiated by Asian countries; ingly rely on investment treaties not just as a means of attracting
• section three highlights some of the new ideas explored in FDI, but also as a means of protecting the overseas investments of
those treaties and elsewhere; and their nationals.
• section four provides an overview of developments in China Consequently, despite criticisms of ISDS and a move away
and India, as well as a few other notable developments on a from traditional BITs, countries in Asia have been actively nego-
national level. tiating multilateral treaties and free trade agreements (FTAs) with
ISDS provisions.As Professors Peinhardt and Wellhausen note, such
Historical background multilateral treaties constitute an ‘overlapping channel[] of access
Over the past few decades, global FDI has experienced exponen- to ISDS,’ allowing states to ‘act on domestic dissatisfaction with
tial growth. In the Asia-Pacific region in particular, FDI has been ISDS’ – for example, by terminating BITs – ‘without eschewing
hugely important for economic development. For example, India ISDS altogether.’13 This alternative route has generated renewed
has seen its annual FDI inflows increase from less than US$1 bil- enthusiasm for multilateral treaties and FTAs across Asia as a vehicle
lion in the early 1990s to nearly US$40 billion in 2017.1 During for attracting FDI and protecting investments abroad.
this period, it has become one of the fastest-growing economies
in the world.2 Multilateral treaties
In a bid to attract FDI, countries in Asia sought to modernise A number of multilateral treaties that contain investment chapters
their laws and policies governing foreign investment, notably by and provisions on ISDS have been signed or are in the process
of being negotiated by Asian states, reflecting active investment New Zealand with Brunei, Malaysia, Peru,Vietnam and Australia
diplomacy in the region. Such agreements include preferential specifically exclude ISDS entirely or allow ISDS only if the rel-
trade agreements, FTAs, economic partnership agreements and evant state agrees.32 In a joint declaration, Canada, Chile and New
economic integration agreements with provisions for the promo- Zealand have also stated their intent ‘to work together on matters
tion and protection of foreign investments through substantive and relating to the evolving practice’ of ISDS, ‘including as part of the
procedural safeguards. ongoing review and implementation’ of the CPTPP.33
Key to the recent initiatives is the Association of Southeast It remains to be seen what economic and legal effects these
Asian Nations (ASEAN), a regional intergovernmental organi- multilateral agreements will have, and how they will interact with
sation comprising Brunei, Cambodia, Indonesia, Laos, Malaysia, BITs in the Asia-Pacific region.While the aim of these agreements
Myanmar, the Philippines, Singapore, Thailand and Vietnam. is to liberalise trade between signatory states, different approaches
In addition to concluding the 2009 ASEAN Comprehensive have been adopted with regard to investor protections and there
Investment Agreement (ACIA) among its 10 members,14 ASEAN has been some reluctance wholeheartedly to adopt ISDS mecha-
is currently a contracting party to 13 international investment nisms. New Zealand’s side agreements entered into in parallel with
agreements.The latest investment agreements were signed in 2017 the signing of the CPTPP are particularly reminiscent of Australia’s
with Hong Kong15 and in 2014 with India.16 ASEAN has also previously stated intent to reject ISDS in new investment treaties.
concluded regional investment treaties with China,17 Australia and
New Zealand,18 Korea19 and Japan.20 Regional developments
ASEAN is also in the process of negotiating a free trade agree- The proliferation of trade deals and negotiations described above
ment with the European Union (EU). At the 16th consulta- promises a greater global impact for Asian states. Notably, recent
tions between ASEAN Economic Ministers (AEM) and the EU developments in Asia have showcased the region as a marketplace
Trade Commissioner in March 2018, officials pledged to speed for new ideas and experiments in the field of international invest-
up their efforts to negotiate FTAs, both at the bilateral level and ment law.
at the region-to-region level.21 Negotiations are also ongoing One type of provision that has gained traction in Asia is the use
with Canada.22 of binding statements and interpretation. In response to criticism
Another important development in treaty negotiations in Asia that investment tribunals do not interpret international investment
is the Regional Comprehensive Economic Partnership (RCEP), agreements (IIAs) in accordance with what the contracting states
for which negotiations were officially launched in 2012. RCEP had in mind when they entered into those agreements, Asian states
covers trade in goods and services, investment, intellectual property, have concluded agreements with procedures for contracting states
and competition policy. Its aim is to create a ‘modern, comprehen- to issue joint interpretations of treaty provisions. For example, the
sive, high-quality and mutually beneficial economic partnership ACIA contains a provision whereby the tribunal or a disputing
agreement among the ASEAN member states and ASEAN’s FTA party can request a joint interpretation of any provision of the
partners’.23 RCEP is being negotiated by 16 Asia-Pacific coun- ACIA at issue in a dispute.34 Only if the member states cannot
tries24 with the aim of being finalised in 2019.25 agree on a joint interpretation within 60 days would the tribunal
RCEP’s final language on ISDS has yet to be revealed. It is be entitled to decide the issue; otherwise, any joint interpreta-
also not clear what types of investments would be protected by tion is binding on the tribunal.35 A materially identical provision
RCEP and whether RCEP’s scope would differ from those of on joint interpretation features in the ASEAN-Australia-New
existing agreements.26 At the Fifth RCEP Intersessional Ministerial Zealand FTA,36 and a provision to the same effect is included in
Meeting in August 2018, the negotiating parties reportedly agreed the ASEAN-India FTA.37 The Canada-China BIT also provides
to reduce the scope of application of ISDS, in particular agree- that parties ‘may take any action as they may jointly decide’38 and
ing that the proposed ISDS provision would not apply on a most in the event that the respondent state invokes a specific exception
favoured nation (MFN) basis and would not apply to the pro- to the treaty as a defence, the contracting parties are to consult each
hibition of performance requirements pertaining to technology other to determine whether such defence is valid.39
transfer and royalty payments.27 The China-Australia FTA (ChAFTA) goes one step further
The increasing importance of the Asia-Pacific region in invest- with an additional provision that enables parties to control the
ment trade talks is evinced by Japan’s role in spearheading the application of the treaty.40 Under the ChAFTA, if an investor chal-
negotiations of the CPTPP after the United States withdrew lenges a regulatory measure, the respondent state is entitled to issue
from the TPP in January 2017.28 Japan persuaded Canada to stay a ‘public welfare notice’ explaining the basis for its position.41 This
in the agreement and in November 2017, Japan announced the would suspend the arbitration proceedings and trigger a 90-day
main breakthroughs in negotiations. The Japanese prime minister, consultation period with the non-disputing state.42 If an agree-
Shinzo Abe, has also expressed hope for the revival of the original ment cannot be reached within that timeframe, the matter would
12-nation TPP trade deal with the US.29 be decided by the investment tribunal.
In the meantime, the CPTPP was signed on 8 March 2018 Another development in the field of investment treaty law that
between Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, is receiving some attention in Asia consists of appellate mecha-
New Zealand, Peru, Singapore and Vietnam, and has entered into nisms. Historically, decisions in investment treaty arbitrations are
force for Australia, Canada, Japan, Mexico, New Zealand, Singapore final and subject only to very limited grounds of review.43 This
and Vietnam.30 Despite certain provisions being suspended – nota- has led to criticisms concerning the lack of corrective mecha-
bly the definitions of ‘investment agreement’ and ‘investment nisms if tribunals are seen as having made ‘wrong’ decisions.44
authorisation’31 – the CPTPP remains largely unchanged from Asian IIAs that contemplate the creation of an appellate mecha-
the TPP in relation to ISDS, and importantly, preserves the option nism include the Singapore-US FTA,45 India’s new Model BIT
of investment treaty arbitration for violations of the investment and the ChAFTA. The Singapore-US FTA states that the ‘Parties
protection standards contained in the agreement. Notably, however, shall strive to reach an agreement that would have [an appellate
additional side letters entered into in parallel with the CPTPP by body that may be established by a separate multilateral agreement

in force as between the parties] review awards’ rendered under the specific facts and legal instruments involved, as a theoretical mat-
US-Singapore FTA.46 Similarly, the Indian Model BIT encourages ter, the employment of such a broad definition suggests that the
the parties to ‘establish an institutional mechanism to develop an infrastructure investments contemplated by the OBOR initiative
appellate body or similar mechanism to review awards rendered by would generally be covered.60
tribunals [under the BIT].’47 Under the ChAFTA, the states have an In addition, as a general matter, in many cases Chinese BITs
obligation ‘to commence negotiations with a view to establishing would also likely protect the Chinese state-owned enterprises
an appellate mechanism to review awards’ within three years after (SOEs) that can be expected to lead OBOR investments.61 The
it enters into force.48 more recent Chinese BITs expressly include SOEs within the
The appeal mechanism provision has more teeth in the recently definition of ‘investor’, while older Chinese BITs do not on their
negotiated EU-Singapore Investment Protection Agreement and face exclude SOEs.62 The argument that Chinese SOEs would be
EU-Vietnam FTA, as these agreements effectively establish a per- protected even by the older Chinese BITs because they define
manent Appeal Tribunal to hear appeals from the awards issued by ‘investor’ broadly enough to encompass SOEs, will certainly be
the permanent investment tribunal (also established by the agree- made in future disputes.
ments and further discussed below).49 The grounds for appeal are: In Beijing Urban Construction Group v Yemen, Chinese SOE
• error in the interpretation or application of the applicable law; Beijing Urban Construction Group Co Ltd (BUCG) was allowed
• manifest error in the appreciation of the facts, including the to bring its claims of expropriation against Yemen under the 2002
appreciation of the relevant domestic law; and Yemen-China BIT. That case concerned a US$100 million con-
• the grounds provided in article 52 of the ICSID Convention.50 tract to construct part of the terminal at Sana’a International
Airport in Yemen.63 Yemen did not challenge BUCG’s standing
The EU-Singapore Investment Protection Agreement and as an ‘investor’ under the BIT, although it raised the objection
EU-Vietnam FTA also provide a novel provision for a permanent that BUCG, as an SOE, did not qualify as a ‘national of another
investment tribunal.51 The tribunal will comprise six members Contracting State’ under article 25 of the ICSID Convention.64
under the EU-Singapore Investment Protection Agreement and The tribunal rejected Yemen’s objection, concluding that BUCG
nine under the EU-Vietnam FTA – one-third from the EU, one- was not acting as an agent of the Chinese government or fulfilling
third from Singapore or Vietnam (as the case may be) and one- Chinese governmental functions in Yemen.65
third from third countries – and the tribunal will hear cases in In terms of the substantive investment protections in Chinese
divisions of three members, chaired by the national from a third investment agreements, most Chinese BITs with countries partici-
country. The members will be paid a retainer fee ‘to ensure their pating in the OBOR initiative include provisions for fair and equi-
availability’,52 and such retainer fee may be permanently trans- table treatment (FET).66 All Chinese BITs with OBOR countries
formed into a regular salary,53 in which case the members will serve also prohibit expropriation or nationalisation of investments unless
full-time on the tribunal and cannot accept other engagements. the taking is for the public interest, is non-discriminatory and in
accordance with the law, and is accompanied by compensation.67
National developments Most of these BITs also protect against indirect expropriation
China with phrases such as measures ‘having an effect equivalent to’ or
China’s One Belt One Road or Belt and Road (OBOR) initiative ‘tantamount to’ expropriation.68
has generated substantial commentary and analysis since its launch Finally, on the issue of access to ISDS, China’s BITs have
in 2013. It is a development strategy that seeks to enhance land- undergone an evolution over time. The BITs may be grouped
based (the belt) and sea-based (the road) connectivity between into three different generations.69 The first generation of Chinese
China and major markets in Europe, Asia and the Middle East BITs, concluded between 1982 and 1989, either do not permit
through massive investments in infrastructure development. ISDS or limit its availability to disputes concerning the amount of
OBOR has become a centrepiece of China’s foreign policy and compensation for expropriation.70 The second generation, from
is part of Chinese president Xi Jinping’s ambitious plan to deepen 1990 to 1997, also restrict access to ISDS but contain references
economic ties with the world and reshape international trade.54 to ICSID arbitration, particularly in those BITs concluded after
So far, 72 countries are participating in the initiative, and the list China acceded to the ICSID Convention in 1993.71 The third
continues to grow.55 generation, comprising BITs concluded after 1997, generally con-
Despite the enormous financial resources China has pledged tain comprehensive ISDS provisions granting access to interna-
for the OBOR initiative, it is not yet clear how much investment tional arbitration for all investor-state disputes.72 Accordingly, the
protection will be available to OBOR investors.56 This is an impor- availability of ISDS would depend on which BIT applies.
tant issue for OBOR investors because infrastructure projects pre- The jurisdictional restrictions found in the older Chinese
sent heightened investment risks. These projects are characterised BITs have been invoked against Chinese investors, sometimes
by complex structures and arrangements, and they involve pay- successfully. For example, in China Heilongjiang v Mongolia,73 the
ments of large sums of money over an extended period of time, tribunal dismissed for lack of jurisdiction three Chinese investors’
often in countries that are politically or economically unstable. As claims against Mongolia.74 Mongolia had cancelled a licence for
implementation of the OBOR initiative unfolds, it is likely that the claimants to operate in the Tumurtei iron ore mine and the
investment disputes relating to it will also arise. claimants sought to have the licence reinstated.75 The claims were
China is currently party to 109 BITs that are in force (the brought under the 1991 China-Mongolia BIT, which provided
largest number in Asia and second in the world only to Germany), that disputes ‘involving the amount of compensation for expro-
and 19 treaties with investment provisions that are in force.57 priation’ may be submitted to arbitration.76 Although the award is
China has investment agreements with the majority of the OBOR not public, reports indicate that the tribunal had concluded that
countries.58 the BIT’s dispute settlement clause restricted its jurisdiction only
Many Chinese BITs adopt a broad definition of ‘investment’.59 to disputes over the amount of compensation for expropriation,
Thus, although the outcome of individual cases will depend on the not the legality of an expropriation.77
China Heilongjiang stands in contrast to three other cases approach to investment protection, and particularly access to
brought by investors under Chinese BITs, namely Tza Yap Shum investor-state arbitration. One interesting development on this
v Peru,78 Sanum Investments v Laos,79 and Beijing Urban Construction front, in addition to the developments with regard to rules and
Group v Yemen.80 In Tza Yap Shum and Sanum Investments, the tri- institutions noted above, is that China has announced plans to
bunals interpreted the language ‘involving the amount of com- establish international courts in China to resolve OBOR-related
pensation for expropriation’ in the dispute settlement clause of investment and commercial disputes.92 It is unclear, however,
the respective BITs81 broadly to mean not only the calculation whether and to what extent these courts would have jurisdiction
of the amount owed, but also other issues inherent in an expro- over another sovereign state and thus provide a viable alternative
priation, such as whether the expropriation had been carried forum for Chinese investors to pursue investor-state claims.
out in compliance with the applicable BIT’s requirements.82 The Finally, although not specifically related to OBOR, it is
tribunal in Beijing Urban Construction Group also adopted a perhaps interesting to note when considering China’s experi-
broad interpretation of similar language in the China-Yemen ence with ISDS that there have been only three known arbitra-
BIT’s dispute settlement clause.83 The relevant treaty language in tions involving China as a host state,93 and the only one that
the China-Peru BIT and the China-Laos BIT is identical to that has proceeded to judgment was recently dismissed in a rarely
of the China-Mongolia BIT interpreted in China Heilongjiang. used summary proceeding under ICSID Arbitration Rule 41(5).
Although it is unknown why the China Heilongjiang tribunal In Ansung Housing v China, Ansung, a Korean property devel-
chose to diverge from the approach taken by the earlier tribunals, oper, commenced ICSID arbitration against China under the
China Heilongjiang is the most recent decision of the four cases 2007 China-Korea BIT alleging violations of an agreement to
on this issue and demonstrates the real risk that a Chinese inves- build a luxury golf course project in China. The tribunal held
tor may face substantial jurisdictional challenges in attempting to that Ansung’s claim was time-barred under the China-Korea
submit its claims against a foreign state to arbitration. BIT, which provides that an investor could not submit a claim
A temporal objection to jurisdiction was also invoked success- to international arbitration ‘if more than three years have elapsed
fully against Chinese investors in Ping An Life Insurance v Belgium.84 from the date on which the investor first acquired, or should
In that case, the claimants alleged that Belgium had expropri- have first acquired, knowledge that the investor had incurred
ated their 2007 investment in a banking and insurance group loss or damage’.94 Ansung had filed its request for arbitration in
and sought to arbitrate the dispute in ICSID under the 1986 October 2014, more than three years after the date on which it
and 2009 BITs between China and the Belgian-Luxembourg first acquired knowledge of loss or damage in ‘late summer or
Economic Union (BLEU). The 1986 BIT’s dispute settlement early autumn 2011’. 95 The tribunal also decided that Ansung
clause does not contemplate ICSID arbitration as such and also could not save its time-barred claim through the MFN clause
restricts arbitration to disputes that ‘[arose] from an amount of of the BIT,96 because that clause did not apply to the scope of
compensation for expropriation, nationalisation or other similar a state’s consent to arbitrate with investors, including temporal
measures’.85 By contrast, the 2009 BIT grants access to ICSID limitation periods.97
arbitration for all legal disputes between an investor of one state
and the other state.86 Because the dispute crystallised before the India
2009 BIT entered into force, the claimants sought to rely on the Alongside China, India is one of the fastest growing economies
substantive obligations contained in the 1986 BIT as well as the in the world.98 The United Nations Conference on Trade and
procedural remedy of the 2009 BIT. The tribunal dismissed the Development (UNCTAD) reported in 2017 that it was the third
case for lack of temporal jurisdiction, concluding that ‘the more most attractive destination for FDI, after China and the United
extensive remedies under the 2009 BIT’ were not available to States.99 India’s investment policy from the 1990s called for the
‘pre-existing disputes that had been notified under the 1986 BIT use of BITs to attract foreign investors. Between 1994 – when
but not yet subject to arbitral or judicial process’.87 This case also it signed its first BIT, with the UK – and 2011, India signed an
highlights the risk that restrictive dispute settlement provisions in average of four to five BITs per year, granting broad investment
China’s older BITs may be used against Chinese investors seek- protections to foreign investors.100
ing to protect their OBOR investments, in the absence of any India’s stance on investment treaties underwent a dramatic
broader investment protections that may be negotiated as OBOR reversal in 2011, when for the first time India was found to have
moves forward. violated BIT obligations, in the White Industries case.101 Before
Various Chinese arbitral institutions also have begun to offer White Industries, only nine reported BIT cases had been brought
themselves as alternative fora for the resolution of OBOR- against India, and they all had settled.102 White Industries con-
related investment disputes. Effective 1 October 2017, China cerned prolonged judicial delays that left the claimant unable
International Economic and Trade Arbitration Commission to enforce an arbitral award against an Indian state-owned min-
(CIETAC), a leading arbitration institution in China, launched ing company. Although the tribunal found that the delays did
special international investment arbitration rules with the resolu- not constitute a denial of justice, it applied an ‘effective means’
tion of OBOR-related claims in mind.88 In conjunction with the standard from another Indian BIT through the MFN clause of
launch of these new rules, CIETAC established an Investment the Australia-India BIT.103 The tribunal held that India had failed
Dispute Resolution Center in Beijing to hear such disputes.89 The to provide White Industries with an effective means of assert-
rules also authorise CIETAC’s Hong Kong Arbitration Centre ing claims and enforcing rights, and it ordered India to pay the
to administer such arbitrations.90 In a similar vein, the Shenzhen amounts due under the award plus interest, as well as most of the
Court of International Arbitration (SCIA) updated its arbitration claimant’s costs.104
rules in 2016 to provide that it would accept and administer inves- At least 14 investment treaty cases against India followed
tor-state arbitrations under the UNCITRAL Arbitration Rules.91 White Industries,105 challenging the legality of India’s actions rang-
As the discussion above may suggest, China could possibly do ing from the assessment of retrospective taxes,106 to the cancella-
more as OBOR unfolds to develop a comprehensive and uniform tion of spectrum licenses107 and telecom licences,108 to criminal

investigations of bribery allegations.109 All of these cases remain Other developments

pending, and India has reportedly already been found in breach Beyond China and India, there has also been plenty of activ-
of its investment treaty obligations in at least two of the cases: ity in other Asian countries concerning ISDS, both in terms of
Deutsche Telekom and CC/Devas.110 defending investor-state claims and undertaking new initiatives to
White Industries and subsequent cases prompted a reevaluation develop ISDS in the region.
of India’s investment treaty programme: India adopted a new pol-
icy of terminating its existing BITs and published a new, narrower Arbitrations to watch
Model BIT.111 In July 2016, India sent BIT termination notices In the past six years, South Korea has been on the receiving end
to as many as 57 countries.112 With regard to some 25 BITs that of three investor-state disputes, two of which are still ongoing.127
India could not terminate unilaterally because their initial terms The Lone Star case, in particular, has received substantial media
had not expired, India requested to enter into joint interpretative attention and generated hostility towards ISDS in South Korea.128
statements with the other countries to prevent expansive inter- This case involves a protracted and acrimonious dispute between
pretations by tribunals.113 The first Joint Interpretative Note was South Korea and US private equity firm Lone Star Funds over the
signed with Bangladesh in July 2017.114 latter’s investment in Korea Exchange Bank (KEB) and the taxa-
The new Model BIT was approved by the Indian Cabinet tion of Lone Star’s investment gains. Lone Star acquired a majority
in December 2015 and introduced significant changes to India’s stake in KEB in 2003, at a time when KEB was reportedly in dire
investment regime. The scope of protected investors and invest- financial straits. Korean law prohibited the sale of a majority stake
ments has been narrowed, specifically excluding portfolio assets in a Korean bank to Lone Star unless that bank was in financial
and intangible rights115 and requiring protected investors to have distress. As the economy rebounded, the value of KEB shot up and
‘substantial business activities’ in the home state where they are the Korean government began to scrutinise the acquisition based
incorporated.116 on suspicions that KEB might not actually have been in financial
The Model BIT also does not apply to tax disputes117 – a pro- distress at the time of the acquisition. A governmental agency
vision clearly intended to foreclose the possibility of future claims subsequently announced that Lone Star’s acquisition of KEB was
like the ones brought by Vodafone, Cairn Energy and Vedanta illegal and financial regulators blocked Lone Star’s attempts to sell
Resources. It also contains a general exceptions provision reserv- KEB between 2005 and 2011. Lone Star eventually sold its major-
ing India’s right to implement and enforce regulatory measures ity stake in KEB in 2012. The Korean government also imposed
in the public interest, for example to protect public morals or 85 billion won in taxes on Lone Star in respect of the sale of all
to conserve the environment.118 Additionally, the Model BIT its investments in South Korea.
specifically excludes from the scope of the expropriation clause Lone Star commenced ICSID arbitration in 2012 under the
state measures that are ‘designed and applied to protect legitimate 1974 Korea-BLEU BIT, demanding over US$4.6 billion in dam-
public interest or public purpose objectives such as public health, ages allegedly caused by South Korea’s actions, which allegedly
safety and the environment.’119 delayed the KEB sale process and depressed the sale price, and
Other notable changes are the deletion of the FET and MFN subjected Lone Star’s investment gains to unjustified taxation. A
clauses, which featured in most of India’s existing BITs,120 and the hearing on jurisdiction took place in January 2016 and a hear-
addition of conditions precedent before ISDS becomes available ing on the merits followed in June 2016.129 The award is yet to
to a foreign investor. For example, investors must first exhaust all be rendered, but given the amount of public attention to this
available local remedies, and there are strict limitation periods for dispute in South Korea, whatever the outcome, it is expected to
submitting claims to arbitration.121 have a significant influence on the country’s approach to foreign
Since India adopted the Model BIT, it has successfully con- investment going forward. Already, ostensibly due to the Lone Star
cluded a BIT with Cambodia which reportedly adopts almost dispute, South Korea has adopted a policy of including a denial
all of the Model BIT’s text.122 India is also negotiating a BIT of benefits clause in all of its BITs, in order to exclude so-called
with Brazil that reportedly replaces ISDS with other alternative ‘mailbox companies’ from the scope of investment protections,
dispute resolution mechanisms such as an ombudsman, state-state whereas only one Korean BIT had such a clause before Lone Star
arbitration and ‘dispute prevention procedures.’123 commenced arbitration.130
India has maintained its scepticism of ISDS; in July 2017, Indonesia has also been in the news as the respondent state
a High Level Committee to Review the Institutionalisation of in a number of investor-state arbitrations. While it has generally
Arbitration Mechanism in India issued a report suggesting that prevailed in the cases brought against it – UNCTAD reports
India should consider ‘shift[ing] away entirely from investor-state that cases against Indonesia were either decided in its favour,
dispute resolution’, or including appellate mechanisms in BITs if or discontinued, or settled131 – it is worth noting that the latest
India decides to maintain ISDS.124 two investor-state arbitrations commenced against Indonesia in
Although India’s efforts to protect its national interests are recent years involved investors of other Asian countries: India132
commendable, they arguably fail to give sufficient consideration and Singapore.133 As Asian countries continue to strengthen their
to India’s interests as a home state. India’s annual outward FDI economic ties with one another, it is likely that such arbitrations
has increased from less than US$100 million in the early 1990s to between investors of one Asian country and another Asian coun-
over US$5 billion by 2016, although the numbers have steadily try will become more common.
declined from a peak of US$21 billion since the 2008 financial
crisis.125 Indian investors have also commenced five arbitrations ISDS initiatives
against other states, the latest filed in September 2017 against Alongside regional trade agreements and the concurrent develop-
Bosnia and Herzegovina.126 Accordingly, India’s investment treaty ment of ISDS, there have been important initiatives in the region,
policy should be calibrated to balance its right to regulate with in Singapore and Hong Kong.
the need to protect the overseas investments of its nationals. First, the Investment Arbitration Rules of the Singapore
International Arbitration Centre (SIAC IA Rules) came into force
in January 2017, becoming the first set of investment arbitra- 12 UNCTAD WIR2018, Annex 1.
tion rules to be promulgated by a private arbitral institution.134 13 Clint Peinhardt & Rachel L Wellhausen, ‘Withdrawing From Investment
Commentators have highlighted that the SIAC IA Rules ‘actively Treaties but Protecting Investment’, 7 Glob. Pol’y 571, 572 (2016).
address some of the main points of criticism which have been 14 ASEAN Comprehensive Investment Agreement, February 26, 2009
raised against investment arbitration in recent years, in particular, (entered into force February 24, 2012) [hereinafter ‘ACIA’].
with respect to the transparency of proceedings and the partici- 15 Agreement on Investment Among the Governments of the Hong
pation of non-disputing stakeholders’.135 These rules showcase Kong Special Administrative Region of the People’s Republic of
Singapore’s continued dedication to becoming a hub for interna- China and the Member States of the Association of Southeast Asian
tional dispute resolution. Nations, 12 November 2017 (scheduled to enter into force by 1
Second, in 2017, both Singapore and Hong Kong legalised January 2019).
third-party funding (TPF) in international arbitrations seated in 16 Agreement on Investment Under the Framework Agreement on
those jurisdictions,136 following the meteoric rise in demand for Comprehensive Economic Cooperation Between the Association
TPF in international arbitration.137 The increased availability of of Southeast Asian Nations and the Republic of India, 12 November
TPF may well encourage both prospective claimants and respond- 2014 [hereinafter ‘ASEAN-India Investment Agreement’]. Article
ent states to arbitrate investor-state claims in Singapore or Hong 30 stipulates that the Agreement entered into force on 1 July 2015
Kong, as TPF may ease the financial burden of prosecuting or for any party that notified the other parties in writing that it has
defending against those claims.This could increase the number of completed its internal requirements.
investment treaty arbitrations in Asia, although the impact of TPF 17 Agreement on Investment of the Framework Agreement on
in Hong Kong and Singapore on the volume of such arbitrations Comprehensive Economic Cooperation Between the People’s
remains to be seen. Republic of China and the Association of Southeast Asian Nations, 15
August 2009 (entered into force 1 January 2010).
Conclusion 18 Agreement Establishing the ASEAN-Australia-New Zealand Free
It remains to be seen whether and to what extent the new invest- Trade Area, 27 February 2009 (entered into force 10 January 2010)
ment protection standards and approaches to ISDS that Asian [hereinafter ‘AANZFTA’].
countries are adopting or proposing are here to stay, as they have 19 Agreement on Investment Under the Framework Agreement on
not yet been tested.The trend certainly seems to be that ISDS will Comprehensive Economic Cooperation Among the Governments
at least persist in one form or another in Asia, and perhaps grow. of the Member Countries of the Association of Southeast Asian
As Asian economies continue to expand, their approach towards Nations and the Republic of Korea, 2 June 2009 (entered into force 1
and use of ISDS will surely be closely watched, with one possible September 2009).
outcome being that at least some of their continued experimenta- 20 Agreement on Comprehensive Economic Partnership Among Japan
tion with new ideas could lead to improvements to the current and Member States of the Association of Southeast Nations, Mar. 28,
international investment regime. 2008 (entered into force 1 December 2008).
21 The Sixteenth AEM-EU Trade Commissioner Consultations, Joint Media
Notes Statement (2 March 2018), http://asean.org/storage/2018/03/16-
1 See UN Conf. on Trade and Dev. (UNCTAD), World Investment AEM-EU-TC-JMS-final.2-00000002.pdf.
Report 2018: Investment and New Industrial Policies, Annex Table 1, 22 At the ASEAN Economic Ministers-Canada Consultation on 8
UN Doc. UNCTAD/WIR/2018 (June 6, 2018), https://unctad.org/en/ September 2017, Canada and ASEAN member States endorsed
PublicationChapters/wir2018_AnnexTables_en.pdf (UNCTAD WIR2018, terms of reference for an in-depth FTA feasibility study and agreed
Annex 1). to launch exploratory discussions to examine the potential for an
2 See section four. ASEAN-Canada FTA. See The Sixth AEM-Canada Consultations, Joint
3 Kenneth J Vandevelde, ‘A Brief History of International Investment Media Statement, paragraphs 4–5 (8 September 2017), http://asean.
Agreements’, 12 UC Davis J Int’l L & Pol’y 157, 171 (2005). org/storage/2017/09/FINAL-JMS-AEM-Canada-6_.pdf. The first set of
4 Luke Nottage, ‘The TPP Investment Chapter and Investor-State exploratory discussions took place in July 2018 in Singapore. See Press
Arbitration in Asia and Oceania: Assessing Prospects for Ratification’, Release, Exploratory Discussions for a Possible Canada-ASEAN Free
17 Melb J of Int’l L 313, 321 (2016). Trade Agreement, Government of Canada (20 March 2019), https://
5 Id. international.gc.ca/trade-commerce/trade-agreements-accords-
6 See Claudia T Salomon & Sandra Friedrich, ‘Investment Arbitration in commerciaux/agr-acc/asean-anase/fta-ale/background-contexte.
East Asia and the Pacific’, 16 J World Inv & Trade 800, 807–808 (2015). aspx?lang=eng&_ga=2.29702845.345862892.1555013748-
7 See id at 808 & Chart B.1. 1191320279.1555013748.
8 Ben Bland and Shawn Donnan, ‘Indonesia to Terminate More Than 60 23 Regional Comprehensive Economic Partnership (RCEP), ASEAN,
Bilateral Investment Treaties’, Fin. Times (Mar. 26, 2014), www.ft.com/ http://asean.org/?static_post=rcep-regional-comprehensive-
content/3755c1b2-b4e2-11e3-af92-00144feabdc0. economic-partnership (last visited 10 April 2018).
9 See Prabhash Ranjan & Pushkar Anand, ‘The 2016 Model Indian 24 The 16 countries are the ten members of ASEAN, as well as China,
Bilateral Investment Treaty: A Critical Deconstruction’, 38 Nw J Int’l L & India, Japan, South Korea, Australia and New Zealand.
Bus. 1, 16-18 (2017). 25 The Seventh Regional Comprehensive Economic Partnership (RCEP)
10 Jürgen Kurtz, ‘The Australian Trade Policy Statement on Investor- Intersessional Ministerial Meeting, Joint Media Statement (2 March
State Dispute Settlement’, 15 ASIL Insights (2 August 2011), www.asil. 2019), Siem Reap, Cambodia, https://asean.org/storage/2019/03/
org/insights/volume/15/issue/22/australian-trade-policy-statement- RCEP-ISSL-MM-7-JMS-FINAL.pdf.
investor-state-dispute-settlement. 26 Jack Newsham, RCEP Could Increase Asian Investor Arbitration,
11 Austl. Gov’t Dep’t of Foreign Affairs & Trade, Investor-State Dispute Activists Say, Law360 (8 December 2016), www.law360.com/
Settlement, http://dfat.gov.au/trade/investment/Documents/isds- articles/870476/rcep-could-increase-asian-investor-arbitration-
faqs.pdf (last visited 12 April 2018). activists-say.

27 Subhayan Chakraborty, ‘RCEP Countries Open to Easing Investment 47 Model Text for the Indian Bilateral Investment Treaty, art. 29, https://
Rules, Agree to Ease ISDS Clauses’, Business Standard (8 September static.mygov.in/rest/s3fs-public/mygov_15047003859017401.pdf
2018), https://www.business-standard.com/article/economy-policy/ [hereinafter ‘Indian Model BIT’].
rcep-countries-open-to-easing-investment-rules-agree-to-ease-isds- 48 ChAFTA, supra n. 40, art. 9.23.
clauses-118090800031_1.html. 49 Investment Protection Agreement Between the European Union and
28 Yoichi Funabashi, ‘In America’s Absence, Japan Takes the Its Member States, of the One Part, and the Republic of Singapore,
Lead on Asian Free Trade’, Wash. Post (22 February 2018), www. of the Other Part, art. 3.10 (published 18 April 2018 and currently
washingtonpost.com/news/global-opinions/wp/2018/02/22/ undergoing legal review) [hereinafter ‘EU-Singapore IPA’]; Free Trade
in-americas-absence-japan-takes-the-lead-on-asian-free-trade/. Agreement Between the European Union and the Socialist Republic
29 Peter Landers, ‘Japan, the Original Trade Villain, Now Casts Itself as of Vietnam, ch. 8, sec. 3, subsec. 4, art. 13 (published 1 February 2016
the Hero’, Wall St. J. (9 March 2018), www.wsj.com/articles/japan- and currently undergoing legal review) [hereinafter ‘EU-Vietnam
the-original-trade-villain-now-casts-itself-as-the-hero-1520591404. FTA’].
30 Tim McDonald, ‘Asia-Pacific Trade Deal Signed by 11 Nations’, BBC 50 EU-Singapore IPA, supra, art. 3.19; EU-Vietnam FTA, supra, ch. 8, sec. 3,
News (8 March 2018), www.bbc.co.uk/news/business-43326314; subsec. 5, art. 28.
What Is The CPTPP?, Government of Canada (26 February 2019), 51 EU-Singapore IPA, supra n. 49, art. 3.9; EU-Vietnam FTA, supra n. 49,
https://international.gc.ca/trade-commerce/trade-agreements- ch. 8, sec. 3, subsec. 4, art. 12.
accords-commerciaux/agr-acc/cptpp-ptpgp/index.aspx?lang=eng. 52 EU-Singapore IPA, supra n. 49, art. 3.9(12); EU-Vietnam FTA, supra
31 See Caroline Simson, ‘New TPP Shows Investor-State Arbitration n. 49, ch. 8, sec. 3, subsec. 4, art. 12(14).
Support Persists’, Law360 (27 February 2018), www.law360.com/ 53 EU-Singapore IPA, supra n. 49, art. 3.9(15); EU-Vietnam FTA, supra
articles/1016667/new-tpp-shows-investor-state-arbitration-support- n. 49, ch. 8, sec. 3, subsec. 4, art. 12(17).
persists. 54 Huaxia Lai and Gabriel M Lentner, ‘Paving the Silk Road BIT by BIT: An
32 Press Release, Hon David Parker, New Zealand Signs Side Analysis of Investment Protection for Chinese Infrastructure Projects
Letters Curbing Investor-State Dispute Settlement, New Zealand Under the Belt & Road Initiative’, 14 Transnat’l Disp. Mgmt. 1, 1
Government (9 March 2018), www.beehive.govt.nz/release/new- (October 2017).
zealand-signs-side-letters-curbing-investor-state-dispute-settlement. 55 See International Cooperation: Profiles, Belt and Road Portal, https://
33 Canada-Chile-New Zealand Joint Declaration on Investor State eng.yidaiyilu.gov.cn/info/iList.jsp?cat_id=10076 (listing the profiles of
Dispute Settlement (9 March 2018), https://www.mfat.govt.nz/assets/ 72 participating countries).
CPTPP/CPTPP-Joint-Declaration-ISDS-Final.pdf. 56 Lai and Lentner, supra n. 54, at 1.
34 ACIA, supra n. 14, art. 40(2). 57 UNCTAD, International Investment Agreements Navigator: IIAs by
35 Id. art. 40(3). Economy, Investment Policy Hub, http://investmentpolicyhub.
36 AANZFTA, supra n. 18, ch. 11, art. 27(2). unctad.org/IIA/IiasByCountry.
37 ASEAN-India Investment Agreement, supra n. 16, art. 20(19)-(20). 58 Lai and Lentner, supra n. 54, at 7.
38 Agreement Between the Government of Canada and the 59 Norah Gallagher and Wenhua Shan, Chinese Investment Treaties:
Government of the People’s Republic of China for the Promotion Policies and Practice 54-55 (2009).
and Reciprocal Protection of Investments, Can.-China, art. 18, 9 60 See Lai and Lentner, supra n. 54, at 9–11.
September 2012 (entered into force 1 October 2014). 61 Rupert Walker, Is China’s Ambitious Belt and Road Initiative A Risk
39 Id. art. 20(2). Worth Taking for Foreign Investors?, South China Morning Post (11
40 Free Trade Agreement Between the Government of Australia and March 2018), www.scmp.com/business/companies/article/2136372/
the Government of the People’s Republic of China, Austl.-China, chinas-ambitious-belt-and-road-initiative-risk-worth-taking.
June 17, 2015 (entered into force 20 December 2015) [hereinafter 62 Norah Gallagher, Role of China in Investment: BITs, SOEs, Private
‘ChAFTA’]. Enterprises, and Evolution of Policy, 31 ICSID Rev. 88, 99 (2016).
41 Id. art. 9.11(5). 63 Beijing Urban Constr Grp Co Ltd v Republic of Yemen, ICSID Case
42 Id. art. 9.11(6). No. ARB/14/30, Decision on Jurisdiction, paragraph 3 (31 May 2017)
43 Under Article 52 of the ICSID Convention, the grounds for annulment [hereinafter ‘BUCG v Yemen Decision on Jurisdiction’].
are limited to the following: improper constitution of the tribunal; 64 Id paragraph 29.
manifest excess of powers; corruption; serious departure from a 65 Id paragraphs 37–44.
fundamental rule of procedure; and failure to state reasons. Under 66 Lai and Lentner, supra n. 54, at 12.
Article V of the New York Convention, the grounds are: incapacity 67 Id at 18.
of one of the parties to the arbitration agreement; invalidity of the 68 Id.
arbitration agreement; the losing party was not given proper notice 69 See generally Gallagher and Shan, supra n. 59, at 35–43.
of the arbitral appointment or of the arbitration proceedings or was 70 Id at 37. See also J Romesh Weeramantry, ‘Investor-State Dispute
otherwise unable to present its case; matters decided exceed the Settlement Provisions in China’s Investment Treaties’, 27 ICSID Rev.
scope of the submission to arbitration; and improper constitution of 192, 193 (Sept. 22, 2012).
the tribunal or conduct of the arbitral proceedings. 71 Weeramantry, supra, at 193. China signed the ICSID Convention on
44 See, eg, European Comm’n Concept Paper, Investment in TTIP and 9 February 1990 and ratified it on 7 January 1993. See Database of
Beyond – The Path for Reform: Enhancing the Right to Regulate and ICSID Member States, ICSID (2018), https://icsid.worldbank.org/en/
Moving from Current Ad Hoc Arbitration Towards an Investment Pages/about/Database-of-Member-States.aspx.
Court 8-9 (5 May 2015), http://trade.ec.europa.eu/doclib/ 72 Weeramantry, supra n. 70, at 193.
docs/2015/may/tradoc_153408.PDF. 73 China Heilongjiang Int’l Econ. & Technical Coop. Corp., Beijing
45 United States-Singapore Free Trade Agreement, Sing.-U.S., 6 May Shougang Mining Inv Co Ltd, and Qinhuangdaoshi Qinlong Int’l
2003 (entered into force 1 January 2004). Indus. Co Ltd v Mongolia, UNCITRAL, PCA Case No. 2010-20. The
46 Id. art. 15.19(10). award was issued on 30 June 2017 but is not publicly available. See
PCA Case Repository – China Heilongjiang, et al v Mongolia, https:// (in Chinese only); CIETAC, Explanatory Note Regarding CIETAC
www.pcacases.com/web/view/48. International Investment Arbitration Rules, Belt and Road Portal
74 See Caroline Simson, Mongolia Prevails in Row Over Nixed Mining (26 September 2017), www.yidaiyilu.gov.cn/zchj/zcfg/29165.htm
License, Law360 (6 July 2017), www.law360.com/articles/941804/ (in Chinese only) (unofficial translation: ‘the promulgation of the
mongolia-prevails-in-row-over-nixed-mining-license. Investment Arbitration Rules fulfils the practical needs of China’s ‘One
75 Id. Belt One Road’ initiative’).
76 Agreement Between the Government of the People’s Republic of 89 CIETAC International Investment Arbitration Rules, supra, art. 4(3).
China and the Government of the Mongolian People’s Republic 90 Id.
Concerning the Encouragement and Reciprocal Protection of 91 SCIA Arbitration Rules, Shenzhen Court of International Arbitration,
Investments, China-Mong., art. 8(3), 26 August 1991 (entered into art. 2(2) (1 December 2016), www.sccietac.org/web/doc/view_
force 1 November 1993). rules/856.html (in Chinese only).
77 See, eg, Simson, supra n. 74. 92 Bryan Cave Leighton Paisner, Belt and Road Insights - China
78 Tza Yap Shum v The Republic of Peru, ICSID Case No. ARB/07/6. Announces New Courts for Resolving Belt and Road Disputes,
79 Sanum Invs Ltd v Lao People’s Democratic Republic, UNCITRAL, PCA Lexology (22 March 2018), www.lexology.com/library/detail.
Case No. 2013-13. aspx?g=9b2a23d2-a461-4e89-96a4-adeb3ecf7e20.
80 Beijing Urban Constr Grp Co Ltd v Republic of Yemen, ICSID Case 93 Ekran Berhad v People’s Republic of China, ICSID Case No.
No. ARB/14/30. ARB/11/15; Ansung Housing Co, Ltd v People’s Republic of China,
81 See Agreement Between the Government of the Republic of Peru ICSID Case No. ARB/14/25; Hela Schwarz GmbH v People’s Republic
and the Government of the People’s Republic of China Concerning of China, ICSID Case No. ARB/17/19. Of these, the Hela Schwarz
the Encouragement and Reciprocal of Investments, China-Peru, art. matter is ongoing. In addition, in March 2018, it was reported that
8(3), 9 June 1994 (entered into force 1 February 1995); Agreement Singapore mineral resources company AsiaPhos Ltd had threatened
Between the Government of the People’s Republic of China and the to commence investment treaty arbitration against China after
Government of the Lao People’s Democratic Republic Concerning Chinese authorities declined to renew its mining rights in Sichuan. See
the Encouragement and Reciprocal Protection of Investments, Jarrod Hepburn and Luke Eric Peterson, ‘China Warned of Possible
China-Laos, art. 8(3), 31 January 1993 (entered into force 1 June Investment Treaty Arbitration’, Inv. Arb. Reporter (6 March 2018),
1993). www.iareporter.com/articles/china-warned-of-possible-investment-
82 Tza Yap Shum v The Republic of Peru, ICSID Case No. ARB/07/6, treaty-arbitration/.
Decision on Jurisdiction and Competence, paragraph 188 (June 19, 94 Agreement between the Government of the People’s Republic
2009), upheld in Tza Yap Shum v The Republic of Peru, ICSID Case of China and the Government of the Republic of Korea on the
No. ARB/07/6, Decision on Annulment, paragraphs 98 (no manifest Promotion and Protection of Investments, China-S. Kor., art. 9(7), 7
excess of powers), 100–113 (no failure to state reasons), 141–142 September 2007 (entered into force 1 December 2007) [hereinafter
(no serious departure from a fundamental rule of procedure) (12 ‘China-Korea BIT’].
February 2015); Sanum Invs Ltd v Lao People’s Democratic Republic, 95 Ansung Housing Co, Ltd v People’s Republic of China, ICSID
UNCITRAL, PCA Case No. 2013-13, Award on Jurisdiction, paragraphs Case No. ARB/14/25, Award, paragraphs 114, 121 (9 March 2017)
329–342 (13 December 2013), upheld by the Singapore Court of [hereinafter ‘Ansung Housing v. China Award’].
Appeal in Sanum Invs Ltd v Lao People’s Democratic Republic, 96 China-Korea BIT, supra n. 94, art. 3.
[2016] SGCA 57, Judgment, paragraphs 130-131, 150 (29 September 97 Ansung Housing v China Award, supra n. 95, paragraphs 138–141.
2016). 98 The International Monetary Fund (IMF) has reported that India’s
83 BUCG v Yemen Decision on Jurisdiction, supra n. 63, paragraphs GDP at market prices grew by 7.1 per cent in 2016 and 6.7 per cent
87, 109. See Agreement on the Encouragement and Reciprocal in 2017, with projected growth figures of 7.4 per cent for 2018 and
Protection of Investments Between the Government of the People’s 7.8 per cent in 2019. IMF, World Economic Outlook Update: Brighter
Republic of China and the Government of the Republic of Yemen, Prospects, Optimistic Markets, Challenges Ahead (22 January 2018),
China-Yemen, art. 10.2, 16 February 1998 (entered into force10 April Table 1, www.imf.org/en/Publications/WEO/Issues/2018/01/11/world-
2002) (providing that the Contracting States consented to arbitrate economic-outlook-update-january-2018.
disputes ‘relating to the amount of compensation for expropriation’). 99 UNCTAD, World Investment Report 2017: Investment and the Digital
84 Ping An Life Ins Co, Ltd and Ping An Ins (Grp) Co, Ltd v The Economy, at 8 and fig. I.8, UN Doc. UNCTAD/WIR/2017 (7 June 2017),
Government of Belgium, ICSID Case No. ARB/12/29, Award (30 April http://www.unctad.org/en/PublicationsLibrary/wir2017_en.pdf.
2015) [hereinafter ‘Ping An v Belgium Award’]. 100 Nish Shetty, ‘India’s New Approach to Investment Treaties’, Asian
85 Agreement Between the Government of the People’s Republic Disp. Rev. 189, 190 (2016).
of China and the Belgian-Luxembourg Economic Union on the 101 White Industries Australia Limited v Republic of India, UNCITRAL, Final
Reciprocal Promotion and Protection of Investments, art. 10(3), 4 Award, ¶ 16.1.1 (30 November 2011) [hereinafter ‘White Industries v.
June 1984 (entered into force 5 October 1986 and terminated 1 India Award’].
December 2009). 102 UNCTAD, India – As Respondent State, Investment Policy Hub, http://
86 Agreement Between the Belgium-Luxembourg Economic Union investmentpolicyhub.unctad.org/ISDS/CountryCases/96?partyRole=2
and the Government of the People’s Republic of China on the [hereinafter ‘UNCTAD, India – As Respondent State’]. It should be
Reciprocal Promotion and Protection of Investments, art. 8, 6 June noted that India is not a party to the ICSID Convention, and that
2005 (entered into force 1 December 2009). investment arbitrations instituted under the UNCITRAL Arbitration Rules
87 Ping An v Belgium Award, supra n. 84, paragraph 231. are subject to a greater degree of confidentiality. There may well
88 CIETAC International Investment Arbitration Rules, China International have been other investor-State arbitrations against India that are not
Economic and Trade Arbitration Commission, art. 1 (2 September publicly known.
2017) www.cietac.org/index.php?m=Page&a=index&id=389 103 White Industries v India Award, supra n. 101, paragraphs 1.11, 11.2.1–
[hereinafter ‘CIETAC International Investment Arbitration Rules’] 11.2.9.

104 Id. paragraphs 11.4.16–11.4.20. Korea, Investment Policy Hub, http://investmentpolicyhub.unctad.

105 UNCTAD, India – As Respondent State, supra n. 102. org/ISDS/Details/679. The third case, Hanocal Holding v Korea, was
106 Vodafone v India, UNCITRAL, Notice of Arbitration (17 April discontinued in October 2016 before the filing of any memorials.
2014); Cairn Energy PLC and Cairn UK Holdings Limited (CUHL) v See ICSID, Hanocal Holding BV and IPIC International BV v Republic
Government of India, UNCITRAL, PCA Case No. 2016-7; Vedanta of Korea (ICSID Case No. ARB/15/17), https://icsid.worldbank.org/
Resources PLC v India, UNCITRAL (2015). en/Pages/cases/casedetail.aspx?CaseNo=ARB/15/17 (procedural
107 Deutsche Telekom v India, UNCITRAL, Notice of Arbitration (2 details).
September 2013); CC/Devas (Mauritius) Ltd, Devas Employees 128 See generally Jonathan Cheng, ‘Lone Star Case Revives Questions
Mauritius Private Limited, and Telecom Devas Mauritius Limited v About Investment in Korea’, Wall St. J. (14 May 2015), www.wsj.
Republic of India, UNCITRAL, PCA Case No 2013-09. com/articles/lone-star-case-revives-questions-about-investment-in-
108 Maxim Naumchenko, Andrey Poluektov and Tenoch Holdings Limited korea-1431609387; S Nathan Park, ‘What’s At Stake: South Korea vs
v The Republic of India, UNCITRAL, PCA Case No. 2013-23; Khaitan Lone Star Funds’, Wall St. J. (29 June 2015), https://blogs.wsj.com/
Holdings Mauritius Limited v. India, UNCITRAL, Notice of Arbitration (30 korearealtime/2015/06/29/whats-at-stake-south-korea-vs-lone-star-
Sept. 2013). funds/; Jung Min-hee, ‘ISD Dispute with Hedge Fund: Final Phase
109 Astro All Asia Networks and South Asia Entertainment Holdings Limited of ISD Between S. Korea and Lone Star Funds Around the Corner’,
v India, UNCITRAL, 2016. BusinessKorea (1 June 2016), www.businesskorea.co.kr/english/news/
110 See J’arrod Hepburn et al, India Round-Up: Updates on Five Pending money/14845-isd-dispute-hedge-fund-final-phase-isd-between-s-
Investment Treaty Arbitrations Including Rulings (on Liability in korea-and-lone-star-funds-around.
Deutsche Telekom Case)’, Tribunals and Anti-Suit Injunctions, Inv. Arb. 129 See ICSID, LSF-KEB Holdings SCA and others v Republic of Korea,
Reporter (21 March 2018), www.iareporter.com/articles/india-round- supra n. 127.
up-updates-on-five-pending-investment-treaty-arbitrations-including- 130 See Robert W Wachter, Elizabeth J Shin and Hyun Soo Joo,
rulings-tribunals-and-anti-suit-injunctions/. ‘Investment Treaty Arbitration 2017: Korea’, Glob. Arb. Rev.
111 For a comprehensive analysis of the Model BIT, see Ranjan and (19 September 2017), https://globalarbitrationreview.com/
Anand, supra n. 9. jurisdiction/1004663/korea.
112 Kavaljit Singh and Burghard Ilge, ‘Remodeling India’s Investment 131 UNCTAD, Indonesia – As Respondent State, Investment Policy
Treaty Regime’, The Wire (16 July 2016), https://thewire.in/52022/ Hub, available at http://investmentpolicyhub.unctad.org/ISDS/
remodeling-indias-investment-treaty-regime/. CountryCases/97?partyRole=2. This table does not include Amco
113 Id. Asia v Indonesia, which was decided in favour of the claimants. See
114 See Press Release, Press Information Bureau, Cabinet Approves Amco Asia Corp and others v Republic of Indonesia, ICSID Case No.
Joint Interpretative Notes on the Agreement Between India ARB/81/1, Award in Resubmitted Proceeding (5 June 1990).
and Bangladesh for Promotion and Protection of Investments, 132 Indian Metals & Ferro Alloys Ltd v Republic of Indonesia, UNCITRAL,
Government of India (12 July 2017), http://pib.nic.in/newsite/ PCA Case No. 2015-40. The arbitration was initiated in July 2015
PrintRelease.aspx?relid=167345. under the 1999 India-Indonesia BIT and is ongoing. See PCA Case
115 Indian Model BIT, supra n. 47, art. 1.4. Repository – Indian Metals & Ferro Alloys Limited (India) v The
116 Id. art. 1.5. Government of the Republic of Indonesia, www.pcacases.com/
117 Id. art. 2.4. web/view/144.
118 Id. art. 32. 133 Oleovest Pte Ltd v Republic of Indonesia, ICSID Case No. ARB/16/26.
119 Id. art. 5.5. The Singaporean company commenced arbitration in 2016 under
120 In place of an FET clause, the Model BIT contains a provision titled the 2005 Singapore-Indonesia BIT but filed a request to discontinue
‘Treatment of Investments’ and lists specific obligations, such as the proceedings a week after the tribunal was constituted. On
denial of justice and ‘manifestly abusive treatment.’ See id. art. 3. 19 March 2018, by a majority, the tribunal issued a procedural
121 Id. art. 15. order noting that the proceedings had been discontinued. See
122 Shetty, supra n. 100, at 193. ICSID, Oleovest Pte Ltd v Republic of Indonesia (ICSID Case No.
123 Joel Dahlquist, ‘Brazil and India Conclude Bilateral Investment Treaty’, ARB/16/26), https://icsid.worldbank.org/en/Pages/cases/casedetail.
Inv. Arb. Reporter (28 November 2016), www.iareporter.com/articles/ aspx?CaseNo=ARB/16/26 (procedural details).
brazil-and-india-conclude-bilateral-investment-treaty/. 134 Investment Arbitration Rules of the Singapore International Arbitration
124 Report of the High Level Committee to Review the Institutionalisation Centre, Singapore International Arbitration Centre (1 January 2017),
of Arbitration Mechanism in India 106-107 (30 July 2017), http:// www.siac.org.sg/our-rules/rules/siac-ia-rules-2017.
legalaffairs.gov.in/sites/default/files/Report-HLC.pdf. 135 Christopher Boog and Philip Wimalasena, ‘The SIAC IA Rules: A New
125 See UNCTAD WIR2017, Annex 2, supra n. 12. Player in the Investment Arbitration Market’, 6 Indian J. Arb. L. 72, 88
126 UNCTAD, India – As Home State, Investment Policy Hub, (2017).
available at http://investmentpolicyhub.unctad.org/ISDS/ 136 See Debevoise & Plimpton LLP, ‘Client Update: Hong Kong and
CountryCases/96?partyRole=1; ‘Jarrod Hepburn, Indian Investors Singapore Permit Third-Party Funding in International Arbitration’
File UNCITRAL BIT Claim Against Bosnia’, Inv. Arb. Reporter (28 June 2017), www.debevoise.com/~/media/files/insights/
(25 September 2017), https://www.iareporter.com/articles/ publications/2017/06/20170628_hong_kong_and_singapore_permit_
indian-investors-file-uncitral-bit-claim-against-bosnia-alleging- third_party_funding_in_international_arbitration.pdf.
that-they-were-misled-during-privatization-tender-and-later- 137 ICCA-Queen Mary Task Force on Third-Party Funding in International
subjected-to-unfair-treatment-by-securities-commission/. Arbitration, Joint Report, The ICCA Reports No. 4, 18 (April 2018),
127 See ICSID, LSF-KEB Holdings SCA and others v Republic of Korea www.arbitration-icca.org/publications/Third-Party-Funding-Report.
(ICSID Case No. ARB/12/37), https://icsid.worldbank.org/en/Pages/ html (noting that third -party funding now occupies ‘centre stage in
cases/casedetail.aspx?CaseNo=ARB/12/37 (procedural details); the global commercial litigation and arbitration market.’).
UNCTAD, Mohammad Reza Dayyani and others v Republic of
Tony Dymond Z J Jennifer Lim

Debevoise & Plimpton LLP Debevoise & Plimpton LLP
Tony Dymond is a partner at Debevoise & Plimpton. His practice Z J Jennifer Lim is an associate at Debevoise & Plimpton. Her
focuses on complex, multi-jurisdictional disputes, in both litiga- practice focuses on international dispute resolution and arbitration.
tion and arbitration. Ms Lim joined Debevoise in the New York Office in 2013 and
Mr Dymond joined Debevoise in 2014. He has advised clients transferred to the firm’s Hong Kong office in June 2016. From
in a wide range of jurisdictions, having spent the last 20 years in 2012 to 2013, she clerked for Judge Hisashi Owada and Judge
London, Hong Kong and Seoul. He is widely acknowledged as Leonid Skotnikov at the International Court of Justice in The
a leading lawyer in high value disputes arising from large-scale Hague, Netherlands. Ms Lim received a JD from Columbia Law
projects, particularly in the energy and infrastructure sectors. Mr School, where she was a James Kent scholar, recipient of the David
Dymond has advised on some of the largest, most complex, mar- Berger Memorial Prize, and a senior editor of the American Review
ket shaping disputes in these sectors. of International Arbitration. She received an LLB with first class
He regularly acts on shareholder and joint venture disputes honours from University College London in 2012. While in law
and on corporate governance disputes. He acted for the Hong school, Ms Lim participated in the Philip C Jessup International
Kong Security and Futures Commission in the first exercise of Law Moot Court Competition, and remains the only person in
its statutory power to bring ‘unfair prejudice’ proceedings. He has the history of the competition to receive the Stephen M Schwebel
appeared in arbitrations under the principal arbitration rules and Award for best oralist in the Championship Round for two years
in the English and Hong Kong courts. in a row.
Mr Dymond was called to the bar of England and Wales in Ms Lim is fluent in Mandarin Chinese. From 2014 to 2016,
1993, and was admitted as a solicitor in Hong Kong in 2000 and she was a member of the international law committee of the New
in England and Wales in 2002. York City Bar Association. She also served on the programme
committee for the 2016 annual meeting of the American Society
of International Law.
21/F AIA Central Debevoise & Plimpton LLP has successfully represented clients in Asia-related arbitrations for dec-
1 Connaught Road Central ades. The firm’s arbitration practice in Asia reflects Debevoise’s global strength in the area. It is one of
Hong Kong very few law firms in the world to combine sophisticated international arbitration, general commer-
Tel: +852 2160 9800 cial dispute resolution and public international law capacity in four major international arbitration
Fax: +852 2810 9828
centres: New York, London, Hong Kong and Paris.
The Asia team has a strong track record advising on the most complex international disputes for
Tony Dymond (London)
tdymond@debevoise.com leading multinationals, international organisations, sovereigns and non-governmental organisations.
Clients benefit from a team of internationally renowned arbitration lawyers. The firm has a deep
Z J Jennifer Lim (Hong Kong) bench of partners, counsel and associates who focus on arbitration in the region. The senior mem-
jlim@debevoise.com bers of the team are also heavily involved in shaping the arbitration environment in Asia, taking
leadership roles on bodies such as the Hong Kong International Arbitration Centre and the Singapore
www.debevoise.com International Commercial Court Committee.
The team’s long track record of work on arbitration in Asia, coupled with a deep level of involve-
ment in the region’s arbitration community, is incredibly powerful. It gives the team the experience
and perspective needed to advise clients on their most critical arbitrations.

Oil and Gas Arbitration in the Asia-Pacific Region
Duncan Speller, Jonathan Lim and Justin Li
Introduction identified. This article examines these trends and considers pos-
The increased use of arbitration by parties in the Asia-Pacific sible future directions for oil and gas arbitrations in the region.
region1 has been a consistent trend over the past decade and
shows little sign of abating. The Singapore International Current trends
Arbitration Centre (SIAC), for example, recently announced Enhancing the appeal of international arbitration
that it administered 402 new cases in 2018, up 17 per cent from Several jurisdictions in the Asia-Pacific region have taken steps
343 new cases in 2016 and a 48 per cent increase from the 271 to make themselves more attractive to arbitration generally and
new cases filed in 2015.2 The Chinese International Economic oil and gas arbitration in particular. These have taken the form of
and Trade Arbitration Commission (CIETAC) administered its institutional developments and legislative changes.
all-time high of 2,962 new domestic and foreign-related cases
in 2018, up from only 2,298 cases in 2017.3 The Hong Kong Institutional developments
International Arbitration Centre (HKIAC) had a total of 532 Australia has introduced innovations specific to the oil and gas
new cases filed in 2017,4 of these new cases, 297 were arbitra- sector. In November 2014, the Perth Centre for Energy and
tions, 15 were mediations and 220 were domain name disputes.5 Resources Arbitration (PCERA) was launched. As a specialised
The importance of the oil and gas sector to the Asia-Pacific energy and resources arbitral institution with a dedicated panel
economies cannot be overstated.6 It is therefore unsurprising that of expert arbitrators, PCERA is the first of its kind in the Asia-
oil and gas arbitrations in the region continue to increase in both Pacific region.14 In August 2017, PCERA published the PCERA
prominence and frequency. Arbitration Rules 2017, which are based expressly on a modified
Disputes arising out of the oil and gas sector often involve version of the UNCITRAL Arbitration Rules.
multiple parties and contracts, require highly technical areas of Many institutions in the region have made changes that are
expertise and are particularly suitable for international arbitra- designed to improve arbitration generally, but which will also have
tion. Indeed, in recent surveys conducted by the Queen Mary a positive effect on oil and gas arbitrations. For example, the SIAC
University of London, 56 per cent of energy industry respond- most recently revised its rules in 2016. Included in the revisions
ents preferred arbitration as a choice of resolving cross-border are a number of amendments that will enhance the utility and
disputes and 78 per cent of energy industry respondents strongly attractiveness of the SIAC Rules to the oil and gas sector, including:
agreed or agreed that arbitration is well-suited to the energy • the early dismissal of claims and defences procedure;
industry.7 Further, 85 per cent of respondents opine that it is • provisions regarding joinder of additional parties and consoli-
likely that the use of international arbitration for resolving cross- dation of multiple arbitrations; and
border energy disputes will increase in the future.8 • further refinements to the existing emergency arbitrator and
The Asia-Pacific region’s share of global energy consump- expedited arbitration procedures.15
tion is expected to rise to 48 per cent – or almost half of global
consumption – by 2040.9 These dramatic increases in commer- Given that oil and gas disputes often involve multiple contracts
cial and economic activity in the oil and gas sector portend and multiple parties, joining relevant parties or consolidating the
an even greater role for international arbitration in the Asia- dispute in a single arbitral forum will result in a more efficient
Pacific region. resolution of the dispute, if it is fair and appropriate to do so.
The types of interests that may give rise to arbitration in the Disputing parties will also benefit from the enhancements made
oil and gas sector are diverse and vary within the region. Asia by the SIAC to its emergency arbitrator mechanism, which allows
accounted for 72.9 per cent of global liquefied natural gas (LNG) parties to obtain expedited interim relief before the constitution
imports in 2017, with a 72.9 per cent market share, and Japan, of the tribunal within 14 days,16 and to the expedited procedure,
China and South Korea are the world’s largest LNG importing which allows parties to obtain an award within six months of the
countries.10 The pattern of LNG importation within Asia has constitution of the tribunal.17
also shifted in recent years, with China, India and other develop- The SIAC has also released its first set of investment arbi-
ing countries overtaking the more established markets of Japan tration rules (the SIAC IA Rules), which came into effect on
and South Korea.11Australia, Malaysia, India and Indonesia, along 1 January 2017.18 The SIAC IA Rules were developed with a view
with China, are the largest oil and gas producers in the Asia- towards issues ‘unique to international investment arbitration’.19
Pacific region.12 Jurisdictions such as Timor Leste, Vietnam and Some of the key provisions under the SIAC IA Rules include:
the Philippines have significant amounts of unexplored oil and • a default list procedure for the appointment of the sole or
gas resources that are more recently being commercialised.13 presiding arbitrator;
Although it is difficult to generalise about the varied con- • an opt-in mechanism for the appointment of an emer-
tracts, practices and legal frameworks pertaining to oil and gas gency arbitrator;
across the Asia-Pacific region, a few emerging trends can be • a procedure for early dismissal of claims and defences;
• provisions for submissions by non-disputing parties; and interest recognised by the law in the arbitration other than under
• provisions to enable the tribunal to order the disclosure of the funding agreement’.32 This would include lawyers and law
third party funding arrangements and to take such arrange- firms (save for lawyers and law firms acting for a party in the
ments into account when apportioning costs.20 arbitral proceedings).
These changes will provide additional options to arbitration
In December 2017, the SIAC proposed an innovative cross-insti- users in the oil and gas sector in terms of funding their claims
tution consolidation protocol,21 which is designed to facilitate the (although users should be aware that public policy issues may still
consolidation of international commercial disputes across multiple arise if third-party funding is prohibited in a jurisdiction where
institutions. Such consolidation is currently not possible under enforcement may be sought).
the leading institutional arbitration rules. The SIAC has prepared Australia has made a number changes to its arbitration leg-
a memorandum discussing the protocol for cross-institution con- islation in recent years that will have positive consequences for
solidation22 and is in the process of engaging with other arbitral energy arbitrations. In 2015, the International Arbitration Act was
institutions and the arbitration community on the protocol.23 amended to expressly provide that arbitrations seated in Australia
There is a degree of convergence among the rules of the lead- are presumptively confidential, subject to a number of limited
ing centres in the Asia-Pacific region.The HKIAC revised its rules exceptions, namely consent, third party rights, enforcement of
in 2018, with the latest version of the rules also including com- awards, public interest and natural justice.33 Confidentiality can
prehensive provisions dealing with multiple contracts, joinder and be very important for the oil and gas industry, especially as highly
consolidation, emergency interim relief, early dismissal of claims valuable and proprietary information may be at stake, particularly
and expedited procedures.24 CIETAC likewise revised its rules in in upstream exploration and appraisal ventures. In 2018, further
2015 and the revised CIETAC Rules also have provisions on mul- amendments were introduced to broaden the tribunal’s discretion
tiple contracts, joinder and consolidation, and emergency interim in awarding costs and disapply the existing confidentiality provi-
relief and expedited procedures.25 In addition, on 1 October 2017, sions to arbitral proceedings to which the UNCITRAL Rules
CIETAC released the International Investment Arbitration Rules on Transparency in Treaty-based Investor-State Arbitration apply.34
(CIETAC IA Rules), the first set of investment arbitration rules India has made significant strides to improve its reputation as a
promulgated by a Chinese arbitration institution.26 venue for arbitration, including revisions to its legal framework for
In April 2016, India established the Mumbai Centre for arbitration through the 2015 Indian Arbitration and Conciliation
International Arbitration (MCIA), its first home-grown interna- (Amendment) Act, which came into force on 23 October 2015.35
tional arbitration centre.27 The MCIA Rules, like the other leading The key reforms made by the new act include:
rules in the region, have provisions dealing with multiple contracts, • clarification that provisions on court-ordered interim relief
joinder and consolidation, emergency interim relief, and expe- and court assistance in the taking of evidence would, sub-
dited procedures. More recently, in 2019, the Japan Commercial ject to contrary agreement, apply to arbitrations seated out-
Arbitration Association (JCAA) amended its Administrative Rules side India;36
and its Commercial Rules and issued a new set of ‘Interactive • strict time limits for an arbitral tribunal seated in India to
Rules’.28 The changes to the Commercial Rules include duties render a final award;37 and
for arbitrators to conduct a reasonable investigation into potential • limitations on the scope of ‘public policy’ as a ground for refus-
conflicts of interest, rules regarding tribunal secretaries and rules ing enforcement of awards.38
on disclosure of dissenting opinions.29 The new Interactive Rules
take a more inquisitorial approach by, for example, requiring the The 2015 amendments are in line with modern arbitration prac-
tribunal to set out its preliminary view on key factual and legal tice (although some, such as the time limits, have been criticised)
issues as early as possible and before a decision on whether a hear- and, along with the introduction of the MCIA, will give India
ing is necessary. greater prominence as a potential seat for arbitration. China is
also continually improving its arbitration legal framework. Under
Legislative changes Chinese law, before a lower court refuses recognition or enforce-
Singapore and Hong Kong have periodically made refinements to ment of a foreign-related or foreign arbitration award, such deci-
their legal frameworks for arbitration to ensure that they remain sion has to be reported to the Supreme People’s Court (SPC).39 In
ahead of latest developments in the field. Most recently, in 2017, 2017, the SPC released two judicial interpretations on arbitration
both Singapore and Hong Kong took legislative steps to permit (the Interpretations).40 The Interpretations extend the SPC report-
third party funding. Singapore introduced amendments to the Civil ing system to domestic arbitral awards, permit parties to participate
Law Act with effect from 1 March 2017 that abolished the com- in the decision-making of the reviewing court and clarify the
mon law torts of champerty and maintenance, and also provided approach the SPC will take with respect to the law governing
that third-party funding is not contrary to public policy or illegal the arbitration agreement (which will not necessarily be the law
when it is provided by qualifying funders in prescribed dispute governing the underlying contract).41
resolution proceedings, details of which are set out in the Civil
Law (Third Party Funding) Regulations 2017 (Regulations).30 Arbitrations involving states or state-linked parties
In June 2017, Hong Kong passed the Arbitration and Mediation Oil and gas resources often take on a strategic, security or geo-
Legislation (Third Party Funding) (Amendment) Ordinance 2017 political significance for a state. The state is the resource-owner
to permit third-party funding and this law came into force in under the law for most countries in the region.42 Producing states
February 2019.31 Unlike Singapore, Hong Kong does not mandate are thus key players in the oil and gas industry and may take on a
third-party funders to adhere to particular regulations. Hong Kong commercial interest in a particular oil and gas venture or contract,
also adopted a broader definition of a third-party funder that is or exercise certain regulatory and control functions that affect a
not limited to professional funders and includes any ‘person who particular venture or contract. States can participate in a venture
is a party to a funding agreement . . . and who does not have an or contract in one or more of a variety of ways:

• they may participate through an oil and gas ministry or some the KG-DG offshore gas block in the Bay of Bengal, which it
type of government agency; operates in a joint venture with the Indian government, BP and
• they may participate through a national oil and gas com- Niko Resources, a Canadian company.50 The parties’ pleadings
pany; or are before the arbitral tribunal and the parties are in the process
• they may regulate through hydrocarbon laws, regulations or of completing the arbitration proceedings.51 Reliance Industries
policies.43 then filed another claim together with BP and Niko Resources
in 2014 under the same agreement relating to the Indian gov-
Oil and gas arbitrations therefore frequently involve states or state- ernment’s delay in implementing a price hike for natural gas.52
linked parties. These can include commercial arbitrations arising This claim was later withdrawn.53 In November 2016, Reliance
out of various contracts between private parties and states or state- Industries began yet another arbitration under the same agree-
linked parties, and also arbitrations under investment treaties. ment after India imposed a US$1.55 billion fine on Reliance
Industries and its partners for extracting certain gas that had
Commercial arbitrations migrated to the KG-D6 block from adjacent blocks owned by
States or their national oil companies are typically parties to the Oil and Natural Gas Company (ONGC).54 In 2018, the arbi-
upstream agreements granting private oil and gas companies the tral tribunal held for Reliance, finding that the consortium was
rights to certain oil and gas interests. These may take the form of entitled to produce all gas from its contract area and India was
a concession agreement, a licence agreement, a production sharing ordered to pay US$8.3 million in costs.55 Most recently, in the last
agreement or a service agreement.They may also take the form of quarter of 2018, Niko Resources served a notice of arbitration on
a hybrid agreement that combines elements of the different types Reliance, after Reliance and BP issued notice to Niko Resources
of granting agreements. In general, since the 1970s, the oil and gas for withdrawal from the production sharing contract based on the
industry has shifted from concession agreements, under which the latter’s alleged default on certain cash calls.56
state granted title over the resource to private companies, to pro- Many oil and gas arbitrations in the region or involving parties
duction sharing agreements or service agreements, under which from the region arise out of joint venture agreements as well. In
the state retains ownership over the resources but grants a private June 2016, Sinopec, China’s state owned energy company, filed a
company the right to participate as an investor and a producer.44 US$5.5 billion claim against Repsol in Singapore over an invest-
Under a production sharing agreement, which is the most ment in an ailing North Sea oil joint venture.57 A decision in this
commonly encountered type of granting agreement, the investor case is expected this year.58 In March 2017, PetroChina and five
takes on exploration and other risks in the venture, but has an other Chinese state-owned oil companies submitted to arbitra-
entitlement to recover costs and share in the production as profit, tion under the American Arbitration Association Rules a dispute
once operations become commercial. Indonesia, in fact, intro- over oil and gas fields in Chad against Carlton, a Texas energy
duced production sharing agreements in the 1960s.45 Production investments company.59 This reflects a marked shift away from the
sharing agreements are now found across the Asia-Pacific region, reluctance that Chinese state-owned companies have sometimes
including in Bangladesh, China, India, Malaysia, Myanmar, had in the past to invoke formal dispute resolution procedures.
Philippines, Sri Lanka and Vietnam.46 In May 2017, MedcoEnergi, an Indonesian oil company, won a
Disputes that may arise under production sharing agreements US$24 million UNCITRAL award in a dispute with Singaporean
include disputes regarding: and Australian partners arising out of a joint venture to oper-
• the recovery of costs and accounting procedure under ate the Jeruk oil field off the coast of East Java.60 MedcoEnergi
the agreement; received full payment in 2017.61
• the extent and nature of rights granted under the contract;
• non-payment of invoices or royalties; Investment treaty arbitrations
• prices or price adjustments; and A significant number of oil and gas disputes in the Asia-Pacific
• delays, disruptions or force majeure. region have also been submitted to arbitration under various
investment treaties. Such treaties frequently provide for commit-
The nature and complexity of such disputes varies, and depend on ments by host states to certain standards of conduct with respect
factors such as the scale and complexity of the project, the parties to the treatment of foreign investments, and for the states’ consent
involved and the political environment. that breaches of such standards may be submitted to arbitration.
A large proportion of oil and gas arbitrations in the region Countries in Asia are party to more than 1,200 bilateral invest-
have arisen out of production sharing and other granting agreement treaties or investment agreements, many of which provide
ments – India has reportedly been involved in arbitrations relat- for the arbitration of investment disputes.62
ing to 22 out of its 310 production sharing agreements in the A number of multilateral treaties that cover the region, includ-
past 15 years.47 Some arbitrations are illustrative of the range of ing the 2009 ASEAN Comprehensive Investment Agreement
issues that might be encountered. In December 2010, Reliance (ACIA) and the Comprehensive and Progressive Agreement for
Industries, together with BG Exploration, commenced arbitra- Trans-Pacific Partnership (CPTPP) also provide for arbitration.
tion against India regarding a dispute about two production shar- The CPTPP is an agreement reached in January 2018 by the
ing contracts that granted the claimants the exclusive right to remaining 11 of the former 12 Trans-Pacific Partnership (TPP)
exploit petroleum resources.48 The arbitration is still yet to con- countries after the withdrawal of the United States. The CPTPP
clude, although five awards have been issued and parts of the came into force on 30 December 2018. The CPTPP incorporates
‘Final Partial Award’ issued in October 2016 have been chal- the original TPP, with a number of changes effected to the origi-
lenged before the English Commercial Court by the claimants.49 nal text through the suspension of over 30 TPP provisions that are
In November 2011, Reliance Industries filed another notice of listed in an annex.63 It remains to be seen whether China, the big-
arbitration against India, regarding a dispute arising out of the gest economy in the region, will join the CPTPP,64 or whether it
cost recovery provisions its production sharing agreement over will focus on other multilateral treaties with other trade partners in
the Asia-Pacific, including the Regional Comprehensive Economic treaties on different terms, although reports are not conclusive. For
Partnership (RCEP) and the Free Trade Area of the Asia-Pacific treaties that have been terminated or are about to be terminated,
(FTAAP).65 investments made prior to the expiry of the treaties should con-
A substantial number of investment treaty arbitrations involv- tinue to enjoy protection under survival or sunset clauses for up
ing states in the Asia-Pacific region have related to oil and gas to 15 years.80 Indeed, in August 2016, Oleovest, a Singapore-based
disputes.A large proportion of ICSID arbitrations involving parties subsidiary of an Australian renewable energy company, initiated
from the region have been related to the oil and gas sector. As of an ICSID arbitration against Indonesia under the Singapore–
October 2016, out of the 46 ICSID cases involving a state from Indonesia BIT with respect to a palm oil oleochemcial project
South Asia, East Asia and the Pacific, 45 per cent concerned the in Sumatra. The treaty had lapsed in June 2016, but the relevant
oil, gas and mining sector.66 A significant number of non-ICSID treaty contains a survival clause protecting existing investments for
investment treaty arbitrations also relate to the oil and gas sector. ten years after June 2016.81 The case was discontinued in 2018.82
Given the complexity and variety of the security and politi-
cal environments in which many oil and gas ventures operate, a Future directions
wide range of different issues can give rise to investment treaty Price movements and volatility
arbitration. For example, expropriation claims of various descrip- Price movements in oil and gas markets are a key driver of change
tions whether framed as lawful or unlawful, direct or indirect are in the industry. They are also a driver of disputes. Parties to energy
not uncommon in the oil and gas sector. In 2016, a UNCITRAL related contracts that were formed and negotiated in a different
tribunal dismissed two treaty claims brought by Progas Holdings, a price environment may find themselves or their counterparts tied
Mauritian entity, and its British-Iraqi shareholder against Pakistan to agreements that are no longer as profitable as had been antici-
for alleged expropriation of an LPG terminal in Port Qasim, pated. Further exploration, appraisal or development of existing
Karachi.67 The awards are being challenged before the English oil and gas assets may proceed on a slower and more conservative
court in an application to set aside filed by the investors.68 timescale. Parties may seek to get out of, or revise, a bad bargain.
Retroactive taxation claims and other regulatory actions by All of this can give rise to disputes; indeed, the recent low price
governments also frequently give rise to investment treaty disputes. environment has reportedly given rise to a number of disputes
In March 2015, Cairn Energy, a Scottish oil company, initiated arising out of unpaid invoices or cost overruns, or the suspen-
a UNCITRAL arbitration against India under the UK–India sion, renegotiation or cancellation of oil exploration and drilling
bilateral investment treaty (BIT), alleging that India’s demands for obligations.83
US$1.6 billion in retroactive taxes against its Indian subsidiary, as Price movements will continue to be volatile and difficult
well as India’s restrictions preventing Cairn from selling its remain- to predict. Future upward movements in oil and gas prices or
ing 10 per cent stake in its subsidiary, are in breach of the treaty.69 In regional divergences in prices creating arbitrage opportunities,
2017, the tribunal declined Cairn’s request for interim measures to will very likely fuel an increase in disputes. Indeed, a study done
prevent India from enforcing against its assets and proceeding with by Chatham House shows a correlation between the oil and gas
the sale of Cairn’s minority stake in a former subsidiary.70 In May price level and the number of arbitrations in other words, the
2015, Hanocal Holding and IPIC International, Dutch subsidiar- highest incidence of arbitrations took place during the oil and
ies of the International Petroleum Investment Company (IPIC), commodity price boom from 2002–2008.84
initiated an ICSID arbitration for retroactive tax levied on the Because gas is often sold in large volumes under 20 to 35-year
sale of a controlling stake in Hyundai Oilbank, which is a Korean long-term gas supply and purchase agreements, price movements
petroleum and refining company.71 The case was discontinued in and volatility often lead to very large and complex gas pricing
October 2016.72 More recently, in July 2016, Royal Dutch Shell disputes. In particular, many such contracts include a price review
initiated ICSID arbitration against the Philippines for US$1.1 bil- or price adjustment clause, which permits parties to revise the
lion in retroactive tax bills levied by the Philippines auditing com- price formulae under their contract if a certain set of contractually
mission on the gas produced from the Philippines’ first natural gas defined criteria are satisfied.85
field in Malampaya.73 The case is still pending.74 Samsung filed an In Europe, various factors and developments have contrib-
ICSID claim against Oman, under the Oman–Korean BIT, in rela- uted to a proliferation of gas price arbitrations in the past decade
tion to a bidding process held by the state to find a contractor to involving disputes over the applicability and mechanics of such
undertake improvements to the Sohar refinery in northern Oman price review clauses. Commentators attribute this increase to the
in 2015. The case settled in 2018.75 development of competitive natural gas markets and liquid gas
Investment treaty arbitration has also been subject to criticism hubs in some parts of Europe, leading to a mismatch between
in recent years and the response of some states in the region has spot prices for gas and the prices paid under long-term gas sup-
been to terminate or seek to renegotiate its BITs. As at March ply contracts that predate those developments, which tend to be
2017, India notified 58 countries, including 22 EU countries, of linked to oil and alternative fuels.86 Another driver of the increase
its intention to terminate its BITs.76 India has announced that it in such disputes has been the oversupply of natural gas due to
intends to replace those treaties by negotiating a new set of treaties the development of shale gas in the United States and China, and
based on the new Indian Model BIT, which it published in 2015.77 increased LNG imports from the Middle East and North Africa,
It was reported last year that the new model treaty, in particular which has led to a further divergence in the price-setting mecha-
the arbitration clause requiring investors to resolve the dispute in nisms in the oil and gas markets.87
Indian courts for at least five years before going for arbitration, has Perhaps surprisingly, such gas price arbitrations have not been
not been well-received.78 as common in the Asia-Pacific region even though regional devel-
Indonesia also announced at the end of 2014 that it would opments, including the dramatic spike in demand for LNG after
formally phase out its 67 BITs and has proceeded to terminate a the Fukushima nuclear power plant incident, have contributed to
number of such treaties in accordance with that announcement.79 the increase in gas pricing disputes in Europe.88 One commenta-
There have been indications that Indonesia plans to negotiate new tor’s review of public LNG disputes found that, out of 72 LNG

disputes observed globally between 2010 and 2016, there have has a higher price, which can give rise to disputes. For example,
been no reports of arbitrations brought by a Japanese, Chinese or disputes have arisen out of destination restrictions or diversion
Korean LNG buyer (even though Japan, China and South Korea provisions in LNG contracts, including whether a seller is enti-
together account for more than half of global LNG imports).89 tled to refuse a diversion proposal or whether and how profits on
In February 2018, Korea Gas Corporation, a South Korean diverted cargoes are to be shared.103
state-owned entity, brought a gas price review arbitration against There is very little public information on LNG-related arbi-
the Australia’s North West Shelf joint venture under supply con- trations involving parties from the Asia-Pacific region as most
tract that ended in 2016.90 It remains to be seen whether this is LNG contracts are confidential and therefore publicly available
an isolated example or the first of a series of gas price review details about disputes are limited.104 However, as LNG markets
claims akin to the spate of such claims that has recently been seen continue to mature in the Asia-Pacific and trading volumes con-
in Europe. tinue to increase, it is likely that more of such disputes will arise
Not much information is publicly available on the price revi- in the future.
sion mechanisms in gas or LNG supply and purchase agreements. Another area to watch is LNG-related construction disputes.
However, commentators point to anecdotal evidence that long- Australia has almost US$200 billion of LNG-related construc-
term contracts in the Asia-Pacific region are traditionally set on tion projects underway, as the recent build up of Australia’s LNG
the basis of Japan Customs-cleared Crude (JCC) prices and con- industry has also led to cost overruns of almost US$50 billion at
tain vague price review clauses that do not always provide for multiple facilities operated by major oil and gas companies.105
price revision through arbitration.91 There are also suggestions that Along with other factors, this has predictably led to a number of
Asian market participants prefer to negotiate rather than arbitrate LNG-related construction disputes being submitted to arbitra-
price adjustment issues.92 tion. For example, in 2015, Saipem, an Italian company, com-
However, more recent reports suggest that regional partici- menced arbitration against GLNG Operations, an Australia-based
pants are now more seriously considering drafting or relying on company, regarding a contract related to the Gladstone LNG
gas price review mechanisms in their long-term contracts, in project. GLNG’s counterclaim in this case amounts to approxi-
part because of a growing divergence between sellers’ and buy- mately A$1.1 billion (in alleged pipeline replacement costs) and
ers’ positions. This will increasingly be the case as the JCC prices A$24 million (in alleged costs for the adoption of temporary
compete with the development of emerging gas trading markets adjustment measures).106 Proceedings are currently ongoing and
in Singapore and Shanghai,93 which may develop in the future an award is expected soon.107 In September 2016, Chevron initi-
into gas hubs and a reference point for gas pricing.The European ated UNCITRAL arbitration in Perth against CPB Contractors,
experience with liberalisation of gas markets and the emergence an Australian construction company, and Saipem, regarding a dis-
of gas hubs, and its impact on market behaviour and gas price puted request for US$1.5 billion in extra costs for constructing a
reviews, suggests that gas price arbitrations will be a potential jetty for the LNG project.108 This case is still pending.109 In August
growth area for the future in the Asia-Pacific region.94 2017, CPB notified Saipem of yet another arbitration regarding
One important difference with Europe, however, is that the the construction of the dock of the same LNG jetty project, in
Asia-Pacific is not a single market and does not have a coordinat- which CPB requested that Saipem be ordered to pay approxi-
ing political, legal or regulatory mechanism like the European mately A$1.39 billion.110
Commission that can establish standards across the board for
third party access to infrastructure or to regulate anticompetitive State-to-state arbitration disputes
contracting behaviour.95 This means that the development of a As energy and resource security becomes an increasing concern
regional gas hub may take a longer time than it did in Europe. for states in the Asia-Pacific region, which is likely given volatile
energy prices and the reliance of China, Japan and South Korea
Other LNG disputes on oil and gas imports,111 there may also be more state-to-state
The Asia-Pacific region alone accounts for over two-thirds of the arbitrations that are related to the oil and gas sector.
global LNG growth.96 In 2017, 50.3 per cent of the global sup- State-to-state disputes can arise out of oil and gas resources
ply of LNG went to the Asia-Pacific.97 Japan, China and South that straddle contested state boundaries. For example, in 2009 the
Korea remain the world’s top three LNG importers.98 Asia-Pacific Permanent Court of Arbitration (PCA) in The Hague admin-
buyers received an increased amount of LNG from sellers within istered a UNCITRAL arbitration between the Sudan People’s
the region, causing intra-regional trade to rise to 83.9 metric Liberation Movement and the government of Sudan regard-
tonnes (MT) in 2017 from 76.5 MT in 2016.99 By 2017, Australia ing the contested borders of the Abyei region, which is located
and Malaysia had become the second and third world’s leading within the Muglad Basin and contains a number of oil and gas
exporters of LNG, only surpassed by Qatar.100 In November 2018, subsurface resources.112 Similar disputes have arisen regarding
Australia overtook Qatar for the first time as the world’s largest land boundaries in the Asia-Pacific, most notably in the Kashmir
exporter of LNG.101 In the future, some commentators have pre- region where Pakistan, India and China have all put forward com-
dicted that, as result of increasing demand from Australia, India, peting claims,113 although such claims have not been submitted
Indonesia and Malaysia, the demand for LNG in the region is to arbitration.
expected to be double or more by 2030.102 Similar disputes can also arise out of oil and gas resources that
Besides the gas price review issues referred to above, there are straddle maritime boundaries or exclusive economic zones. In July
other issues specific to LNG ventures and contracts that can give 2016, a five-member PCA tribunal constituted under the 1982
rise to disputes. In particular, unlike pipeline gas, LNG can be UN Convention on the Law of the Sea (UNCLOS) rejected ter-
transported and delivered to destinations other than those speci- ritorial claims by China in the South China Sea, with respect to
fied in the parties’ contract and can also be re-exported after it is the status of the Scarborough Shoal, Itu Aba and certain features
delivered.This creates opportunities for market participants to cre- in the Spratly Islands.114 China has, however, consistently rejected
ate additional value by sending LNG cargoes to a destination that the legitimacy of the PCA award, on the basis that territorial
questions are not subject to the United Nations Convention for BP, Statistical Review of World Energy June 2018, available at
the Law of the Sea (UNCLOS),115 and rather than comply with https://www.bp.com/content/dam/bp/business-sites/en/global/
the award, China has instead stepped up its construction activities corporate/pdfs/energy-economics/statistical-review/bp-stats-
and presence in the South China sea.116 This goes to show how review-2018-full-report.pdf, at pp 17, 28, 29.
delicate and politically sensitive these boundary issues can be and 7 Queen Mary University of London, Corporate choices in
illustrates some of the limitations of the arbitration process in International Arbitration Industry Perspectives, at p 2, available
resolving such disputes. at http://www.arbitration.qmul.ac.uk/docs/123282.pdf; see also
Disputes could also arise out of agreements to share revenue International Centre for Energy Arbitration, Dispute Resolution in
between states. One example is the dispute between Australia the Energy Sector: Initial Report (2015), available at http://www.
and Timor-Leste regarding the controversial Certain Maritime scottisharbitrationcentre.org/wp-content/uploads/2015/05/
Arrangements in the Timor Sea (CMATS) treaty that sets out a ICEA-Dispute-Resolution-in-the-Energy-Sector-Initial-Report-Square-
method for dividing revenue from the very large and potentially Booklet-Web-version.pdf, at pp 3 and 8.
lucrative Greater Sunrise oil and gas reserve.117 CMATS split rev- 8 Queen Mary University of London, The Evolution of International
enues on a 50–50 basis and imposed a 50-year moratorium on Arbitration, at p 30, available at http://www.arbitration.qmul.
Timor-Leste pursuing maritime boundary negotiations or claims. ac.uk/media/arbitration/docs/2018-International-Arbitration-
Timor-Leste sought to terminate the CMATS.118 Survey-report.pdf; Id, at pp 30–31.
In September 2016, a five-member commission at the PCA 9 BP Energy Outlook 2019, at p 65, available at https://www.bp.com/
found that it had jurisdiction to hear a compulsory concilia- content/dam/bp/business-sites/en/global/corporate/pdfs/energy-
tion proceeding under UNCLOS annex V involving Australia economics/energy-outlook/bp-energy-outlook-2019.pdf.
and Timor-Leste, which would require Australia to negotiate 10 GIIGNL, The LNG Industry GIIGNL Annual Report 2018, at p 6,
with Timor-Leste regarding a permanent maritime boundary available at https://giignl.org/sites/default/files/PUBLIC_AREA/
(Australia had expressly excluded disputes relating to sea bound- Publications/rapportannuel-2018pdf.pdf.
ary delimitation from compulsory arbitration and judicial settle- 11 BP Energy Outlook 2019, at p 99 available at https://www.bp.com/
ment in 2002).119 content/dam/bp/business-sites/en/global/corporate/pdfs/energy-
After negotiations, Timor-Leste and Australia reached an economics/energy-outlook/bp-energy-outlook-2019.pdf.
agreement on 30 August 2017 in Copenhagen on the central 12 See BP Statistical Review of World Energy June 2018, available at
elements of a permanent maritime boundary in the Timor Sea https://www.bp.com/content/dam/bp/business-sites/en/global/
ending a maritime boundary dispute affecting the fate of an esti- corporate/pdfs/energy-economics/statistical-review/bp-stats-
mated US$40 billion in oil and gas reserves. The agreement also review-2018-full-report.pdf, at pp 14, 28.
addresses the legal status of the Greater Sunrise gas field located in 13 See J Reed and G Ramos, ‘Philippines set to develop 14 petroleum
the disputed waters and the establishment of a special regime for blocks’, dated 25 March 2018, available at https://www.ft.com/
the development of the field and the sharing of revenues.120 The content/7759221a-2cc3-11e8-9b4b-bc4b9f08f381; J Reed and
treaty was signed on 6 March 2018.121 G Ramos, ‘China and Philippines sign offshore oil and gas deal’,
The UNCLOS annex 5 conciliation proceedings were the dated 21 November 2018, available at https://www.ft.com/
first of their kind. It remains to be seen how such procedures will content/a4bf926e-ecb9-11e8-89c8-d36339d835c0.
be employed in future state-to-state disputes. 14 A Van Der Walt, P Wiese and D Jasmat, ‘Australia: Will Australia’s
first dedicated Energy and Resources Arbitration Centre meet the
Notes needs of industry?’, dated March 2015, available at http://www.
1 The exact periphery of what constitutes the ‘Asia-Pacific region’ is mondaq.com/australia/x/382996/Will+Australias+first+dedicated+E
difficult to define with precision and depends in part on context. nergy+and+Resources+Arbitration+Centre+meet+the+needs+of+in
For example, the Asia-Pacific Economic Cooperation forum dus.
includes Canada, Chile, Russia, Mexico, Peru and the United 15 See G Born, J Lim and D Prasad, 2016 SIAC Rules, International
States. For the purposes of this article, these countries are not Arbitration Alert, dated 29 July 2016, available at https://www.
treated as falling within the Asia-Pacific region. wilmerhale.com/uploadedFiles/Shared_Content/Editorial/
2 See SIAC, 2018 Annual Report, at p 15, available at http://www. Publications/WH_Publications/Client_Alert_PDfs/2016-07-29-2016-
siac.org.sg/images/stories/articles/annual_report/SIAC_Annual_ SIAC-Rules.pdf.
Report_2018.pdf. 16 See 2016 SIAC Rules, Schedule 1.
3 CIETAC, Statistics, available at http://cietac.org/index. 17 See 2016 SIAC Rules, Rule 5.
php?m=Page&a=index&id=24. 18 See 2017 SIAC IA Rules, available at, http://www.siac.org.sg/our-
4 At the time of publication of this article, the HKIAC has not yet rules/rules/siac-ia-rules-2017.
released its 2018 statistics. 19 2017 SIAC IA Rules, available at, http://www.siac.org.sg/our-rules/
5 HKIAC, Statistics, available at http://www.hkiac.org/about-us/ rules/siac-ia-rules-2017.
statistics. 20 ‘SIAC unveils investment arbitration offering’, Global
6 Based on 2017 data, Asia-Pacific, as a region, remains the biggest Arbitration Review, dated 3 January 2017, available at https://
consumer of oil. Asia-Pacific’s oil consumption represented 35.6% globalarbitrationreview.com/article/1079293/siac-unveils-
of the global consumption. The region’s oil consumption growth is investment-arbitration-offering.
also the highest at 2.9 per cent per annum. Asia-Pacific’s natural 21 Proposal on Cross-Institution Consolidation http://siac.org.sg/69-
gas consumption grew steadily (second only to Africa) and siac-news/551-proposal-on-cross-institution-consolidation-protocol.
continues to consume over a fifth (21.0 per cent) of the world’s 22 SIAC, Memorandum Regarding Proposal on Cross-Institution
natural gas. On the production side, apart from the Middle East, Consolidation Protocol, available at http://siac.org.sg/images/
Asia-Pacific achieved the highest average natural gas production stories/press_release/2017/Memorandum%20on%20Cross-
growth rate in the past 10 years (at 4.0 per cent per annum). See Institutional%20Consolidation%20(with%20%20annexes).pdf.

23 See also Kshama A Loya, ‘Institution Consolidation Protocol Mitigate 39 Notice of the Supreme People’s Court on Handling Foreign-Related
the Perceived Weakness of Arbitrations in Effectively Resolving Multi- and Foreign Arbitration Issues, [1995] Fa Fa 18, available at http://
Party, Multi-Contract Disputes?’ YSIAC Newsletter June/July 2018, www.people.com.cn/zixun/flfgk/item/dwjjf/falv/9/9-2-1-05.html.
Issue 19, at p 23, available at http://www.siac.org.sg/images/stories/ 40 Rules on the Reporting and Verification Matters in Cases of
documents/ysiac_newsletter/YSIAC%20Newsletter%20Issue%20 Arbitration-Related Judicial Review, [2017] Fa Shi 21, available at
No.19.pdf. http://www.court.gov.cn/zixun-xiangqing-75862.html; Rules on
24 2018 HKIAC Administered Arbitration Rules, available at http://www. Several Substantive Matters in Hearing Cases of Arbitration-Related
hkiac.org/sites/default/files/ck_filebrowser/PDF/arbitration/2018_ Judicial Review, [2017] Fa Shi 22, available at http://www.court.
hkiac_rules.pdf. gov.cn/zixun-xiangqing-75872.html.
25 2015 CIETAC Rules; J Tao and M Zhong, ‘A Quick Read of the CIETAC 41 K Sanger, J Fei and B Young, SPC Publishes new Judicial
Arbitration Rules 2015’, 31 Arbitration International 2015, p 455. Interpretations on Arbitration, available at https://hsfnotes.com/
26 CIETAC IA Rules, available at http://www.cietac.org/index.php?m arbitration/2018/01/10/spc-publishes-new-judicial-interpretations-
=Article&a=show&id=15199&l=en; see also J Fei, A Crockett and P on-arbitration/; D Thomson and A Ross, ‘China reforms reporting
Chen, ‘Facilitating the Belt and Road: CIETAC Launches Investment system’, Global Arbitration Review, dated 9 February 2018,
Arbitration Rules’, dated 4 December 2017, available at https:// available at https://globalarbitrationreview.com/article/1153364/
www.herbertsmithfreehills.com/latest-thinking/facilitating-the-belt- china-reforms-reporting-system.
and-road-cietac-launches-investment-arbitration-rules. 42 D Bishop, E Roche and S McBrearty, ‘The Breadth and Complexity
27 See A Ross, ‘Home-grown centre to launch in Mumbai’, Global of the International Energy Industry’, in JW Rowley et al (eds), The
Arbitration Review, dated 8 April 2016, available at http:// Guide to Energy Arbitrations (2nd ed, 2017), at p 2 (‘Most countries
globalarbitrationreview.com/article/1035436/home-grown-centre- follow the regalian or dominial systems regarding ownership of
to-launch-in-mumbai. subsurface minerals. Under these systems, subsurface minerals
28 D Gilmore, J Ribeiro, S Beer, B Jolley, ‘New 2019 JCAA Rules: Is belong to, or are controlled by, the sovereign.’).
Three a Crowd?’, dated 8 February 2019, available at http:// 43 D Bishop, E Roche and S McBrearty, ‘The Breadth and Complexity
arbitrationblog.kluwerarbitration.com/2019/02/08/new-2019-jcaa- of the International Energy Industry’, in JW Rowley et al (eds), The
rules-is-three-a-crowd/. Guide to Energy Arbitrations (2nd ed, 2017), at p 6.
29 D Gilmore, J Ribeiro, S Beer, B Jolley, ‘New 2019 JCAA Rules: Is 44 D Bishop, E Roche and S McBrearty, ‘The Breadth and Complexity
Three a Crowd?’, dated 8 February 2019, available at http:// of the International Energy Industry’, in JW Rowley et al (eds), The
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30 See I Rajah, ‘Third Party Funding – Reinforcing Singapore As A Agreements: Legal, Economic & Policy Aspects, 2009, 69; K
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2017, available at https://www.mlaw.gov.sg/content/dam/minlaw/ Analysis, Oxford Institute for Energy Studies, October 1999, at p 10.
corp/News/Civil%20Law%20Amendment.pdf. 46 K Bindemann, Production-Sharing Agreements: An Economic
31 The amendment is fully in force since February 2019, because a Analysis, Oxford Institute for Energy Studies, October 1999, at p 63.
code of practice for third-party funders had to be issued for some 47 Petroleum & Natural Gas Minister Dharmendra Pradhan’s
provisions of section 3 of the Arbitration and Mediation Legislation written reply, ‘Energy World’, Economic Times, dated April 2015,
(Third Party Funding) to have effect. The Hong Kong Department of available at http://energy.economictimes.indiatimes.com/news/
Justice issued that code in December 2018. The government of the oil-and-gas/310-production-sharing-contracts-have-attracted-22-
Hong Kong Special Administrative Region, Code of Practice for Third arbitration-cases-dharmendra-pradhan-tells-lok-sabha/46988403.
Party Funding of Arbitration issued, available at https://www.info. 48 Reliance Industries Ltd v Union of India [2018] EWHC 822 (Comm)
gov.hk/gia/general/201812/07/P2018120700601.htm. paragraph 2 (16 April 2018).
32 Hong Kong Arbitration Ordinance (Cap 609), section 98J(1); cf 49 Reliance Industries Ltd v Union of India [2018] EWHC 822 (Comm)
Singapore Civil Law (Third-Party Funding) Regulations 2017, section paragraph 9 (16 April 2018).
4; Singapore Civil Law Act, section 5B(8); see also J D Agostino, B 50 K Karadelis, ‘Reliance tackles India over gas field cost recovery’,
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funding-for-arbitration-and-mediation/. 51 Reliance Industries Limited, Integrated Annual Report 2017 18, at
33 Australian International Arbitration Act 1974, Sections 23D, 23G. p 71, available at http://www.ril.com/getattachment/e5d8ddac-
34 Australian Civil Law and Justice Legislation Amendment Act 2018, 3899-4a0f-beb5-aa7f8100010c/AnnualReport_2017-18.aspx.
Schedule 7. 52 ‘India faces new claim over gas pricing delay’, Global Arbitration
35 See J Rahman and D Prasad, Indian Parliament Enacts Revisions Review, 12 May 2014, available at http://globalarbitrationreview.
to the 1996 Arbitration Act, dated 14 January 2016, available at com/article/1033385/india-faces-new-claim-over-gas-pricing-
https://www.wilmerhale.com/pages/publicationsandnewsdetail. delay.
aspx?NewsPubId=17179880410; see India Arbitration and 53 D Thomson, ‘BP and Reliance withdraw claim against India’, Global
Conciliation Act 2015, Sections 2(2), 29A, 34(2)(b) and 48(2)(b). Arbitration Review, dated 23 June 2017, available at https://
36 Bharat Aluminium Co & ors v Kaiser Aluminium Technical Service, globalarbitrationreview.com/article/1143456/bp-and-reliance-
Inc (2019) 9 SCC 552; Indian Arbitration and Conciliation Act 2015, withdraw-claim-against-india.
Section 2(2). 54 T Jones, ‘Reliance threatens India claim over billion-dollar fine’,
37 Indian Arbitration and Conciliation Act 2015, Section 29A. Global Arbitration Review, November 2016, available at http://
38 Indian Arbitration and Conciliation Act 2015, Sections 34(2)(b) and globalarbitrationreview.com/article/1072591/reliance-threatens-
48(2)(b). india-claim-over-billion-dollar-fine.
55 C Sanderson, ‘India loses billion-dollar case over gas migration’, 68 J Hepburn, ‘English Court Orders Security for Costs Against
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56 Reliance Industries Limited, Financial performance for the quarter/ 2018, available at https://www.iareporter.com/articles/
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ril.com/getattachment/8aa9eb29-fa77-4555-8056-7998b7e1159b/ aside-proceedings-funded-by-burford-capital-but-declines-security-
Financial%20performance%20for%20the%20quarter/nine%20 over-still-unpaid-adverse-costs-order-in-underlying-arbitration/.
months%20ended%2031%20Dec,%202018.aspx. 69 D Thomson, ‘A tax claim against Modi’s India?’, Global
57 D Thomas, ‘Sinopec takes on Repsol over North Sea oil investment’, Arbitration Review, dated 11 March 2015, available at http://
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globalarbitrationreview.com/article/1036415/sinopec-takes-on- modi%E2%80%99s-india; D Thomson, ‘India says no to Cairn tax
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58 C Denina, ‘Exclusive: Repsol working with BofA-Merrill Lynch to sell UK at https://globalarbitrationreview.com/article/1034568/india-
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exclusive-repsol-working-with-bofa-merrill-lynch-to-sell-uk-north-sea- available at https://globalarbitrationreview.com/article/1142783/
fields-sources-idUSKCN1GC2GW cairn-seeks-to-halt-sale-in-indian-back-tax-dispute; L Yong, ‘Cairn
59 L Yong, ‘PetroChina submits to arbitration after five-year battle’, loses bid to restrain India in tax dispute’, Global Arbitration Review,
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globalarbitrationreview.com/article/1138499/petrochina-submits- article/1144271/cairn-loses-bid-to-restrain-india-in-tax-dispute.
to-arbitration-after-five-year-battle; L Yong, ‘PetroChina affirms 70 L Yong, ‘Cairn loses bid to restrain India in tax dispute’,
consent to arbitrate Chad oil dispute – but with a footnote’, dated Global Arbitration Review, 11 July 2017, available at https://
21 April 2017, available at https://globalarbitrationreview.com/ globalarbitrationreview.com/article/1144271/cairn-loses-bid-to-
article/1139900/petrochina-affirms-consent-to-arbitrate-chad-oil- restrain-india-in-tax-dispute.
dispute--but-with-a-footnote. 71 L Yong, ‘New ICSID claim against South Korea’, Global Arbitration
60 T Jones, ‘Indonesian company wins dispute over oil field joint Review, 22 May 2015, available at http://globalarbitrationreview.
venture’, Global Arbitration Review, dated 26 May 2017, available com/article/1034478/new-icsid-claim-against-south-korea.
at https://globalarbitrationreview.com/article/1142086/indonesian- 72 Hanocal Holding BV and IPIC International BV v Republic of Korea,
company-wins-dispute-over-oil-field-joint-venture. ICSID Case No ARB/15/17, available at https://icsid.worldbank.org/
61 MedcoEnergi, Annual Report 2017 (2018), at p 117. en/Pages/cases/casedetail.aspx?CaseNo=ARB/15/17.
62 See S Hamanaka, Asian Noodle Bowl of International Investment 73 L Yong, ‘Shell takes on Philippines over back taxes’,
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December 2013, available at http://www.unescap.org/sites/default/ globalarbitrationreview.com/article/1067235/shell-takes-on-
files/pari-shintaro.pdf; UNCTAD International Investment Agreements philippines-over-back-taxes.
Navigator, available at http://investmentpolicyhub.unctad.org/IIA. 74 Shell Philippines Exploration BV v Republic of the Philippines, ICSID
63 See D Robertson, L Chung and Z Wang, ‘A Comprehensive and Case No. ARB/16/22, available at https://icsid.worldbank.org/en/
Progressive Agreement for Trans-Pacific Partnership’, dated 17 Pages/cases/casedetail.aspx?CaseNo=ARB/16/22.
November 2017, available at https://hsfnotes.com/publicinternation 75 T Jones, ‘Samsung and Oman settle ICSID dispute’, Global
allaw/2017/11/17/a-comprehensive-and-progressive-agreement-for- Arbitration Review, 22 January 2018, available at https://
trans-pacific-partnership/. globalarbitrationreview.com/article/1152959/samsung-and-oman-
64 See eg SCMP, ‘Beijing “looking into joining trans-Pacific trade pact” settle-icsid-dispute.
to hedge against US’, dated 11 October 2018, available at https:// 76 N Peacock and N Joseph, ‘Mixed Message to investors as
www.scmp.com/news/china/diplomacy/article/2168147/beijing- India Quietly Terminates Bilateral Investment Treaties with 58
looking-joining-trans-pacific-trade-pact-hedge-against; Global Times, Countries’, 16 March 2017, available at https://hsfnotes.com/
‘CPTPP could be a strong trading partner for China’, dated 1 January arbitration/2017/03/16/mixed-messages-to-investors-as-india-quietly-
2019, available at http://www.globaltimes.cn/content/1134261.shtml; terminates-bilateral-investment-treaties-with-58-countries/.
Global Times, ‘CPTPP puts pressure on China, but options remain 77 See K Singh and B Ilge, ‘India overhauls its investment treaty regime’,
open’, dated 1 January 2019, available at http://www.globaltimes. Financial Times, 15 July 2016, available at http://blogs.ft.com/
cn/content/1134250.shtml. beyond-brics/2016/07/15/india-overhauls-its-investment-treaty-
65 See Consulate-General of the People’s Republic of China, Wong Yi: regime/.
Speed up RCEP Negotiation and March toward the FTAAP, dated 78 Reuters, ‘India’s proposed investment treaty terms leave foreign
7 February 2017, available at http://www.fmprc.gov.cn/ce/cggb/ partners cold’, 19 January 2018, available at https://www.reuters.
eng//xwdt/t1437162.htm. com/article/india-investment-treaty/indias-proposed-investment-
66 ICSID, ICSID Caseload – Statistics, Special Focus: South & East Asia treaty-terms-leave-foreign-partners-cold-idUSL4N1P72N1.
& the Pacific, October 2016, available at https://icsid.worldbank. 79 See A Crockett, ‘Indonesia’s Bilateral Investment Treaties: Between
org/en/Documents/resources/ICSID%20Web%20Stats%20Asia%20 Generations?’, 30 ICSID Review 2, 2015, 437.
Statistics%20Oct%202016.pdf, at p 19. 80 See A Crockett, ‘Indonesia’s Bilateral Investment Treaties: Between
67 D Thomson, ‘Pakistan defeats treaty claims over gas terminal’, Generations?’, 30 ICSID Review 2, 2015, 437, at p 438.
Global Arbitration Review, 1 September 2016, available at http:// 81 J Hepburn, ‘Palm Oil Company Sees BIT Claim Registered Against
globalarbitrationreview.com/article/1067803/pakistan-defeats- Indonesia at ICSID’, IA Reporter, 11 August 2016.
treaty-claims-over-gas-terminal. 82 L E Peterson, ‘Singapore Investor Takes U-Turn in BIT Arbitration with

Indonesia, Leading to Split Tribunal Order’, IA Reporter, 22 March singapore-are-asias-lng-players-heading-for-a-contractual-train-

2018, available at https://www.iareporter.com/articles/singaporean- wreck; Gaffney, Cline & Associates, ‘All Change for LNG! The Energy
investor-takes-u-turn-in-bit-arbitration-with-indonesia-leading-to-split- Market Reform train Arrives in Japan’, 14 July 2015, available at
tribunal-order/. http://gaffney-cline-focus.com/all-change-for-lng-the-energy-
83 See also R King, ‘Disputes arising from oil price decline’, Globe market-reform-train-arrives-in-japan.
Law and Business, dated 1 April 2015, available at http://www. 94 G MacLaren et al, ‘Recent moves towards gas trading hubs in Asia:
globelawandbusiness.com/blog/disputes-arising-from-oil-price- implications for Asian gas buyers and sellers’, 27 May 2016, available
decline. at http://knowledge.freshfields.com/m/Global/r/1524/recent_
84 P Stevens, J Kooroshy, G Lahn and B Lee, ‘Conflict and Coexistence moves_towards_gas_trading_hubs_in_asia.
in the Extractive Industries’, Chatham House Report, dated 95 See G MacLaren et al, ‘Recent moves towards gas trading hubs
November 2013, available at https://www.chathamhouse. in Asia: implications for Asian gas buyers and sellers’, 27 May 2016,
org/sites/files/chathamhouse/public/Research/Energy%2C%20 available at http://knowledge.freshfields.com/m/Global/r/1524/
Environment%20and%20Development/chr_coc1113.pdf. recent_moves_towards_gas_trading_hubs_in_asia.
85 J Trenor and A Holloway, ‘Gas Price Disputes under Long-Term Gas 96 ExxonMobil, ‘The Outlook for Energy – Asia Pacific demand drives
Sales and Purchase Agreements’, in D Schwartz (ed), The Energy LNG trade’, available at http://corporate.exxonmobil.com/en/
Regulation and Markets Review, 2018, 32, at p 35. energy/energy-outlook/charts-2017/asia-pacific-demand-drives-
86 J Trenor and A Holloway, ‘Gas Price Disputes under Long-Term Gas lng-trade; also see T Daiss, ‘New LNG Supply to Create Structural
Sales and Purchase Agreements’, in D Schwartz (ed), The Energy Changes in Asia-Pacific Gas Market’, 14 December 2015, available
Regulation and Markets Review, 2018, 32, at pp 37–38; S Sarzana, at http://www.downstreamtoday.com/news/article.aspx?a_
‘The rise of price revision arbitrations’, CDR, 31 October 2012, id=50308; also see T Daiss, ‘OPEC/Russia Oil Deal Pushes Up Asian
available at https://www.cdr-news.com/categories/uk/european- Natural Gas Prices’, dated 10 December 2016, available at https://
energy-disputes:-the-rise-of-price-revision-arbitrations; also see ‘Gas www.forbes.com/sites/timdaiss/2016/12/10/opec-russian-oil-cut-
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at https://www.blplaw.com/expert-legal-insights/articles/gas-price- 97 International Gas Union, 2018 World LNG Report, at p 11, available
reviews-is-arbitration-the-problem; also see J Baily and R Lidgate, at https://www.igu.org/research/2018-world-lng-report-27th-world-
‘LNG price reviews: a sign of the times’, The Journal of World Energy gas-conference-edition.
Law & Business (2014) 7 (2): 140–152. 98 International Gas Union, 2018 World LNG Report, at p 11, available
87 S Sarzana, ‘The rise of price revision arbitrations’, 31 October 2012, at https://www.igu.org/research/2018-world-lng-report-27th-world-
available at https://www.cdr-news.com/categories/uk/european- gas-conference-edition.
energy-disputes:-the-rise-of-price-revision-arbitrations; also see ‘Gas 99 International Gas Union, 2018 World LNG Report, at p 11, available
Price reviews: Is arbitration the problem?’, 6 March 2014, available at https://www.igu.org/research/2018-world-lng-report-27th-world-
at https://www.blplaw.com/expert-legal-insights/articles/gas-price- gas-conference-edition.
reviews-is-arbitration-the-problem; also see J Baily and R Lidgate, 100 International Gas Union, 2018 World LNG Report, at p 3, available at
‘LNG price reviews: a sign of the times’, The Journal of World Energy https://www.igu.org/research/2018-world-lng-report-27th-world-gas-
Law & Business (2014) 7 (2): 140–152. conference-edition.
88 J Trenor and A Holloway, ‘Gas Price Disputes under Long-Term Gas 101 See J Smyht, ‘Australia’s LNG export surge fuels domestic supply
Sales and Purchase Agreements’, in D Schwartz (ed), The Energy concerns’, dated 12 December 2018,available at https://www.
Regulation and Markets Review, 2018, 32, at p 38. ft.com/content/912a7de8-fdc3-11e8-aebf-99e208d3e521.
89 P Weems, ‘A Look Inside the Recent Rise in LNG Disputes’, 102 A Corbeau and D Ledesma (eds), LNG Market in Transition: The
Law360, 4 August 2016, available at https://www.law360.com/ Great Reconfiguration, 2016, p 385.
internationalarbitration/articles/823081/a-look-inside-the-recent-rise- 103 S Finizio, ‘Destination Restrictions and Diversion Provisions in LNG Sale
in-lng-disputes. and Purchase Agreements’, in J W Rowley et al (eds), The Guide to
90 T Jones, ‘Korean buyer brings gas pricing claim against Australian Energy Arbitrations (3rd ed, 2018), 218, at pp 228–229.
supplier’, Global Arbitration Review, dated 14 February 2018, 104 S Finizio, ‘Destination Restrictions and Diversion Provisions in LNG Sale
available at https://globalarbitrationreview.com/article/1159042/ and Purchase Agreements’, in J W Rowley et al (eds), The Guide to
korean-buyer-brings-gas-pricing-claim-against-australian-supplier. Energy Arbitrations (3rd ed, 2018), 218, at p 228.
91 K Yafimava, ‘Outlook for the Long Term Contracts in a Globalizing 105 See J Smyth, ‘Cost overruns near $50bn as Australia s LNG boom
Market’, Oxford Institute for Energy Studies, dated 19 January 2014, falters’, Financial Times, dated 31 October 2016, available at https://
available at https://www.unece.org/fileadmin/DAM/energy/se/pp/ www.ft.com/content/29667e96-9f15-11e6-891e-abe238dee8e2.
geg/gif5_19Jan2015/s1_1_Yafimava.pdf, at p 18. 106 SAIPEM, Interim Consolidated Report, as of 30 June 2018, at p 118,
92 P Weems, ‘A Look Inside the Recent Rise in LNG Disputes’, Law360, available at http://www.saipem.com/en_IT/static/documents/
dated 4 August 2016 (‘More than a dozen’ disputes ‘did not SaipemSem18Ing.pdf.
result in any litigation or arbitration, as the parties found a way to 107 SAIPEM, Interim Consolidated Report, as of 30 June 2018, at p 118,
renegotiate their agreements or otherwise work out their serious available at http://www.saipem.com/en_IT/static/documents/
commercial issues & most of those settled disputes involved Asian SaipemSem18Ing.pdf.
parties or claims under construction contracts (particularly for 108 B Button-Stephens, ‘Chevron stay upheld in LNG jetty dispute’,
recent Australian projects’), available at https://www.law360.com/ Global Arbitration Review, dated 21 March 2017, available at http://
internationalarbitration/articles/823081/a-look-inside-the-recent-rise- globalarbitrationreview.com/article/1138487/chevron-stay-upheld-
in-lng-disputes. in-lng-jetty-dispute.
93 See ‘Singapore: Are Asia’s LNG players heading for a contractual 109 SAIPEM, Interim Consolidated Report, as of 30 June 2018, at p 119,
train wreck?’, Global Arbitration Review, 4 November 2015, available at http://www.saipem.com/en_IT/static/documents/
available at http://globalarbitrationreview.com/article/1034880/ SaipemSem18Ing.pdf.
110 SAIPEM, Interim Consolidated Report, as of 30 June 2018, at p 119,

available at http://www.saipem.com/en_IT/static/documents/
SaipemSem18Ing.pdf.
111 M Herberg, ‘The Role of Energy in Disputes over the South China Duncan Speller
Sea, Maritime Awareness Project’, 28 June 2016, available at http:// Wilmer Cutler Pickering Hale and Dorr LLP
maritimeawarenessproject.org/2016/06/28/the-role-of-energy-in-
disputes-over-the-south-china-sea/. Duncan Speller is a partner in Wilmer Cutler Pickering Hale and
112 F Baetens and R Yotova, ‘The Abyei Arbitration: A Model Procedure Dorr’s litigation/controversy department, and a member of the
for Intra-State Dispute Settlement in Resource-Rich Conflict Areas?’, international arbitration practice group. Mr Speller is based in
Goettingen Journal of International Law 3 (2011) 1, 417–446, London, where he practises international arbitration and English
available at http://www.gojil.eu/issues/31/31_article_baetens_ High Court litigation.
yotova.pdf, at p 419. Mr Speller is an English barrister with more than 15 years’
113 See ‘India, Pakistani and Chinese border disputes: Fantasy frontiers’, experience. He has represented clients in more than one hundred
The Economist, dated 8 February 2012, available at http://www. institutional and ad hoc arbitrations, sited in both common and
economist.com/blogs/dailychart/2011/05/indian_pakistani_and_ civil law jurisdictions, including England, New York, Hong Kong,
chinese_border_disputes. Singapore, France, Switzerland, Sweden, Austria and Germany. Mr
114 Award, The Republic of the Philippines and the People’s Republic of Speller also has substantial experience of international commer-
China, PCA Case 2013-19, dated 12 July 2016, available at http:// cial litigation in both the English Court of Appeal and in the
res.cloudinary.com/lbresearch/image/upload/v1468332901/PH-CN- Commercial and Chancery Divisions of the High Court. He has
20160712-Award_hp4h85.pdf. particular experience of litigation concerning aviation, oil and
115 ‘China rejects UNCLOS award’, Global Arbitration Review, 12 gas, insurance and reinsurance, telecommunications, banking and
July 2016, available at http://globalarbitrationreview.com/ competition law issues. Mr Speller sits on the governing body
article/1067170/china-rejects-unclos-award/; see also I Kardon, of the Bucharest Court of International Arbitration and is co-
‘China Can Say “No”: Analyzing China’s Rejection of the South author of A Practical Guide to International Commercial Arbitration:
China Sea Arbitration’, (2018) 13 University of Pennsylvania Asian Assessment, Planning and Strategy (second edition forthcoming).
Law Review 1.
116 O Holmes and T Phillips, ‘South China Sea dispute: what you need
to know about The Hague court ruling’, The Guardian, 12 July 2016,
available at https://www.theguardian.com/news/2016/jul/12/south-
china-sea-dispute-what-you-need-to-know-about-the-hague-court-
ruling.
117 D Doherty, ‘Australia and Timor-Leste to negotiate permanent
maritime boundary’, The Guardian, 9 January 2017, available at
https://www.theguardian.com/world/2017/jan/09/australia-and-
timor-leste-to-negotiate-permanent-maritime-boundary.
118 B Doherty, ‘Timor-Leste drops espionage claims against Australia
in maritime border dispute’, The Guardian, 24 January 2017,
available at https://www.theguardian.com/world/2017/jan/24/
timor-leste-drops-espionage-claims-against-australia-in-maritime-
border-dispute; T Jones and S Perry, ‘East Timor and Australia to tear
up oil and gas treaty’, Global Arbitration Review, 10 January 2017,
available at https://globalarbitrationreview.com/article/1079859/
east-timor-and-australia-to-tear-up-oil-and-gas-treaty.
119 T Jones, ‘Australia fails to halt conciliation with East Timor’, Global
Arbitration Review, 26 September 2016, available at http://
globalarbitrationreview.com/article/1068790/australia-fails-to-halt-
conciliation-with-east-timor.
120 L Yong, ‘East Timor and Australia reach deal on maritime border’,
Global Arbitration Review, 4 September 2017, available at https://
globalarbitrationreview.com/article/1147052/east-timor-and-
australia-reach-deal-on-maritime-border.
121 L Young, ‘Australia and East Timor sign treaty on maritime border’,
Global Arbitration Review, 6 March 2018, available at https://
globalarbitrationreview.com/article/1166345/australia-and-east-
timor-sign-treaty-on-maritime-border.

Jonathan Lim Justin Li

Wilmer Cutler Pickering Hale and Dorr LLP Wilmer Cutler Pickering Hale and Dorr LLP
Jonathan Lim focuses his practice on international arbitration Justin Li is a visiting foreign consultant at Wilmer Cutler Pickering
matters and complex multi-jurisdictional disputes. He has expe- Hale and Dorr LLP in London. He has experience with cases
rience with representation of clients in ad hoc and institutional involving both private sector and government clients in commer-
arbitrations sited in various jurisdictions, including both common cial and investment arbitrations under the International Chamber
law and civil law jurisdictions in Europe, Asia and the Americas. of Commerce, London Court of International Arbitration and
Mr Lim has advised governments in Africa and Asia on public UNCITRAL Rules, seated in various jurisdictions, including
international law issues and international arbitration law reform. both common law and civil law jurisdictions. in Asia-Pacific,
Mr Lim has also worked on World Trade Organization (WTO) Europe and South America. He has experience in disputes in the
dispute settlement matters and is part of the team representing the oil and gas, hydroelectricity, insurance and reinsurance, banking
government of Somalia in its WTO accession process. and other commercial sectors. He has also advised governments
In addition to his practice as counsel, Mr Lim has a develop- in Africa and Asia-Pacific in the development of their arbitration
ing practice as arbitrator and has received Singapore International legislative framework.
Arbitration Centre and German Arbitration Institute appoint-
ments as sole and party-appointed arbitrator in proceedings seated
in Europe and Asia. Mr Lim is also a visiting senior fellow at the
National University of Singapore, where he teaches a course on
commercial and investment arbitration each year. He is co-chair
of the Asia-Pacific Forum for International Arbitration and is a
member of the Young SIAC Steering Committee.
49 Park Lane Wilmer Cutler Pickering Hale and Dorr LLP offers one of the world’s premier international arbitration
London, W1K 1PS and dispute resolution practices. The multinational team – consisting of over 70 lawyers, trained
United Kingdom and qualified in a wide range of common and civil law jurisdictions – has extensive experience
Tel: +44 20 7872 1000 with arbitration administered by all of the major international arbitration institutions, including the
Fax: +44 20 7839 3537
International Chamber of Commerce, London Court of International Arbitration, International Centre
for Settlement of Investment Disputes, UNCITRAL, American Arbitration Association/International
Duncan Speller
duncan.speller@wilmerhale.com Centre for Dispute Resolution, Singapore International Arbitration Centre, Hong Kong International
Arbitration Centre, Stockholm Chamber of Commerce and others, as well as more specialised forms
Jonathan Lim of institutional arbitration and ad hoc arbitrations. In recent years, the practice has handled more
jonathan.lim@wilmerhale.com than 650 proceedings, in numerous arbitral seats, and governed by the laws of more than 70 dif-
ferent legal systems. In addition to representing clients as counsel, many of the firm’s international
Justin Li arbitration lawyers regularly sit as arbitrators. The practice has particular experience in a number of
justin.li@wilmerhale.com specialised substantive areas, including: disputes involving states; energy; financial services; joint
venture, services and franchise disputes; insurance; mergers and acquisitions; construction and engi-
www.wilmerhale.com
neering; intellectual property; telecommunications; and employment.
Shi Yan Lee
Introduction Specialised Arbitration Rules for Maritime Disputes

The Singapore Chamber of Maritime Arbitration (SCMA) is SCMA arbitration is not meant to replicate administered forms
one of two Singaporean arbitration institutions. First launched of arbitration as exemplified by rules issued by arbitration
in 2004 and independently reconstituted in 2009 from the institutions such as the International Chamber of Commerce
Singapore International Arbitration Centre (SIAC), the SCMA International Court of Arbitration (ICC Arbitration) or the
was established to serve the needs of maritime disputants and to London Court of International Arbitration (LCIA).
further Singapore’s aim of serving as Asia’s centre of maritime To cater to the unique needs of the maritime industry, the
legal expertise and dispute resolution.1 SCMA maintains three sets of arbitration rules each designed
Although similar in many ways to international commercial for a specialised area of the maritime and shipping business.We
arbitration of the general variety, the existence of specialised discuss the key features of each of our arbitration rules in the
maritime arbitration bodies is testament to the distinctive dif- following sections.
ferences in the way the maritime and shipping industry con-
ducts its business and resolves its disputes. Two differences will SCMA Arbitration Rules (2015, 3rd ed)2
be highlighted for the purposes of this guide. The SCMA Arbitration Rules are designed as a ‘light touch’
First, the nature of the maritime and shipping business is framework to ensure minimal institutional intervention. Party
intrinsically an interconnected one. Industry participants from autonomy and flexibility are the key underlying principles that
all over the world are susceptible to sensitivities and fluctua- underpin the SCMA arbitration framework. The SCMA does
tions in the regional and domestic markets. Resources, risks not charge any filing, management or administration fee.
and reward often necessarily reside in common pools across The SCMA Arbitration Rules are intended to be used by
national and geopolitical boundaries. A significant majority of parties to resolve disputes including charter parties, cargo loss
industry participants are therefore a part of one or more pri- and damage, bills of lading, international trade and cargo (con-
vate international maritime organisations such as the Baltic and tainer or commodities such as liquid, dry or break bulk, among
International Maritime Council (BIMCO), the International others), shipbuilding and repair, ship sale and purchase, and oil
Chamber of Shipping (ICS), and the International Group of and gas, in a manner that preserves their long-term commer-
P&I Clubs (IGP&I). Business is usually conducted in accord- cial relationships. The SCMA Arbitration Rules are one of the
ance with the guidelines or the standard forms produced and three default maritime arbitration rules provided for under the
maintained by these and other organisations. Accordingly, the BIMCO Standard Dispute Resolution Clauses.Where an arbi-
industry takes a very commercial attitude with regard to the tration brought under the SCMA Arbitration Rules involves
resolution of its disputes. amounts in dispute under US$150,000, an expedited proce-
Second, the nature of maritime disputes is unique. Many dure, the SCMA Small Claims Procedure (SCMA SCP), will
of the legal issues have no parallel in general international apply by default. A detailed explanation of the SCMA SCP is
commercial disputes. For example, and this list is by no means set out in a subsequent section.
exhaustive, the concepts of the maritime adventure, charter
parties, bills of lading and the transfer of title, maritime liens, Commencing an SCMA arbitration
marine insurance, bunker disputes (such as ship fuel), ship and An SCMA arbitration is commenced by the claimant providing
sister ship arrests, collisions, salvage, in rem actions against the a notice of arbitration to the respondent, containing only brief
ship or the law of general average (and not forgetting stowa- details such as a request to refer a dispute to arbitration, details
ways, of course) are unique to shipping. Many of these disputes of parties and a reference to the arbitration agreement and the
involve complex factual or technical questions that require not substantive contract from or out of which the dispute arose.3
only the application of legal principles, but also deep knowl- It is not compulsory to state details such as the nature and
edge of the customs and workings of the international mari- circumstances of the dispute, or the relief or remedy sought,
time and shipping business. Perhaps more so than any other area which can be included at a later stage of the arbitration. Parties
of international commercial arbitration, arbitrators in maritime often take advantage of these provisions to attempt settlement
and shipping disputes are not made up solely by those who are without incurring unnecessary or wasted costs to protect their
qualified in the law, but also those with significant commer- legal cause of action. There is no filing fee.
cial experience.
Accordingly, the rules by which maritime disputes are Appointing the tribunal
resolved take these factors into account and ensure that such Unless otherwise agreed, the tribunal will consist of three
disputes are resolved in an appropriate, but also commercial, fair arbitrators (or one arbitrator where the SCMA SCP applies).
and economical, fashion. Each party will appoint an arbitrator and the two arbitrators
thus appointed will appoint the third arbitrator. If an arbitrator

cannot be appointed within 14 days of service of the notice If no party objects within 60 days of publication of an
of arbitration, either party may apply to the chairman of the award, the SCMA may publish a redacted version of the award.
SCMA for such appointment.There is an appointment service The redaction shall preserve anonymity as regards the identity
fee of S$750 per party. of the parties, their legal and other representatives and of the
An appointment fee of S$500 is payable to the arbitrator tribunal. SCMA awards and an accompanying case commen-
upon his or her appointment. There is no scale of arbitrators’ tary prepared by the SCMA Secretariat are published on the
fees, but arbitrators are expected to advise parties of its esti- Lloyd’s Maritime Law Newsletter as a Singapore arbitration
mated fees and take a commercial view on their costs. maritime award.
The appointment of an arbitrator can be challenged if there
are justifiable doubts as to his or her impartiality or independ- Optional institutional services
ence, or if the arbitrator does not possess the qualifications Although the SCMA is not involved in case management or
stipulated by the parties. If a party does not agree to the chal- procedure. There are instances where parties may wish to seek
lenge or the arbitrator does not withdraw, the party making the the assistance of the SCMA to progress the arbitration. SCMA
challenge may refer the matter to the chairman of the SCMA provides four elective services, for a modest fee, to assist parties
for his or her decision. A party may also apply to a court of in their arbitration:
competent jurisdiction to remove an arbitrator if he or she is • appointment of arbitrator;
physically or mentally incapable of conducting the arbitration, • determining a challenge to an arbitrator;
if justifiable doubts exists as to his or her ability to do so, or if • fundholding service; and
the arbitrator has refused or failed to use reasonable dispatch • authenticating an SCMA award for enforcement in a New
to conduct the arbitration or make the award. York Convention country.
Case procedure and institutional involvement SCMA Small Claims Procedure

The SCMA is not involved in case management or procedure. The SCMA SCP is an expedited procedure designed to provide
These are left to parties and their counsel, who are often in a just and swift resolution to disputes where the sum of the claim
better position to agree on timelines among themselves in view and counterclaim is under US$150,000.The SCMA SCP forms
of any ongoing attempts at settlement or mediation. Parties part of the SCMA Arbitration Rules and applies by default
who are unable to agree among themselves may apply to the where the sums in dispute are under the US$150,000 threshold.
tribunal for directions. Under this procedure, the dispute will be heard and deter-
Unless parties agree otherwise, the statement of claimant’s mined by a sole arbitrator. The arbitration process is expedited
case must be served within 30 days after the appointment of and the 30-day intervals for the serving of case statements under
the tribunal and the subsequent case statements – the state- the SCMA Arbitration Rules are reduced to 14-day intervals.
ment of respondent’s defence and counterclaim (if any), the There are no oral hearings unless the tribunal directs otherwise,
statement of claimant’s reply and defence to counterclaim (if and if so directed, the hearing shall be held for arguments only.
any) – must be served within 30 days of service of each pre- The sole arbitrator shall issue his or her award within 21 days
ceding statement. from the close of proceedings and is not obliged to give reasons
Case statements must contain full particulars, a compre- for the award.
hensive statement of the facts and all contentions of law in There is also a cap on the arbitrator’s fees and recover-
support of a party’s position. All supporting documents relevant able legal costs. The arbitrator’s fees are capped at US$5,000
to the issues between the parties must also be submitted along or US$8,000 for disputes with a counterclaim. The amount of
with the case statements. No further case statements or written legal or other costs that may be ordered by the sole arbitrator
statements shall be served unless the tribunal has given leave shall not exceed US$7,000 or US$10,000 for disputes with
for parties to do so. a counterclaim.
Within 14 days of the time fixed for the statement of claim-
ant’s reply, parties must serve the questionnaire set out under Singapore Bunker Claims Procedure
Schedule A of the arbitration rules. Parties are obliged to pro- The Singapore Standard Code of Practice for Bunkering5 and
vide its responses on, among other questions, the main issues the Technical Reference Bunker Mass Flow Metering6 pro-
requiring determination and whether such issues are suitable vide for the SCMA to administer bunker dispute arbitrations
for determination as a preliminary issue, whether an oral hear- in accordance with the Singapore Bunker Claims Procedure
ing is required, any expert evidence intended to be adduced, (the SBC Terms). Parties may bring their disputes for resolu-
the estimated length of hearing, and whether the disputes is tion under one of the avenues provided for under the bunker
suitable for mediation.4 codes or refer the dispute to the SCMA for arbitration under
the SBC Terms.
The award The SBC Terms provide a simplified, quick and inexpensive
The tribunal shall make its award in writing within three procedure to resolve disputes arising out of the sale and supply
months from the close of proceedings. The award must state of bunkers where the claim or counterclaim does not exceed
the reasons upon which the award is based and signed by at S$100,000 and where only a single issue is involved in the dis-
least a majority of the tribunal. The tribunal may take into pute. Where an arbitration proceeds under the SBC Terms, an
account any unreasonable refusal by a party to participate in a arbitrator from the SCMA Panel of Arbitrators is appointed to
mediation when deciding which party shall bear the costs of be the sole arbitrator.
the arbitration and legal and other costs. Parties must file their points of claim within 14 days of the
The SCMA Secretariat does not scrutinise an award made registrar’s acceptance of the reference and subsequently, within
by the tribunal. 14-day intervals, file the points of defence and counterclaim
(if any), and the points of reply and defence (if any). An award Expert panel of maritime and shipping arbitrators
must be made by the sole arbitrator within 14 days of the close The SCMA maintains a panel of arbitrators, details of which are
of submissions or hearing if one is called. The parties must on the SCMA website www.scma.org.sg. Parties may appoint
endeavour to complete the hearings within two days. any arbitrator they wish, whether or not they are also on the
Alternatively, parties may invoke the summary procedure SCMA panel of arbitrators.The criteria for membership of the
under the SBC Terms within seven days of the service of the SCMA panel is available on the SCMA website.
notice and request for a summary hearing within 14 days A successful applicant must:
of such invocation. The registrar of the SCMA or a person • be engaged for at least 10 years in a responsible position
appointed by the registrar will determine the dispute at the or positions in one or more areas of the shipping industry,
conclusion of the summary hearing. either commercial, technical or legal;
The SBC Terms were drafted in consultation with the • have knowledge of law relating to shipping, arbitration
Singapore Shipping Association, the Maritime and Port practice and procedure; and
Authority of Singapore and the SCMA. As with all other • demonstrate an ability to draft reasoned awards in maritime
Singapore-seated awards, awards made under the SBC Terms disputes whether by submitting at least two reasoned awards
are final, binding and enforceable in Singapore and any other which the applicant has drafted or evidencing membership
New York Convention state. of a recognised arbitration institution.
SCMA Expedited Arbitral Determination of Collision There are also discretionary waiver provisions to allow deserv-
The SCMA Expedited Arbitral Determination of Collision ing applicants who do not ostensibly meet the criteria to be
Claims Terms (SEADOCC Terms) is an arbitration procedure admitted in appropriate cases. Applicants are approved by an
designed to determine collision liability through a binding admissions committee.
arbitration award issued within a relatively short amount of
time (for collision claims). The SEADOCC Terms are invoked Notes
by parties’ agreement to appoint a sole arbitrator in accord- 1 https://www.mpa.gov.sg/web/portal/home/media-centre/news-
ance with the terms after a collision has occurred. releases/detail/18b7f4d9-50fd-4909-90f4-239065aa7675
The sole arbitrator to be appointed is usually an expert 2 This section is based on the Commentary on the 3rd Edition of the
in assessing collisions liability. Use of the SEADOCC Terms Rules of SCMA (21 October 2015) authored by Mr Simon Davidson,
is particularly appropriate when parties (or their clubs) need former Head of Procedure Committee, SCMA.
to determine liability and resolve inter-ship claims in an effi- 3 Two other items are required: (1) a proposed on the number of
cient and cost-effective manner. One of the key features of arbitrators if there was no prior agreement; and (2) name(s) of the
the SEADOCC Terms is that it stipulates the submission of proposed arbitrator(s).
a predetermined list of documents necessary for the expedi- 4 See Schedule A of the SCMA Arbitration Rules (2015, 3rd ed).
tious determination of collision liability within 14 days of the 5 SS600:2014.
appointment of the sole arbitrator.7 The list of documents must 6 TR48:2014.
fit within one lever arch file and the summary of background 7 See paragraph 18 of the SEADOCC Terms.
facts must be set out within no more than six pages of A4 paper.
The SEADOCC Terms were drafted with the support and
input from protection and indemnity insurance clubs, marine
insurers and senior maritime interests in Singapore.

Shi Yan Lee

Singapore Chamber of Maritime
Arbitration
Shi Yan is an assistant registrar at the Singapore Chamber of

Maritime Arbitration providing case services under the SCMA
Arbitration Rules. Shi Yan holds a bachelor’s degree in aviation
from RMIT and a JD from the University of Melbourne. Prior
to his appointment at the SCMA, Shi Yan worked at a leading
aviation disputes practice and has been involved in cross-bor-
der airline and aerospace liability defence. He is admitted as an
Australian lawyer in the state of Victoria and is admitted to the
Singapore Bar.
32 Maxwell Road The Singapore Chamber of Maritime Arbitration (SCMA) is a specialist arbitration institution for the
#02-14 Maxwell Chambers resolution of maritime and international trade disputes. It is guided by its principal aim of providing
Singapore 069115 a comprehensive set of non-administered arbitration rules with optional features. SCMA offers the
Tel: +6324 0552 maritime and international trade communities a neutral, cost-effective and flexible framework to
resolve their disputes fairly and expeditiously. www.scma.org.sg
Shi Yan Lee
shiyan.lee@scma.org.sg
www.scma.org.sg
Australia
Doug Jones, Frank Bannon, Dale Brackin, Steve O’Reilly and Clive Luck
Clayton Utz
Australia has a long-standing tradition of embracing arbitration as Institutional arbitration in Australia: Australian Centre for
a means of alternative dispute resolution (ADR). Initially rising International Commercial Arbitration
to prominence as the dominant method of dispute resolution in The Australian Centre for International Commercial Arbitration
the construction and infrastructure industries, commercial parties (ACICA) is Australia’s premier international arbitration institu-
now choose arbitration to resolve domestic and international dis- tion. It has published its own set of arbitration rules, known as
putes in a broad range of sectors, spanning energy, commodities, the ACICA Arbitration Rules 2016 (the ACICA Rules).The first
trade, investment and general corporate and commercial transac- edition of the ACICA Rules was published in 2005, but ACICA
tions. Strong and steady growth of the Australian economy over has issued multiple revisions since then.
the past two decades and the opening of Asian markets have accel- The 2016 edition of the ACICA Rules came into force on 1
erated a growing trend towards the use of arbitration, particularly January 2016 and introduced significant amendments to address
to resolve international disputes. perceived shortcomings in international arbitration practice. One
Australia continues to develop as an attractive hub for inter- of the major objectives of the changes has been to reduce the ris-
national arbitration. Its robust legislative framework together ing time and cost of international arbitrations. ACICA has sought
with the strongly supportive approach of Australia courts to the to achieve this objective through an ‘overriding objective’ to con-
enforcement of arbitral awards and agreements make it an ideal duct proceedings with fairness and efficiency in proportion with
choice of seat for commercial parties, putting Australia at the fore- the value and complexity of a given dispute (article 3). In addition,
front of international arbitration in the Asia-Pacific region. the 2016 ACICA Rules require arbitrators to adopt certain case
management practices including conferencing and measures to
Arbitration law reforms in Australia encourage settlement by the parties (article 21.3). ACICA has also
Australia’s international arbitration framework underwent sig- sought to facilitate effective consolidation and joinder through
nificant changes in 2010. The primary legislation for interna- article 14, and to protect arbitrators in the discharge of their func-
tional arbitration in Australia is the International Arbitration tions through a robust immunity encapsulated in article 49.
Act 1974 (Cth) (the IAA). Importantly, amendments to the IAA An earlier round of important amendments was made in 2011.
adopted the 2006 version of the UNCITRAL Model Law on The ACICA Rules were updated to include provisions relating to
International Commercial Arbitration (the Model Law), replacing emergency arbitrators that enable the appointment of an emer-
the 1985 version. gency arbitrator in arbitrations that have commenced under the
There were a number of other noteworthy amendments to ACICA Rules, but in which a tribunal has not yet been appointed.
the IAA. In particular, section 21 of the IAA was repealed, which Therefore, by accepting the ACICA Rules, parties also accept to
had the effect that parties could no longer contract out of the be bound by the emergency rules and any decision of an emer-
Model Law. The IAA now includes detailed provisions dealing gency arbitrator. The power of the emergency arbitrator applies
with the consolidation of proceedings, which apply if the parties to all arbitrations conducted under the ACICA Rules, unless the
expressly agree to them. parties expressly opt out of the regime in writing.
At the domestic arbitration level, uniform arbitration legisla- Also included in the 2011 amendments to the ACICA Rules
tion based on the 2006 Model Law is now in operation in all states were provisions for ‘Application for Emergency Interim Measures
and territories of Australia. This uniform legislation is known as of Protection’. These provide that the emergency arbitrator may
the Commercial Arbitration Acts (CAAs). The CAAs represent a grant any interim measures of protection on an emergency basis
significant step forward in modernising Australia’s domestic arbi- that he or she deems necessary and on such terms as he or she
tration legislation, having brought it into alignment with the IAA deems appropriate. Such emergency interim measures may take
at the federal level. the form of an award or of an order that must be made in writ-
The CAAs include confidentiality provisions that apply unless ing and must contain the date when it was made and reasons for
the parties specifically opt out, and allow for an appeal from the the decision. These emergency procedures generally follow the
arbitration award if certain preconditions are met. Further, under same approach as the ACICA Rules on interim measures and will
the CAAs, the courts must stay court proceedings in the presence not prejudice a party’s right to apply to any competent court for
of an arbitration agreement, removing the courts’ discretion to stay interim measures.
proceedings that was previously available. These updates to the ACICA Rules have provided parties
Australia has further entrenched the use of ADR processes in cross-border disputes with a prompt and efficient option for
through the enactment of the Civil Dispute Resolution Act 2011 obtaining urgent interlocutory relief before an arbitral tribunal
(Cth).This Act explicitly recognises that litigation should be a last is constituted.
resort in resolving disputes and requires parties to take ‘genuine ACICA has also published a separate set of Expedited
steps’, such as mediation or direct negotiations, to resolve a civil Arbitration Rules (the ACICA Expedited Rules), of which the
dispute before court proceedings can be commenced. latest version was published in 2016. The ACICA Expedited

Australia
Rules aim to provide arbitration that is quick, cost effective and As mentioned above, matters of international arbitration are
fair, considering in particular the amounts in dispute and com- governed by the IAA, which incorporates the Model Law. The
plexity of issues. These rules operate on an opt-in basis. Model Law provides for a flexible and arbitration-friendly legis-
Most recently, ACICA has launched and published its lative environment, granting parties ample freedom to tailor the
Tribunal Secretary Panel and Guidelines in recognition of the procedure to their individual needs.
prevalent use of tribunal secretaries in commercial arbitration, and The IAA supplements the Model Law in several respects.
the value they can bring to the administration of the arbitra- Division 3, for example, empowers Australian courts to make
tion. Panel appointments last three years and applicants must have orders in aid of evidence gathering in international arbitrations,
completed the Chartered Institute of Arbitrators (CIArb) Tribunal such as by way of a subpoena requiring a person to produce cer-
Secretaries Course (or equivalent), and demonstrate involvement tain documents or to attend examination before the arbitral tri-
in at least one arbitration, or have a minimum six months’ experi- bunal.While these provisions apply unless the parties expressly opt
ence as a tribunal secretary. A list of panel members is published out, there are other provisions (those dealing with the consolida-
on the ACICA website and tribunals are encouraged to make tion of proceedings) that only apply if the parties expressly opt
their own arrangement with the tribunal secretary in relation in. The IAA also provides clarity to the meaning of the term ‘pub-
to appointments. The Guidelines came into effect on 1 January lic policy’ for the purpose of articles 34 and 36 of the Model Law.
2017 and apply to tribunal secretaries involved in an ACICA- Part II of the IAA implements Australia’s obligations as a
administered arbitration. signatory to the New York Convention on the Recognition
and Enforcement of Foreign Arbitral Awards 1958 (New York
Hearing facilities: Australian Disputes Centre Convention). Australia acceded to the New York Convention
The Australian Disputes Centre (ADC), based in Sydney and out without reservation. Australia is also a signatory to the ICSID
of which ACICA operates, is an independent non-profit organi- Convention, the implementation of which is contained in part
sation and serves as ‘one-stop’ ADR shop, offering a full range IV of the IAA.
of dispute resolution services including mediation and interna- Domestic arbitration is governed by the relevant CAAs of
tional arbitration. each state or territory where the arbitration takes place. All states
The ADC houses leading ADR providers, which, in addition and territories, except the Australian Capital Territory, have passed
to ACICA, include CIArb Australia and the Australian Maritime uniform domestic arbitration legislation adopting the Model Law,
and Transport Arbitration Commission. ensuring that Australia has a largely consistent domestic and inter-
The ADC is available for any arbitrations, regardless of national arbitration legislative framework in line with the inter-
whether the arbitration is domestic or international, Australian or national benchmark.
foreign-seated, or proceeding under the ACICA or other institu-
tional rules. The ADC also accommodates mediations and other Arbitration agreements
dispute resolution processes. In addition to state-of-the-art hear- For international arbitrations in Australia, the Model Law and the
ing facilities, the ADC also provides all the necessary business New York Convention require the arbitration agreement to be in
support services, including case management and trust account writing. While article II(2) of the New York Convention requires
administration provided by skilled and professional staff. an ‘agreement in writing’ to include an arbitral clause in a contract
or an arbitration agreement signed by both parties or contained in
Other institutions: Perth Centre for Energy and Resources an exchange of letters, the Model Law is more expansive, covering
Arbitration and Melbourne Commercial Arbitration and content recorded in any form. Under the IAA, the term ‘agree-
Mediation Hub ment in writing’ has the same meaning as under the New York
In 2014, the Perth Centre for Energy and Resources Arbitration Convention. Domestic arbitrations under the CAAs adopt the
(PCERA) was established as a not-for-profit centre for arbitra- more expansive definition contained in the Model Law.
tion and expert determination specialised in administering dispute In the landmark decision of Comandate Marine Corp v Pan
resolution in the energy and resources sector. Australia Shipping (2006) FCAFC 192, the Federal Court of
The PCERA is geographically located in Perth, Western Australia held that an arbitration clause contained in an exchange
Australia, which is a regional hub for Australian and Asian energy of signed letters was sufficient to fulfil the written requirement. An
and resources projects.The PCERA boasts an institutional frame- arbitration clause can also be incorporated by express reference to
work, the PCERA Arbitration Principles, which is designed to standard terms and conditions, as was held in Warner Bros Feature
facilitate the efficient resolution of energy and resource industry Productions Pty Ltd v Kennedy Miller Mitchell Films Pty Ltd (2018)
disputes.This framework is coupled with a specialised knowledge NSWCA 81.
base drawn from an array of specialised arbitration practitioners. However, as the Federal Court pointed out in its decision in
These qualities make the PCERA an attractive option for disput- Seeley International Pty Ltd v Electra Air Conditioning BV (2008)
ing parties in the energy and resources sector. FCA 29, ambiguous drafting may still lead to unwanted results.
A further institutional addition to the Australian arbitration In that case, the arbitration clause included a paragraph providing
scene in 2014 was the Melbourne Commercial Arbitration and that nothing in the arbitration clause would prevent a party from
Mediation Hub (MCAMH). Arbitrations at the MCAMH benefit ‘seeking injunctive or declaratory relief in the case of a material
from the same neutrality, judicial support and leading regulatory breach or threatened breach’ of the agreement.The Federal Court
framework as offered by other Australian arbitral institutions. interpreted that paragraph to mean that the parties intended to
preserve their right to seek injunctive or declaratory relief before
Primary sources of arbitration law a court. The court was assisted in its interpretation by the fact
Legislative powers in Australia are divided between the that the agreement also included a jurisdiction clause. Another
Commonwealth of Australia, as the federal entity, and the six case where a poorly drafted clause was held to be ineffective
states and two territories. was Hurdsman & Ors v Ekactrm Solutions Pty Ltd (2018) SASC
Australia
112 in which the clause provided for referral of disputes to a approved the issuance of subpoenas compelling two witnesses to
‘mediator for determination in accordance with the (Singapore give evidence before an Australian-seated arbitral tribunal pursu-
International Arbitration Centre Rules)’. Mediation under the ant to these provisions.
Singapore International Arbitration Centre Rules is of course Similarly, under the CAAs, a party may obtain a court order
non-existent, but the court was not willing to imply that the refer- compelling a person to produce documents under section 27A.
ence to mediator was intended to mean ‘arbitrator’. In such cases, The case of Samsung C&T Corporation, in the matter of Samsung
an application for rectification of an ambiguously worded contract C&T Corporation (2017) FCA 1169 suggests that parties will face
may be an appropriate means by which to obtain enforcement. greater difficulty in obtaining subpoenas from Australian courts in
Under Australian law, arbitration agreements are not required aid of foreign seated arbitration proceedings, the court in that case
to be mutual. They may confer a right to commence arbitration declining to grant subpoenas in aid of Singapore-seated arbitra-
to one party only (see PMT Partners v Australian National Parks & tion proceedings..
Wildlife Service (1995) HCA 36). Some standard form contracts,
particularly in the construction industry and the banking and The arbitral tribunal
finance sector, still make use of this approach. Appointment and qualification of arbitrators
Australian laws impose no special requirements with regard to
Arbitrability the arbitrator’s professional qualifications, nationality or residence.
Australian courts have taken a broad view on the scope of com- However, arbitrators must be impartial and independent, and must
mercial disputes that are capable of settlement by arbitration disclose circumstances likely to give rise to justifiable doubts as
(ie, arbitrable). In the landmark case of Rinehart v Welker (2012) to their impartiality or independence. The IAA clarifies that a
NSWCA 95, Bathurst CJ clarified that ‘it is only in extremely justifiable doubt exists only where there is a real danger of bias of
limited circumstances that a dispute which the parties have agreed the arbitrator in conducting the arbitration.
to refer to arbitration will be held to be non-arbitrable’ (at (167)). Where the parties fail to agree on the number of arbitrators
After a detailed synthesis of the Australian authorities, his Honour to be appointed, section 10 of the CAAs provides for a single
held that disputes that are arbitrable may include claims involv- arbitrator to be appointed while article 10 of the Model Law
ing fiduciary breach, fraud, serious misconduct, claims for the provides for the appointment of a three-member tribunal. The
removal of a trustee and certain statutory claims for breach of the appointment process for arbitrators will generally be provided in
Competition and Consumer Act 2010 (Cth) (such as claims under the institutional arbitration rules, or within the arbitration agree-
section 18 in respect of misleading and deceptive conduct) and ment itself. For all other circumstances, article 11 of the Model
contraventions of the Corporations Act 2010 (Cth), notwithstand- Law and section 11 of the CAAs prescribe a procedure for the
ing that such claims may entail the grant of statutory remedies by appointment of arbitrators.
the arbitral tribunal. Where the parties have not agreed upon an appointment pro-
However, the arbitrability of commercial disputes is not cedure or where their appointment procedure fails, parties are
without its limits. For example, there is a recognised principle able to seek the appointment of arbitrators for international arbi-
that arbitrators cannot award relief that affects the public at large. trations from ACICA. The availability of statutory appointment
Competition, bankruptcy and insolvency disputes are generally procedures was confirmed in Broken Hill City Council v Unique
(although not invariably) non-arbitrable. Intellectual property Urban Built Pty Ltd (2018) NSWSC 825 a case in which the
disputes affecting rights in rem, such as the status of patents and Court, noting Article 11 of the CAAs, rejected the submission
trademark, are similarly non-arbitrable (Larkden Pty Limited v Lloyd that an arbitration clause was inoperable by reason that it speci-
Energy Systems Pty Limited (2011) NSWSC 268). fied a non-existent entity (the Australasian Dispute Centre) as the
Where multiple claims are brought by one party, but only appointing authority. Furthermore, pursuant to article 11(5) of
some of which are capable of settlement by arbitration, the courts the Model Law, any appointment made by ACICA is unreview-
have approached this issue by staying court proceedings only for able by a court.
those claims it considers capable of settlement by arbitration (see The emergency arbitrator provisions in the ACICA Rules
Hi-Fert v Kiukiang Maritime Carriers (1998) 159 ALR 142). enable the appointment of an emergency arbitrator in arbitra-
tions commenced under the ACICA Rules but before the case
Third parties is referred to an arbitral tribunal. The emergency procedure calls
There are very limited circumstances in which a third party who for ACICA to use its best endeavours to appoint the emergency
is not privy to the arbitration agreement may be a party to the arbitrator within one business day of its receipt of an application
arbitral proceedings. One situation in which this can occur is in for emergency relief.
relation to a parent company where a subsidiary is bound by an Arbitration law in Australia does not prescribe a special pro-
arbitration agreement, though this exception is yet to be finally cedure for the appointment of arbitrators in multiparty disputes.
settled by Australian courts. There is, however, authority suggest- If multiparty disputes are likely to arise under a contract, it is
ing that a third party can be bound by an arbitration agreement in advisable to agree on a set of arbitration rules containing particular
the case of fraud or where a company structure is used to mask the provisions for the appointment of arbitrators under those circum-
real purpose of a parent company (see Sharrment Pty Ltd v Official stances, such as those found under article 13 of the ACICA Rules.
Trustee in Bankruptcy (1988) 18 FCR 449).
Under the revised IAA, courts now have the power to issue Challenge of arbitrators
subpoenas for the purpose of arbitral proceedings, requiring a For arbitrations under the IAA and the CAAs, a party can chal-
third party to produce to the arbitral tribunal particular docu- lenge an arbitrator if circumstances exist that give rise to justifiable
ments or to attend for examination before the arbitral tribunal doubts as to the arbitrator’s impartiality and independence. The
(section 23(3) of the IAA). In UDP Holdings Pty Ltd v Esposito parties are free to agree on a procedure for challenging arbitrators.
Holdings Pty Ltd (2018) VSC 316, the Supreme Court of Victoria Failing such agreement, the Model Law and CAAs prescribe that

Australia
the party must initially submit a challenge to the tribunal, and In addition to those functions prescribed in the Model Law,
then may apply to a competent court if the challenge is rejected. courts have additional powers granted by the IAA, including the
To remove arbitrators because of a perceived lack of inde- power to issues subpoenas, as discussed above.
pendence and impartiality under the IAA and the CAAs, any Domestically, courts also have limited power to intervene
challenge must demonstrate that there is a ‘real danger’ that the under the CAAs. These circumstances include:
arbitrator is biased. • applications by a party to set aside or appeal against an award
(sections 34 and 34A);
Power of arbitrator to act as mediator, conciliator or other • where there is a failure to agree on the appointment of an
non-arbitral intermediary arbitrator, the court may appoint an arbitrator at the request
The CAAs contain provisions under section 27D to facilitate of a party (section 11);
med-arb, a process whereby an arbitrator may act as a mediator • a challenge to an arbitrator (section 13);
or conciliator or other ‘non-arbitral intermediary’ to resolve the • terminating the mandate of an arbitrator who is unable to
dispute. Med-arb may occur if the arbitration agreement provides perform the arbitrator’s functions (section 14);
for it or the parties have consented to it. Under the CAAs, an • reviewing an arbitral tribunal’s decision regarding jurisdic-
arbitrator who has acted as a mediator in mediation proceedings tion (section 16); and
that have been terminated may not conduct subsequent arbitra- • making orders in relation to the costs of an aborted arbitra-
tion proceedings in relation to the dispute unless all parties to the tion (section 33D).
arbitration consent in writing.
Interim measures
Liability of arbitrators Under the Model Law, the arbitral tribunal is generally free to
The IAA and CAAs both provide that arbitrators are not liable make any interim orders or grant interim relief as it deems nec-
for negligence in respect of anything done or omitted to be done essary. Further, under the Model Law, courts may order interim
in their capacity as arbitrators (with the exception of fraud). This measures irrespective of whether the arbitration is seated in that
exclusion is also reflected in article 49 of the ACICA Rules. country. Courts may also enforce interim measures issued by a
There are no known cases where an arbitrator has been sued foreign arbitral tribunal (article 17H of the Model Law).
in Australia. The CAAs contain detailed provisions dealing with interim
measures in part 4A, including allowing courts to make interim
The arbitral procedure awards unless the parties expressly intend otherwise and an obli-
The principle of party autonomy is held in high regard by gation on courts to enforce interim measures granted in any state
Australian tribunals. As a result, arbitral procedure tends to vary or territory, except in limited circumstances.
significantly according to the particulars of the dispute and the The willingness of Australian courts to grant interim meas-
needs of the parties involved. ures in aid of arbitration can be seen from the case of Trans
Parties are generally free to tailor the arbitration procedure to Global projects Pty Ltd (In liquidation) v Duro Felguera Australia Pty
their particular needs, provided they comply with fundamental Ltd (2018) WASC 136 where the Court granted freezing orders
principles of due process and natural justice. In doing so, the most against the respondent’s assets after finding that there was a risk
significant requirement under the Model Law is that the parties that the respondent would dissipate its assets and a danger that
are treated with equality and are afforded a reasonable opportu- a prospective arbitral award in favour of the applicant would be
nity to present their case. This requirement cannot be derogated left unsatisfied. The decision was upheld on appeal.
from, even by the parties’ agreement.
Stay of proceedings
Court involvement Provided the arbitration agreement is drafted widely enough,
Australian courts have a strong history of supporting the auton- Australian courts will stay proceedings in face of a valid arbitra-
omy of arbitral proceedings. Courts will generally interfere only tion agreement. Section 8 of the CAAs gives greater primacy
if specifically requested to do so by a party or the tribunal, and to the arbitration agreement. So long as there is an arbitration
only where the applicable law allows them to do so. agreement that is not null or void, inoperative or incapable of
The courts’ powers under the Model Law, and therefore under being performed, the court must refer the parties to arbitration.
the IAA, are very restricted. Under the Model Law, courts may: There is no scope for the court to exercise discretion so as not
• grant interim measures of protection (article 17J); to enforce an arbitration agreement.
• appoint arbitrators where the parties or the two party- For international arbitrations, Australian courts support the
appointed arbitrators fail to agree on an arbitrator (articles autonomy of international arbitration and will stay court pro-
11(3) and 11(4)); ceedings in the presence of a valid arbitration agreement broad
• decide on a challenge of an arbitrator, if so requested by the enough to cover the dispute, assuming the subject matter of the
challenging party (article 13(3)); dispute is arbitrable. Courts will refuse a stay only if they find the
• decide, upon request by a party, on the termination of a man- arbitration agreement is null, void, inoperative or incapable of
date of an arbitrator (article 14); being performed and may impose such conditions as they think
• decide on the jurisdiction of the tribunal, where the tribunal fit in ordering a stay.
has ruled on a plea as a preliminary question and a party Similarly, article 8 of the Model Law mandates a stay of pro-
has requested the court to make a final determination on its ceedings where there is a valid arbitration agreement. A party
jurisdiction (article 16(3)); must request the stay before making its first substantive sub-
• assist in the taking of evidence (article 27); and missions. Although the issue of the relationship between article
• set aside an arbitral award (article 34(2)). 8 of the Model Law and section 7 of the IAA has not been
settled by the courts, the prevailing opinion among arbitration
Australia
practitioners is that a party can make a stay application under frequently adopting procedures that suit the particular circum-
either of the two provisions (this also seems to reflect the posi- stances of the case and that allow for more efficient proceedings.
tion of the Federal Court in Shanghai Foreign Trade Corporation v For arbitrations governed by the IAA, article 27 of the Model
Sigma Metallurgical Company (1996) 133 FLR 417). Law allows an arbitrator to seek the court’s assistance in the taking
The IAA is expressly subject to section 11 of the Carriage of evidence. In such case, a court will usually apply its own rules
of Goods By Sea Act 1991 (Cth), which renders void an arbi- for the taking of evidence.
tration agreement contained in a bill of lading or similar doc-
ument relating to the international carriage of goods to and Form of the award
from Australia, unless the designated seat of the arbitration is in The proceedings are formally ended with the issuing of a final
Australia. There are also statutory provisions in Australia’s insur- award. The Model Law and the CAAs contain similar form
ance legislation that render void an arbitration agreement unless requirements that awards must meet (see article 31 of the Model
it has been concluded after the dispute has arisen. Law and section 31 of the CAAs).
The Model Law and the CAAs do not prescribe time limits
Party representation for delivery of the award and delays in rendering an award do not
There is great flexibility regarding legal representation in inter- result in the termination of the arbitral proceedings. Despite this,
national arbitrations under the IAA and domestic arbitrations a party may apply to a court to terminate an arbitrator’s mandate
under the CAAs. In either situation, parties may elect to either on the basis that the arbitrator is unable to perform his or her
represent themselves or choose to be represented by a legal prac- function or fails to act without undue delay (article 14(1) of the
titioner or any other person. There is no equivalent provision in Model Law).
the Model Law. Under article 29 of the Model Law, any decision of the arbi-
tral tribunal must be made by a majority of its members, but the
Confidentiality of proceedings presiding arbitrator may decide procedural questions if authorised
Arbitrations seated in Australia now enjoy confidentiality by by the parties or the arbitral tribunal.
default (section 23C), subject to a limited number of narrow
exceptions, such as where the parties expressly agree otherwise Recourse against award
(sections 23D-23G). The only available avenue for recourse against international
The current position reflects the amendments to the IAA awards is to set aside the award (article 34(2) of the Model Law).
effected by the Civil Law and Justice Legislation Amendment The grounds for setting aside an award mirror those for refusal
Act 2015. Prior to this enactment, confidentiality under the IAA of enforcement under the New York Convention, and essentially
only applied on an opt-in basis, with the onus on the parties require a violation of due process or a breach of public policy. The
to agree expressly (in their arbitration agreement or otherwise) term ‘public policy’ in article 34 of the Model Law is qualified in
to hold arbitration proceedings confidentially. Failure to do so section 19 of the IAA and requires some kind of fraud, corrup-
could lead to the unsavoury outcome where an arbitration was tion or breach of natural justice in the making of the award. The
not confidential, despite a party having at all times intended to Model Law does not contemplate any right to appeal for errors
resolve the commercial dispute on a confidential basis. of law.
The 2015 amendments to the IAA effectively displaced the In 2014, the Full Court of the Federal Court of Australia in
well-known decision in Esso Australia Resources v Plowman (1995) TCL Air Conditioner (Zhongshan) Co Ltd v Castel Electronics Pty Ltd
183 CLR 10, in which the High Court of Australia held that (2014) FCAFC 83 held that an international arbitral award will
while arbitral proceedings and hearings are private in the sense not be set aside or denied enforcement under the Model Law for
that they are not open to the general public, this does not mean a breach of the rules of natural justice unless real unfairness or real
that all documents voluntarily produced by a party during the practical injustice in the conduct of the dispute resolution process
proceedings are confidential. is demonstrated by reference to established principles of natural
justice and procedural fairness. The Full Court also rejected the
Evidence notion that minor or technical breaches of the rules of natural
Evidentiary procedure in Australian arbitrations is largely influ- justice would suffice for the setting aside or non-enforcement of
enced by the common law system. Arbitrators in international an international arbitral award in Australia.
and domestic arbitration proceedings are not bound by the Further, the Federal Court’s decision in Uganda Telecom Pty Ltd
rules of evidence, and may determine the admissibility, rele- v Hi Tech Telecom Pty Ltd (2011) FCA 131 reinforced the finality of
vance, materiality and weight of the evidence with considerable arbitral awards and Australia’s pro-enforcement policy by holding
freedom (article 19(2) of the Model Law and section 19(3) of that there is no general discretion to refuse enforcement; and the
the CAAs). public policy ground for refusing enforcement under the IAA
Although arbitrators enjoy great freedom in the taking of should be interpreted narrowly and should not give rise to any
evidence, in practice, arbitrators in international proceedings will sort of residual discretion.
often refer to the IBA Rules on the Taking of Evidence (the IBA In William Hare UAE LLC v Aircraft Support Industries Pty Ltd
Rules). The ACICA Rules also recommend the adoption of the (2014) NSWSC 1403, the Supreme Court of New South Wales
IBA Rules in the absence of any express agreement between the held that where parts of an award are affected by a breach of the
parties and the arbitrator (article 31.2). rules of natural justice in respect of one aspect of an arbitration,
The situation is slightly different in domestic arbitrations. the infected parts of the award can be severed and the balance of
Despite the liberties conferred by section 19(3) of the CAAs, the award enforced in accordance with section 8 of the IAA. The
many arbitrators still conduct arbitrations similarly to court decision was subsequently affirmed by the Court of Appeal (see
proceedings: namely, witnesses are sworn in, examined and (2015) NSWCA 229). This case reflects the strongly pro-enforce-
cross-examined. Nevertheless, arbitrators are more and more ment attitude of Australian courts to enforcing arbitral awards.

Australia
The same grounds for setting aside an award apply domesti- In 2013, the High Court of Australia in TCL Air Conditioner
cally. However, the CAAs also permit an appeal of an award on (Zhongshan) Co Ltd v The Judges of the Federal Court of Australia &
a question of law in limited circumstances (section 34A). Such Anor (2013) HCA 5 confirmed that the Federal Court has juris-
an appeal is only possible with the leave of the court or if the diction to enforce international arbitral awards and that the pow-
parties agree to the appeal before the end of the appeal period. ers exercised by an arbitral tribunal are not in contravention of
Further, the court must be satisfied that the following require- the Australian Constitution.
ments are satisfied:
• the determination of the question will substantially affect the Investor-state arbitration
rights of one or more of the parties; From an Australian perspective, the opening of foreign markets,
• the question is one that the arbitral tribunal was asked especially in Asia, is also increasing the significance of the protection
to determine; of foreign direct investment under the International Convention
• the decision of the tribunal on the question is obviously on the Settlement of Investment Disputes between States and
wrong (or is one of general public importance); and Nationals of Other States 1965 (the ICSID Convention). While
• despite the agreement of the parties to resolve the matter by the number of investment arbitrations involving Australian parties
arbitration, it is just and proper in all the circumstances for the is expected to increase significantly over the next decade, the level
court to determine the question. of awareness about the availability of investment protection under
investment treaties still needs to be raised.
The confinement of challenges under the IAA and CAAs Australia continues to negotiate bilateral investment treaties
strictly to those grounds set out in the acts was confirmed by the (BITs) and free trade agreements (FTAs) actively. Australia has
Federal Court in Beijing Be Green Import & Export Co Ltd v Elders entered into FTAs with New Zealand, Chile, the United States,
International Australia Pty Ltd (2014) FCA 1375. In that case the Malaysia, Singapore and Thailand, and is a party to the ASEAN–
applicant was unsuccessful in seeking a stay of the execution of Australia–New Zealand FTA. Australia was one of 12 nations to
a money judgment of a CIETAC award, pending determination sign the Trans-Pacific Partnership (TPP) on 4 February 2016, fol-
of separate CIETAC arbitral proceedings. The applicant sought a lowing over seven years of negotiations, though the ratification
stay on the ground that the award in the latter proceedings would of the TPP has since stalled. In March 2018 the 11 signatories to
constitute a substantial set-off of the money judgment. The Court the TPP other than the United States signed an alternative agree-
held that this ground did not warrant a stay and the respondent ment known as the Comprehensive and Progressive Agreement
was entitled to the fruits of the arbitral process into which the for Trans-Pacific Partnership (CPTPP). The CPTPP is a free
parties had freely entered. trade agreement involving 11 countries in the Pacific region,
The increasing incidence of emergency arbitration has led namely Australia, New Zealand, Brunei Darussalam, Canada,
to more attention being paid to the issue of enforceability in Chile, Japan, Malaysia, Mexico, Peru, Singapore and Vietnam.The
the context of awards rendered by emergency arbitrators. Sauber CPTPP entered force in Australia on 30 December 2018. Notably
Motorsport AG v Giedo Van Der Garde BV and Others (2015) VSCA it does contain investor-state arbitration provisions. Earlier in
37 concerned award enforcement proceedings in a dispute where 2014, Australia concluded FTAs with China, Japan and Korea,
an emergency arbitrator had earlier granted emergency injunctive representing Australia’s three largest export markets. Further
relief. This remains a developing area of law in Australia. FTAs are currently under negotiation with India, Indonesia,
and the Gulf Cooperation Council, in addition to the Pacific
Enforcement Agreement on Closer Economic Relations Plus and the Regional
Often, in practice, the most important moment for a party that has Comprehensive Economic Partnership.
obtained an award is the enforcement stage. Australia has acceded Following a brief period of reluctance towards including
to the New York Convention without reservation. It should be investor-state dispute settlement (ISDS) provisions in its BITs
noted, however, that the IAA creates a quasi-reservation in that and FTAs, in recent years Australia has been more willing to
it requires a party seeking enforcement of an award made in a incorporate these provisions. Chapter 9 of the CPTPP establishes
nonConvention country to be domiciled in, or to be an ordinary robust investment protections and detailed dispute settlement
resident of, a Convention country. So far, no cases have been procedures that allow for arbitration in the event of a breach of
reported where this requirement was tested against the somewhat the protections. FTAs with China and Korea also incorporated
broader obligations under the New York Convention and, given ISDS provisions including requirements that Australian investors
the ever-increasing number of Convention countries, the likeli- must be treated fairly and equitably, and prohibit discrimination
hood that this requirement will become of practical relevance against foreign investments in favour of domestic investments.
is decreasing. The FTA with Japan does not include ISDS provisions but it
Section 8 of the IAA implements Australia’s obligations under does contain a review clause providing for future consideration
article V of the New York Convention and provides for foreign of ISDS provisions.
awards to be enforced in the courts of a state or territory as if the
award had been made in that state or territory and in accord- The authors gratefully acknowledge the assistance provided in the prepara-
ance with the laws of that state or territory. For awards made tion of this chapter by William Stefanidis, Lawyer at Clayton Utz.
within Australia, either article 35 of the Model Law for interna-
tional arbitration awards, or section 35 of the CAAs for domestic
awards, applies.
Australia
Doug Jones Frank Bannon

Clayton Utz Clayton Utz
Professor Doug Jones AO is a leading independent international Frank Bannon is a leading partner in the construction, major pro-
commercial and investor-state arbitrator. jects and international arbitration groups whose expertise covers
The arbitrations in which he has been involved include infra- a range of areas, including construction, engineering and min-
structure, energy, commodities, intellectual property, commercial ing, major projects, international arbitration, dispute resolution
and joint venture, and investor-state disputes spanning over 30 and litigation.
jurisdictions around the world. Frank has acted in a broad range of disputes both locally and
Doug is an arbitrator member at Arbitration Place in Toronto internationally, and is experienced in all forms of dispute reso-
and a door tenant at Atkin Chambers in London, and has an office lution including litigation, arbitration, expert determination and
in Sydney, Australia. mediation (both in advising at the contract drafting stage and
Prior to his full-time practice as an arbitrator Doug had 40 at the dispute stage). He has acted in a number of high-profile
years’ experience as an international transactional and disputes international arbitrations concerning major infrastructure projects
projects lawyer. under most of the major international institutional rules, includ-
Doug is acknowledged as a leading arbitrator and is highly ing UNCITRAL, the International Chamber of Commerce, the
ranked in a number of leading publications. Most recently, in 2017, Singapore International Arbitration Centre and the Kuala Lumpur
Chambers Asia-Pacific recognised Doug as ‘without question the Regional Centre for Arbitration.
leading Asia-Pacific-based arbitrator for construction disputes’, Frank is consistently recognised and acknowledged for his
and he maintained his Band One ranking in the International expertise in leading legal directories. He has been voted by peers
arbitration category. as one of Australia’s best lawyers in construction/infrastructure
Doug has published and presented extensively, and holds (2008–2018), is classified as ‘Pre-eminent’ in Doyle’s Guide –
professorial appointments at Queen Mary College, University of Leading Construction & Infrastructure Litigation Lawyers (New South
London; and Melbourne University Law School. Wales 2018) and is listed in construction – Australia in Chambers
Doug is an Officer of the Order of Australia, and one of only Asia-Pacific 2018.
four Companions of the Chartered Institute of Arbitrators.
Level 15, 1 Bligh Street Clayton Utz was founded in 1833 and today is one of the largest and most successful commercial
Sydney, NSW 2000 law firms in Australia. We have 169 partners and over 1,600 employees based in six offices around the
Australia country (Sydney, Melbourne, Brisbane, Canberra, Darwin and Perth).
Tel: +61 2 9353 4000 Our clients include Australia’s and the world’s largest corporations and financial institutions as
Fax: +61 2 8220 6700
well as federal and state government agencies. We also maintain strong links with legal firms across
the globe through membership of the Lex Mundi and Pacific Rim Advisory Council (PRAC) networks.
Doug Jones
Clayton Utz is a full-service firm with 14 national practice groups (NPG): banking and financial
djones@claytonutz.com
services; competition; commercial litigation; corporate, M&A and capital markets; employment
and workplace relations; energy and resources; environment and planning; insurance advisory and
Frank Bannon
claims; intellectual property and technology; major projects; public sector; real estate; restructuring
fbannon@claytonutz.com
and insolvency; and taxation. Our NPG structure allows us to focus on the needs of individual sectors
of commerce and industry by supporting them with precise and specialised areas of legal practice.
Dale Brackin
We have been a key player in many of Australia’s largest and most complex projects, with clients
dbrackin@claytonutz.com
including federal and state government departments and many of Australia’s top 100 companies.
Steve O’Reilly The international arbitration group at Clayton Utz is one of the leading practices in the Asia-
soreilly@claytonutz.com Pacific region. The team is known for its world-class practitioners. Doug Jones is well known through-
out the international arbitration community and has advised and represented clients in major
Clive Luck international transactions, projects and disputes throughout the world under all of the major arbitra-
cluck@claytonutz.com tion rules and regimes.
Clayton Utz is committed to the development and study of international arbitration and inter-
www.claytonutz.com national dispute resolution in Australia and the Asia-Pacific region. Clayton Utz, supported by the
University of Sydney, holds an annual International Arbitration Lecture, with previous presenters
including Sally Harpole, Toby Landau QC, Lord Mustill, Fali Nariman, Rusty Park, Arthur Marriott QC,
Karl-Heinz Böckstiegel, Gabrielle Kaufmann-Kohler, Jean-Claude Najar, Essam AI Tamimi, David
Rivkin, Chief Justice James Allsop AO and most recently Michael Hwang SC and, most recently, the
Honourable Sir Bernard Eder.

Australia
Dale Brackin Clive Luck

Clayton Utz Clayton Utz
Practising widely in building and construction law for more than Clive is a partner in the major projects and construction team of
30 years, Dale has also developed particular expertise in the reso- Clayton Utz in Perth. He is admitted as a barrister and solicitor
lution of commercial disputes on construction and engineering in the Supreme Court of Western Australia, the Federal Courts of
projects through litigation, arbitration and alternative dispute Australia and as a solicitor in the Supreme Court of England and
resolution techniques throughout Australia and in various inter- Wales. His practice focuses on major construction, engineering,
national jurisdictions. infrastructure and resource projects in Australia and abroad.
He has conducted numerous arbitration proceedings, includ- Clive has represented clients in mediation, adjudication,
ing domestic arbitrations in various states and territories of arbitration and litigation in many jurisdictions, including advis-
Australia as well as international arbitrations, both ad hoc and ing on disputes in Australia, the United Kingdom, South Africa,
institutional (including under the ICC Rules, the UNCITRAL Mauritius, Cote D’Ivoire, Ghana, Burkina Faso, India, Indonesia,
rules and the EDF Rules). Papua New Guinea, Japan, Singapore and Hong Kong. He has
Dale has been widely recognised for his expertise. He was leading credentials in Australia in both domestic and international
voted by peers as one of Australia’s Best Lawyers in construc- arbitration and regularly acts in major disputes across the con-
tion/infrastructure and litigation (2008–2018), he was recog- struction, energy and resources industries, including appearing
nised by Chambers Asia Pacific as leading in the Construction field as counsel in arbitrations and on procedural applications in the
(2013–2018) and was listed in Doyle’s Guide for 2018 as ‘Pre- Australian Federal and Supreme Courts relating to international
eminent’ in Queensland for construction. and commercial arbitrations. He has acted in matters governed
under various arbitral rules including UNCITRAL, ICC, AFSA,
HKIAC and SIAC rules.
Steve O’Reilly
Clayton Utz
Steve O’Reilly is a senior partner in the construction, major

projects and international arbitration groups. Steve has extensive
experience in a wide range of construction, engineering, mining
and energy, and resources projects. He has been involved in some
of the largest construction disputes in Australia, South East Asia,
the United States and the United Kingdom.
Steve’s practice lends itself to major arbitration work
commonly involving international arbitration through the
International Chamber of Commerce or UNCITRAL rules or
through bespoke contracts for large infrastructure, and energy and
resources projects with domestic arbitration agreements but evok-
ing international arbitration style procedures.
Steve has been voted by peers as one of Australia’s best lawyers
in construction/infrastructure (2008–2018).
China
Zhang Shouzhi, Huang Tao and Xiong Yan
With the continuing development of cross-border trade and Provisions on judicial review of arbitration
investment, commercial arbitration, including international com- The Provisions of the Supreme People’s Court on Several Issues
mercial arbitration, has witnessed steady growth in China (for Relating to Judicial Review of Arbitration (Provisions on Judicial
the purpose of this article, unless otherwise stated, China means Review of Arbitration)4 clarifies, among others, the follow-
Mainland China not including Hong Kong, Macau, and Taiwan) ing issues.
during the past decade. The Provisions on Judicial Review of Arbitration allows a
Indeed, statistics for 2017 show 360 cases filed in the 253 arbi- party to apply for the recognition of a foreign arbitral award if the
tration commissions in China, with the disputed amount totalling arbitration case is related to a domestic proceeding, even though
533.8 billion yuan.1 neither the respondent’s domicile nor the respondent’s property is
In order to accommodate China’s economic transformation located within China. Jurisdiction over such applications is with
and to facilitate the Belt and Road Initiative (BRI) announced the intermediate court or the higher court at the place of the
by the Chinese government in 2013, China is making great effort court or arbitral institution handling the domestic proceedings.
to create a more open and arbitration-friendly environment that Previously, because the Civil Procedure Law does not identify
aligns with internationally acceptable standards. In pursuit of this the competent court with jurisdiction to hear a party’s application
cause, on its domestic front China has adopted measures that are to recognise a foreign arbitral award where neither the respond-
generally applicable nationwide and have made groundbreaking ent’s domicile nor the respondent’s assets is located within China,
innovations within its Pilot Free Trade Zones, pioneering and parties who applied for recognition of a foreign arbitral award in
experimental zones of China’s multifaceted reforms. Discussions China in such circumstances (for example because the adjudica-
and explorations are also underway regarding new developments tion of the domestic case is dependent on the recognition of
in international arbitration such as investor-state arbitration and the foreign arbitration) would encounter jurisdictional issues.The
third-party funding, both of which have attracted the attention Provisions on Judicial Review of Arbitration fills this lacuna in
and interest of academics and arbitration practitioners alike. the Civil Procedure Law and offers better protection for parties
This article aims to review significant developments on the who need to apply for the recognition of foreign arbitral awards.
law and practice of arbitration in China and to provide read- According to the Provisions on Judicial Review of Arbitration,
ers with a general understanding of some important aspects of as an exception to finality of court decisions in the judicial review
Chinese arbitration landscape. process (whether the arbitral award is domestic, foreign-related
or foreign), if the application to recognise or enforce or set aside
Recent significant developments an arbitral award is not accepted or declared inadmissible by the
New rules regarding judicial review of arbitration court (before the court examines the merits of the application),
In addition to the Arbitration Law2 and the arbitration related- the applicant is entitled to appeal.
rules of the Civil Procedure Law,3 arbitration in China is mainly Previously, there were no explicit provisions allowing the
subject to regulations and judicial interpretations of the Supreme applicant to appeal and it was often the case, for example, that a
People’s Court (SPC). foreign applicant was left with no remedies when its application
In line with its ongoing stance to support arbitration, in 2017 to recognise and enforce a foreign arbitral award was knocked
and 2018, the SPC issued three sets of new rules that are of espe- off the docket by the court before any substantive examination
cial importance in clarifying and reshaping the judicial review without justifiable causes.With the Provisions on Judicial Review
mechanism of arbitration. of Arbitration in place, an arbitrary non-acceptance of the appli-
Judicial review of arbitration in China refers to cases where cation by the lower courts in its decision-making process will
the competent court is asked to: be restrained.
• determine the validity of an arbitration agreement; Regarding the validity of an arbitration agreement, the SPC
• set aside an arbitral award; and took a firm pro-arbitration stance. According to the Provisions on
• recognise or enforce, or refuse to recognise or enforce an arbi- Judicial Review of Arbitration, absent the parties’ agreement on
tral award. the applicable law governing the arbitration agreement, if the law
of the place where the arbitral institution is located and the law
Ideally, courts are to maintain a minimal level of control or at the seat of the arbitration differ, the applicable law governing
supervision over an arbitral process that is consistent with what the arbitration agreement is the law that results in a valid arbitra-
is commonly referred to as a non-interventionist approach from tion agreement.
the courts. The new rules of the SPC are intended to balance Before the Provisions on Judicial Review of Arbitration came
the necessary supervision and the need to guard against excessive into effect, article 18 of the Law on Choice of Law for Foreign-
court interference and local protectionism. Related Civil Relationships5 made it clear that, absent the par-
ties’ agreement on applicable law, the law of the place where the

China
arbitral institution is located or the law at the seat of the arbitra- to the validity of the arbitration agreement if it did not raise such
tion shall apply to the arbitration agreement (if the parties do not objection during the arbitration proceeding, but previously there
agree on the arbitral institution or seat of arbitration, the courts was no similar rule in relation to irregularities of arbitration pro-
may apply Chinese law),6 but it was silent on which of the two cedures. The Provisions of the Enforcement of Arbitral Awards
laws should be applied in the case of a conflict. The Provisions confirms the general applicability of the rule of waiver and estop-
on Judicial Review clarifies this ambiguity and adopts a law that pel for the first time.
supports the validity of arbitration agreement.
Arbitration-related innovations within Pilot Free Trade Zones
Provisions on report for approval A major innovation within Pilot Free Trade Zones relates to ad
The Provisions of the Supreme People’s Court on Report for hoc arbitration. The Arbitration Law only provides for institu-
Approval of Arbitration Cases under Judicial Review (Provisions tional arbitration. Ad hoc arbitration in China has long been
on Report for Approval)7 expands the application scope of the regarded as invalid under Chinese law, although an ad hoc arbitral
reporting mechanism to purely domestic arbitrations. award rendered in a country other than China or is enforceable
Previously, if a lower court intended to invalidate an arbitra- in China under the New York Convention,10 and ad hoc arbitral
tion agreement, or set aside or refuse recognition or enforcement awards made in Hong Kong, Macau or Taiwan, are also enforce-
of an arbitral award involving foreign, Hong Kong, Macau or able in China under the applicable arrangements.
Taiwan elements, it would report to the higher court for review At the end of 2016, the SPC issued its Opinions on Providing
and approval and the SPC alone had the ultimate authority Judicial Safeguard for the Development of Pilot Free Trade Zones
to decide on invalidation, setting aside, or non-recognition or (Opinions for Pilot Free Trade Zones),11 under which courts may
enforcement. Purely domestic cases, however, were subject to no recognise the validity of arbitration agreement with specific seat
such reporting and review restraints. of arbitration, specific arbitration rules and specific arbitrators if
With the coming into effect of the Provisions on Report for the arbitration agreement is between companies registered in the
Approval, purely domestic arbitration cases involving no foreign, Pilot Free Trade Zones. Any decision to invalidate such arbitra-
Hong Kong, Macau or Taiwan elements shall also be reported to tion agreement shall be reported to the higher court and up to
and reviewed by the higher court. the SPC for approval. Accordingly, arbitration in the Pilot Free
If the intermediate people’s court intends to invalidate an arbi- Trade Zones is no longer confined to institutional arbitration and
tration agreement, or set aside or refuse enforcement of an arbitral ad hoc arbitration satisfying the above-mentioned conditions is
award involving no foreign, Hong Kong, Macau or Taiwan ele- also a viable choice.
ments, it shall report to the higher for review and approval. Another important innovation within the Pilot Free Trade
If the high people’s court intends to uphold the lower court’s Zones is the expansion of the scope of disputes submitted to
decision to invalidate an arbitration agreement, or set aside or foreign arbitration. Chinese courts had long taken the view that
refuse enforcement of an arbitral award involving no foreign, an agreement to submit a purely domestic dispute with no ‘for-
Hong Kong, Macau or Taiwan elements, the high people’s court eign element’ to foreign arbitration was invalid and unenforceable,
shall report to the SPC for review and approval when the parties based on a narrow interpretation of ‘foreign element’ (for example
are domiciled in different provinces of China or the high people’s foreign invested entities incorporated under Chinese law were
court intends to set aside or refuse enforcement of an arbitral considered domestic entities and foreign investment did not con-
award on the ground of public policy. stitute a foreign element).
The Provisions on Report for Approval aims to extend pro- Change came with the case of Siemens International Trade
tection against local protectionism to purely domestic arbitrations (Shanghai) Co, Ltd v Shanghai Golden Landmark Co, Ltd12 where the
and it also shows the SPC’s caution and prudence on its applica- First Intermediate People’s Court of Shanghai interpreted ‘foreign
tion of public policy. element’ in a more liberal manner and different from the con-
ventional approach. According to the First Intermediate People’s
Provisions on enforcement of arbitral awards Court of Shanghai, although the parties were domestic-registered
A breakthrough change brought by the Provisions of the Supreme companies, the place of delivery was in China and the disputed
People’s Court on Several Issues concerning Enforcement of goods were also located within China, the dispute could still be
Arbitral Awards by People’s Courts (Provisions on Enforcement considered as involving foreign elements because the parties were
of Arbitral Awards)8 is the introduction of the mechanism for third wholly foreign-owned enterprises in the Free Trade Zone and
parties to apply for non-enforcement of arbitral awards rendered the circulation of the disputed goods in and out of the Free Trade
by Chinese arbitration commissions if the arbitration is instituted Zone displayed similar features of an international sales of goods
with malicious or fraudulent intent, which fills the legislative gap transaction. Following and upholding the opinion of the First
in relation to legal remedies available for third parties prejudiced Intermediate People’s Court of Shanghai, the SPC’s Opinions for
by fictitious arbitrations in China. Pilot Free Trade Zones further expands the scope of convention-
Another salient feature of the Provisions on Enforcement of ally domestic disputes, which are eligible for foreign arbitration
Arbitral Awards is the confirmation of the rule on estoppel in its in two ways:
article 14(3), under which a party who was aware or should have • disputes between or among wholly foreign-owned enterprises
been aware of the inconformity of the arbitration procedures with registered within a Pilot Free Trade Zone may be submitted
the applicable law or arbitration rules is precluded from relying to arbitration outside China, regardless of whether a ‘foreign
on the procedural inconformity to apply for non-enforcement of element’ exists in the case or not; and
the arbitration award if the party has participated in or continued • where one of the parties is a foreign invested enterprise reg-
to participate in the arbitration without raising any objection. istered in a Pilot Free Trade Zone, either party is prohibited
Under article 27 of the Interpretations on the Application of the from objecting to the validity of the arbitration agreement
Arbitration Law,9 a party is deemed to have waived its objection providing for foreign arbitration if the parties have agreed to
China
submit the dispute to foreign arbitration or if the party failed investment disputes between governments and investors if an arbi-
to raise objection during the arbitration. tration agreement has been reached in a contract, treaty, statute
of law or other instruments.18 Shenzhen International Court of
Establishment of the International Commercial Tribunal Arbitration also amended its arbitration rules in 2016 and included
On 1 July 2018, the Provisions of the Supreme People’s Court investment disputes between governments and foreign investors to
on Establishment of the International Commercial Tribunal be within the scope of its jurisdiction.19 With the implementation
(Provisions on Establishment of the ICT)13 took effect, setting the of the BRI, Chinese arbitration institutions are expected to play a
tone in support of international commercial dispute resolution. greater role in international investment arbitrations.
According to the Provisions on Establishment of the ICT, the SPC In September 2018, different arbitration institutions in
established the International Commercial Tribunal (ICT) and is Guangdong-Hong Kong-Macau Greater Bay Area (comprised
empowered to designate qualified international arbitral institu- of the two Special Administrative Regions of Hong Kong and
tions as part of its efforts to build a ‘one-stop’ international com- Macau, and nine municipalities of Guangdong Province, referred
mercial dispute resolution platform and mechanism. Important to as Greater Bay Area) established the Guangdong-Hong
impacts on arbitration brought by the Provisions on Establishment Kong-Macau Greater Bay Area Arbitration Alliance (Arbitration
of the ICT include the following. Alliance), with the purpose of strengthening cooperation among
• If the parties agree to submit the disputes to a designated arbitration institutions and to integrate arbitration resources in the
international arbitral institution, they are entitled to apply to Greater Bay Area.20 The Arbitration Alliance is purported to be an
the ICT for interim measures, including measures of evidence international commercial arbitration platform where parties enjoy
preservation, property preservation and injunctions, before and a wide range of options and freedom in choosing arbitration rules
after the arbitration commences. Under the Arbitration Law, and appointing arbitrators. A cooperation memorandum was just
an application for interim measures has to be made through signed in February 2019 by the arbitration institutions forming
arbitral institution. The Provisions on Establishment of the the Arbitration Alliance21 and it is still to be seen whether and to
ICT brings about the possibility for the parties to directly what extent the alliance could facilitate international arbitration
apply to the ICT for interim measures in arbitrations admin- in the Greater Bay Area.
istered by the designated international arbitral institutions
and will likely improve the efficacy of interim measures in Arbitration agreement
such cases. If rules on the conflict of laws (in particular article 14 of the Law
• If the parties agree to submit the disputes to a designated on Choice of Law for Foreign-Related Civil Relationships) lead
international arbitral institution, they are entitled to apply to to application of Chinese law to determine validity of arbitration
the ICT to set aside or enforce the arbitral award rendered agreement, according to article 16 and article 17 of the Arbitration
by the designated international arbitral institutions. Under Law, a valid arbitration agreement must:
the Arbitration Law and related rules, an application to set • express the parties’ intention to arbitrate;
aside or enforce an arbitral award should be made to inter- • set out the matters to be arbitrated;
mediate courts and level-by-level report and review up to the • select an arbitration commission;
SPC has to be performed if arbitral awards involving foreign, • be in writing and validly executed; and
Hong Kong, Macau or Taiwan elements are to be set aside • be entered into by individuals with full civil capacity or
or refused recognition or enforcement. Under the Provisions legal persons.
on Establishment of the ICT, an application to set aside or
enforce an arbitral award will be made to the ICT with less Meanwhile, the matters agreed to be arbitrated must be arbitrable
concerns for local protectionism and without the process of for the arbitration agreement to be valid. According to article 2
going through the level-by-level reporting. of the Arbitration Law, the following subject matters may not be
referred to arbitration:
Evolution of arbitration rules and growth of arbitral institutions • disputes concerning marriage, adoption, custody, fostering and
In line with the position of the Opinions for Pilot Free Trade succession; and
Zones on ad hoc arbitration, arbitration institutions in China have • administrative disputes that shall, in accordance with the law,
taken steps to keep up with the development. For example, the be dealt with by administrative authorities.
Zhuhai Arbitration Commission released its Ad Hoc Arbitration
Rules of the Hengqin Pilot Free Trade Zone in March 2017,14 the Under article 11 of the Administrative Litigation Law22 and article
Shijiazhuang Arbitration Commission updated its arbitration rules 11 of the Interpretation on the Administrative Litigation Law,23
in June 2017 to include service for arbitration between parties non-arbitrable administrative disputes include disputes arising
within Free Trade Zones conducted in accordance with specific out of agreements between private parties and the government
arbitration rules by specific arbitrators,15 the China International pertaining to administrative law rights and obligations. The SPC
Economic and Trade Arbitration Commission (CIETAC) Hong generally avoids an across-the-board approach to agreements
Kong Arbitration Centre published its Rules as Appointing involving administrative law elements and distinguishes between
Authority in Ad Hoc Arbitrations in July 2017,16 and in October consensual aspects of the agreement where the private party and
2017 the Guangzhou Arbitration Commission adopted the Rules the government are of equal footing and administrative aspects of
for Bridging Ad Hoc Arbitration and Institutional Arbitration for- the agreement where the government is exercising public func-
mulated by the China Internet Arbitration Alliance.17 tion and governmental authority, the disputes in relation to the
Further eye-catching progress made by Chinese arbitra- former being arbitrable. In multiple cases, disputes arising out of
tion institutions in recent years can be seen in the release of the government concession agreements or private-public-partnership
investor-state arbitration rules by CIETAC in 2017. Under this (PPP) agreements were held to be of civil nature but not disputes
set of rules, CIETAC will exercise jurisdiction over international of administrative agreements.24

China
There has been controversy whether civil antitrust disputes are The mindset and customary practice of Chinese parties, arbi-
arbitrable. Some courts hold the view that civil antitrust cases are trators and courts are more inclined to follow the principle that
not just disputes the parties are privy to, but also concern public he or she who makes the claim bears the burden of proof. What
interest, particularly the interests of average consumers, and thus this means is that a party should produce evidence in support of
are not arbitrable.25 its own case and claims, and adjudicators are not easily swayed by
Chinese law recognises the concept of competence- arguments that discovery or disclosure, which they may believe to
competence in a limited way. If one party intends to challenge the be abusive, is vital or indispensable to the proper adjudication of
validity of arbitration agreement and the arbitral tribunal’s jurisdic- the case.
tion, it may either request the arbitration commission or arbitral Although it is possible to request the opposing party to pro-
tribunal or apply to the competent court for a ruling according to duce specific documents on which the outcome of the dispute
article 20 of the Arbitration Law, subject to the following condi- might depend and non-production of which might lead to adverse
tions and limits. inference, normally a party’s request for broad or voluminous cat-
• Challenge to the validity of arbitration agreement and the egories of documents in the possession or custody of the other
arbitral tribunal’s jurisdiction must be made before the first party will not be granted.
arbitration hearing is held. Congruent with its position on disclosure or discovery, the
• If one party requests the ruling to be made by the arbitration arbitration regime of China is generally silent on the existence
commission or arbitral tribunal while the other party requests and treatment of issues of privilege, which is a common ground to
the ruling from the court, the ruling shall be made by the object disclosure and discovery requests. One exception is article
court unless the arbitration commission or arbitral tribunal 19.1 of the CIETAC Guidelines on Evidence, which provides that:
has already ruled on the issue of jurisdiction. In practice, the
parties may apply to the court to rule on the invalidity of the the tribunal may, pursuant to rules on the privilege it considers appropriate,
arbitration agreement before the arbitration commences. decide not to admit certain evidence, particularly confidential communica-
• Some courts view a party’s right to request the arbitration tions between a lawyer and his/her client and evidence related to settle-
commission to rule on the issue of jurisdiction and the right to ment negotiations between the parties.
request the competent court to make the ruling to be mutually
exclusive – once a party requests the arbitration commission In theory, the parties to an international arbitration may agree on
or arbitral tribunal to rule on the arbitral jurisdiction, the same the rules of privilege to be applied or the arbitral tribunal may
party is not entitled to make the same request to the competent determine the law applicable to the issue of privilege according to
court, and vice versa.26 relevant conflict of law rules, but as discovery and disclosure are
• The courts’ jurisdiction to examine the validity of arbitration generally not part of the arbitration procedure in China, the issue
agreements under article 20 of the Arbitration Law is inter- of privilege rarely arises.
preted in a restrictive manner. Existence or effectiveness, as The Arbitration Law28 and most arbitration rules of Chinese
opposed to validity, of arbitration agreements are deemed as arbitration commissions provide for very general rules as regards
a substantive or factual issue that should be examined by an burden of proof, evidence submission, collection and examination,
arbitral tribunal and thus is beyond the courts’ jurisdiction leaving wide discretion to the arbitral tribunal over admissibility,
under article 20 of the Arbitration Law.27 Such view may be relevance and weight of evidence.The parties may agree on more
criticised as a mechanical interpretation of article 20 of the detailed evidence rules to be applied, for example the CIETAC
Arbitration Law, but from the pro-arbitration perspective, a Guidelines on Evidence or the International Bar Association
restrictive interpretation of article 20 of the Arbitration Law Rules on the Taking of Evidence in International Commercial
is intended to prevent the court’s excessive interference with Arbitration, or agree to adopt these evidence rules as guidance.
arbitral tribunal’s competence to decide its own jurisdiction. In In absence of agreement between the parties, arbitral tribunals
any event, although parties are not entitled to request courts to usually refer to the evidence rules applicable to civil procedure
rule on non-existence or ineffectiveness of arbitration agree- as guidance, but as arbitration procedure is featured by party
ment at the arbitration stage, they can still rely on the non- autonomy, applicability of relatively rigid civil procedure rules is
existence or ineffective argument to apply for setting aside or often limited.
resist enforcement of arbitral award afterwards. Three general categories of evidence in Chinese arbitration are
documentary evidence, fact witness evidence and expert evidence.
If one party commences court proceedings in breach of an arbi-
tration agreement, the other party has the right to challenge the Documentary evidence
court’s jurisdiction by invoking the arbitration agreement. Documentary evidence is often considered to be of higher pro-
If the defendant appears at the first court hearing without rais- bative value because it is contemporaneous, not created for the
ing objection to the court’s jurisdiction, the arbitration agreement purpose of supporting a party’s contention in an arbitration and
will be deemed to have been waived by the parties and the court thus usually represents one of the most accurate records of the
will proceed. events that took place. Accordingly, compared to witness evidence,
documentary evidence is more widely used and heavily relied on
Evidence and disclosure in Chinese arbitration cases.
Although parties are required to exchange evidence before hear-
ing, Chinese law and arbitration rules of Chinese arbitration com- Fact witness evidence
missions provide for no mechanism equivalent to US style of Where witness statements are produced, the parties are entitled to
discovery or common law type of disclosure and neither arbitral conduct cross-examination. Neither arbitral tribunals nor courts
tribunals nor courts are authorised by law to compel production of are empowered by law to compel the attendance of witnesses in
documents from parties or third- or non-parties to an arbitration. hearings, but if a witness refuses to appear before the tribunal to
China
testify when requested by the arbitral tribunal to do so, the party arbitral award is made by a Chinese arbitration commission, irre-
who provides the witness statement or intends to introduce the spective of whether or not the award is made in the territory of a
witness for testimony may be deemed to have failed to satisfy its contracting state to the New York Convention other than China,
burden of proof. the award is subject to relevant rules of the Civil Procedure Law.
The question then arises is whether the New York Convention
Expert evidence or rules of the Civil Procedure Law should be applied to awards
Expert evidence may be given by party-appointed experts or made by Chinese arbitration commissions in the territory of a
tribunal-appointed experts. In the past, some arbitrators viewed contracting state to the New York Convention other than China.
the testimony of party-appointed experts as inherently biased As, in theory, treaty obligations prevail over domestic rules,
and have tended to treat party-appointed experts with unwar- one possible way to get around the question is to apply the New
ranted suspicion. Nowadays, however, party-appointed experts are York Convention to such awards but also allow interested parties
quite common and even more common than tribunal-appointed to avail themselves of any right under the Civil Procedure Law.
experts. Usually each party will appoint its own expert and the This is envisaged by article VII of the New York Convention,
tribunal will consider and weigh expert evidence from both sides, under which the provisions of the convention shall ‘not deprive
usually with conflicting or competing opinions. any interested party of any right he may have to avail himself of
an arbitral award in the manner and to the extent by the law . . .
Arbitral awards of the country where such award is relied on’.
Different awards and applicable laws Accordingly, although recognition and enforcement of such
According to article 58 and other relevant provisions of the awards is generally governed by the New York Convention, any
Arbitration Law, the Arbitration Law applies to arbitrations con- right of an interested party under the Civil Procedure Law (for
ducted by Chinese arbitration commissions, and parties may apply example, the right to apply for setting aside the arbitral award) is
to the intermediate people’s court at the place where the arbitra- also applicable.That being said, there has been no published court
tion commission is located to set aside arbitral awards made by the case in relation to an award made by a Chinese arbitration com-
arbitration commission. mission in the territory of a foreign country and it is still uncertain
As regards recognition or non-recognition and enforcement how Chinese courts will apply the New York Convention and the
or non-enforcement of arbitral awards, different procedures or Civil Procedure Law on such occasions.
standards of recognition and enforcement apply to different types Second, the concept of ‘arbitral awards not considered domes-
of arbitral awards. Broadly speaking, there are currently four dif- tic awards’ or otherwise known as non-domestic awards under
ferent recognition and enforcement regimes. article I of the New York Convention is one of the most compli-
• The 1958 New York Convention on the Recognition cated issues posed by the convention. Article I of the convention
and Enforcement of Foreign Arbitral Awards (New York adopts the ‘territorial’ criterion as a general criterion to decide
Convention), which is applicable to arbitral awards made in the the scope of application of the convention. It also recognises that
territory of a contracting state to the New York Convention contracting states may want to consider factors other than the
other than China and arbitral awards not considered domestic seat of the arbitration when determining whether an award falls
awards in China. within its scope and thus includes the ‘non-domestic’ criterion as
• The Arrangement of the Supreme People’s Court con- well. Because the New York Convention does not offer a defini-
cerning Mutual Enforcement of Arbitral Awards Between tion of non-domestic awards, it could be argued that contracting
the Mainland and the Hong Kong Special Administrative states have a discretionary power to decide what they ‘consider’ as
Region,29 the Arrangement of the Supreme People’s Court non-domestic awards. However, some suggest that non-domestic
concerning Mutual Recognition and Enforcement of awards only refer to awards made in the state where recognition
Arbitral Awards Between the Mainland and Macau Special and enforcement is sought under the procedural law of another
Administrative Region,30 and the Provisions of the Supreme state because this criterion finds support in the travaux préparatoires
People’s Court on Recognition and Enforcement of Arbitral of the New York Convention.32
Awards of Taiwan Region,31 which are applicable to arbitral Pursuant to a textual and holistic interpretation of arbitra-
awards made in Hong Kong, Macau and Taiwan respectively. tion-related rules of the Civil Procedure Law and the Arbitration
• Article 237 and other related rules of the Civil Procedure Law, Law, in determining whether an arbitral award is domestic or not,
which are applicable to awards rendered by Chinese arbitra- Chinese law seems to adopt an ‘institution’ standard,33 which is
tion commissions, generally regarded as purely domestic arbi- different from either ‘territorial’ test or ‘governing law’ test.
tral awards. Under the institution standard, instead of looking into whether
• Article 274 and other related rules of the Civil Procedure Law, the arbitral award is made in a foreign territory or under foreign
which are applicable to arbitral awards rendered by Chinese procedural law, Chinese courts will consider whether the arbitral
arbitration commissions involving foreign, Hong Kong, award is made by a Chinese or foreign arbitral institution to decide
Macau or Taiwan elements. whether the arbitral award is domestic or not. If an arbitral award
is made by a foreign institution, it is not a domestic arbitral award
Several complex or unsettled issues arise from the above regimes. even if it is made in the territory of China. Following this logic,
First, according to article I of the New York Convention, arbi- the Intermediate People’s Court of Ningbo (Ningbo Court) held
tral awards made in the territory of a contracting state other than that the arbitral award made by a foreign institution in China was
China, regardless of whether the awards are made by Chinese non-domestic arbitral award within the meaning of the New York
arbitration commissions or not, fall within the scope of the con- Convention and thus New York Convention should be applied.34
vention and should be governed by the provisions of the conven- Whether the interpretation by the Ningbo Court of non-
tion. On the other hand, a literal interpretation of article 237 and domestic awards accords with the New York Convention, and
related rules of the Civil Procedure Law seem to suggest that, if an whether application of the New York Convention is compatible

China
with China’s reservation under the convention, is subject to con- • there is no valid arbitration agreement between the parties;
jecture. Some criticise the institution standard as an inappropriate • the composition of the arbitral tribunal or the arbitration
standard to decide the nationality of arbitral awards and argue that procedure was not in accordance with the agreement of the
the territorial test should be applied according to which arbitral parties, or violates the requirements of the law governing the
awards made by Chinese arbitration commissions in the terri- arbitration procedure;
tory of China are actually domestic awards.35 Some argue that • the subject matter of the dispute is not contemplated by the
China’s reservation in accordance with article I(3) of the New terms of the arbitration agreement or is not arbitrable; and
York Convention that ‘it will apply the convention to the recog- • the arbitral award is in conflict with public policy.
nition and enforcement of awards made only in the territory of
another contracting state’ excludes the application of convention For arbitral awards made by Chinese arbitration commissions
to non-domestic awards,36 and thus even if an award is categorised involving no foreign, Hong Kong, Macau or Taiwan elements,
as non-domestic award, the New York Convention is not appli- namely awards that are purely domestic, two more challenging
cable in any event. Notwithstanding these contrasting views, it is grounds touching on the merits of the arbitration are added,40
fair to say that the decision of the Ningbo Court is undoubtedly which are:
a pro-arbitration stance adopted by the Chinese courts insofar as • the evidence on which the arbitral award is based is
the recognition and enforcement of international arbitral awards in forged; and
China are concerned, although it remains to be seen how Chinese • the other party has concealed evidence that is sufficient to
courts will treat such awards in the future. affect the fair decision of the arbitral tribunal.
A third issue arising from the different enforcement and rec-
ognition regimes regards the fact that, as a contracting state to the In recent years, Chinese courts are showing increasing willing-
Convention on the Settlement of Investment Disputes between ness to support recognition and enforcement of arbitral awards.
States and Nationals of Other States (ICSID Convention), China The vast majority of foreign arbitral awards have been success-
is obligated to enforce an arbitral award made under the ICSID fully recognised or enforced. Among the limited number of cases
Convention (ICSID award) as if it were an effective judgment of a where courts refuse recognition and enforcement, the over-
Chinese court by virtue of article 54(1) of the ICSID Convention. whelming majority was based on procedural grounds (especially
ICISD awards are not subject to review by domestic courts on the ground that the constitution of the arbitral tribunal or the
during the enforcement process and no refusal grounds such as arbitral procedures are in violation of the parties’ agreement or
those provided in article V of the New York Convention can be statutory requirements, or that the respondent does not receive
invoked to prevent enforcement, although the ICSID Convention proper notice of arbitration) and courts generally avoid engaging
does not prevent domestic courts from refusing enforcement on with issues of merits.
the ground of state immunity.37 Among the rare instances where foreign arbitral awards were
On the face of it, ICSID awards should be enforced in con- refused recognition and enforcement, the following two cases are
tracting states without much hindrance. However, because China worth particular attention:
does not promulgate specific rules or set up special mechanism First, in the recognition and enforcement case of the arbi-
to implement the ICSID Convention, there can be practical dif- tral award between Noble Resources International Pte, Ltd
ficulties in an attempt to enforce an ICSID award in China. For and Shanghai SinceTech International Trade Co, Ltd, the SPC
example, it may be difficult to identify the competent court with opined that the arbitral tribunal composed of a sole arbitrator
jurisdiction over the case, since no rule of the Civil Procedure Law in contradiction to the parties’ agreement on a three-member
envisages enforcement against the Chinese Central Government. arbitral tribunal in the arbitration clause satisfied article V(1)(d)
As to whether the New York Convention may be relied on as of the New York Convention and should be refused recognition
an alternative enforcement venue of ICISD awards or investor- and enforcement.
state arbitral awards more generally, the SPC made it clear in its In this case, the arbitration clause provided for arbitration
Notice on Implementing the New York Convention38 that dis- under the Arbitration Rules of the Singapore International
putes between foreign investors and host governments are not Arbitration Centre (SIAC Rules) and expressly stated that the
considered to be disputes arising out of ‘commercial legal rela- arbitral tribunal should be composed of three arbitrators. The
tionship’, and China has made a reservation under the New York dispute fell within the scope of the expedited procedure under
Convention to only recognise and enforce arbitral awards over the SIAC Rules and the president of the SIAC decided that the
disputes arising out of commercial legal relationship.Therefore, an arbitral tribunal be composed of a sole arbitrator in accordance
investor-state award cannot be recognised and enforced under the with article 5(2)(b) of the SIAC Rules regarding expedited pro-
New York Convention. cedure, which provides that ‘the case shall be referred to a sole
In sum, for investor-state awards to be recognised and effec- arbitrator, unless the President determines otherwise’.
tively enforced in China, further legislative measures or judicial The SPC, stressing party autonomy in arbitration, held the
clarifications will be needed. view that, as the arbitration clause did not exclude applicability
of a three-member tribunal in expedited procedure, adoption
Grounds to challenge awards of expedited procedure should not affect the parties’ funda-
Arbitral awards may be set aside or refused recognition or enforce- mental procedural right to have a three-member tribunal; that
ment only on limited grounds. For awards under the New York the president of the SIAC, when exercising their power under
Convention, awards made in Hong Kong, Macau or Taiwan and for article 5(2)(b) of the SIAC Rules, should respect and defer to,
awards made by Chinese arbitration commissions involving foreign, but not decide against the parties’ agreement on the tribunal
Hong Kong, Macau or Taiwan elements, namely awards that are composition. The SIAC’s decision in contravention to the arbi-
not purely domestic in one way or another, the grounds to chal- tration clause was therefore a serious procedural irregularity that
lenge them are similar and mostly procedural, mainly including:39 justified non-recognition and enforcement.41
China
The case is important in clarifying the relationship between 12 Siemens International Trade (Shanghai) Co, Ltd v Shanghai Golden
the arbitration agreement and the applicable arbitration rules in Landmark Co, Ltd, the First Intermediate People’s Court of Shanghai,
the case of a conflict between them. According to the SPC, the 27 November 2015, (2013) Hu Yi Zhong Min Ren (Wai Zhong) No. 2.
parties’ consensus embodied in the arbitration agreement is the 13 Provisions of the Supreme People’s Court on Establishment of the
cornerstone of arbitration and prevails over the applicable arbitra- International Commercial Tribunal, Fa Shi [2018] No. 11, effective as
tion rules or at least the arbitration rules should be interpreted from 1 July 2018.
and applied in a way compatible with the arbitration agreement. 14 Ad Hoc Arbitration Rules of the Hengqin Pilot Free Trade Zone,
A second instance of a foreign arbitral award being refused adopted by the Second Meeting of the Fifth Session of the Zhuhai
recognition regards public policy. Although public policy appears Arbitration Commission on 18 March 2017, effective as from 15 April
to be a vague concept and a catch-all ground to challenge arbitral 2015.
awards, in practice, the SPC has interpreted and applied public 15 Shijiazhuang Arbitration Commission Rules 2017, effective as from 1
policy in a very narrow way and reliance on public policy to July 2017.
refuse recognition and enforcement is extremely rare. 16 China International Economic and Trade Arbitration Commission
According to the SPC, violation of public policy is confined Hong Kong Arbitration Centre Rules as Appointing Authority in Ad
to violation of China’s fundamental public interest, including Hoc Arbitrations, effective as from 1 July 2017.
violation of basic principles of law, infringement of China’s state 17 China Internet Arbitration Alliance Rules for Bridging Ad Hoc
sovereign, prejudice to national and public security, and conflicts Arbitration and Institutional Arbitration, effective as from 19
with public morality.42 September 2017.
In the landmark case of Hemofarm DD, MAG International Trade 18 China International Economic and Trade Arbitration Commission
Holding DD, Suram Media Ltd v Jinan Yongning Pharmaceutical Co International Investment Arbitration Rules (For Trial Implementation),
Ltd, the SPC confirmed that the award at issue should not be adopted by the China Council for the Promotion of International
recognised or enforced because the arbitral tribunal had interfered Trade (China Chamber of International Commerce) on 12
with the jurisdiction of Chinese court and China’s judicial sover- September 2017, and effective as from 1 October 2017.
eignty when it determined issues that had already been decided 19 Shenzhen Court of International Arbitration Rules, effective as from 1
by Chinese court.43 The case is of practical importance in that it December 2016.
alerts arbitral tribunals to the potential risks when they deal with 20 See http://zwgk.gd.gov.cn/006940167/201902/t20190201_798077.
issues that have already been decided by a Chinese court and html.
reminds arbitral tribunals to be prudent to take on matters that are 21 See http://gd.people.com.cn/n2/2019/0223/c123932-32674666.html
considered by Chinese courts as within their jurisdiction. 22 Administrative Litigation Law of the People’s Republic of China
(2014).
Notes 23 Interpretation of the Supreme People’s Court on Application of the
1 Annual Report on International Commercial Arbitration in China Administrative Litigation Law of the People’s Republic of China, Fa
(2017) released by the CIETAC, available at: http://www.cietac.org. Shi [2015] No. 9, effective as from 1 May 2015.
cn/index.php?m=Article&a=show&id=15643. 24 Beijing Northern ITU Electric Engineering Power Engineering Co, Ltd
2 Arbitration Law of the People’s Republic of China (2017). v Urumqi Bureau of Transportation, the Supreme People’s Court,
3 Civil Procedure Law of the People’s Republic of China (2017). 25 July 2014, (2014) Min Er Zhong No. 40; Henan Xinling Highway
4 Provisions of the Supreme People s Court on Several Issues Relating Construction Investment Co, Ltd v Government of Huixian City, the
to Judicial Review of Arbitration, Fa Shi [2017] No. 22, effective as Supreme People’s Court, 28 October 2015, (2015) Min Yi Zhong
from 1 January 2018. No. 244; China Energy Conservative Asset Management Co, Ltd v
5 Law of the People’s Republic of China on Choice of Law for Foreign- Jingmen Jinghuan Environmental Protection Technology Co, Ltd,
Related Civil Relationships (2011). the Supreme People’s Court, 27 February 2017, (2016) Zui Gao Fa
6 Article 14 of the Interpretation of the Supreme People’s Court Min Zai No. 234; Urumqi Bureau of Transportation v Urumqi Nanshan
on Several Issues Concerning Application of the Law of People’s Circle Line Passenger Transportation Co, Ltd, the Supreme People’s
Republic of China on Choice of Law for Foreign-Related Civil Court, 30 June 2017, (2017) Zui Gao Fa Min Shen No. 416.
Relationships (I), Fa Shi [2012] No. 24, effective as from 7 January 25 Nanjing Songxu Technology Co, Ltd v Samsung (China) Investment
2013. Co, Ltd, the High People’s Court of Jiangsu, 29 August 2016, (2015)
7 The Provisions of the Supreme People’s Court on Report for Approval Su Zhi Min Xia Zhong Zi No. 00072.
of Arbitration Cases under Judicial Review, Fa Shi [2017] No. 21, 26 Da Tang International (Hong Kong) Limited v Sinosteel Group
effective from 1 January 2018. Shanxi Co Ltd, the Fourth Intermediate People’s Court of Beijing, 24
8 Provisions of the Supreme People’s Court on Several Issues October 2017, (2017) Jing 04 Min Te No. 21.
concerning Enforcement of Arbitral Awards by People’s Courts, Fa 27 Chongqing Palm Springs Real Estate Development Co, Ltd v
Shi [2018] No. 5, effective as from 1 March 2018. Sichuan First Construction Engineering Company, the High People’s
9 Interpretation of the Supreme People’s Court Concerning Some Court of Chongqing, 14 November 2018, (2018) Yu Min Zhong No
Issues on Application of the Arbitration Law of the People’s Republic 474; Shenyang Shuangxing Construction Group Co, Ltd v Fushun
of China, Fa Shi [2006] No. 7, effective as from 8 September 2006. Lehuo Real Estate Development Co, Ltd, the High People’s Court
10 Guangzhou Ocean Shipping Co, Ltd v Marships of Connecticut of Liaoning, 5 April 2017, (2016) Liao Min Zhong No. 804; Guangzhou
Company, Guangzhou Maritime Court, China, 17 October 1990, Zhike Electronic Commerce Co, Ltd v Qi Feng, Qu Lina, the
Selection of Cases of People’s Courts (Volume 1, 1992), the People’s Intermediate People’s Court of Guangzhou, 17 June 2015, (2015) Hui
Court Press, October 1992 edition, pp 163–167. Zhong Fa Zhong Yi Zi No. 80.
11 Opinions of the Supreme People’s Court on Providing Judicial 28 Articles 43, 44, 45 and 46 of the Arbitration Law.
Safeguard for the Construction of Pilot Free Trade Zones, Fa Fa [2016] 29 Arrangement of the Supreme People’s Court Concerning Mutual
No. 34, released on 30 December 2016. Enforcement of Arbitral Awards between the Mainland and the

China
Hong Kong Special Administrative Region, Fa Shi [2000] No. 3,

effective as from 1 February 2000.
30 Arrangement of the Supreme People’s Court concerning Mutual
Recognition and Enforcement of Arbitral Awards Between the Zhang Shouzhi
Mainland and Macau Special Administrative Region, Fa Shi [2007] King & Wood Mallesons
No. 17, effective as from 1 January 2008.
31 Provisions of the Supreme People’s Court on Recognition and Zhang Shouzhi is a senior partner in the dispute resolution prac-
Enforcement of Arbitral Awards of Taiwan Region, Fa Shi [2015] No. tice group of King & Wood Mallesons, specialising in arbitra-
13, effective as from 1 July 2015. tion, litigation and alternative dispute resolution. He has extensive
32 Albert Jan van den Berg, ‘When Is an Arbitral Award Nondomestic experiences in cross-border trade and investment, banking and
Under the New York Convention of 1958?’, 6 Pace Law Review 25 finance, infrastructure, intellectual property, product liability and
(1985). recognition and enforcement of foreign and Hong Kong arbitral
33 Zhao Xiuwen, ‘Recognition and Enforcement of ICC Awards in awards in China.
China Based on Analysis of Relevant Cases’, 3 Journal of Law Zhang Shouzhi has been part of hundreds of international
66 (2010); Yang Honglei, Study of the New York Convention from arbitration cases under various rules, including those of the China
the Perspective of Judicial Practice in Mainland China, Doctoral International Economic and Trade Arbitration Commission,
Dissertation of China University of Political Science and Law (2006), p Beijing Arbitration Commission, the International Chamber
28. of Commerce, the Stockholm Chamber of Commerce, the
34 DUFERCO SA v Ningbo Arts and Crafts Int l Trade Co, Ltd, the Hong Kong International Arbitration Centre, the Singapore
Intermediate People’s Court of Ningbo, 22 April 2009, [2008] Yong International Arbitration Centre, the Federation of Fats and
Zhong Jian Zi No. 4. Oilseeds Associations and the Grain and Feed Trade Association.
35 Gao Xiaoli, Nationality of Arbitral Awards Should be Determined He has also represented clients in numerous commercial and civil
by the Seat of Arbitration but not by the Arbitration Institution, 20 litigations. Many of his clients are Fortune 100 companies includ-
People’s Judicature 68 (2017). ing world-known banks and multinational companies.
36 Zhang Yibing, A Study of China’s Reciprocal Reservation to the 1958 Zhang Shouzhi has been repeatedly recognised by Chambers
New York Convention, Master Dissertation of China University of Asia Pacific as a Band 1 lawyer in China in the areas of dispute
Political Science and Law (2008), pp 17–18. resolution and international arbitration since 2009 and has been
37 Article 5 of the ICISD Convention. ranked as ‘Eminent Practitioner’ in dispute resolution area (for
38 Notice of the Supreme People’s Court on Implementing the both litigation and international arbitration practices) by Chambers
Convention on the Recognition and Enforcement of Foreign Arbitral Asia Pacific for five consecutive years from 2015 to 2019. In
Awards Acceded to by China, Fa [Jing] Fa [1987] No. 5, effective as Asia Pacific Legal 500 2018, he was recommended in the field
from 10 April 1987. of dispute resolution. He was selected as the 2015 ‘Lawyer of
39 Article V of the New York Convention; article 7 of the Arrangement the Year: Dispute Resolution-Litigation’ by China Law & Practice
Concerning Mutual Enforcement of Arbitral Awards Between and the 2018 ‘A-List Elite’ for China practice by China Business
the Mainland and the Hong Kong Special Administrative Region; Law Journal.
article 7 of the Arrangement Concerning Mutual Recognition and
Enforcement of Arbitral Awards Between the Mainland and Macau
Special Administrative Region; article 15 of the Provisions of the
Supreme People’s Court on Recognition and Enforcement of Arbitral
Awards of Taiwan Region; article 274 of the Civil Procedure Law.
40 Article 237 of the Civil Procedure Law and article 58 of the
Arbitration Law.
41 Reply of the Supreme People’s Court Regarding the Case of
Recognition and Enforcement of the Arbitral Award between
Noble Resources International Pte, Ltd and Shanghai SinceTech
International Trade Co, Ltd, (2017) Zui Gao Min Fa No. 50.
42 Reply of the Supreme People’s Court to the Request for Instructions
on Non-Recognition of No. 07-11 (Tokyo) Arbitral Award of the
Japan Commercial Arbitration Association, (2010) Min Si Ta Zi No.32;
Reply of the Supreme People’s Court to the Request for Instructions
on Application by Castel Electronics Pty Ltd for Recognition and
Enforcement of the Foreign Arbitration Award, (2013) Min Si Ta Zi No.
46.
43 Reply of the Supreme People’s Court to the Request for Instructions
on the Non-Recognition and Non-Enforcement of an Arbitration
Award of the ICC International Court of Arbitration, (2018) Min Si Ta Zi
No. 11.
China
Huang Tao Xiong Yan

King & Wood Mallesons King & Wood Mallesons
Huang Tao is the head of the dispute resolution practice group Xiong Yan is an associate of the dispute resolution practice group
of King &Wood Mallesons. He has over 20 years’ experience in of King &Wood Mallesons. She is a qualified Chinese lawyer
international civil and commercial litigation and arbitration. and holds a MJur degree from the University of Oxford. Xiong
Huang Tao has represented well-known domestic and interna- Yan’s experiences extend to a broad spectrum of areas, including
tional companies in hundreds of commercial and maritime cases internationals sales of machinery and goods, construction pro-
before the China International Economic and Trade Arbitration jects, confidentiality agreement, corporate governance, private
Commission, the International Chamber of Commerce Court, equity, public-private partnership, recognition and enforcement
the London Court of International Arbitration, the Stockholm of foreign arbitral awards in China, among others. She has advised
Chamber of Commerce, the Hong Kong International Arbitration or represented clients on litigation before the Supreme People’s
Centre and the Singapore International Arbitration Centre. His Court and various lower courts, and has also been involved in
representations primarily involve disputes in international trade, arbitrations under some major institutional rules including those
cross-border investment and financing and M&A. Huang Tao has of the China International Economic and Trade Arbitration
also represented for hundreds of foreign-related civil and com- Commission, the Stockholm Chamber of Commerce and the
mercial litigation cases before Chinese courts at all levels. Hong Kong International Arbitration Centre.
From 2002 to 2008, Huang Tao was appointed as a head of the
legal working group for the Beijing Organizing Committee of the
29th Olympic Games (BOCOG), leading the working group in
providing comprehensive legal services to the BOCOG. In 2015,
the 2022 Beijing Winter Olympic Bid Committee invited Huang
Tao to be the presenter for its legal theme.
Huang Tao has been constantly named as a ‘Leading Individual’
in the field of dispute resolution in China by The Legal 500 and has
been recognised as a ‘Market-leading Lawyer’ by Asialaw Profiles.
In 2017, he was listed as one of ‘China’s Top 15 Litigation Lawyers’
by Asian Legal Business. In 2018, he was selected as ‘China’s
Dispute Resolution Lawyer of the Year’ by Asialaw and Benchmark
Litigation and ‘Dispute Resolution Lawyer of the Year’ by China
Law & Practice. In 2018, he was appointed as a panel expert to the
Committee for Trail Supervision over Civil and Administrative
Proceedings by the Supreme People’s Procuratorate.
18th Floor, East Tower As an international law firm headquartered in Asia, King & Wood Mallesons is able to practice
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zhangshouzhi@cn.kwm.com worked with clients in a wide range of sections, including energy, construction, shipping, banking
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Huang Tao tech, intellectual property and other industries on international arbitration law. Its services include
huangtao@cn.kwm.com advising on arbitration agreements in cross-border deals, conducting institutional and ad hoc pro-
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xiongyan1@cn.kwm.com
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www.kwm.com China’s leading individuals in various arbitration publications.

India
Naresh Thacker and Mihika Jalan
Introduction party), then such a person would also be ineligible for nominating
India has witnessed a significant jump to the 77th rank in the another arbitrator.1 On another occasion, to ensure constitution
World Bank’s latest Ease of Doing Business rankings (2019), up of a fair and unbiased tribunal, the court went to great lengths
23 notches from 2018. Hence, the government of India’s intent of to note that ‘. . . [a] panel should be broad based . . . engineers of
promoting ease of doing business and creating parity with inter- prominence and high repute from private sector should also be
national regulatory standards has clearly delivered results. included. Likewise [a] panel should comprise of persons with legal
In this, there is little doubt that the judiciary has a tremendous background . . . as it is not necessary that all disputes that arise,
impact on the economy. Litigation disputes – more specifically, would be of technical nature . . .’.2 On yet another occasion the
finality, to disputes with enforcement of judgments, decrees or court noted that an arbitrator, who was in contravention of clauses
awards – is the ultimate loop that needs to be closed in order for 22 and 24 of schedule 5 to the amended Arbitration Act, would be
the business engine to run smoothly. The present government de jure disqualified under section 14(1)(a) from continuing with
as well as the courts have understood this urgent need and this his mandate and therefore, the court terminated his mandate. All
is visible both in the legislative intent as well as judiciary’s treat- these instances clearly reflect the judiciary’s painstaking efforts to
ment of disputes. In our article in The Asia-Pacific Arbitration Review ensure appointment of impartial arbitrators.
2019, we had dealt with the amendments to the Arbitration and In 2018, the issue of employee arbitrator once again reared its
Conciliation Act, 1996 (Arbitration Act) through the Arbitration head and the Supreme Court, while deciding the issue of appoint-
and Conciliation (Amendment) Act 2015 (Amendment Act) and ment of ex-employees, held that such mandate is not against the
its effect on the conduct of arbitration within the country.We also provisions of the Arbitration Act, both pre- and post-Amendment
dealt with various challenges addressed by courts across the coun- Act.The Supreme Court noted certain decisions of English courts
try in the implementation of the Amendment Act. Further, we had and concluded that the Arbitration Act does not disqualify a for-
touched upon the Arbitration and Conciliation (Amendment) Bill mer employee from acting as an arbitrator, provided that there are
2018 (Amendment Bill), which as of now has been approved by no justifiable doubts as to his or her independence and impar-
the Union Cabinet and the lower house of the Indian parliament. tiality. In this instance, the nominee arbitrator had retired almost
However, its fate now hangs in balance as the lower house of the 10 years ago from the services of the nominating party, which
Indian parliament was dissolved in view of the general elections in formed the factual basis of the Supreme Court’s decision.3 The
India and the Amendment Bill will now have to be reintroduced conclusion could have been markedly different if the arbitrator
at an opportune time. In this edition of The Asia-Pacific Arbitration appointed was a former employee of the nominating party any-
Review we have updated the position of Indian law on arbitration time in the past three years.
since our last article. We analyse the effect and consequences of a
few key decisions passed in the last year. Interim relief
Prior to the Amendment Act, litigants were unsure about efficacy
Upholding independence and impartiality of arbitrators of interim relief obtained from a tribunal because the tribunals’
For an unbiased decision, it is obvious that no man or woman powers to grant interim reliefs were restricted in scope and its
should be a judge in his or her own cause. While the foregoing is enforcement shrouded in ambiguity. To ensure that interim relief
a recognised principle of natural justice and followed in India, the granted by a tribunal was an efficacious remedy, the Amendment
practice of appointing ex-employees as arbitrators has nevertheless Act aligned the tribunals’ powers to that of the courts’ and made
for long been prevalent in India. When this practice was brought interim relief granted by tribunal enforceable as an order of the
to the attention of courts, they frowned upon it as such prac- court under the provisions of the Code of Civil Procedure, 1908
tice cast justifiable doubts about a tribunal’s ability to adjudicate (the Code).
impartially. To ensure that awards rendered an unbiased view of Further, while courts have repeatedly upheld the additional
the dispute, the Amendment Act inserted schedule 5 and schedule powers of interim relief conferred by the Amendment Act on the
7 in the Arbitration Act.These schedules incorporate International tribunals,4 the Bombay High Court, on one occasion, noted a
Bar Association Guidelines relating to independence and impar- practical limitation to such powers – that the power of a tribunal
tiality of arbitrators in the Arbitration Act. to appoint a receiver was limited to appointment of a private
These newly inserted standards for independence and impar- receiver as opposed to the court receiver.5
tiality of arbitrators have been zealously upheld by the Indian judi- Following the Amendment Act coming into effect, the
ciary. To eliminate bias, the Supreme Court expanded the scope Supreme Court extended its pro-arbitration approach to issues
of schedule 5 to the amended Arbitration Act (which disallows that had arisen in relation to arbitrations prior to the Amendment
a party’s employee to act as an arbitrator) by holding that if the Act. This is exemplified by the Supreme Court’s decision in Alka
person named as an arbitrator was ineligible to act as an arbitra- Chandewar,6 wherein the court enforced the interim directions
tor (in this case by reason of his being a managing director of the passed by the tribunal, noting that the party’s failure to comply
India
with tribunal’s interim order amounted to a contempt of tribunal’s awards for the mere asking. Repeatedly, the courts have clarified
order. This view encourages parties to arbitrations initiated prior that in proceedings wherein an award is challenged, the courts
to the Amendment Act (before 23 October 2015) to approach do not sit in appeal over it, thereby limiting courts’ interference
tribunals for interim relief, being rest assured that such interim with an award.15
orders are enforceable. The above was also illustrated recently by the Supreme Court’s
In order to balance the requirement of minimal interven- decision wherein the issue of arbitrability of dispute, which had
tion of court in arbitration with easy accessibility to courts for been decided in the award, was yet again argued before it in an
efficacious remedies, section 9(3) of the amended Arbitration appeal from a high court’s order rejecting a challenge to an award.
Act dissuades courts from entertaining application for interim Re-examining the law in India about the scope of interference by
relief after tribunals have been constituted, unless courts find that a court with an award under sections 34 and 37 of the Arbitration
circumstances exist in which interim relief granted by tribunal Act, the Supreme Court concluded that the scope of its powers
may be inefficacious. Explaining the fine balance, the Calcutta under the said section does not warrant an independent assess-
High Court7 clarified that under section 9(3), the court’s power ment of the merits of the award and declined to interfere with
is not automatically barred by constitution of an arbitral tribu- the award.16
nal and that the court may grant relief if it finds that the relief Separately, when called upon to decide the validity of two-
given by the tribunal will be inefficacious. However, the Calcutta tiered arbitration in context of the Arbitration Act, the Supreme
High Court noted that, in the event the tribunal assumes powers Court upheld parties’ autonomy to provide for a two-tiered arbi-
in circumstances under sections 338 and 34,9 an application for tration.17 In the case, the validity of appellate arbitration was chal-
interim relief will have to be made to the tribunal (provided such lenged on the grounds that, inter alia, two-tiered arbitration was
relief will be efficacious). To put to rest the controversy created not in accordance with the Arbitration Act and was against pub-
by the decisions of the Supreme Court in Bhatia International10 lic policy. Rejecting the foregoing grounds, the Supreme Court
and BALCO,11 the Amendment Act introduced provisions under noted that in providing for two-tiered arbitration, the parties had
which parties to an international commercial arbitration seated not bypassed any provision of the Arbitration Act. The court fur-
outside India are allowed to approach courts in India for interim ther noted that the argument that an appeal is a creature of statute
reliefs.This amendment has far-reaching consequence as it allows would not apply in the present case as there was a distinction
foreign parties or foreign award holders to secure their interests between a statutory appeal to a court and an appeal to a non-
pending grant or enforcement of an award. The usefulness of the statutory body agreed between the parties.
amendment is illustrated by a recent decision of the Bombay High After considering the intent of the Arbitration Act, the
Court wherein the high court secured sums due under a foreign Supreme Court has recently clarified that for, establishing the
award that was pending enforcement. In relation to the proviso to grounds on the basis of which an award was challenged under
section 2(2) of the amended Arbitration Act, the Bombay High section 34, the parties will not ‘ordinarily’ be required to lead
Court noted that recourse to Indian courts for interim measures evidence and that the records of the arbitrator qualified as ‘proof ’
in relation to a foreign-seated arbitration is a transitory provi- under section 34.18 However, in this decision, the Supreme Court
sion, pending enforcement of the foreign award.12 The Bombay noted that where there may be some matters that may not be
High Court’s recent ruling, that an application for interim relief in contained in such record, which are relevant to determination
relation to a foreign award can be made to a court which enjoys of issues, in that case such matters may be brought to the court’s
jurisdiction over the assets of the judgment debtor,13 spares users notice by affidavits filed by both parties.The Supreme Court fur-
the unnecessary dilemma of deciding which court to approach, ther clarified that persons swearing to the affidavits should not be
that is, a court that enjoys jurisdiction over the subject matter of cross-examined ‘unless absolutely necessary’.
arbitration or a court which enjoys jurisdiction over that subject The above decision seems to be at odds with the Amendment
matter of the award. Bill, to the extent that the latter seeks to amend the Arbitration
For 2019, a necessary corollary of replicating the tribunal’s Act to provide that proof under section 34 is limited to records
powers with that of the court’s powers, with respect to grant of of the tribunal and does not leave any leeway of additional evi-
interim relief, is its effect on the rights of a third party. This situa- dence being led under circumstances as were present in the above
tion arose recently and was addressed by the Bombay High Court. decision. In this regard at least the Amendment Bill seems to be
The high court held that a third party has a remedy under sec- heading in the correct direction.
tion 37 of the amended Arbitration Act to file an appeal before
a court against an interim order passed by a tribunal. Observing Enforcement of awards
the absence of the word ‘party’ in section 37, which is otherwise Prior to the Amendment Act, initiation of challenge proceedings
used in section 34 of the amended Arbitration Act, the Bombay automatically led to stay on execution of a domestic award. Such
High Court concluded that such absence makes the legislative a practice was, hitherto, used to disrupt the execution of an award
intent clear that the term was deliberately not inserted so as to for an award holder. By expressly prohibiting such automatic stay
provide a recourse to appeal to third parties affected by interim on execution proceeding, the amendments provided the much-
relief granted by tribunals and courts.14 needed relief to an award holder who can now proceed to execute
an award, unless the execution proceeding is expressly stayed.
Restricting grounds for challenge to an award Clarifying and expediting the process for execution of an
To reduce judicial intervention with an award, whether granted in award, the Supreme Court ruled that an award may be executed
a domestic or a foreign seated arbitration, extensive amendments directly by the court having territorial jurisdiction over the award-
pertaining to a challenge against an award were introduced in the debtor’s assets.19 Thus, the court did away with ubiquitous practice
Arbitration Act. The amendments in this context are welcomed. of requesting transfer of execution proceedings initiated before
The Indian judiciary has strictly implemented the amended a court enjoying supervisory jurisdiction over the arbitration to
provisions, refusing applications seeking to stall enforcement of another court. This decision not only clarifies the procedure for

India
execution but puts to rest the continuous debate about whether courts time and again, with the Bombay High Court even impos-
execution proceedings had to be first initiated before a court having costs of 500,000 rupees on a party that sought to challenge
ing jurisdiction over the arbitration proceedings and then trans- an award (granted in an arbitration seated in New York) before
ferred to the court where the assets of the judgment debtor were the court.26 The Bombay High Court reiterated that Part 1 of the
located, or whether the execution proceedings could be directly Arbitration Act did not apply to arbitrations seated outside India.
initiated before the court which enjoys jurisdiction over the assets The Supreme Court has clarified the importance of the seat
of the judgment-debtor. in the context of domestic arbitrations, holding that the seat of
In 2018, this position was reiterated by the Supreme Court arbitration was akin to an exclusive jurisdiction clause27 and as
when it held that because the award required a transmission of a consequence, a choice of an Indian city as the seat or place of
shares that could only be effected by a rectification of the reg- arbitration would confer exclusive jurisdiction on the courts of
ister of the company, the party requiring such rectification may such city. Thus, an application challenging the award will lie to
approach the national company law tribunal for effective enforce- courts of the city named as the seat of arbitration.
ment of the award.20 Recently, however, while distinguishing the Indus Mobile deci-
Further, be it a domestic award or a foreign award, the sion on the grounds that the arbitration agreement in the said case
Supreme Court has refused to expand the scope of its review in provided for an exclusive arbitration clause, a division bench of the
the context of enforcement proceedings. The Supreme Court in Delhi High Court, when called upon to decide whether choice of
relation to domestic awards has reiterated that an arbitral award seat automatically vests courts of the seat with exclusive jurisdic-
is given the status of a decree of a civil court and should be tion for arbitration related proceedings, held that it did not. The
enforced in accordance with the Code; that an executing court high court reasoned that if choice of seat meant that the courts of
can only execute the decree and cannot hold any factual inquiry the seat enjoyed exclusive jurisdiction, such choice would deprive
that can have the effect of nullifying the decree itself.21 In rela- courts where the cause of action arose of jurisdiction and would
tion to enforcement of foreign awards, it has been reiterated that militate against Supreme Court’s decision in BALCO.28 However,
grounds for resisting enforcement of foreign award in India are in arriving at its conclusion, the Delhi High Court failed to notice
narrow. When called upon to determine the question of enforce- a decision of a coordinate bench, wherein the fact that Delhi was
ability of an award in light of the provisions of Foreign Exchange chosen as seat of arbitration by the parties was held to be good
Management Act 1999 (FEMA), the Delhi High Court noted enough to claim exclusive jurisdiction. This was in spite the fact
that ‘the width of the public policy defence to resist enforcement that the agreement conferred Mumbai courts with exclusive juris-
of a foreign award, is extremely narrow. And the same cannot be diction as well as the fact that the cause of action had arisen in
equated to offending any particular provision or a statute.’22 On Mumbai. This case took note of the decision of Supreme Court
another occasion, similar contentions in relation to FEMA – that in Indus Mobile to arrive at its conclusion.
the foreign award contravened the provisions of FEMA – were Another issue recently addressed by Supreme Court recently
raised before the Delhi High Court, which refused to intervene was how to determine the seat of arbitration when the arbitration
with the ruling of the arbitral tribunal. The court held that the agreement expressly provided only for the venue.29 In this case, the
tribunal’s interpretation of the agreement was consistent with the law governing procedure of arbitration was UNCITRAL Model
parties’ intentions and was not opposed to Indian law.23 Law on International Commercial Arbitration of 1985 (Model
Recently, when called upon to decide objections raised against Law), with the arbitration taking place and the award being passed
the enforcement of a foreign award on the grounds that the appli- in Kuala Lumpur. Reiterating the difference between a seat and
cant had failed to produce the arbitration agreement at the time a venue of arbitration, the Supreme Court held that, while place
of filing for enforcement and that the charter party agreement of arbitration and seat of arbitration can be used interchangeably
containing the arbitration clause was unsigned, the Supreme and on a plain reading ‘place’ of arbitration (in the absence of any
Court rejected the objections.24 While deciding the first issue, the conditions in relation to the ‘place’) can be equated to a ‘seat’ of
Supreme Court noted that the agreement was produced later in arbitration, the same is not true for a venue. Whether ‘venue’ can
the proceedings and that the non-production of arbitration agree- be considered as a ‘seat’ would necessarily have to be examined
ment at the time of filing the enforcement application was not a on a case-to-case basis, depending on the conditions appended
ground mentioned in the exhaustive list of grounds for refusing to the chosen ‘venue’. The Supreme Court held that a seat was
enforcement under section 48 of the amended Arbitration Act. not elected because the parties failed to choose and the arbitra-
Further, noting that the objective of the New York Convention tor failed to determine the place for arbitration. The fact that the
was to facilitate enforcement of foreign awards, the Supreme arbitration took place in Kuala Lumpur and the award was passed
Court denounced adherence to excessive formality for enforce- in Kuala Lumpur was not sufficient to treat Kuala Lumpur as the
ment. It also upheld the arbitration agreement in an unsigned seat. Hence, the Supreme Court upheld the jurisdiction of Indian
charter party holding that the term ‘agreement in writing’ in the courts to hear a challenge to the award.
New York Convention is wide and includes even correspondence
exchanged between the parties, and that the arbitrator and court What constitutes an arbitration agreement?
had examined abundant material on the issue. Of late, there have been various decisions clarifying the law on
arbitration agreement. The Supreme Court has clarified and reit-
Place of arbitration erated that for reading an arbitration clause in another document
International arbitration practice has primarily been seat-centric. as a part of the contract between parties, there must exist in the
Having adopted the Model Law, India, too, follows the seat centric contract a conscious acceptance of the arbitration clause in the
principles in arbitration. The Supreme Court in BALCO25 rec- other document. Finding such an intention to exist and paying
ognised that the seat was the centre for international arbitration heed to the developing nature of commercial law, the Supreme
and held that Indian courts would have no jurisdiction over any Court on one occasion held that a general reference in a con-
arbitration seated outside India. This has been reiterated by the tract to a standard form of contract of one party was sufficient to
India
incorporate the arbitration clause contained in such standard form Other than the immediate foregoing instances, the Indian
of contract.30 judiciary has taken great care in restraining itself from interven-
However, the foregoing decisions are not mere examples of ing in the arbitral process. This is illustrated in a recent decision
liberal interpretations but also examples on the necessity of ascer- of the Delhi High Court where the court recognised an arbitral
taining a mutual intention of the parties to agree to refer their tribunal’s power to pierce the corporate veil.36
disputes to arbitration. Hence, when a party recently sought to Likewise, after noting the decision of the Supreme Court in
obtain interim relief in a matter on the basis of a purported oral SBP & Co,37 the Bombay High Court recently reiterated a settled
agreement to arbitrate de hors a written agreement between the position of law that in exercise of writ jurisdiction under section
parties (which expressly barred arbitration), the Supreme Court 226 and 227 of the Constitution of India, high courts cannot
held that the arbitration agreement was not valid and, thus, refused entertain a petition from interlocutory orders passed during arbi-
interim relief.31 This reiterates the courts’ attempt to uphold the tral proceedings.38
sanctity of party autonomy in arbitrations.
The decisions of the Supreme Court and the Bombay High Emerging issues
Court, respectively,32 upholding the validity of open-ended arbi- Although, the Amendment Act, with the support of the Indian
tration clauses, which allow parties to determine the mode of dis- judiciary, has made great strides in clarifying and aligning the law
pute resolution once the dispute arises, demonstrates that decisions of arbitration in India with international arbitral standards and
of Indian courts are in sync with international jurisprudence. In practices, there remain grey areas of law which have escaped the
Jay Bhagwati, the party opposing such a clause contended that the attention of or remain unaddressed by both, the legislature and
clause, at best, allowed parties to mutually agree on a future date as the judiciary.
to whether the disputes should be referred to arbitration (which as
per the settled position of law does not constitute a valid arbitra- Indian parties’ foreign seat
tion agreement). However, the Bombay High Court distinguished A question that has repeatedly reared its head, is whether two
open-ended clauses from clauses that are an agreement to enter Indian parties can choose a foreign seat for an arbitration.
into an arbitration agreement sometime in future on the basis that Deciding this question in the context of the erstwhile Arbitration
the former kind of clause ‘does not contemplate any such mutual Act 1940,39 the Supreme Court held that two Indian parties were
consent subsequently after arising of dispute between the parties’. free to opt for a foreign-seated arbitration. However, the position
In the Supreme Court, however, the foregoing argument was of law under the Arbitration Act, with the amended provisions,
not made. Nonetheless, the Supreme Court upheld the validity of remains unclear.
open-ended clause before it and this is reason enough for the lower While deciding an application for appointment of an arbi-
courts to adhere to this as a precedent. trator, the Supreme Court on one occasion held that under the
Arbitration Act, it was not open for two parties to derogate from
Minimal intervention of courts Indian law by opting for a foreign-seated arbitration.40 Yet again,
Having adopted the Model Law, the Arbitration Act provided for this case is not definitive, as the court via official corrigendum
minimal intervention by courts in arbitral proceedings. To bolster clarified that ‘. . . any findings or observations made hereinbefore
the existing provisions, the Amendment Act, in addition to limit- were only for the purpose of determining the jurisdiction of this
ing courts’ role in granting interim reliefs and interfering with court as envisaged under section 11 of the 1996 Act and not for
awards, also restricts courts’ role in an application for appointment any other purpose’.
of arbitrators. The Supreme Court, while deciding an application Though the Bombay High Court41 expressed its view that
for appointment of an arbitrator under the amended Arbitration such a proposition could be considered as opposed to public
Act, recognised such restrictions introduced as section 11(6A)33 in policy of India, the Madhya Pradesh High Court, following the
the amended Arbitration Act.34 Supreme Court’s decision under the erstwhile Arbitration Act
However, in certain exceptional cases, the Supreme Court has 1940, took a view contrary to the view taken by the Bombay
upheld intervention of courts on grounds other than those under High Court.42 While the decision of the Madhya Pradesh High
the Arbitration Act. In one ruling, in view of a full and final set- Court was appealed to the Supreme Court, this particular ques-
tlement existing between the parties, the Supreme Court, while tion remained unaddressed.
deciding an application for appointment of an arbitrator, refused to
refer the matter to arbitration on the grounds that for a reference Unilateral appointments of arbitrators
to arbitration a dispute needed to exist. The Amendment Act provides grounds that raise justifiable doubts
More recently, in another case, the Supreme Court upheld about the independence and impartiality of an arbitrator and
an order of a high court (division bench), which in turn upheld grounds, which render a party’s nominee ineligible to act as an
the order of high court (single judge) recalling its previous order arbitrator. A recent decision,43 wherein the Delhi High Court
for appointment of arbitrator.35 The Supreme Court held that the allowed a contractually agreed appointing authority, who was one
high court as a constitutional court and a court of record enjoyed of the party’s representatives, to unilaterally appoint an arbitrator,
inherent powers to recall its orders. In response to an argument brings to light that the practice of unilateral appointment is preva-
that the minimal intervention policy of courts, as envisaged in the lent in India. This practice raises concerns about the independ-
Arbitration Act, interdicts a high court’s power to review or recall ence and impartiality of arbitrators who are unilaterally appointed.
its decision, the Supreme Court held that, since it had concluded By providing grounds that raise justifiable doubts and grounds
that there was no arbitration agreement between the parties, the that render a party’s nominee ineligible to act as an arbitrator,
Arbitration Act did not apply to the present case. However, this the Amendment Act has put to rest certain concerns associated
decision leaves open the question as to whether in the presence with the independence and impartiality of arbitrators. Thus, even
of a valid arbitration agreement, will the high courts and Supreme while unilaterally appointing an arbitrator, a party cannot nomi-
Court continue to enjoy inherent powers. nate a person who, in terms of schedule 7 of the Arbitration Act, is

India
ineligible to act as an arbitrator. Nonetheless, the Amendment Act Arbitration Council of India (Council) to appoint arbitrators.
fails to put an absolute end to the practice of unilateral appoint- In the absence of a graded arbitral institute the chief justice
ment of arbitrators. Concerns about impartiality linger in the of a high court is required to maintain a panel of arbitrators
minds of parties in India, which is a maturing jurisdiction and from which arbitrators are to be appoint by the court; and
where in certain cases, for example in contracts where parties have • establishing an independent body to grade arbitral institution
unequal bargaining power, the provisions of the Amendment Act and accredit arbitrators.
may not totally negate the possibility of appointment of an arbitra-
tor who’s independence may be justifiably doubted. The foregoing efforts have been bolstered by the judiciary, with
the Supreme Court on a previous occasion (for the very first
Failure to recognise emergency arbitrators time) directing the MCIA to appoint an arbitrator in an interna-
Emergency arbitrators are commonly provided in the rules tional commercial dispute. In this, the court delegated its power
of almost all international arbitral institutes, for example, the of appointment of arbitrator to an ‘institution designated by such
Singapore International Arbitration Centre, the International court’. Further, various high courts have keenly promoted insti-
Chamber of Commerce, and domestic arbitral institutes, such as tutional arbitrations. This is exemplified by the establishment of
the Mumbai Centre for International Arbitration (MCIA). Given the Delhi International Arbitration Centre, under the aegis of the
the lengths that the legislature and the judiciary have gone to Delhi High Court, and the initiative of the High Court of Punjab
ensure that interim measures in arbitrations are meaningful, it is and Haryana to establish the Chandigarh Arbitration Centre.
difficult to understand why the opportunity to recognise emer-
gency arbitrators has been missed.This failure is especially baffling Confidentiality
given that the legislature has adopted a proactive approach towards The Amendment Bill proposes to include that, notwithstand-
institutional arbitration. ing anything contained in any other law for the time being in
While courts have, in relation to foreign-seated arbitrations, force the arbitrator, the arbitral institution and the parties to the
granted interim reliefs under the Arbitration Act in Raffles Design44 arbitration agreement shall keep confidential all the arbitral pro-
and Avitel,45 the courts to date have ruled that a suit has to be filed ceedings. The only document exempted from confidentiality is
for seeking enforcement of such awards rendered by emergency an award that can be disclosed for the purpose of implementation
arbitrator.46 Given the ambiguity in law about the status of relief and enforcement. While the suggestion is a positive step towards
granted by an emergency arbitrator and the procedure to enforce ensuring that secrecy of arbitral proceedings, the watertight word-
the same, parties ought to be careful in agreeing to arbitral rules ings of the proposed amendment leaves doubt as to if and in
which do not provide an opt-out mechanism from the provisions what other circumstances can the confidentiality be exempted,
relating to emergency arbitrators. for example, in relation to comply with a legal duty.
Further amendments to the Arbitration Act: Arbitration and Arbitration Council of India
Conciliation (Amendment) Bill 2018 To encourage India as a hub of international commercial arbi-
A high-level committee under the chairmanship of Honourable trations, the Amendment Bill seeks to establish a body – the
Justice B N Srikrishna, Supreme Court of India, was consti- Arbitration Council (the Council). It further proposes that the
tuted by the government to review the state of Indian arbitra- Council shall establish uniform professional standards on matters
tion pursuant to the Amendment Act. The committee submitted concerning arbitration for the purpose of promoting arbitration,
its report on 30 July 2017. On the basis of few suggestions in conciliation, mediation and other alternative dispute resolution
the report, the Amendment Bill was issued. Among the various mechanisms in India. It also outlines that, among other things,
changes suggested, the Amendment Bill lays emphasis on institu- the Council remains responsible for grading of arbitral institutions
tional arbitration, as opposed to ad hoc arbitration, and seeks to and arbitrators and for reviewing such grading. The Amendment
address practical difficulties faced in the applicability and imple- Bill also vests some regulatory powers in the Council, such as the
mentation of the Amendment Act. We analyse a few important framing of regulations for the discharge of its functions in consul-
amendments suggested to the Arbitration Act and consequences tation with the central government and in consonance with the
ensuing therefrom. Arbitration Act (as amended), and to this end it proposes to define
‘regulations’ as ‘regulations made by the Council under this act’.
Impetus to institutional arbitrations The Amendment Bill also envisages the Council maintaining an
Great efforts have been made by both the judiciary and the leg- electronic depository of all arbitral awards and such other records
islature to encourage institutional arbitration for settlement of related thereto, in such manner as may be specified by the regu-
disputes. The Maharashtra state government implemented the lations. However, details about what documents are within the
‘Institutional Arbitration Policy’ for the state of Maharashtra where ambit of the phrase ‘other records related thereto’, the accessibility
it suggested that dispute resolution mechanisms in all existing gov- to the depository, the measures to be taken to prevent theft and
ernment or public sector undertakings contracts and agreements date privacy breach remain unclear.
(where value exceeds 50 million rupees) be amended to provide
for reference of disputes to ‘Indian Arbitration Institutes’.47 The Retrospective or prospective applicability of the
government of Maharashtra recognised and approved the MCIA, a Amendment Act
domestic arbitration institute of repute, as an arbitration institute.48 A question that has arisen since the enforcement of the
Now, the Union Cabinet through the Amendment Bill seeks to Amendment Act is whether arbitration-related proceedings that
provide impetus to institutional arbitrations by, inter alia: were initiated prior to the Amendment Act but were pending at
• requiring that the Supreme Court or a high court (as the case the time of its coming into effect (23 October 2015) are regulated
may be) in an application for appointment of arbitrators to by the provisions of the Amendment Act. The ambiguity about
designate arbitral institutions that have been graded by the applicability of the Amendment Act to proceedings pending when
India
the Amendment Act was brought in force arose primarily due (b) if so agreed by the parties, a party, with notice to the
to the terminology of section 26 of the Amendment Act, which other party, may request the arbitral tribunal to give an
reads ‘but this act shall apply in relation to arbitral proceedings interpretation of a specific point or part of the award.
commenced on or after the date of commencement of this act’. [. . .]
The rulings of various high courts on this issue were in con- (3) The arbitral tribunal may correct any error of the type referred to
flict. Consequently, appeals were filed before the Supreme Court to in clause (a) of sub-section (1), on its own initiative, within thirty
decide the issue. Recently, the Supreme Court has finally decided days from the date of the arbitral award.
the issue.49 The court noted that it was clear from the language of [. . .]
section 26 that the amended provisions were prospectively appli- Unless otherwise agreed by the parties, a party with notice to
cable to arbitral proceedings and court proceedings in relation the other party, may request, within thirty days from the receipt
thereto. Further, determining the applicability of the amended of the arbitral award, the arbitral tribunal to make an additional
section 36 to existing proceedings, the court held that ‘section 36, arbitral award as to claims presented in the arbitral proceedings
as substituted, would apply even to pending section 34 applications but omitted from the arbitral award.’
on the date of commencement of the Amendment Act’. 9 (34) Application for setting aside arbitral award:
Interestingly, the Amendment Bill, which was approved ‘Recourse to a Court against an arbitral award may be made only
prior to the Supreme Court’s decision, takes a contrary view. by an application for setting aside such award . . .
The Amendment Bill proposes to introduce section 87 to the (4) On receipt of an application under sub-section (1), the
Arbitration Act stating that the Amendment Act will not apply to Court may, where it is appropriate and it is so requested
court proceedings arising out of or in relation to arbitral proceed- by a party, adjourn the proceedings for a period of time
ings that commenced prior to Amendment Act and the same is determined by it in order to give the arbitral tribunal an
irrespective of when such court proceedings commenced, that is, opportunity to resume the arbitral proceedings or to take
whether prior to or after the Amendment Act. such other action as in the opinion of arbitral tribunal will
In said circumstances, the Supreme Court in its ruling has eliminate the grounds for setting aside the arbitral award.’
drawn the legislature’s attention to section 87 of the Amendment 10 Bhatia International v Bulk Trading SA, (2002) 4 SCC 105.
Bill. It remains to be seen whether the Amendment Bill will 11 Bharat Aluminum Co v Kaiser Aluminum Technical Services Inc,
be aligned with the Supreme Court’s ruling. Further, since the (2012) 9 SCC 552.
Amendment Bill remains silence on its applicability, it remains to 12 Aircon Beibars FZE v Heligo Charters Pvt Ltd, 2017 SCC Online Bom
be seen whether learnings from past mistakes will be imbibed by 631.
introducing a provision expressly dealing with the applicability of 13 Trammo DMCC (formerly Known as Transammonia DMCC) v
the Amendment Bill. Nagarjuna Fertilizers & Chemicals Ltd, 2017 SCC Online Bom 8676.
While the reason for further amendments to the Arbitration 14 Prabhat Steel Traders Pvt. Ltd v Excel Metal Processors Pvt Ltd, 2018
Act is discernible, doubts persist as to the nature of the amend- SCC Online Bom 2347.
ments proposed. A few impediments yet remain in the Arbitration 15 MP Power Generation Co Ltd & Anr v Ansaldo Energia Spa & Anr,
Act, despite the Amendment Act, and these certainly need to be 2018 SCC Online SC 385.
ironed out. Further, the need to institutionalise arbitration in the 16 MMTC Ltd v Vedanta Ltd, 2019 SCC Online SC 220.
country is a well-intentioned notion, but the proposed amend- 17 Centrotrade Minerals and Metals Inc v Hindustan Copper Ltd, (2017)
ments throw up interesting mix of questions, foremost among 2 SCC 228.
them whether by seeking to bring in a regulator, the Amendment 18 M/s Emkay Global Financial Services Ltd v Girdhar Sondhi, (2018) 9
Bill impinges upon party autonomy. SCC 49.
19 Sundaram Finance Ltd v Abdul Samad, 2018 SCC Online SC 121.
Notes 20 Cheran Properties Ltd v Kasturi and Sons Ltd, 2018 SCC Online SC
1 TRF Ltd v Energo Engineering Projects Ltd, 2017 (8) SCC 377. 431.
2 Voestalpine Schienen GmBH v Delhi Metro Rail Corporation, 2017 (4) 21 Punjab State Civil Supplies Corporation Ltd v Atwal Rice and
SCC 665. General Mills, (2017) 8 SCC 116.
3 The Government of Haryana PWD Haryana (B and R) Branch v GF 22 Cruz City 1 Mauritius Holdings v Unitech Ltd, 2017 SCC Online Del
Toll Road Pvt Ltd & Ors, 2019 SCC Online SC 2. 7810.
4 NTPC Ltd v Jindal ITF Ltd & Ors, 2017 SCC Online Del 11219; Delhi 23 NTT Docomo Inc v Tata Sons Ltd, 2017 SCC Online Del 8078.
State Industrial & Infrastructure v PNC Delhi Industrial Infra Pvt Ltd, 24 PEC Limited v Austbulk Shipping Sdn Bhd, 2018 SCC Online SC 2549.
2019 SCC Online Del 7413; Lanco Infrastructure Ltd v Hindustan 25 Supra at note 11.
Construction Co Ltd, 2016 SCC Online Del 5365; Enercon GmbH & 26 Katra Holdings Ltd v Corsair Investments LLC & Ors, 2017 SCC Online
Ors v Yogesh Mehra & Ors, 2017 SCC Online Bom 1744. Bom 8480.
5 Shakti International Pvt Ltd v Excel Metal Processors Pvt Ltd, 2017 27 Indus Mobile Distribution Pvt Ltd v Datawind Innovations Pvt Ltd &
SCC Online Bom 321. Ors, AIR 2017 SC 2105.
6 Alka Chandewar v Shamshul Ishrar Khan, 2017 SCC Online SC 758. 28 Antrix Corporation Ltd v Devas Multimedia Pvt Ltd,2018 SCC Online
7 Bishnu Kumar Yadav v ML Soni & Sons & Ors, AIR 2016 Cal 47. Del 9338.
8 (33) Correction and interpretation of award; additional award: 29 Union of India v Hardy Exploration and Production (India) Inc, 2018
‘(1) Within thirty days from the receipt of the arbitral award, unless SCC Online SC 1640.
another period of time has been agreed upon by the parties: 30 Inox Wind Ltd v Thermocables Ltd, (2018) 2 SCC 519.
(a) a party, with notice to the other party, may request the 31 Municipal Corporation of Greater Mumbai & Anr v Pratibha
arbitral tribunal to correct any computation errors, any Industries Ltd & Ors, 2018 SCC Online SC 2737.
clerical or typographical errors or any other errors of a 32 Zhejiang Bonly Elevator Guide Rail Manufacture Co Ltd v Jada
similar nature occurring in the award; Elevator Components, 2018 SCC Online SC 1503; Jay Bhagwati

India
Construction Co v Haware Engineers & Builders Pvt Ltd, 2018 SCC

Online Bom 3873.
33 Section 11 (6A): ‘The Supreme Court or, as the case may be, the
High Court, while considering any application under sub-section Naresh Thacker
(4) or sub-section (5) or sub-section (6), shall, notwithstanding any Economic Laws Practice
judgment, decree or order of any Court, confine to the examination
of the existence of an arbitration agreement.’ Arbitration and Naresh Thacker is a partner in the litigation, arbitration and dis-
Conciliation Act, 1996 : Section 11 – Appointment of arbitrators. pute resolution practice of Economic Laws Practice, specialising
34 M/s Duro Felguera SA v M/s Gangavaram Port Ltd, (2017) 9 SCC 729. in arbitration, commercial and tax disputes. He is a qualified law-
35 Supra at note 31. yer with the additional attribute of being a solicitor in England
36 GMR Energy Ltd v Doosan Power Systems India Pvt Ltd, 2017 SCC and Wales.
Online Del 11625. Naresh has successfully represented clients in matters pertain-
37 SBP & Co v Patel Engineering Ltd, (2005) 8 SCC 618. ing to economic offences before diverse tribunals and courts in
38 Suchitra Chavan v Axis Bank Asset Sales Centre, 2018 SCC Online India. He is also actively involved in the field of alternate modes
Bom 2854. of dispute resolution and has managed a number of International
39 Atlas Export Industries v Kotak & Co, (1999) 7 SCC 61. Chamber of Commerce, London Court of International
40 TDM Infrastructure Pvt Ltd v UE Development India Pvt Ltd, (2008) 14 Arbitration (LCIA), Singapore International Arbitration Centre,
SCC 271. UNCITRAL, Swiss Rules and ad hoc arbitrations. He has been
41 Addhar Mercantile Pvt Ltd v Shree Jagdamba Agrico Exports Pvt part of mediation and conciliatory proceedings at the clients’
Ltd, 2015 SCC Online Bom 7752. behest and has brought them to fruition.
42 Sasan Power Ltd v North America Coal Corporation India Pvt Ltd, Naresh is currently active in a number of professional organ-
2015 SCC Online MP 7417. isations including the Law Society UK, the London Court of
43 DK Gupta & Anr v Renu Munjal, 2017 SCC Online Del 12385. International Arbitration and the All India Federation of Tax
44 Raffles Design International India Pvt Ltd v Educomp Professional Practitioners. He is often quoted by prestigious international
Education Ltd, 2016 SCC Online Del 5521. journals and his articles continue to appear in trade publications
45 Avitel Post Studios Ltd v HSBC PI Holdings (Mauritius) Ltd, 2014 SCC around the world. He has been featured as a leading tax contro-
Online Bom 929. versy adviser in India in Tax Controversy Leaders (fourth, fifth and
46 Supra at note 44. sixth editions) and as an expert in World Tax 2015.
47 Government Resolution No. Misc. 2016/C. No.20/D-19, 13 October Prior to Economic Laws Practice, Naresh practised as an inde-
2016. pendent counsel on indirect tax and litigation matters.
48 Government Resolution No. ARB/C.No.01/2017/D-19, 28 February
2017 read with Government Resolution No. Misc-2016/C.No.20/D-19,
01 December 2016 and Government Resolution, 4 March 2017.
49 Board of Control for Cricket in India v Kochi Cricket Pvt Ltd and Ors,
15 March 2018, Civil Appeal Nos. 2789-2880 of 2018 (arising out of SLP
(C) Nos. 19545-19546 of 2016).
India
Mihika Jalan
Mihika is an associate manager in the litigation and dispute reso-

lution practice of Economic Laws Practice. She graduated from
ILS Law College, Pune in 2014, and is enrolled with the Bar
Council of Maharashtra and Goa. Mihika deals with arbitrations,
both domestic and international, as well as litigation before courts.
109A, 1st floor, Dalamal Towers Economic Laws Practice (ELP) is a leading full-service Indian law firm established in 2001 by eminent lawyers
Free Press Journal Road from diverse fields. The firm brings to the table a unique combination of professionals comprising lawyers, char-
Nariman Point tered accountants, financial planners, economists and company secretaries; enabling us to offer services with
Mumbai 400 021 a seamless cross-practice experience and top-of-the-line expertise to our clients.
Tel: +91 22 6636 7000
ELP has a unique position among law firms in India for offering comprehensive services across the entire
Fax: +91 22 6636 7172
spectrum of transactional, advisory, litigation, regulatory and tax matters. Our areas of expertise include bank-
Naresh Thacker ing and finance; competition law and policy; corporate and commercial; hospitality; infrastructure; interna-
nareshthacker@elp-in.com tional trade and customs; litigation and dispute resolution; private equity and venture capital; securities laws
and capital markets; tax; and telecommunications, media and technology.
Mihika Jalan With six offices across India (Mumbai, New Delhi, Pune, Ahmedabad, Bangalore and Chennai), ELP has a
mihikajalan@elp-in.com team of over 180 qualified professionals with acumen in diverse practice areas. We work closely with leading
global law firms in the UK, the US, the Middle East and the Asia-Pacific region. This gives us the ability to provide
www.elplaw.in a pan-India and global service offering to our clients.
Our commitment is to develop and nurture long-term relationships with our clients by providing the most
optimal solutions in a practical, qualitative and cost-efficient manner. Our in-depth expertise, immediate avail-
ability, geographic reach, transparent approach and the involvement of our partners in all assignments has
made us the firm of choice for our clients.
ELP’s market-leading litigation and dispute resolution practice is built on the strength of a team that is not
only at the cutting edge of legal knowledge and research skills, but has also mastered the art of advocacy.
Each team member is acknowledged to consistently deliver results. The team prides itself on diversity and
depth of experience and represents clients across fora and practice areas from inquiry and investigation
stages right up to the Supreme Court of India, playing a dual role of solicitor and counsel, which sets us apart
from other practices in India.
ELP is recognised internationally as a thought leader in India for arbitration. We have represented clients
in proceedings before various institutions – such as the International Chamber of Commerce, the London
Court of International Arbitration (LCIA), LCIA India, the Singapore International Arbitration Centre, the London
Maritime Arbitrators Association and the Grain and Feed Trade Association, the Kuala Lumpur Regional Centre
for Arbitration – and in ad hoc proceedings around the world, with the amount in disputes ranging from a few
million to billions of dollars. Our approach to commercial disputes has ensured the most effective representa-
tion of our clients as often these disputes require industry-specific know-how. ELP offers its expertise in various
sectors such as energy, construction, international trade, government contracts, admiralty, insurance and
product liability. We also take pride in offering cost-effective services to our clients in less sizeable disputes by
efficient staffing. The firm has been recognised as one of the top specialist arbitration firms in the world by GAR
100 (ninth and tenth edition) and as Dispute Resolution Law Firm of the Year in India Business Law Journal’s
Indian Law Firm Awards 2015. ELP’s dispute resolution practice has also been ranked in the Top Tier by The
Legal 500 Asia-Pacific 2016–2018.

Japan
Yoshimi Ohara
Overview • increasing awareness of international arbitration among the

The year of 2018 was full of new developments in dispute reso- Japanese business community; and
lution in Japan. • promoting Japan as seat of arbitration.
• In May, the Japan International Dispute Resolution Center
(JIDRC-Osaka) was launched, offering an affordable and Although the budget may not be impressive compared with the
convenient venue for arbitration and mediation at a facility amounts offered by governments in neighbouring jurisdictions, it
of the Ministry of Justice in the Kansai area of Japan.1 is substantial given the record high fiscal deficit and competing
• In September, the International Arbitration Center in Tokyo political, economic and social agenda in Japan and such budgeting
(ITAC) was launched to offer the settlement of IP disputes in sends an unequivocal message to the arbitration community that
arbitration by distinguished former IP judges of the United the Japanese government is committed to support the promotion
States, South America, the United Kingdom, Europe, China, of international arbitration in Japan.
Korea, Japan and Australia.2 Another important step taken by the government in 2018 was
• In November, the Japan International Mediation Center to prepare a draft bill to amend the Registered Foreign Lawyer
(JIMC-Kyoto) was launched to offer international media- Act to expand the scope of international arbitration that registered
tion services at Doshisha University, in the heart of Kyoto, foreign lawyers registered in Japan and outside Japan can handle as
close to the imperial palace and certain temples in Kyoto.3 counsel. Currently, foreign lawyers may serve as counsel in Japan
• In December, the Japan Commercial Arbitration Association only in international arbitration seated in Japan in which one of
(JCAA), under the leadership of Professor Masato Dogauchi the parties’ address or principal place of business is outside Japan.
published three new rules:4 As a consequence, technically foreign lawyers are currently not
• the Commercial Arbitration Rules; allowed to serve as counsel in arbitration in Japan where all parties
• the Interactive Arbitration Rules; and are Japanese parties even when all parties are wholly owned sub-
• the Administrative Rules for the UNCITRAL Arbitration, sidiaries of foreign parent companies. This was harshly criticised
all of which came into force in 1 January 2019. by a prominent foreign lawyer then stationed in Japan and regis-
• Last not the least, the Japanese government budgeted approx- tered as a foreign lawyer under the act.8 Sharing an anecdote con-
imately US$2.6 million in its 2019 fiscal year plan to promote cerning himself, he claimed that the act unreasonably restricts the
international arbitration in Japan.As part of an effort to attract choice of Japanese parties to have truly international arbitration
more international arbitration to Japan, the government has proceedings seated in Japan by retaining registered foreign lawyers.
put together a bill to amend the act commonly known as As part of an effort to increase capacity to conduct interna-
the registered foreign lawyer act (Registered Foreign Lawyer tional arbitration in Japan, the government aims to expand the
Act)5 to expand the scope of international arbitration that definition of international arbitration in which foreign lawyers
registered foreign lawyers6 can handle as counsel. may serve as counsel in Japan to include arbitration among all
Japanese parties so long as there are certain foreign elements, more
This article focuses on actions taken by the government and the specifically where:
JCAA in 2018. • a party to the arbitration is a subsidiary of foreign entities;
• governing law of an underlying contract is foreign law; or
Government backing of international arbitration in Japan • seat of arbitration is outside Japan.9
The Japan article in the 2019 edition of The Asia-Pacific Arbitration
Review reported that the Abe administration, for the first time This bill once passed at the Diet will offer more choices to users
in the history of modern Japan, identified the promotion of who conduct whole or part of the arbitration proceedings in
international arbitration in Japan as part of the Basic Policy Japan. While this bill has not been submitted to the Diet due to
on Economic and Fiscal Management and Reform in 2017.7 rather congested schedule of the Diet, the arbitration community
Such policy was introduced based on the initiatives of Ms Yoko welcomes this prospective amendment that will aid the capacity
Kamikawa, the then incumbent Minister of Justice, and has been building of arbitration practitioners in Japan.
continued by Mr Takashi Yamashita, the current incumbent
Minister of Justice. To implement this policy, the government The JCAA’s reforms and new rules
budgeted approximately US$2.6 million for the 2019 fiscal year The JCAA has changed
for launching a state of the art hearing facility in Tokyo to be Not surprisingly, amid the government’s efforts to promote arbi-
ready for: tration in Japan, the JCAA’s consistently low caseload of around 20
• sports arbitration for the 2020 Olympics; new filings per year has been under the constant spotlight when
• capacity building; the government sector and the private sector have been devising a
• organising international arbitration events in Japan; plan to promote international arbitration in Japan. Presumably in
Japan
response to such pressure, in 2018 the JCAA appointed Professor of the arbitration more predictable for the parties and second to
Masato Dogauchi, a prominent international private law academic make the arbitration more affordable. The JCAA considers that
to serve as the director and officer of the JCAA in charge of early disclosure of the tribunal’s interim views may facilitate set-
arbitration and mediation in 2018. He focused on improving the tlement discussions between the parties.
transparency of the organisation and administration of JCAA arbi- In terms of predictability, arbitrators, being open-minded,
tration, and introduced new rules in order to make arbitration, in intentionally form only a very preliminary view on disputed issues
his view, more useful and affordable. at the early stage of the proceedings, which later evolves in one
direction or another based on the parties’ subsequent written and
Publication of arbitrators oral submissions. In fact, appreciating the preliminary nature of
In terms of transparency, first and foremost the JCAA published such views the JCAA rules provide that the preliminary views
a list of arbitrators who have sat as an arbitrator in the last 20 expressed by the tribunal will not be binding on the tribunal’s
years and quantified each arbitrator’s experience as an arbitrator subsequent decisions.16 I wonder whether it would be useful to
in the JCAA’s arbitration proceedings by the number of appoint- force arbitrators to form preliminary impression to be ready to
ments and their role within the tribunal (co-arbitrator received share in writing with the parties twice even before an evidentiary
one point, sole arbitrator received two points and a presiding arbi- hearing both from the perspectives of predictability of arbitra-
trator received three points).10 The JCAA also published not only tion and impartiality of arbitrators. It is not uncommon for judges
the name but also the age, nationality and procedural languages in the civil law jurisdictions, particularly in Asia, to disclose their
of each arbitrator. The JCAA used to share its panel of arbitrators preliminary impression to the parties in order to guide the parties
with parties and their counsel upon their request. However such and to facilitate settlement. However, such practice is entirely for-
panel of arbitrators was never made publicly available and the qual- eign to most common law jurisdictions. Disclosure of arbitrators’
ity of the panel of arbitrators had been questioned due to lack of preliminary impressions might invite challenge against arbitrators
published objective standard for the selection of the panel mem- based on lack of impartiality in common law jurisdictions. While
bers and lack of periodic review of the panel members. Therefore, the rules prohibit the parties from challenging arbitrators based on
publication of objective information of arbitrators who once sat the fact that he or she has expressed preliminary views under article
in JCAA arbitrations has been generally welcomed by users who 56.1,17 how the court of enforcement will perceive the interactive
always need to rely on the expertise of outside counsel with respect aspect of the JCAA rules is yet to be seen.
to arbitrator candidates. The JCAA explains that the new interactive arbitration rules
As part of an effort to increase transparency, the JCAA codified are also aimed at tackling issues of time and cost of arbitration.
and published its policy of restricting the involvement of the JCAA While the JCAA calls for the ‘noble integrity of arbitrators’, it
officers and staff members in the administration of arbitration and would be quite a task for counsel to find well qualified arbitrators
mediation cases having conflict of interest.11 The JCAA officers able to properly manage creative, interactive arbitration proceed-
and staff members will be excluded from administering those cases ings without appearing to be biased towards either party and at
or otherwise an information firewall will be installed. The JCAA the same time who would accept heavily discounted remunera-
may not appoint its director or auditor as an arbitrator or mediator. tion. Given the relatively limited contribution of arbitrators’ fees
As a user, I found the latest JCAA website more informative and and expenses to the total cost of arbitration (which was reported
accessible as a result of the initiatives taken by the JCAA in 2018. to be on average 16 per cent of the entire cost of arbitration
In terms of the JCAA’s new rules, unlike its effort to promote in ICC arbitration in 2003 and 2004 according to the first edi-
transparency, not all aspects of the new rules were hailed by the tion of Techniques for Controlling Time and Costs in Arbitration
arbitration community in Japan. (2007))18 once again I wonder if these new ambitious rules will
do more harm than good to the users of arbitration.
The Interactive Arbitration Rules12
The JCAA was quite ambitious to introduce unique rules for The Commercial Arbitration Rules
arbitration called the Interactive Arbitration Rules, which require Concurrently, the JCAA has amended its conventional
arbitral tribunals to disclose their interim views on factual and legal Commercial Arbitration Rules as well as its administrative rules
issues in the arbitration twice in writing: first, at the early stage of for UNCITRAL arbitration. The new Commercial Arbitration
the proceedings by drafting a summary of each party’s positions Rules are the default rules when the parties agree to the JCAA
on factual and legal grounds of the claim and the defence;13 and arbitrations without specifying which rules out of three will apply.
second, prior to an evidentiary hearing by drafting a summary of The Commercial Arbitration Rules clarify, in line with the global
factual and legal issues that the tribunal considers important and standard practice, among other things:
preliminary view on those issues. After giving a party an oppor- • an arbitrator’s continuing obligation to investigate and disclose
tunity to comment on the tribunal’s preliminary views as well as to the parties any circumstances that may, in the eyes of the
on whether to conduct an evidentiary hearing, the tribunal is to parties, give rise to justifiable doubts as to his or her impartial-
decide whether to hold an evidentiary hearing.14 In spite of the ity and independence pending arbitration; and
additional daunting task entrusted to them, remuneration for the • the disclosure obligation of tribunal secretaries and their terms
tribunal members is set disproportionately low compared to the and conditions of appointment.
additional daunting task entrusted to them. Arbitrator fees are flat
fees and vary depending on the amount in dispute. For instance, On the other hand, the JCAA has introduced rather unique
if the amount in dispute is ¥100 million or more, but less than provisions, such as the prohibition of disclosure of a dissenting
¥5 billion, the remuneration is fixed at ¥3 million in the case of opinion or individual opinion in any manner19 and the prohibi-
a sole arbitrator regardless of the nature and complexity of the tion of a party appointed arbitrator’s ex parte communication
case or the number of hours spent by the sole arbitrator.15 The with the party who appointed the arbitrator, with respect to the
idea behind the new ambitious rules is first to make the outcome appointment of the third arbitrator without a written consent of

Japan
all parties.20 In the JCAA’s view, dissenting opinions only serve was too short for the arbitration community, even within Japan, to
a losing party in assisting its challenge against an arbitral award. react timely. Some of the initiatives appear to be more controver-
On the contrary, in my view the prohibition of communicating a sial than beneficial to the parties and to the JCAA itself. Now that
dissenting opinion to the parties may reduce the quality of delib- the JCAA is under its new leadership, we can only hope that the
eration, as the tribunal members may not take the time to reach a JCAA will reach out to the arbitration community in and outside
unanimous opinion, particularly given that arbitrators’ fees under Japan to listen to their needs and concerns in order to become
commercial arbitration rules are capped and their hourly rate will more friendly and proactive for the benefit of users.
be reduced by 10 per cent for every 50 hours in excess of the
initial 150 hours on a case.21 Conclusion
The JCAA considers it inappropriate for a party appointed It is an exciting moment to be part of the evolution of dispute
arbitrator to engage in ex parte communication with a party who resolutions in Japan. We anticipate a state of the art hearing facil-
appointed him or her in relation to the selection of the third ity to be open in Tokyo, the Registered Foreign Lawyer Act to be
arbitrator unless all parties agree to do so in writing. This new amended, amendments to the Arbitration Act to be proposed to
rule could be confusing to the parties because ex parte com- the Diet and more to come. Please stay tuned.
munication of a party with a party appointed arbitrator in rela-
tion to the selection of the third arbitrator is general practice in Notes
international arbitration, as recognised in the IBA Guidelines on 1 http://www.idrc.jp/index_en.html.
Party Representation in International Arbitration, and parties and 2 https://www.iactokyo.com/.
arbitrators who are unfamiliar with the JCAA rules may easily run 3 https://www.jimc-kyoto.jp/page1.
afoul of those provisions, which will potentially create grounds for 4 http://www.jcaa.or.jp/e/arbitration/rules.html.
challenging an arbitrator and even an award. 5 Act on Special Measures concerning the Handling of Legal
Services by Foreign Lawyers (The amended act comes into effect
Calling for arbitrators’ noble integrity as of 1 March 2016 (Act No. 69 of 2014 comes into effect as of
Perhaps the most controversial aspect of the JCAA’s new rules, 1 April 2016)) http://www.japaneselawtranslation.go.jp/law/
consistent through the three sets of new rules, is the JCAA’s detail/?id=2787&vm=04&re=01.
attempt to reduce arbitrators’ remuneration. The JCAA may, and 6 Those foreign lawyers are registered with the Japan Federation
does, depending on the rules, set the remuneration of arbitrators of Bar Association and different from foreign lawyers registered to
at substantially below the international arbitration standard, which practice outside Japan.
makes it rather difficult for the parties to appoint an arbitrator of 7 http://www5.cao.go.jp/keizai-shimon/kaigi/cabinet/2017/2017_
their choice. Under the Interactive Arbitration Rules arbitrators’ basicpolicies_en.pdf (a provisional English translation).
remuneration is set to be fixed fees at an amount that is substan- 8 https://globalarbitrationreview.com/article/1067624/japan-
tially below the international standard. Under the Commercial %E2%80%93-eight-years-on-and-no-progress.
Arbitration Rules, which calculate arbitrators’ remuneration on 9 This element was introduced to clarify foreign lawyers’ ability to
an hourly basis, the hour rate of an arbitrator is set to be ¥50,000 serve counsel in Japan when seat of arbitration is outside Japan but
regardless of the complexity of disputes subject to downward part of the proceedings such as hearing is conducted in Japan.
adjustments. First, when an arbitrator spends more 150 hours, his 10 http://www.jcaa.or.jp/e/arbitration/rules.html See ‘JCAA-
or her hourly rate will be reduced by 10 per cent for every 50 experienced Arbitrators and Mediators’.
hours in excess of the initial 150 hours, up to 50 per cent of the 11 http://www.jcaa.or.jp/e/arbitration/docs/
original hourly rate.22 Second, arbitrators’ remuneration is capped eb8304d06e9003fbd19e8e51cc9d887c77717cc3.pdf.
at an amount that varies depending on the amount in disputes.23 12 http://www.jcaa.or.jp/e/arbitration/docs/Interactive_Arbitration_
The parties may not opt out from the rules which regulate arbi- Rules.pdf.
trators’ remuneration without the agreement of all parties prior 13 Article 48.1 of Interactive Arbitration Rules.
to the constitution of the tribunal; however, there is no guaran- 14 Article 56.1 of Interactive Arbitration Rules.
tee that all parties will agree to opt out, particularly when the 15 In the event of the three member tribunal the presiding arbitrator will
relationship between the parties has been aggravated. Under the receive ¥4 million and party appointed arbitrators will each receive
administrative rules for UNCITRAL arbitration, again it is the ¥2.5 million. Article 94 and 95 of Interactive Arbitration Rules.
JCAA, not the parties, that determines an hourly rate of arbitrators 16 Article 56.5 of Interactive Arbitration Rules.
within the range of US$500 to US$1,500 for each arbitrator.24 17 Article 56.6 of Interactive Arbitration Rules.
The JCAA has taken rigorous steps in an attempt to improve 18 https://iccwbo.org/publication/icc-arbitration-commission-report-
its stature in the international arbitration arena by introducing on-techniques-for-controlling-time-and-costs-in-arbitration/.
innovative rules and vigorous disclosure. These are remarkable 19 Article 63 of the JCAA Commercial Arbitration Rules.
changes that should be welcomed because the JCAA’s policy and 20 Article 28.5 of the JCAA Commercial Arbitration Rules.
practice has not been very visible to users both in and out of Japan 21 Article 94, 95 of the JCAA Commercial Arbitration Rules.
in the past.Whether the actual steps taken by the JCAA truly serve 22 Article 95.1 of the Commercial Arbitration Rules.
its objectives and its goals is a separate issue. Public comments 23 Article 94 of the Commercial Arbitration Rules.
were sought for the new draft rules for only two weeks, which 24 Rule 20.2 of the Administrative Rules for UNCITRAL arbitration.
Japan
Yoshimi Ohara
Yoshimi Ohara is a partner at Nagashima Ohno & Tsunematsu, and the Commentary on Investment Treaty Arbitration Award
Tokyo office. Her practice focuses on international arbitration, available on the METI website. Ms Ohara also serves as chair
litigation and mediation. She represents both domestic and for- arbitrator, co-arbitrator or sole arbitrator under the rules of the
eign clients in international arbitration in various seats under ICC, SIAC, JCAA, the Korean Commercial Arbitration Board
the rules of the International Chamber of Commerce (ICC), and UNCITRAL.
ICSID, the Singapore International Arbitration Centre (SIAC), Ms Ohara is currently serving as a vice president of the ICC
the Japan Commercial Arbitration Association (JCAA) and the Court, a governing board member of the International Council for
American Arbitration Association and International Centre for Commercial Arbitration and a board member of Swiss Arbitration
Dispute Resolution. Before launching her international arbitra- Association and Japan Association of Arbitrators. She previously
tion practice, she was active in the area of corporate transactions served as a court member (2010–2015) and vice president of the
and IP disputes. With a strong corporate and IP background, London Court of International Arbitration (2013–2015). She is a
she has extensive experience in dealing with disputes covering frequent speaker and author on the subject of international arbi-
a wide range of subjects, including joint ventures, M&A, corpo- tration. She has taught international arbitration at Keio University
rate alliance, infrastructure, energy, investment, insurance, tech- Law School, LLM programme since 2014.
nology transfer, intellectual property, sales and distribution. Ms Ms Ohara received her LLB from the University of Tokyo
Ohara worked for the Ministry of Economy Trade and Industry and her LLM from Harvard Law School. She is admitted to prac-
(METI) in Japan in putting together the Investment Treaty FAQ tice law in Japan and New York.
JP Tower Nagashima Ohno & Tsunematsu is the first integrated full-service law firm in Japan and one of the
2-7-2 Marunouchi foremost providers of international and commercial legal services based in Tokyo. The firm’s overseas
Chiyoda-ku network includes offices in New York, Singapore, Bangkok, Ho Chi Minh City, Hanoi and Shanghai,
Tokyo, 100-7036 associated local law firms in Jakarta and Beijing where our lawyers are on-site, and collaborative
Japan
relationships with prominent local law firms. In representing our leading domestic and international
Tel: +81 3 6889 7146
clients, we have successfully structured and negotiated many of the largest and most significant
Fax: +81 3 6889 8146
corporate, finance and real estate transactions related to Japan. In addition to our capabilities
Yoshimi Ohara that span key commercial areas, the firm is known for path-breaking domestic and cross-border risk
yoshimi_ohara@noandt.com management and corporate governance cases and large-scale corporate reorganisations. Over
450 lawyers are part of the firm, including over 30 experienced foreign attorneys from various jurisdic-
www.noandt.com tions, who work together in customised teams to provide clients with the expertise and experience
specifically required for each client matter.
Our international arbitration team has been representing both domestic and foreign cli-
ents effectively and efficiently in international arbitration at various seats under the rules of the
International Chamber of Commerce, ICSID, the Singapore International Arbitration Centre, the
Japan Commercial Arbitration Association, the American Arbitration Association and International
Centre for Dispute Resolution, the China International Economic and Trade Arbitration Commission
and UNCITRAL. The disputes that we handle cover a wide range of subjects, including joint ventures,
M&A, corporate alliances, infrastructure, construction, investment, oil and gas, energy, technology
transfer, intellectual property, sales and distribution.

Korea
Beomsu Kim, Young Suk Park and Keewoong Lee
KL Partners
Is Korea on its way to become a new arbitration hub for Asia? as one of the oldest arbitral institutions in the region, combined
As one of the most trade-dependent and export-oriented econo- with an increasing pool of qualified arbitrators it has been striving
mies, Korea has experienced a surge and diversification in cross- to retain. As of 31 December 2017, the KCAB maintains a panel
border trade and investment over the past few decades, largely of 1,225 arbitrators, up from 1,091 in 2013. This pool of arbitra-
driven by the nation’s conglomerates, such as Samsung, Hyundai tors covers over 22 different jurisdictions encompassing most parts
Group and LG Corporation. Reflecting robust outbound eco- of the globe. Among this panel, 262 arbitrators are exclusively
nomic activities of such major Korean contractors, the number committed to KCAB international arbitration proceedings and
of Korean cross-border transactions has increased and so has the 151 arbitrators conduct both domestic and international proceed-
number of disputes involving Korean entities. ings, thereby providing a total of 413 experts capable of arbitrating
This has led to Korean parties becoming prominent play- in international disputes. In addition, the KCAB panel of arbitra-
ers in the international arbitration scene. In 2017, Korea ranked tors is comprised of select individuals with expertise and experi-
ninth, the second highest in Asia after China, in terms of the ence in a variety of fields including those from the legal profession,
nationalities of parties involved in the arbitration cases filed with academia, public organisations, certified public accountants, patent
the International Chamber of Commerce (ICC).1 Korea has also attorneys and numerous other industries.
maintained a strong presence in other major arbitral institutions, While the nationality of the parties to the KCAB arbitration
ranking seventh in the Hong Kong International Arbitration cases appears to be rather unvaried from 2010 to 2017, with the
Centre (HKIAC) in 2018 and eighth in the Singapore International United States and China consistently ranked the top two coun-
Arbitration Centre (SIAC) in 2017 by the same criterion.2 tries of origin, there was a gradual increase in the number of par-
ties from Southeast Asian countries such as Vietnam and Malaysia
The Korea Commercial Arbitration Board – the only as well as certain Middle East countries including Turkey and Iran.
authorised arbitration institute in Korea This trend is presumably illustrative of growing economic pres-
While the majority of arbitration cases involving Korean parties ence of Korean entities in the above regions via, among others,
are seated outside of Korea, Korea as the seat of arbitration has investment and participation in construction projects.
shown a steady quantitative and qualitative growth over the past There is also a wide variety of industries that constitute the
several years. This is demonstrated in the statistics on the arbi- background of KCAB arbitration cases. Construction consistently
tration cases administered by the Korea Commercial Arbitration stands first in terms of the number of cases and, combined with
Board (KCAB), the only statutorily authorised arbitral institution trade and domestic commercial transaction, accounts for more
in Korea.3 than half of the arbitrations filed with the KCAB. For instance, out
Among others, the number of cases is on the rise. In 2017, the of the total 385 KCAB arbitration cases in 2017, there were 126,
KCAB received a total of 385 requests for arbitration, 78 of which 60 and 48 cases categorised as construction, trade and domestic
were international cases.The total number of cases in 2017 was up commercial transaction disputes, respectively.
approximately 20 per cent from 316 in 2010 while the number The most remarkable change from the period of 2010 to 2017
of international cases has shown a sharper 50 per cent increase was a surge in the number of information technology, entertain-
from 52 in 2010. ment and finance cases, indicating the changing industrial land-
The claim amount presents a steeper growth.The total sum in scape in Korea. The number of information technology cases
dispute for the KCAB arbitration cases in 2017 amounted to over more than doubled from 20 to 41; that of entertainment cases
US$810 million, representing approximately a 50 per cent increase went from a statistically meaningless number, if not nil, to 21; and
from US$535 million in 2010. Notably, over the same time frame, finance-related cases grew more than fivefold from three to 17
there was also a 50 per cent increase in the number of high-value over this period.
cases with the claim amount of US$10 million or more. There has also been a notable shift in causes of action for
Despite such growth in number and size, with the latter most KCAB arbitration cases. While claims concerning contractual
likely accompanying an increase in complexity of the matters in interpretation sharply decreased from 90 cases in 2010 to 28 cases
dispute, the duration of proceedings of arbitration cases adminis- in 2017, disputes over delayed shipment or non-performance of
tered by the KCAB remains rather constant. On average, it took obligations rose more than fivefold from 19 to 101 over the same
169 days to complete a domestic arbitration proceeding and 256 time frame. It presumably suggests growing complexities of the
days for an international one in 2017. In contrast, it took 139 matters in dispute brought to the KCAB. This may partially be
days and 218 days, respectively, in 2010. These numbers demon- due to conventional, purely jurisprudential issues being increas-
strate that the KCAB has been striving to offer prompt and cost- ingly prearranged between contracting parties with the accumula-
effective dispute resolution services to its users. tion of precedents and standardisation of contracts; thus, no longer
Such efficiency can reasonably be explained, at least in part, by becoming an issue and giving way to more sophisticated and fact-
the wealth of experience and expertise accumulated by the KCAB specific disputes.
Korea
Korean courts and jurisprudence – support for arbitration be conducted in a mutually agreed third country based on the
There are certain elements that enabled and will continue to stim- international practice and the arbitration rules of the International
ulate development of Korea as an arbitration-friendly jurisdiction. Chamber of Commerce’. The Seoul High Court held that the
Many of these elements concern conceptual aspects such as judi- arbitration clause was optional given the language that the party
ciary stance and legal frameworks, while certain aspects relate to ‘may’ seek arbitration.8 However, the Supreme Court found
infrastructural or physical features. otherwise, noting that the same language used in the arbitration
Above all, Korean courts, by and large, seem to maintain an clause, combined with the relevant provision in the articles of
affirmative attitude towards arbitration. Representative of such association, seemed to indicate the intention of the parties that
stance is enforcement of arbitral awards. Two of the court deci- arbitration was the only and ultimate method of dispute resolu-
sions, both of which concern enforcement of a foreign arbitral tion the damaged party could resort to in case negotiations failed.9
award, deserve attention in this regard. In sum, the overall stance of the Korean judiciary is reasonably
In a case where an investment company incorporated by a understood to consistently represent a non-interventionist and
US-based private equity fund won an award in the amount of pro-arbitration approach, with regard for the intent of the parties
US$35 million against a subsidiary of a Korean public institu- to resolve disputes by arbitration.
tion in an ICC arbitration and sought enforcement of the arbi-
tral award in Korea, the existence and scope of an arbitration Legislative support for arbitration
agreement between the disputing parties became an issue. The In line with the generally arbitration-friendly attitude of the
Seoul High Court of Korea refused to grant an enforcement order, judiciary, Korea has launched legislative support for its arbitra-
citing a lack of valid arbitration agreement. The court further tion sector. One of such efforts to strengthen the legal frame-
noted that, even if there was such agreement, the plaintiff was work governing arbitration was the amendment to the Korean
not meant to be a party to the arbitration clause.4 The Supreme Arbitration Act in 2016 to further incorporate the UNCITRAL
Court reversed the decision of the lower court by taking a broad Model Law regime. Some of the key improvements under the
and flexible approach to the construction of the language used amended Arbitration Act are as follow.
in the arbitration clause in terms of the scope of its application • Expansion and clarification of arbitrable subject matters.While
and parties subject thereto, deducing that there was a reasonable the pre-amendment Arbitration Act confined the subject mat-
intent among the parties to resolve all disputes arising out of a ters of arbitration to ‘disputes under private laws’, the new
particular juristic relation by arbitration, thereby effectively grant- version expands the subject matter jurisdiction of arbitration
ing enforcement.5 to cover ‘disputes over property rights or reconcilable disputes
In another case where a UK-based software provider com- over non-property rights (that is, non-monetary disputes)’.10
menced enforcement proceedings against a Korean broadcasting This amendment has resolved potential controversy as to
company in Korea after obtaining an award from an arbitration whether public law disputes such as investor-state disputes are
conducted under the UNCITRAL Rules, the Seoul Southern subject to arbitration under the act.
District Court dismissed the enforcement application on the basis • A broader, more lenient definition of ‘written’ arbitra-
that the arbitral award was not sufficiently specific as to the nature tion agreement. The earlier Arbitration Act provided that
of the obligation to be performed by the defendant. The court an arbitration agreement would be deemed a written one
stated that, for an arbitral award to be enforced, it must clarify cer- ‘where a document signed by the parties contains arbitra-
tain details including the type, content and scope of the obligation tion agreement’, but the amended act now deems an arbitra-
to be performed, the court found that the award failed to specify tion agreement made written ‘where terms and conditions
or elaborate on the scope or target of the obligation.6 However, of an arbitration agreement have been recorded, regardless
the Seoul High Court reversed the district court decision and of whether such agreement was made orally, by conduct or
granted the application for enforcement, recognising that there by any other means’.11 The new act also specifically notes
exists legal interest to request an enforcement order on the arbitral that intentions communicated by ‘email’ will also constitute
award notwithstanding the fact that it was not specific enough to a written agreement.12 These eased requirements are likely
be enforced. The high court further noted that an enforcement perceived as a significant change in practice as they have effec-
order on an arbitral award is understood not only to vest it with tively broadened the gateway to arbitration with a more leni-
enforceability but also to protect it from claims of its annulment ent definition of a valid arbitration agreement.
and that, regardless of the enforceability of the arbitral award, • Interim measures. The amended act has diversified interim
there is a practical necessity to confirm the obligation set out in measures by specifying their types as maintenance of status
the arbitral award and facilitate resolution of the dispute between quo or restoration, prevention of present or imminent danger
the parties by inducing voluntary performance of the obligor.7 or impact on arbitral proceedings or prohibition of measure
This appellate court decision serves as a notable precedent as it that may endanger or influence arbitral proceedings, preser-
held that an enforcement order is not necessarily strictly tied to vation of assets subject to enforcement and preservation of
enforceability when it comes to arbitral awards. relevant and important evidence.13 The new act also specifies
In a different case where a Korean investor filed a claim for requirements for interim measures, allows alteration, suspen-
damages against a Chinese company with a Korean court, the sion or revocation of interim measures and states that the
defendant resisted the claim by arguing that the Korean court arbitral tribunal may order the party requesting interim meas-
lacked jurisdiction, citing an arbitration clause in the shareholders’ ures to provide security.14 Most notably, the amended act now
agreement between the parties.The issue was whether the arbitra- provides a statutory basis for court recognition and enforce-
tion clause that read ‘the damaged party may seek resolution by ment of interim measures rendered by the arbitral tribunal.15
way of arbitration’ constituted an exclusive arbitration agreement The implication is that parties may now seek a court-granted
while the articles of association of the investee company provided enforcement of certain measures prior to the final arbitral
that ‘unless settled by negotiations, an arbitration proceeding will award to implement a more attractive and effective remedy.

Korea
• Streamlined procedures for the recognition and enforcement Finally, with the 2016 amendment to the Foreign Legal
of arbitral awards. Before the amendment, recognition and Consultant Act, foreign attorneys now being allowed to repre-
enforcement of arbitral awards could be rendered only by a sent their clients in international arbitration proceedings without
court ‘judgment’, but the amended act now only requires a registering as foreign legal consultants, combined with a phased
court ‘order’ with relatively simplified procedures compared opening of the Koran legal market under the Korea–US and
to a judgment.16 For example, unlike a court judgment that Korea–EU free trade agreements, better serve various needs of
necessarily involves an oral hearing and a written, signed and arbitral consumers in Korea.24
sealed verdict by the judge, a court order takes effect once it
is notified to the parties as appropriate without requiring a KCAB International Arbitration Rules
written verdict and relevant proceedings proceed at a much Along with such sweeping changes at the legislative level, the
swifter space. Either party may file an immediate complaint KCAB implemented revisions to its international arbitration
against a court order to enforce an arbitral award, but such rules in 2016. To name a few, the amended KCAB International
complaint does not suspend enforcement in principle unless Arbitration Rules adopt a process where the Secretariat may refuse
the competent court orders otherwise.17 These changes are to confirm the nomination of arbitrators if he or she finds it clearly
expected to reduce the time and cost associated with arbitral inappropriate.25 Another noteworthy change concerns joinder of
enforcement process. additional parties where the arbitral tribunal may allow a third party
• Strengthened court assistance for evidence examination. The to join the existing arbitral proceedings under certain conditions.26
amendment now allows arbitrators or parties to attend the In addition, the new arbitration rules introduced ‘emergency meas-
evidence examination conducted by the court with permis- ures by emergency arbitrators’ to cater to practical needs for urgent
sion of the judge.18 Under the amended act, when the arbitral conservatory and interim measures in international arbitration
tribunal requests the court to cooperate in evidence exami- settings.27 The KCAB also promulgated the Code of Ethics for
nation, the court may order witnesses, document holders and Arbitrators in 2016, highlighting independence, impartiality and
others to appear before or submit documents to the tribunal.19 duty of due diligence, fairness and confidentiality of arbitrators.28
• Penalty interest to be imposed by the arbitral tribunal.While it
had been unclear as to whether a post-award penalty interest KCAB International to support international disputes
is to be imposed by the domestic enforcement court or the In addition to the above-discussed conceptual elements constitut-
arbitral tribunal, the new act clarifies that the tribunal may ing Korea as a pro-arbitration jurisdiction, it is worth noting that
order either party to pay penalty interest as appropriate when the country is striving to cater to the needs of arbitration users
it renders an award.20 for physical infrastructure. Part of such efforts was establishment
of Seoul International Dispute Resolution Center (Seoul IDRC)
As described, the 2016 amendment to the Arbitration Act pre- in 2013.This multi-purpose hearing facility is increasingly recog-
sents a prompt and effective set of procedures along the overall nised for its state-of-the-art, fully-equipped conference systems
arbitration stage, starting from the request for arbitration, interim and experienced staff.
measures, hearing to enforcement and will thus offer benefits to In April 2018, the KCAB and Seoul IDRC consolidated and
prospective users of the Korean arbitration regime. expanded their hearing facilities in Gangnam Business District, the
Yet there was another major change in legal landscape for heart of Seoul with exceptional transportation and accommoda-
the Korean arbitration industry in 2016 – the enactment of the tion services and the headquarters of some of the top Korean and
Arbitration Promotion Act. As its title suggests, institutional efforts transnational companies. With this consolidation and in response
to promote arbitration in Korea are set out in the act. It man- to growing demand for cross-border commercial dispute resolu-
dates the Minister of Justice to establish and implement a five-year tion, the KCAB also launched a new international division called
master plan for promotion of arbitration industry and prepare KCAB International in 2018.
measures to develop a pool of professional arbitration manpower
as well as policies to attract arbitrations of international disputes Concluding Remarks
so that Korea serves as their arbitral seat or physical venue of hear- It remains to be seen whether Korea will rise to a new arbitration
ing.21 The act also authorises the minister to initiate projects for hub in Asia. However, given the dynamic nature of its economy
installation and operation of dispute resolution facilities, research and growing awareness of arbitration among the business circles,
and international cooperation to lay groundwork for promotion it would hopefully not be premature to state that the country
of arbitration industry and other necessary and prescribed activi- certainly offers an increasingly attractive alternative to more estab-
ties to that end.22 lished arbitral seats such as Singapore and Hong Kong.
Pursuant to the mandate of the Arbitration Promotion Act,
the Minister of Justice has recently drafted and released the Master Notes
Plan for Promotion of Arbitration Industry for 2019–2023. The 1 2018 ICC Dispute Resolution Bulletin, Issue 2.
plan presents a detailed set of strategic measures including, among 2 HKIAC 2018 Statistics (available at: http://www.hkiac.org/about-us/
others, implementation of various training programmes, work- statistics); 2018 SIAC Annual Report.
shops and seminars home and abroad, the establishment of an 3 2010–2017 Statistics on KCAB Claims and 2013-2017 KCAB Annual
arbitration-specialised educational institution under the KCAB, Reports.
publication and distribution of arbitration newsletters, organisa- 4 Seoul High Court Decision, Case No. 2012-Na-88930 (rendered on 16
tion of an advisory council composed of experts from arbitral August 2013).
institutions, academia and business circles and support for diversi- 5 Supreme Court Decision, Case No. 2013-Da-74868 (rendered on 20
fied promotional activities such as hosting international arbitra- October 2015).
tion events and assistance to the opening and operation of the 6 Seoul Southern District Court Decision, Case No. 2012-Gahap-15979
KCAB overseas offices.23 (rendered on 31 January 2013).
Korea
7 Seoul High Court Decision, Case No. 2013-Na-13506 (rendered on 17

January 2014).
8 Seoul High Court Decision, Case No. 2013-Na-11463 (rendered on 30
August 2013). Beomsu Kim
9 Supreme Court Decision, Case No. 2013-Da-71845 (rendered on 30 KL Partners
April 2014).
10 Article 3, Paragraph 1 of the Korea Arbitration Act. Beomsu Kim is the managing partner of KL Partners.
11 Ibid, article 8(3), subparagraph 1. Prior to establishing KL Partners, Mr Kim led the interna-
12 Ibid, article 8(3), subparagraph 2. tional dispute resolution practice group at Shin & Kim. He also
13 Ibid, article 18(2). previously served as a judge at the district courts of Korea for nine
14 Ibid, article 18–2, 18-3 and 18–4. years before joining private practice.
15 Ibid, article 18–7. His main areas of practice are international arbitration and
16 Ibid, article 37(1)–(2). cross-border litigation. He is a member of the International
17 Ibid, article 37(6)–(7). Chamber of Commerce’s (ICC) International Court of
18 Ibid, article 28(3). Arbitration and has served as an arbitrator in arbitration pro-
19 Ibid, article 28(5). ceedings under the auspices of the ICC, the London Court of
20 Ibid, article 34–3. International Arbitration, Singapore International Arbitration
21 Articles 3, 6 and 7 of the Korea Arbitration Promotion Act (enforced Centre, Hong Kong International Arbitration Centre, the United
on 28 June 2017). Nations Commission on International Trade Law and the Korean
22 Ibid, article 4. Commercial Arbitration Board (KCAB), among others.
23 Ministry of Justice, Master Plan for Promotion of Arbitration Industry Mr Kim is the vice president of the Korean Council of
for 2019–2023. International Arbitration and a member of the Management
24 Article 2, paragraphs 2–3, article 24, paragraph 3 and article 24–2 of Committee of the Seoul International Dispute Resolution
the Korea Foreign Legal Consultant Act. Centre. He also serves as an advisor to the KCAB International
25 Article 13.3 of the KCAB International Arbitration Rules. Committee. He is the former executive director of international
26 Ibid, article 21.1. relations for the Korean Bar Association.
27 Ibid, article 32.3 and appendix 3. Mr Kim has consistently been chosen as a leading lawyer in
28 KCAB Code of Ethics for Arbitrators. the fields of international arbitration and corporate matters and
has continuously received favourable reviews in leading foreign
legal journals such as Chambers and Partners, IFLR1000 and The
Legal 500. Of particular note, Mr Kim was named by ALB as one
of ‘Asia’s Best 75 Lawyers’ in 2013, considering factors such as
expertise, visibility, reputation and dedicated client service.

Korea
Young Suk Park Keewoong Lee

KL Partners KL Partners
Young Suk Park is a partner at KL Partners with a broad and Keewoong Lee is an attorney at KL Partners and a member of the
diversified experience in both international and domestic disputes international dispute resolution practice group. Mr Lee received
and transactions. his JD from Seoul National University in 2016 and is a member of
Immediately prior to joining KL Partners he was the general the Korean Bar. He is fluent in both English and Korean. Mr Lee
counsel and an executive director of the investment committee represents domestic and foreign clients in cross-border disputes
at Atinum Partners, a Korean investment house, being involved and general corporate and M&A matters. Prior to joining KL
in investments and transactions, encompassing a variety of sec- Partners, he was an associate at HMP Law.
tors, such as energy, natural resources, real estate, buy-outs, start- Mr Lee’s recent engagements from 2016 to present include
ups and public equity. At the time he also chaired the Arbitration various sectors, such as computer manufacture, chemical manu-
Committee of the In-house Counsel Forum of Korea. facture, energy and healthcare.
Prior to his position with Atinum Partners, Mr Park was a
partner with Kim & Chang’s international arbitration and cross-
border litigation practice group. At the time, his practice focused
on international arbitration, involving multiple ad hoc and insti-
tutional arbitrations, such as with the International Chamber
of Commerce, the Singapore International Arbitration Centre,
the Korean Commercial Arbitration Board, the Netherlands
Arbitration Institute and the Zurich Chamber of Commerce. He
was also involved in investment treaty disputes under the ICSID
Convention and North American Free Trade Agreement as well
as cross-border litigations in multiple jurisdictions.
Mr Park is currently an arbitrator with the Korean Commercial
Arbitration Board.
7th Floor, Tower 8 KL Partners is the first law firm in Korea to specialise specifically in international dispute resolution and
7 Jongro 5 gil corporate and M&A matters. Since its establishment in 2015, KL Partners has secured strong reputa-
Jongro-gu tions and achieved remarkable growth.
Seoul KL Partners does not seek to be the largest firm in Korea. Rather, the goal is to be the firm of
Korea
choice for clients facing difficult legal issues, challenging disputes and major business dealings.
Tel: +8202 6226 7700
KL Partners is led by a team of leading specialists with common principles and values who are
Fax: +8202 6226 7800
dedicated to provide the highest levels of expertise and keen solutions to the clients in Korea and
Beomsu Kim abroad.
bkim@klpartners.com The core values of KL Partners are:
• dedicated client service based on a keen understanding of the client’s needs and goals;
Young Suk Park • the highest quality of service led by hands-on partners from start to finish; and
yspark@klpartners.com • value-added service by efficient teams comprised of experts in the relevant field
Keewoong Lee
KL Partners is recognised as having one of the strongest teams in Korea in the areas of international
kwlee@klpartners.com
dispute resolution and corporate and M&A. Our leading partners have acted as counsels in the
www.klpartners.com most high-profile cases, including numerous cases before the Korean courts, ICSID, the International
Chamber of Commerce, the Singapore International Arbitration Centre, the Hong Kong International
Arbitration Centre, the Korean Commercial Arbitration Board, the London Court of International
Arbitration, the Netherlands Arbitration Institute and the Zurich Chamber of Commerce, and ad-hoc
arbitrations under the UNCITRAL rules.
As a result, KL Partners has been ranked as one of the ‘Leading Firms’ for dispute resolution.
Malaysia
Andre Yeap SC and Avinash Pradhan
Malaysian arbitration law is underpinned by the Malaysian The AIAC’s rules are comparable to those of other major arbi-
Arbitration Act 2005 (the 2005 Act). The 2005 Act, which came tration institutions. The main set of rules – the AIAC Arbitration
into force on 15 March 2006, repealed the Arbitration Act 1952 Rules – incorporates the UNCITRAL Arbitration Rules. The
and the Convention on the Recognition and Enforcement of AIAC has a separate set of rules for expedited arbitrations (termed
Foreign Arbitral Awards Act 1985. The 2005 Act provides a leg- the Fast Track Arbitration Rules) as well as a set of rules that are
islative framework in support of international arbitration in line specifically designed for the arbitration of disputes arising from
with generally recognised principles of international arbitration commercial transactions premised on Islamic principles (the AIAC
law. Initial teething problems arising from the language of the act i-Arbitration Rules). A central feature of the AIAC i-Arbitration
were addressed by the Arbitration (Amendment) Act 2011 (the Rules is that they incorporate a reference procedure to a shariah
2011 Amendment Act). advisory council or shariah expert whenever the arbitral tribunal
In 2018, there were two rounds of amendments to the 2005 has to form an opinion on a point related to shariah principles.
Act. In early 2018, the Arbitration (Amendment) Act 2018 came The rules were revised in 2018. Key features of the new AIAC
into force (the First 2018 Amendment Act). Its purpose was to Arbitration Rules 2018 are provisions for the joinder of third
facilitate the rebranding of the Kuala Lumpur Regional Centre parties as well as for consolidation and technical review of awards
for Arbitration (KLRCA) to the Asian International Arbitration before they are issued. In addition, the AIAC Arbitration Rules
Centre (AIAC); the rebranding was itself driven by the centre’s 2018 also create a self-contained code in relation to emergency
increasing recognition as a hub for international dispute resolu- arbitrators.The 2018 AIAC Fast Track Rules, applicable by agree-
tion. On 8 May 2018, the Arbitration (Amendment) (No. 2) Act ment of the parties, provide for short time limits.The proceedings
2018 (the Second 2018 Amendment Act) came into force. The under the Fast Track Rules are designed to last no longer than 180
Second 2018 Amendment Act updated the 2005 Act to bring it days. Under the Fast Track Rules, the arbitral tribunal in principle
in line with the latest revision of the UNCITRAL Model Law on has only 90 days from the start of the arbitration to conclude the
International Commercial Arbitration 1985 (the Model Law).The oral hearing and a further 90 days to draft the award.
Second 2018 Amendment Act also addressed various deficiencies
in the 2005 Act that had been identified in the case law. The 2005 Act
The jurisprudence of the Malaysian courts has developed The primary source of law in relation to both international and
in tandem with the progressive attitude of the legislature and is domestic arbitration in Malaysia is the 2005 Act, as amended by
strongly influenced by the general principle of minimal curial the 2011 Amendment Act and the Second 2018 Amendment Act.
intervention. Moreover, the Malaysian courts readily draw on case As alluded to above, the 2005 Act is modelled on the UNCITRAL
law from other pro-arbitration jurisdictions, thereby demonstrat- Model Law. It also incorporates important articles from the New
ing a transnational approach and sensitivity to the development York Convention on the Recognition and Enforcement of
of local law on the subject. Foreign Arbitral Awards 1958, to which Malaysia is a signatory. As
The KLRCA has similarly developed progressively. The Malaysia is a common law jurisdiction, the 2005 Act is further
KLRCA was set up in 1978 by the Asian-African Legal supplemented by case law that interprets and applies its provisions.
Consultative Organization to provide a neutral venue in the Asia- In this regard, the 2005 Act vests the power of judicial interven-
Pacific region for the arbitration of disputes in relation to trade, tion in the High Court, which is itself defined under section 2 of
commerce and investment. Today, as the newly rebranded AIAC, the 2005 Act to encompass both the High Court of Malaya and
it hosts and administers domestic and international commercial the High Court in Sabah and Sarawak.1
arbitrations and offers other dispute resolution processes, such Section 8 of the 2005 Act provides the foundation of the
as adjudication and mediation. The AIAC is housed in purpose- approach now taken by Malaysian law and the Malaysian courts
oriented premises that contain all the trappings expected of a to arbitration. It provides that ‘[n]o court shall intervene in mat-
modern venue for international arbitration. The rebranding of ters governed by this act, except where so provided in this act’;
the AIAC has a statutory underpinning – section 3(1) of the First thus espousing the Model Law philosophy of providing within
2018 Amendment Act provides that: the statute itself for all instances of potential court intervention in
matters regulated by the statute.2
[a]ll references to the Kuala Lumpur Regional Centre for Arbitration The 2005 Act distinguishes between international and domes-
in any written law or in any instrument, deed, title, document, bond, tic arbitration, with the more ‘interventionist’ sections of the 2005
agreement or working arrangement subsisting immediately before the Act applying only to domestic arbitrations. International arbitra-
coming into operation of this Act shall, when this Act comes into operation is defined, in general accordance with the Model Law provi-
tion, be construed as a reference to the Asian International Arbitration sions, as an arbitration where:
Centre (Malaysia). • one of the parties has its place of business outside Malaysia;
• the seat of arbitration is outside Malaysia;

Malaysia
• the substantial part of the commercial obligations are to be Section 10 of the 2005 Act allows a party to apply to the High
performed outside Malaysia; Court for a stay of legal proceedings if the subject matter of the
• the subject matter of the dispute is most closely connected to dispute is subject to an arbitration agreement. The application
a state outside Malaysia; or must be taken out before any other step is taken in the court pro-
• the parties have agreed that the subject matter of the arbitra- ceedings.Where the applying party had utilised the court’s process,
tion agreement relates to more than one state.3 such as by requesting for an extension of time from the court to
file its statement of defence, that would be construed as a step in
The interventionist regime in the 2005 Act is set out in Part III of the proceedings, as seen in Mun Seng Fook v AIG Malaysia Bhd.17
the act, which applies by default to domestic arbitrations but not Section 10 of the 2005 Act makes it mandatory for the High
international arbitrations. Parties to a domestic arbitration are free Court to grant a stay unless the arbitration agreement is null and
to opt out of the interventionist regime. Likewise, parties to an void, inoperative or incapable of being performed.
international arbitration may opt in to the interventionist regime. Moreover, the Malaysian courts recognise the principle that
The Second 2018 Amendment Act has significantly eroded the it is for the arbitrators to first decide on questions of jurisdiction,
differences between the interventionist and non-interventionist and not the courts. In Press Metal Sarawak v Etiqa Takaful Bhd,18 the
regime by repealing sections 41 and 42 of the 2005 Act. Section Federal Court specifically approved the following pronouncement
41 had permitted a party, with the consent of the other parties of the Canadian Supreme Court in Dell Computer Corporation v
to the arbitration proceedings or alternatively the consent of the Union des Consommateurs:19
arbitral tribunal, to apply to the High Court for a determination
of a question of law arising in the course of the arbitration, while In a case involving an arbitration agreement, any challenge to the arbi-
section 42 had permitted a party to refer a question of law aris- trator’s jurisdiction must be resolved first by the arbitrator in accordance
ing out of an award to the High Court. Sections 41 and 42 were with the competence-competence principle, which has been incorporated
provisions applicable to the ‘interventionist’ domestic arbitration into art. 943 CCP. A court should depart from the rule of systematic
regime, which could have been opted in to by parties to an inter- referral to arbitration only if the challenge to the arbitrator’s jurisdiction
national arbitration. These provisions no longer form part of the is based solely on a question of law.This exception, which is authorized
2005 Act.The AIAC has described the change as being motivated by art. 940.1 CCP, is justified by the courts’ expertise in resolving such
by the desire to ‘. . . make Malaysia a safe seat and to put the Act questions, by the fact that the court is the forum to which the parties
in line with other arbitration acts worldwide . . .’. apply first when requesting referral and by the rule that an arbitrator’s
Party autonomy features strongly in the 2005 Act. Under the decision regarding his or her jurisdiction can be reviewed by a court. If
2005 Act, parties are at liberty to make their own decisions on the challenge requires the production and review of factual evidence, the
the seat of the arbitration,4 the substantive law applicable to the court should normally refer the case to arbitration, as arbitrators have, for
dispute,5 the number of arbitrators6 and the procedure for their this purpose, the same resources and expertise as courts.Where questions
appointment,7 the time for challenge of an arbitrator and, subject of mixed law and fact are concerned, the court must refer the case to
to the provisions of the 2005 Act, the procedure to be followed by arbitration unless the questions of fact require only superficial considera-
the arbitral tribunal in conducting the proceedings. Section 30(1) tion of the documentary evidence in the record. Before departing from
of the 2005 Act provides for the arbitral tribunal in an interna- the general rule of referral, the court must be satisfied that the challenge
tional arbitration to decide the dispute in accordance with the law, to the arbitrator’s jurisdiction is not a delaying tactic and that it will not
as agreed upon by the parties as applicable to the substance of the unduly impair the conduct of the arbitration proceeding.
dispute. In the event that parties to an international arbitration fail
to agree on the applicable substantive laws, the arbitral tribunal The Federal Court also specifically approved the following
shall apply the law determined by the conflict of laws rules.8 propositions, taken from the Singapore cases of Dalian Hua Liang
Enterprise Group Co Ltd v Louis Dreyfus Asia Pte Ltd20 and Tjong
The arbitration agreement and the jurisdiction of the tribunal Very Sumito v Antig Investments:21
Malaysia takes a broad approach to the construction of arbitra-
tion agreements.The Fiona Trust single-forum presumption – that . . . if it was at least arguable that the matter is the subject of the arbitra-
‘rational businessmen are likely to have intended any dispute aris- tion agreement, then a stay of proceedings should be ordered.
ing out of the relationship into which they have entered or pur-
ported to enter to be decided by the same tribunal’9 – represents . . . if the arbitration agreement provides for arbitration of ‘disputes’ or
the law in Malaysia.10 ‘difference’ or ‘controversies’, then the subject matter of the proceedings
The doctrine of competence-competence is also recognised in in question would fall outside the terms of the arbitration agreement if
Malaysia. Section 18(1) of the 2005 Act provides that the arbitral (a) there was no ‘disputes’ or ‘difference’ or ‘controversy’ as the case may
tribunal may rule on its own jurisdiction, including any objections be; or (b) where the alleged dispute is unrelated to the contract which
with respect to the existence or validity of the arbitration agree- contains the arbitration agreement.
ment.11 The doctrine has been applied by the courts in the cases
of Standard Chartered Bank Malaysia Bhd v City Properties Sdn Bhd This was echoed in AOS Travel & Tours Sdn Bhd v Asean Bintulu
& Anor,12 Chut Nyak Isham bin Nyak Ariff v Malaysian Technology Fertilizer Sdn Bhd:22
Development Corp Sdn Bhd & Ors,13 and TNB Fuel Services Sdn
Bhd v China National Coal Group Corp.14 Malaysian law also rec- in the event there is any doubt as to the validity or applicability of an
ognises the principle of separability; namely that the arbitration arbitration agreement, the court should lean towards compelling the par-
agreement is separate from the main contract in which it may ties to honour the ‘arbitration agreement’ even if the court is in some
be contained.15 An arbitration agreement, therefore, will not be doubt about the validity of the arbitration agreement. [I]t is only in the
invalidated because of, for example, an illegality invalidating the clearest of cases that the court ought to make a ruling on the inapplicabil-
main contract.16 ity of an arbitration agreement.
Malaysia
Similarly, in the case of Asiagroup Sdn Bhd v PFCE Timur Sdn An area of Malaysian law that has seen some recent develop-
Bhd,23 the High Court recognised the statutory power and ment relates to winding-up petitions. In NFC Labuan Shipleasing
jurisdiction of arbitrators to rule on their own jurisdiction and I Ltd v Semua Chemical Shipping Sdn Bhd,28 a winding-up peti-
affirmed the principle that, even if the court had doubts concern- tion had been filed on the basis of a debt said to arise out of a
ing the existence of the arbitration agreement within a contract, charterparty.The respondent to the petition filed an application
it should lean in favour of granting a stay so that the dispute may under section 10 of the 2005 Act to stay the winding up pro-
be referred to arbitration in order to let the arbitrators first decide ceedings, on the basis that the debt was disputed and that the
whether they had jurisdiction to arbitrate the dispute. charterparty provided for disputes to be resolved by arbitration.
Malaysian law recognises the principle of incorporation The High Court of Kuala Lumpur found that:
by reference:24 • a winding-up petition is premised on the inability of the
debtor to pay the debt of the creditor;
According to section 9(5) of [the 2005 Act], an arbitration agreement • the issues to be considered by the court before deciding to
may come into existence by reference . . . the agreement itself need not grant the order or dismiss the petition would be focused
have an arbitration clause in it as long as the agreement refers to an on whether the presumption of insolvency is satisfactorily
arbitration clause in another document and the agreement is in writing rebutted and whether there was any bona fide dispute over
and the reference incorporates the said clause into the agreement . . . the debt on substantial grounds;
• a winding-up petition is not a substantive claim that is
. . .There is no requirement that the arbitration agreement contained in contemplated by section 10 of the 2005 Act, but a statu-
the document must be explicitly referred to in the reference.The reference tory right that may be invoked and exercised at any time
need only be to the document and no explicit reference to the arbitration in accordance with the law on winding-up, and cannot be
clause contained therein is required. modified or diluted by section 10; and
• a winding-up petition is not a claim for payment, but a sui
In TH Heavy Engineering Bhd v Daba Holdings (M) Sdn Bhd (for- generis proceeding with different reliefs and end results from
merly known as Dugwoo (M) Sdn Bhd),25 after an examination of a civil proceeding subject to arbitration, and is therefore not
the existing jurisprudence, the High Court synthesised the gen- susceptible to a stay pending arbitration;
eral principles. First, while case law is relevant, the determination
of whether an arbitration agreement has been incorporated via The High Court however recognised that its power to wind-up
reference is a matter of construction and turns on the facts of was discretionary, and, following the English decision of Salford
each particular case. Second, while no specific forms or words Estates (No. 2) v Altomart Ltd,29 considered that if the debt upon
need be used to incorporate an arbitration agreement into a con- which the petition was based was the subject of an arbitration
tract, and the document to be incorporated need not be signed agreement and was disputed, the petition would ‘be dismissed
by the parties, there must on the other hand be evidence of a (rather than stayed) unless there is evidence that there is another
clear intention to submit to arbitration. Third, where the docu- creditor willing to be substituted as a petitioning creditor’. A
ment containing the arbitration agreement is specifically identi- case in contrast to this is Goh Nguang Chian v Dynapack Eoss
fied in the contract, either directly or indirectly, that is generally Packaging Sdn Bhd.30 Here, the High Court of Johor Bahru
sufficient and the document need not be specifically attached ordered a stay of winding-up proceedings in favour of arbi-
to the contract. On the other hand, where a document is only tration proceedings. The court did not cite the NFC Labuan
referred to in general, broad and unspecific terms, attaching it to case or Salford Estates in its judgement; notwithstanding that
the contract would be prudent, as its absence might point to an the winding-up petition in Goh appears to have been based
absence of evidence of the parties’ intent to arbitrate. in part on a debt said to have been due and owing. The High
The decision in Thien Seng Chan Sdn Bhd v Teguh Wiramas Court of Johor Bahru, however, considered that the petitioner
Sdn Bhd & Anor 26 affirms that the document containing the arbi- had ‘characterised the dispute as being that of a shareholders’
tration clause need not be signed by the parties in order for it to dispute, minority oppression and misrepresentations . . .’, which
be incorporated into the contract. The High Court also clarified fell within the ambit of an arbitration clause in a shareholders’
how arbitration agreements are to be construed when a contract agreement to which the petitioner was considered party. In so
contains multi-tiered dispute resolution clauses: where a con- doing, the court observed that ‘the staying of [winding-up peti-
tract only expressly mentions mediation as a method of dispute tions] on the basis of an arbitration agreement is not unusual’.
resolution, but incorporates an arbitration agreement indirectly The court further held that the fact that the remedy of winding-
by reference to another document, the court will uphold the up was not available in arbitration was not ipso facto a ground to
arbitration agreement:27 render a dispute non-arbitrable.The court concluded that since
the shareholder’s dispute underlying the winding-up petition
It is only too obvious that much as parties may want to first try to was arbitrable, the stay of winding-up proceedings in favour of
resolve their disputes through mediation, there may be times when reso- arbitration should be granted.
lution through mediation fail. Whilst hoping for the best, one must be The decision in Goh is a welcome development to the
prepared for the worst. The [incorporated arbitration agreement] extent that it recognises that shareholders’ disputes are arbitra-
takes over where mediation is terminated. ble. However, in so far as Goh is concerned with the appropriate
procedural response to a winding-up application that purport-
In line with the broad approach to the construction of arbitra- edly engages a dispute falling within the ambit of an arbitration
tion agreements, under the Second 2018 Amendment Act, the clause, the approach in Goh is difficult to reconcile with the
definition of ‘arbitration agreement’ has been expanded so as decision in NLC Labuan. It remains to be seen how the higher
to encompass agreements that are made or recorded by elec- courts will deal with the issue.
tronic means.

Malaysia
The seat of arbitration that ‘the power exercised by the director of the KLRCA under
In The Government of India v Petrocon India Limited,31 the Federal subsections 13(4) and (5) of [the 2005 Act] is an administra-
Court was faced with a question regarding the identification of tive power’ and therefore ‘[his function] is not a judicial function
the seat of arbitration in circumstances where the law applicable where he has to afford the right to be heard to the parties before
to the container contract was Indian law, but where the contract an arbitrator(s) is appointed’.34 Following this, it was held that:35
specified the ‘venue’ of the arbitration as Kuala Lumpur, while
at the same time expressly providing that the ‘arbitration agree- The Court cannot interpose and interdict the appointment of an arbitra-
ment’ was to be ‘governed by’ the ‘laws of England’.The Court of tor whom the parties have agreed to be appointed by the named appoint-
Appeal had concluded that the juridical seat was London, because ing authority under the terms of the Contract, except in cases where it is
English law was chosen as the law of the arbitration. proved that there are circumstances which give rise to justifiable doubt as
The Federal Court disagreed and held that ‘. . . the seat of the [arbitrator’s] impartiality or independence or that the [arbitrator]
arbitration will determine the curial law that will govern the did not possess the qualification agreed to by the parties.
arbitration proceeding’, and drew on English case law to come
to the conclusion that ‘. . . there is a strong presumption that the On the facts, since there was no pre-agreement between the par-
place of arbitration named in the agreement will constitute the ties as to the arbitrator’s qualification, the arbitrator could not be
juridical seat.’32 disqualified on the grounds argued by the appellant.
The Federal Court expressly recognised that there was a dis-
tinction between the seat of arbitration for the purposes of identi- Representation of parties at arbitration
fying the curial law and the physical or geographical place where In the Second 2018 Amendment Act, amendments were also
the arbitration was held, considering that ‘[i]n the case of place of made to allow for broader rights of representation in arbitrations
arbitration it can be shifted from place to place without affecting under the 2005 Act. Specifically, section 3A of the 2005 Act has
the legal seat of the arbitration’.The court, however, held that the been amended to allow for a party to arbitral proceedings to be
word ‘venue’ in the clause meant the juridical seat, reasoning that ‘represented in the proceedings by any representative appointed
if it had merely been a reference to the geographical or physi- by the party.’ This amendment nullifies the effect of the decision
cal seat, it would not have been necessary to have it inserted in in Samsuri bin Baharuddin & Ors v Mohamed Azahari bin Matiasin
the agreement; and that in any event the word ‘venue’ and ‘seat’ and another appeal,36 where the Federal Court had held that the
are often used interchangeably. Ultimately, however, the Federal effect of section 8(1) of the Advocates Ordinance 1953, read with
Court did not overturn the decision of the Court of Appeal, as it section 2(1)(a) and (b) of that statute, was to prohibit foreign
accepted the argument of the respondent that, on the facts of the lawyers who do not have the right to practise law in Sabah from
case, the parties had subsequently expressly agreed to change the representing parties to arbitration proceedings in Sabah.
seat of the arbitration to London.
Interim relief
The appointment of arbitrators The Second 2018 Amendment Act significantly amended the
Sections 12 to 17 of the 2005 Act governs the appointment of provisions of the 2005 Act on interim measures to bring the
arbitrators. Section 12(2) of the 2005 Act provides that, in the legislation fully in line with the provisions of the UNCITRAL
event, that the parties to the arbitral proceedings fail to determine Model Law 2006.
the number of arbitrators, the arbitral tribunal shall consist of The new provisions introduced through the Second 2018
three arbitrators in the case of an international arbitration and a Amendment Act also permit the tribunal to grant interim relief
single arbitrator in the case of a domestic arbitration. on an ex parte basis. Thus, 19B(1) of the 2005 Act now pro-
The default procedures for the appointment of arbitrators vides that:
are provided for under section 13 of the 2005 Act. Parties are,
however, free to determine the procedures that are to be adopted Unless otherwise agreed by the parties, a party may, without notice to
with regard to the appointment of arbitrators. Arbitrators are any other party, make a request for an interim measure together with an
expected to disclose circumstances that may result in a conflict application for a preliminary order directing a party not to frustrate the
of interest, as provided in section 14 of the 2005 Act. A recent purpose of the interim measure requested.
amendment in the Second 2018 Amendment Act is that the
definition of an arbitral tribunal now extends to an ‘emergency The tribunal may grant such a preliminary order provided that
arbitrator’, thereby allowing for the recognition of decisions of it ‘considers that prior disclosure of the request for the interim
emergency arbitrators. measure to the party against whom it is directed risks frustrating
In the event that the parties are unable to agree on the the purpose of the measure’.
appointment of arbitrators, either party may apply to the direc- However, a fundamental difference remains between inter
tor of the AIAC to appoint the arbitrators. In the event that the partes interim measures and preliminary orders. Section 19C(6)
director similarly fails to appoint the arbitrators, either party may of the 2005 Act makes clear that a preliminary order ‘shall be
then apply to the High Court for assistance in the appointments. binding on the parties but shall not be the subject to any enforce-
In the case of Sebiro Holdings Sdn Bhd v Bhag Singh,33 the ment by the High Court . . .’ and that it ‘shall not constitute an
Court of Appeal was confronted with the question of whether award’. A party may therefore still wish to avail itself of interim
the KLRCA director’s appointment of an arbitrator was suscepti- relief from the court.
ble to challenge. Before the High Court, the appellant had sought, In this regard, the 2005 Act permits both the arbitral tribunal
but failed to terminate, the appointment of the respondent as and the courts to grant interim relief. Thus, section 11 of the
arbitrator on the grounds that he lacked geographical knowledge 2005 Act expressly confers powers on the High Court to make
of Sarawak, which was the place of performance of the underly- interim orders in respect of the matters set out in section 11(1)
ing contract. In dismissing its appeal, the Court of Appeal noted (a)–(e) of the 2005 Act, which include orders to:
Malaysia
• take action that would prevent, or refrain from taking action for the High Court to exert some supervisory function over the arbitral
that is likely to cause, current or imminent harm or prejudice process. In the circumstances, the learned Judge ought to have declined
to the arbitral process; and to order discovery.
• provide a means of preserving assets out of which a subsequent
award may be satisfied. The legislature has also reacted to the High Court decision.
Following the Second 2018 Amendment Act, section 19J(3) of
Section 11(3) of the 2005 Act expressly provides that such powers the 2005 Act now expressly provides that:
extend to international arbitrations where the seat of arbitration
is not in Malaysia. [w]here a party applies to the High Court for any interim measure and
The scope of the court’s powers under section 11 of the 2005 an arbitral tribunal has already ruled on any matter which is relevant
Act had previously been considered in Telekom Malaysia Bhd v to the application, the High Court shall treat any findings of fact made
Obnet Sdn Bhd 37 where the plaintiff sought discovery of confiden- in the course of such ruling by the arbitral tribunal as conclusive for the
tial documents during the course of arbitration, but was refused by purposes of the application.’
the arbitrator.The plaintiff then applied to the court for discovery
of those documents under section 11 of the 2005 Act, which was Confidentiality in arbitration proceedings
resisted by the respondent on the grounds that: The Second 2018 Amendment Act introduced sections 41A and
• the court was bound by the arbitrator’s finding of fact that 41B in to the 2005 Act. Section 41A provides that, subject to
discovery ought not to be allowed as grave injustice would be certain exceptions, the parties are prohibited from publishing, dis-
caused to the respondent; closing or communicating any information relating to the arbitral
• section 11 of the 2005 Act only provided for interim meas- proceedings or an award made in those proceedings. Section 41B
ures, and discovery was a permanent measure as the document provides for proceedings under the 2005 Act to be heard other-
could not be undisclosed once it was disclosed; and wise than in open court.
• the court should not interfere with the arbitrator’s procedure.
Admiralty proceedings
Firstly, the court took the view that the proper test that the The 2005 Act had sought to accommodate the maritime industry
arbitrator should have applied was whether the document was by expanding the scope of the high courts’ powers to allow the
necessary for the fair disposal of the case. The obligation of con- arrest of ships or vessels for security. Under the 2011 Amendment
fidentiality was a mere consideration, and would not necessarily Act, special provisions were introduced in relation to admiralty
be determinative of the application. Secondly, the court held that proceedings.These provisions permit the court to order the reten-
even though section 11 of the 2005 Act refers to interim measures, tion of any vessel arrested or any bail or other security given,
some of the specific orders that the court is empowered to make pending the determination of disputes in admiralty arbitrations, to
are not interim in nature. The court considered that the legisla- satisfy any award that may be given in the arbitration proceedings.
ture must have intended that the court should be empowered to The 2005 Act also provides that, where a respondent to admiralty
make such orders whether or not their effect would be interim proceedings commenced against it in the High Court applies for
in nature or otherwise. Thirdly, the court agreed with the general a stay pursuant to subsection 10 of the 2005 Act, the court grant-
position in law that an arbitrator is master of his own procedure, ing the stay may order the continued retention of any property, as
but emphasised that there were exceptions to this general prin- well as make the stay of the court proceedings conditional upon
ciple, one of which was section 11 of the 2005 Act. Thus, the equivalent security being provided to meet the claim: Section
High Court dismissed the respondent’s arguments and ordered 10(2A) to (2C) of the 2005 Act.
discovery. In so doing, the High Court seemed to have considered
that the statutory framework permitted the court to reconsider an Awards
issue that had already been the subject of a determination by the Section 2(1) of the 2005 Act defines an award as a decision of the
tribunal acting within its powers arbitral tribunal on the substance of the dispute and this includes
On appeal, the Court of Appeal roundly disagreed with the any final, interim or partial award and any award on costs or inter-
High Court on this point (Obnet Sdn Bhd v Telekom Malaysia est. Section 36(1) of the 2005 Act further provides that all awards
Bhd):38 are final and binding. Pursuant to section 33 of the 2005 Act, an
award should state the reasons upon which the award is based
We are constrained to observe that [the High Court Judge] . . . treated unless the parties have otherwise agreed or the award is on agreed
the discovery application as if it was an appeal.With respect, the learned terms. Section 35 of the 2005 Act allows the tribunal to correct
Judge was bound by the learned Arbitrator’s finding that the disclosure any clerical error, accidental slip or omission in an award; it also
of the Settlement Agreement ought not to be allowed as such disclosure permits the tribunal to give an interpretation of a specific point
would be prejudicial to the State Government. Whatever the merits of or part of the award upon request by a party.
such a finding, the High Court had no jurisdiction to interfere . . . It Prior to the Second 2018 Amendment Act, one deficiency
is pertinent to observe that the policy behind [the 2005 Act] is one of in the 2005 Act that was identified by the Federal Court was
minimal court intervention . . . In keeping with this policy, section 11 of the tribunal’s lack of power to award interest for the pre-award
[the 2005 Act] must be read as intending to support the arbitral process period. In Far East Holdings Bhd & Anor v Majlis Ugama Islam dan
and not, as the learned Judge here appears to have done, to exercise some Adat Resam Melayu Pahang and other appeals,39 the Federal Court
kind of supervisory role over arbitration proceedings . . . It must then held at that under section 33(6) of the 2005 Act, an arbitrator can
follow that in principle s. 11 of [the 2005 Act] is designed to support only award post-award interest, and not pre-award interest, unless
and facilitate the arbitral process and not to displace it.The approach, in specifically provided for in the arbitration agreement. Similarly, in
the context of s. 11, must be not to encroach on the procedural powers Kejuruteraan Bintai Kindenko Sdn Bhd v Serdang Baru Properties Sdn
of the arbitrators but to reinforce them . . . They are certainly not there Bhd and another originating summons,40 the High Court held that

Malaysia
even though the claims and counterclaims of the respective parties • the composition of the arbitral tribunal or the arbitral proce-
had dealt with the issue of pre-award interest, the effect of sec- dure was not in accordance with the agreement of the parties
tion 33(6) of the 2005 Act was to preclude the issue of pre-award (unless such agreement was in conflict with a provision of the
interest being submitted to arbitration. However, the High Court 2005 Act from which the parties cannot derogate), or, failing
recognised that the saving provision in section 39(3) operated to such agreement, was not in accordance with the 2005 Act; or
preserve the rest of the award.41 • the award has not yet become binding on the parties or has
This lacuna in the 2005 Act has now been cured by the been set aside or suspended by a court of the country in
Second 2018 Amendment Act. Following the amendments, sec- which, or under the law of which, that award was made.
tion 33(6) now provides that the arbitral tribunal ‘. . .may, in the
arbitral proceedings before it, award simple or compound inter- An award may also be set aside or have its recognition or enforce-
est from such date, at such rate and with such rest as the arbitral ment refused where the award is in conflict with the public policy
tribunal considers appropriate. . .’. of Malaysia; or on the ground that the subject matter of the dispute
Section 37 of the 2005 Act addresses the setting aside of the is not arbitrable under Malaysian law. In this regard, section 4(1) of
award where the seat of arbitration is Malayisa. Section 37(4) of the the 2005 Act (as amended in 2018) expressly provides that:
2005 Act provides, inter alia, that an application for setting aside
of an award may not be made after 90 days from the date that the any dispute that the parties have agreed to submit to arbitration under
award was issued. As was established in Triumph City Development an arbitration agreement may be determined by arbitration unless the
Sdn Bhd v Kerajaan Negeri Selangor Darul Ehsan,42 this is a strict arbitration agreement is contrary to public policy or the subject matter
limit, and the court does not have an inherent jurisdiction to set of the dispute is not capable of settlement by arbitration under the laws
aside an award even if an application is made out of time:43 of Malaysia.
. . . If the parties are allowed to go to court to challenge arbitration awards Various cases illustrate that the prevailing judicial philosophy is
even if it is made out of time, then there is no point for the parties to to take an extremely restrictive approach to permitting setting
have undergone arbitration process . . . It defeats the very purpose of aside applications. In Ajwa for Food Industries Co (Migop), Egypt
having arbitration as the chosen mode of dispute resolution contractually v Pacific Inter-link Sdn Bhd & another appeal, the Court of Appeal
agreed to by the parties.This is the reason why the court should be strict explained that ‘the court should be slow in interfering with an
in entertaining this kind of application. arbitral award. The court should be restrained from interference
unless it is a case of patent injustice which the law permits in clear
Sections 38 and 39 of the 2005 Act address the recognition and terms to intervene.’46
enforcement of awards. While section 38 of the 2005 Act sets out As regards the meaning of the term ‘public policy’, it is defined
the procedure for recognising and enforcing awards, section 39 of in section 37(2) of the 2005 Act as including situations where ‘the
the 2005 Act sets out the grounds on which the recognition or making of the award was induced or affected by fraud or corrup-
enforcement of an award will be refused. The court, when decid- tion’, or where a breach of natural justice had occurred during the
ing whether or not to recognise and enforce the award under arbitral proceedings or in the making of the arbitral award. The
section 38(1), will have to consider, apart from the formal require- courts have been clear that the ground is extremely narrow and to
ments therein, whether any of the grounds under section 39(1) be read restrictively. As stated by Lee Swee Seng J in Asean Bintulu
of the Arbitration Act apply. After having satisfied itself that the Fertilizer Sdn Bhd v Wekajaya Sdn Bhd,47 ‘[a]n error of law or fact
requirements of section 38(1) have been complied with and there does not engage the public policy of Malaysia. . .’.48 In this regard,
are no grounds under section 39(1) for refusing to recognise and it is clear that the Malaysian courts do not equate public policy in
enforce the award, it is then mandatory for the court to recognise this context with a wide conception of the public interest; rather,
and enforce the award: Tune Talk Sdn Bhd v Padda Gurtaj Singh.44 the courts have applied the following test:49
Furthermore, where a setting-aside application had already been
dismissed under section 37, and the award is enforced under Although the concept of public policy of the State is not defined in the
section 39, the losing party cannot relitigate the issues that had Act or the model law, the general consensus of judicial and expert opinion
already been decided in the seting-aside action to resist enforce- is that public policy under the Act encompasses a narrow scope. In our
ment as it was in Mewaholeo Industries Sdn Bhd v Awan Timur Palm view, it should only operate in instances where the upholding of an arbi-
Oil Mills Resources (Johor) Sdn Bhd.45 tral award would ‘shock the conscience’ . . . or is ‘clearly injurious to the
In the 2005 Act, the grounds for setting aside an award, and for public good or . . . wholly offensive to the ordinary reasonable and fully
refusing recognition or enforcement, are drawn from article V of informed member of the public’ . . . or where it violates the forum’s most
the New York Convention. A party seeking to set aside or seeking basic notion of morality and justice. . .. This would be consistent with
to resist recognition or enforcement must show that: the concept of public policy that can be ascertained from the preparatory
• a party to the arbitration agreement was under an incapacity; materials to the Model Law.50
• the arbitration agreement is not valid under the law to which
the parties have subjected it, or, failing any indication thereon, The law on setting aside awards has seen recent development.
under the laws of the state in which the award was made; A case in point is Sime Darby Property Berhad v Garden Bay Sdn
• the party making the application was not given proper notice Bhd.51 The High Court was faced with an application to set aside
of the appointment of an arbitrator or of the arbitral proceed- an arbitral award.The dispute concerned a landscaping and turfing
ings or was otherwise unable to present that party’s case; project.The claimant in the arbitration was the contractor for the
• the award deals with a dispute not contemplated by or not project, while the respondent was the employer. The tribunal had
falling within the terms of the submission to arbitration; found the claimant to be liable for rectification works instructed
• the award contains decisions on matters beyond the scope of by the contract administrator, but then held that the parties had, by
the submission to arbitration; conduct, accepted the retention sum as a mode to allocate funds
Malaysia
for rectification works and sought to limit the amount recoverable thrown doubt on the ambit of the decision in Garden Bay, as
by the employer to that amount retained. This, however, was not discussed below.
the position taken by either party. In Pancaran Prima Sdn Bhd v Iswarabena Sdn Bhd,57 the arbitra-
The court set aside the award and held that ‘. . . if the arbitrator tor had awarded a margin for loss of profit at 10 per cent, reason-
had wanted to rely on her knowledge of what she understood to ing that ‘in Malaysian construction industry . . . most contractors
be the usual practice in construction contracts, then she should would include a margin of between 10–15 per cent’ for profit and
inform the parties about it and invite them to challenge such an attendance. The respondent argued before the Court of Appeal
understanding of usual practice’.52 The court, however, pointed that this rate of 10 per cent had been arrived at based on extrane-
out that this was not done, and that the arbitrator had thus decided ous evidence, with a factual basis that was not tendered or submit-
an ‘issue not at play and not pleaded and in that pejorative sense, ted by the parties. It was further argued that both parties were not
an “invented issue” and thus was in breach of natural justice in given a chance to address the arbitrator on the same extraneous
not allowing the parties to be heard on this new issue’.53 Of sig- evidence and that this had caused prejudice to the parties. The
nificance is the High Court’s view as to the test to be applied Court of Appeal agreed with the respondent, finding that, upon a
where there had been a breach of natural justice.The High Court perusal of all the evidence and submissions of parties filed before
considered that ‘[a]ny breach of natural justice not in the manner the arbitrator, this rate of profit and attendance was ‘not supported
of a technical or inconsequential breach would be sufficient for by evidence, not contended by any party, neither [was it] raised in
the court to intervene under section 37(1)(b)(ii) read with section their submissions’. This sufficed to set aside the award under sec-
37(2)(b) application to set aside’.54 tion 37 of the 2005 Act. The Court of Appeal further considered
However, the Court of Appeal (in Garden Bay Sdn Bhd v Sime that, while it was cognisant of its power under section 37(6) to
Darby Property Bhd)55 subsequently allowed an appeal against the remit the matter back to the arbitrator, it declined to do so due
High Court’s decision. The Court of Appeal placed emphasis on to ‘clear errors committed by the learned presiding judge’ and
section 37(6) of the 2005 Act, which provides the High Court instead exercised its discretion to set aside the award.
with the power to ‘. . .adjourn the proceedings . . . to allow the Likewise, in Sigur Ros Sdn Bhd v Master Mulia Sdn Bhd.58 The
arbitral tribunal an opportunity to resume the arbitral proceed- arbitrator had relied on extraneous evidence in coming to its
ings or to take such action as in the arbitral tribunal’s opinion decision and had not allowed parties to deal with or respond to
will eliminate the grounds for setting aside’.The Court of Appeal this extraneous evidence.The High Court found that this violated
considered that the effect of this sub-section, read in light of the the rules of natural justice. However, the High Court declined
other provisions of the 2005 Act, entailed that it was incumbent to exercise its discretion to set aside the award, as the appellant
on a party applying to set aside an award to simultaneously request had not been prejudiced by the breach. On appeal, the Court of
the court to consider whether the award should be remitted to Appeal allowed the appeal and set aside the award. The Court of
the arbitral tribunal: Appeal held that the appellant need not show prejudice for the
award to be set aside. No such requirement existed in the 2005
. . .it is not the court’s function to set aside the award under section 37 Act. While such a requirement may exist in other jurisdictions,
. . . without giving an opportunity to the arbitral tribunal to deliver an such as Singapore or the United Kingdom, the court considered
enforceable award. Any parties who make an application under section that it could not import into the Malaysian arbitration regime a
37 or section 42 without seeking appropriate direction pursuant to sec- principle that was not contemplated by the 2005 Act. The Court
tion 37(6), must be seen to be an abuse of process of court and must be of Appeal did, however, observe that in considering whether dis-
dismissed. . . cretion should be exercised to set aside an award, there had to be
an evaluation of relevant factors such as the seriousness, magnitude
The failure of the applicant to apply for a remission to the tribunal or materiality of the breach, its nature and its impact, whether the
under section 37(6) of the 2005 Act was, in the view of the Court breach would have any effect on the outcome of the arbitration,
of Appeal, fatal to its case to set aside the award. the costs of a rehearing and whether there was any delay in raising
The decision is remarkable. It is founded in a robust concep- the complaint.The Court of Appeal in Sigur Ros further observed
tion of the statutory philosophy of judicial non-interference and that while section 37(6) provided for the matter to be remitted
the unique nature of the Malaysian statutory framework, and, as back to the arbitral tribunal, this option could only be exercised at
far as the authors can tell, has no parallel in United Kingdom, either party’s behest and not on the court’s own invocation. Given
Hong Kong or Singapore jurisprudence.While jurisdictions such that neither party had made such a request, the court decided that
as Singapore recognise the power of the court hearing a setting- it had no power to remit the matter to the arbitrator and accord-
aside application to suspend setting-aside proceedings in order ingly set aside the award.
for the tribunal to be given the opportunity to eliminate the Another significant case is Awan Timur Palm Oil Mills Resources
grounds advanced in support of the application (see, for example, (Johor) Sdn Bhd v Mewaholeo Industries Sdn Bhd,59 where the Court
JVL Agro Industries v Agritrade International Pte Ltd),56 it has never of Appeal declined to set aside an award for an alleged breach of
been suggested that it is mandatory for the applicant to move the natural justice.There, the dispute was referred to arbitration under
court for such a suspension. Parties seeking to set aside an arbitral the Palm Oil Refiners Association of Malaysia (PORAM). Under
award under the 2005 Act ought to be very cautious in making an the PORAM Rules, an arbitration must commence within 120
application to set aside, without a simultaneous application for the days after the expiry of the contract shipment period or the bill of
court to direct the tribunal to cure the matter giving rise to the lading, whichever was later.The applicant alleged that the tribunal
complaint; indeed, the Court of Appeal went so far as to suggest had failed to adhere to the 120-day period for the commence-
that a failure to couple a setting-aside application with a section ment of the arbitration, thereby breaching the rules of natural
37(6) application could constitute an abuse of process. It remains justice. The High Court of Johor Bahru declined to set aside the
to be seen whether the decision will be endorsed by the Federal award.The court observed that the tribunal had allowed an exten-
Court. However, two subsequent Court of Appeal decisions have sion of time under the PORAM Rules in the exercise of its own

Malaysia
discretion.The applicant had not argued before the court whether had been no breach of the rules of natural justice. Moreover, the
such an extension was in excess of the tribunal’s jurisdiction or Court of Appeal took an extremely pragmatic approach to the
challenged the proper exercise of such discretion. In light of this, question of whether the issue had been sufficiently engaged on
the court found that the tribunal had not offended the rules of the pleadings:
natural justice.
In Intraline Resources Sdn Bhd v Exxonmobil Exploration and [32] . . .even though sections 26 and 27 of the Limitation Act 1953
Production Malaysia Inc,60 the High Court commented that the were not formally pleaded, the pleadings as they stood were adequate to
mechanism of section 37 of the 2005 Act was not to be abused by put the Respondent on notice the issue of postponement of the limita-
applicants and reiterated that the threshold for judicial intervention period. It was undisputed that the defence of the Respondent in the
tion under section 37 of the 2005 Act was high:61 alternative was that the Appellant’s claim was time barred by virtue of
the Limitation Act and once that issue of limitation was put on the table
. . .In order to uphold and respect party autonomy the Courts can only so to speak, the Appellant was fully entitled to avail of any means to
intervene in limited circumstances as defined in the statute, focusing on rebut the defence of limitation.
a fair process and on the right of the parties to the arbitration to a deci-
sion that is within the true ambit of their consent to have their dispute The Court of Appeal in this context endorsed the following
arbitrated, and plainly do not extend to the realm of vindicating the proposition, drawn from the Singapore decision in PT Prima
merits or correctness of the decisions of the arbitral tribunal. Courts cannot International Development v Kempinski Hotels SA:63
entertain setting aside applications which are in truth a manifestation of
the desire of the regretful losing party in arbitration to be given another . . .any new fact or change in the law arising after a submission to arbitra-
opportunity to argue the merits of its case. tion 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
It is also clear that the courts take a pragmatic approach to such need not be specifically pleaded.
applications and will not be strung up by technicalities. This is
illustrated by the decision in Tridant Engineering (M) Sdn Bhd v Conclusion
Ssangyong Engineering and Construction Co Ltd.62 Malaysia continues its growth as a centre for arbitration.The 2005
This was an appeal against a High Court decision to the Act provides a coherent modern legislative framework in line
effect that an award contained a decision on matters beyond the with international norms and best practices. As it stands, Malaysia
scope of the submission to arbitration. The respondent was the has all the components in place to take off as a centre for inter-
main contractor for a development in Johor. The appellant was national arbitration. Recent decisions of the country’s domestic
a nominated subcontractor, who entered into two contracts with courts underscore the fact that the Malaysian judiciary is now
the respondent contractor, one for the installation of electrical distinctly pro-arbitration.
services, and the other for extra-low voltage installation works. Given the current arbitral landscape and the progressive and
The dispute in the arbitration concerned a claim by the appellant innovative approach taken by the AIAC in promoting Malaysia
for sums said to be due and owing.The respondent’s position was as a cost-efficient centre for dispute resolution, the country is
that it was entitled to refuse payment on the basis of a ‘pay when poised to tap into the significant growth of international arbi-
paid’ clause in the contracts and that, in any event, the appellant’s tration in the Association of Southeast Asian Nations and Asia-
claim was time-barred.The appellant’s position was that a reason- Pacific region. The right foundations are in place, and the future
able time to pay had lapsed and hence the respondent was liable remains bright.
to pay. Regarding the limitation issue, the appellant’s position was
that time only started to run from the date reasonable steps had Notes
been taken by the respondent to be paid by the employer. 1 Section 2 of the 2005 Act.
The arbitrator decided that the respondent’s liability to pay was 2 Paragraph 17 of the Explanatory Note by the UNCITRAL Secretariat
not contingent on the receipt of the sum from the employer. On on the 1985 Model Law on International Commercial Arbitration.
the limitation issue, the arbitrator decided that there had been an 3 Section 2 of the 2005 Act.
acknowledgment of debt in a proof of debt filed with an insolvent 4 Section 22(1) of the 2005 Act.
entity who had an interest in the project, and that this resulted in 5 Section 30(2) of the 2005 Act.
a postponement of the limitation period pursuant to sections 26 6 Section 12(1) of the 2005 Act.
and 27 of the Limitation Act 1953 (the Limitation Act). 7 Section 13(2) of the 2005 Act.
The High Court decided that this latter aspect of the arbitra- 8 Section 30(4) of the 2005 Act.
tor’s decision fell outside the scope of the reference to arbitra- 9 Fiona Trust & Holding Corporation and Others v Privalov and Others
tion. It is noteworthy, in this regard, that the appellant had not [2007] 4 All ER 951, at 957.
placed any reliance on sections 26 and 27 of the Limitation Act 10 Press Metal Sarawak v Etiqa Takaful Bhd [2016] MLJU 404, KNM
in its pleadings. Process Systems Sdn Bhd v Mission Biofuels Sdn Bhd [2013] 1 CLJ 993.
The Court of Appeal reversed the decision of the High Court See also PLB-KH Bina Sdn Bhd v Hunza Trading Sdn Bhd [2014] 1 LNS
and noted that, although the relevant sections of the Limitation 1074.
Act were not pleaded, the arbitrator had invited full submissions 11 Section 18 of the 2005 Act also provides for the procedures and
on the issue. Moreover, there was no evidence that the respondent time limits for raising objections to the arbitral tribunal’s jurisdiction. It
had protested against the arbitrator’s introduction of the issue of also provides for appeal to court (which shall have the final say) in
postponement of the limitation period. Similarly, the respondent regard to the arbitral tribunal’s ruling on its jurisdiction.
had not sought to introduce any further evidence. 12 [2008] 1 MLJ 233.
The Court of Appeal considered, in this context, that the 13 [2009] 9 CLJ 32.
failure to plead was not fatal to the respondent’s claims. There 14 [2013] 1 LNS 288.
Malaysia
15 Government of India v Petrocon India Limited [2016] MLJU 233. 39 [2018] 1 MLJ 1.
16 Arul Balasingam v Ampang Puteri Specialist Hospital Sdn Bhd 40 [2017] MLJU 1332.
(formerly known as Puteri Specialist Hospital Sdn Bhd) [2012] 6 MLJ 41 Ibid, at [42].
104 at 110I-111A. 42 [2017] MLJU 1518.
17 [2018] MLJU 310. 43 Ibid, at [4]-[5].
18 [2016] MLJU 404. 44 [2019] MLJU 67.
19 [2007] SCJ No. 34. 45 [2018] MLJU 2024.
20 [2005] 4 SLR 646. 46 [2013] 2 CLJ 395, at [13].
21 [2009] 4 SLR 732. 47 [2016] MLJU 354.
22 [2018] MLJU 1814. 48 Ibid, at [44].
23 [2017] MLJU 515. 49 Kelana Erat Sdn Bhd v Niche Properties Sdn Bhd [2012] 5 MLJ 809.
24 Cooperative Rabobank UA (Singapore Branch) v Misc Bhd & Anor 50 Taken from PT Asuransi Jasa Indonesia (Persero) v Dexia Bank SA
[2017] MLJU 2076, at [14]-[19]. [2007] 1 SLR(R) 597, at [59] (internal citations omitted).
25 [2018] 7 MLJ 1. 51 [2017] MLJU 145.
26 [2017] MLJU 1117. 52 Ibid, at [42].
27 Ibid, at [44]. 53 Ibid, at [39].
28 [2017] MLJU 900. 54 Ibid, at [25].
29 [2014] EWCA Civ 1575. 55 [2017] MLJU 1998.
30 [2018] MLJU 885. 56 [2016] 4 SLR 768.
31 [2016] MLJU 233. 57 [2018] MLJU 968.
32 Ibid, at [35]. 58 [2018] 3 MLJ 608.
33 [2015] 4 CLJ 409. 59 [2018] MLJU 1343.
34 Ibid, at [17]. 60 [2017] MLJU 1299.
35 Ibid, at [21]. 61 Ibid, at [90].
36 [2017] 2 MLJ 141. 62 [2016] MLJU 5.
37 [2017] MLJU 1484. 63 [2012] SGCA 35.
38 [2018] MLJU 1400.

Malaysia
Andre Yeap SC Avinash Pradhan

Rajah & Tann Singapore LLP Rajah & Tann Singapore LLP
Andre Yeap SC is Rajah & Tann Singapore’s senior partner. Apart Avinash Pradhan is a partner of Rajah & Tann Singapore LLP and
from international arbitration work, where he has also represented of Christopher & Lee Ong, Malaysia. Avinash’s practice encom-
various state interest in investor-state disputes, Andre has devel- passes a broad spectrum of commercial and corporate disputes.
oped a broad-based corporate, commercial and insolvency-related He is familiar with conducting international arbitrations under
litigation practice, which includes banking, securities, shareholder the major arbitral institutions as well as ad hoc arbitration, and
disputes, fraud, breach of fiduciary duties, trust and estate matters, with proceedings in both the Singapore and Malaysian courts. He
often with strong cross-border elements. Many of his cases, includ- has substantial experience of cross-border disputes and disputes
ing cases relating to international arbitration awards, are landmark involving a conflict between international arbitration proceedings
cases, setting precedent for various areas of the law. The Legal 500 and court litigation, and is adept at formulating and applying for
Asia Pacific has stated,‘Andre Yeap SC is a pillar of strength in com- urgent interim relief, including freezing and anti-suit injunctions.
mercial matters’. He has been consistently recognised as a market Avinash was named as one of Singapore’s most influential lawyers
leading lawyer in arbitration and dispute resolution by various under the age of 40 by the Singapore Business Review and has been
publications, including Global Arbitration Review, Chambers Global, recognised in the 2017, 2018 and 2019 editions of Best Lawyers
Chambers Asia-Pacific and AsiaLaw Profiles. Andre is a member of International as one of Singapore’s leading lawyers in the field of
the Energy Market Authority Board and was previously deputy international arbitration.
chairman of the Income Tax Board of Review and a member of
the Competition Appeal Board.
9 Battery Road Rajah & Tann Singapore is one of the largest full-service law firms in Singapore and South East Asia.
#25-01 Straits Trading Building Over the years, the firm has been at the leading edge of law in Asia, having worked on many of
Singapore 049910 the biggest and highest-profile cases in the region. The firm has a vast pool of talented and well-
Tel: +65 6535 3600 regarded lawyers dedicated to delivering the very highest standards of service across all the firm’s
Fax: +65 6225 9630
practice areas.
The firm entered into strategic alliances with leading local firms across South East Asia and this
Andre Yeap SC
andre.yeap@rajahtann.com led to the launch of Rajah & Tann Asia in 2014, a network of more than 600 lawyers. Through Rajah
& Tann Asia, the firm has the reach and the resources to deliver excellent service to clients in the
Avinash Pradhan region including Cambodia, China, Indonesia, Lao PDR, Malaysia, Myanmar, Philippines, Singapore,
avinash.pradhan@rajahtann.com Thailand and Vietnam. The firm’s geographical reach also includes Singapore-based regional desks
focusing on Japan and South Asia. Further, as the Singapore member firm of the Lex Mundi Network,
www.rajahtannasia.com the firm is able to offer its clients access to excellent legal support in more than 100 countries around
the globe.
Philippines
Jan Vincent S Soliven and Camille Ross G Parpan
Arbitration in the Philippines the agreement.12 In contrast, no such mechanism appears to be

Arbitration in the Philippines is governed by three main pieces available in international arbitration. Rather, the rules on waiver13
of legislation: the New Civil Code (RA 386), the Arbitration and default,14 which allow the continuation of the arbitral pro-
Law of 1953 (RA 876), and the Alternative Dispute Resolution ceedings in the absence of a party provided that due notice has
Act of 2004 (RA 9285). Construction is specifically governed by been given, shall apply.
the Construction Industry Arbitration Law of 1985 (EO 1008).
Arbitration in the Philippines is also governed by the Special Rules Court action in breach of an arbitration agreement
of Court on Alternative Dispute Resolution1 and Department Consistent with the pro-arbitration state policy, a party in a pend-
of Justice (DOJ),2 promulgated by the Supreme Court and the ing action in violation of an arbitration agreement can request
Department of Justice, respectively, all of which underscore state the court to refer the parties to arbitration in accordance with
policy in favor of arbitration.3 such agreement.15 Where such a request for referral to arbitration
The state support accorded to arbitration is further highlighted is made, the courts shall refer the parties to arbitration, subject
by the state policy of implementing the competence-competence only to a finding that the agreement is null and void, inopera-
principle, which accords to the arbitral tribunal the first opportu- tive or incapable of being performed.16 In such a case, the suit or
nity or competence to rule on the issue of its own jurisdiction to proceeding before the court shall be stayed.17 Thus, in one case,
decide a dispute submitted to it for decision, including any objec- the parties were referred to arbitration upon elevation of the case
tion with respect to the existence or validity of the arbitration before the Supreme Court, notwithstanding the conduct of trial
agreement. Courts are even mandated to exercise judicial restraint on the merits by the trial court. In that case, the court emphasised
and defer to the arbitral tribunal in ruling on such issues.4 This that since the petitioner filed a complaint without prior recourse
is in line with the state policy to respect party autonomy, with to arbitration, the proper procedure to enable the Construction
the greatest cooperation and least intervention from the courts.5 Industry Arbitration Commission (CIAC) to decide on the dis-
To this end, court intervention is limited by RA 92856 and the pute is to request the stay or suspension of such action, as provided
Special ADR Rules7 in very specific instances. Where the parties under RA 876.18
have agreed to submit their dispute to arbitration, courts shall Should a party to an arbitration agreement question the
refer the parties to arbitration bearing in mind that such arbitra- existence, validity and enforceability of the arbitration agreement,
tion agreement is the law between the parties and that they are judicial relief may be sought prior to the commencement of the
expected to abide by it in good faith.8 arbitration.19 The filing of such petition does not prevent the
The state policy favouring arbitration, notwithstanding, there commencement of arbitral proceedings20 and requires the courts
are a few matters that cannot be subject to arbitration in the to make no more than a prima facie determination of that issue.21
Philippine setting: While the rules provide for judicial relief even in cases where
• labour disputes covered by the Philippine Labor Code; an arbitration proceeding has been commenced and the arbitral
• civil status of persons; tribunal has ruled upon a preliminary question on jurisdiction,22
• validity of marriage; this does not seem to be at odds with the competence-compe-
• any grounds for legal separation; tence principle. The Special ADR Rules itself require the courts
• jurisdiction of courts; to exercise judicial restraint and defer to the competence or juris-
• future legitime; diction of the arbitral tribunal by allowing the tribunal the first
• criminal liability, opportunity to rule on such issues.23 Moreover, the rules imple-
• future support; and ment a no injunction policy such that judicial recourse to the
• those which by law cannot be compromised.9 court shall not prevent the arbitral tribunal from continuing the
proceedings and rendering its award. In fact, courts are mandated
Commencing an arbitration proceeding not to enjoin the arbitration proceedings during the pendency
The principle of party autonomy empowers the parties to agree of the action.24
on the rules governing the arbitral proceedings. In its absence,
domestic arbitration proceedings are commenced by the serv- Selection of and challenge to arbitrators
ing of a demand for arbitration by either party upon the other.10 Party autonomy also extends to the parties’ selection and chal-
Similarly, international arbitration is commenced by sending a lenge to arbitrators, subject to a few restrictions concerning arbi-
request for the referral of a dispute to arbitration.11 trator qualifications25 and the prohibition against any clause giving
In conformity with the state’s pro-arbitration policy, where a a party the power to choose more arbitrators than the other.26
party fails, neglects or refuses to perform an agreement for arbitra- Where the parties have agreed to submit their dispute to
tion, the aggrieved party may secure a court order directing the institutional arbitration rules, and unless they agree otherwise, the
parties to proceed to arbitration in accordance with the terms of institution’s arbitration rules for the selection and appointment of

Philippines
arbitrators shall be followed. In ad hoc arbitration, and absent the such inconsistency is within the authority of the arbitral tribunal
parties’ agreement on the selection and appointment of arbitrators, to decide.43
the default appointment shall be made by the national president
of the Integrated Bar of the Philippines or his or her duly author- Conduct of proceedings
ised representative.27 The parties are free to agree on the procedure to be followed.
This rule appears to have modified the rule in section 8 of RA Without any agreement, the arbitral tribunal may conduct arbi-
876, providing for the role of courts in the appointment of arbitra- tration in the manner it considers appropriate.44 The power con-
tors in domestic arbitration in the absence of the parties’ agree- ferred upon the tribunal includes the power to determine the
ment. As it now stands, courts shall act, as appointing authority, admissibility, relevance, materiality and weight of any evidence.45
only on specified grounds.28 R.A. 876 confers upon arbitrators in domestic arbitration the
If an appointed arbitrator does not possess qualifications or power to require any person to attend a hearing as a witness and
circumstances exist that give rise to justifiable doubts as to an to subpoena documents, when the relevancy of the testimony
arbitrator’s impartiality or independence, a party may challenge and the materiality thereof has been demonstrated to the arbi-
the appointment of an arbitrator.29 It bears noting that judicial trators.46 The same provision grants arbitrators the power at any
recourse in challenging the appointment of an arbitrator may only time, before rendering the award, to safeguard and/or conserve
be had when such appointing authority fails or refuses to act on any matter which is the subject of the dispute in arbitration. In
the challenge within the proper period.30 addition, arbitrators in domestic arbitration are empowered to
In the event of an arbitrator’s failure or impossibility to act, require parties to produce such additional evidence as the arbitra-
or for other reasons, acts with undue delay, the arbitrator’s man- tors shall deem necessary to an understanding and determination
date shall terminate upon his or her withdrawal or upon the par- of the dispute.47
ties’ agreement on the termination.31 As with the other remedies In all of these, the parties’ fundamental right to equality of
provided under the Special ADR Rules, the termination of the treatment and full opportunity to present its case remain both in
mandate of an arbitrator in the aforementioned circumstances may domestic and foreign arbitration.48
only be sought upon the appointing authority’s failure or refusal
to decide the matter within the proper period.32 Issuance of arbitral awards
The law prescribes the form and contents of the award for domes-
Interim measures tic arbitration. The award must be made in writing and signed
Pursuant to the Model Law33 and RA 9285,34 requests for interim and acknowledged by the sole arbitrator or by a majority of the
measure of protection before a court is not incompatible with an arbitrators, if there is more than one.49 This same rule applies in
arbitration agreement. In Transfield Philippines, Inc v Luzon Hydro foreign arbitrations,50 with the additional requirement that the
Corporation,35 the Supreme Court explicitly recognised that the reason for any omitted signature is stated and that reasons upon
pendency of an arbitral proceeding does not foreclose resort to which the award is based is stated. The statement of reasons may
the courts for provisional reliefs. be dispensed with upon the parties’ agreement.
In such cases, or where the arbitration proceedings have been In the event of a settlement between the parties, the settle-
initiated, requests for interim measures of protection or modifica- ment shall be recorded in the form of an arbitral award on agreed
tion thereof may only be made and acted upon by the court to terms following the form prescribed for arbitral awards.51 Parties
the extent that the arbitral tribunal has no power to act on any to a domestic arbitration may also request that such settlement be
such interim measure, or is unable to act effectively,36 or for assis- embodied in an award which shall be signed by the arbitrators.52
tance in implementing or enforcing an interim measure ordered
by an arbitral tribunal.37 In addition to the grounds for the grant Post-award proceedings
of interim measures of protection by courts,38 an arbitral tribunal In Philippine jurisdiction, different rules govern the recogni-
may order any party to take such interim measure of protection tion and enforcement depending on the nature of the arbitral
as it may consider necessary in respect of the subject-matter of award, that is, whether the award is domestic or international.
the dispute. It may also require any party to provide appropriate International commercial arbitral awards are classified into inter-
security in connection with such measure.39 national commercial awards made in the Philippines and foreign
On the other hand, relief for interim measure shall be granted arbitral awards. Thus, it is necessary to characterise an award to
by the courts to prevent irreparable loss or injury, to provide secu- determine which specific procedural rules govern its recognition
rity for the performance of any obligation, to produce or pre- and enforcement.
serve any evidence, or to compel any other appropriate act or
omission.40 Domestic arbitration53
On this score, it is observed that deference is afforded to the Under RA 9285, domestic arbitration shall continue to be gov-
tribunal in respect of granting or denying measures of protec- erned by RA 876. Further, RA 9285 incorporates, by specific
tion.The Philippine procedural rules provide not only for deferral reference, certain provisions of the Model Law that likewise apply
of court action on any pending petition for an interim measure to domestic arbitration.54 Under RA 876, any party to the con-
where a tribunal has been constituted,41 but it also provides that troversy may apply for an order confirming the domestic arbitral
court orders granting or denying interim measures of protection award ‘at any time within one month after the award is made’.55 It
may be subject to the arbitral tribunal’s subsequent grant, modi- is curious to note, however, that under the Special ADR Rules, a
fication, amendment, revision or revocation. In fact, an interim petition to confirm a domestic arbitral award may be filed ‘at any
measure of protection issued by the arbitral tribunal shall, upon its time after the lapse of 30 days from receipt of the arbitral award’.56
issuance, be deemed to have ipso jure modified, amended, revised A party may also petition the court to correct or modify the
or revoked an interim measure of protection previously issued by award, which must be filed ‘not later than 30 days from receipt of
the court in case of inconsistencies between the two,42 and any the arbitral award’.57 Such petition to correct may be included as
Philippines
part of a petition to confirm the arbitral award or as a petition to party issue a writ of execution. If there are no remaining or surviv-
confirm that award.58 The court may correct and modify or order ing appointed arbitrators, the CIAC shall issue the awaited writ79
the arbitral tribunal to correct and modify the arbitral award in and the release of the writ of execution is purely ministerial.80 It
any of the cases mentioned in the Special ADR Rules.59 should be noted that unlike domestic arbitral awards, where filing
A few points stand out as regards petitions to correct or a petition before the court is necessary, the Revised CIAC Rules
modify. First, the Special ADR Rules provide for an additional of Procedure provide that the motion should be filed with the
ground not found in RA 876: where the arbitrators have omit- arbitral tribunal.
ted to resolve an issue submitted to them for resolution. Second,
it is worth mentioning that the Special ADR Rules allow the International Commercial Arbitration in the Philippines
court to ‘order’ the arbitral tribunal to correct and modify the Any party to an international commercial arbitration in the
arbitral award. Philippines may petition the court81 to recognise and enforce or
The petition to vacate a domestic arbitral award may be filed set aside an arbitral award.82
in opposition to a petition to confirm the arbitral award60 or it Under the Model Law, any party, with notice to the other
may be filed ahead of any petition to confirm.61 In the latter case, party, may request the arbitral tribunal to correct, interpret a spe-
the petition to confirm the arbitral award must be filed, by way cific point or part of an arbitral award,83 or make an additional84
of opposition, to such petition to vacate. Otherwise, the petition award.The request for interpretation and making of an additional
to confirm is vulnerable to a dismissal for violating the rule on award requires the parties’ agreement. In contrast, the remedy of
forum shopping, unless the court allows consolidation.62 The same requesting for an interpretation is unavailable to domestic arbi-
rule applies in case a petition to confirm is filed ahead of a peti- tration. Moreover, requesting an additional award is a ground to
tion to vacate. correct and modify an arbitral award under domestic arbitration.
In all instances, a petition to vacate shall be filed ‘not later Unlike the 30-day time bar in domestic arbitration, the peti-
than 30 days from receipt of the arbitral award’63 and any petition tion for recognition and enforcement of an international com-
filed beyond the 30-day period shall be dismissed.64 The dismissal, mercial arbitral award may be filed anytime from receipt of the
however, of any petition to vacate filed beyond the reglementary award. If, however, a petition to set aside an arbitral award is filed,
period shall not result in the dismissal of the petition to confirm the opposing party must file the petition for recognition and
filed by way of opposition.65 enforcement in opposition to the petition to set aside within 15
The grounds to vacate a domestic arbitral award under days from receipt thereof.85
RA 87666 and Special ADR Rules67 differ from the grounds to Noticeably, a petition to set aside may also be filed ahead of
set aside an arbitral award under Model Law.68 There seems to a petition to recognise and enforce in international commercial
be no inconsistency since the Special ADR Rules provide that arbitration. The period to file such petition to set aside is slightly
the grounds under the Model Law can be invoked to vacate a longer as the Special ADR Rules allow the party to file such peti-
domestic arbitral award.69 In deciding the petition to vacate the tion within three months from the time the petitioner receives
arbitral award, the court shall disregard any other ground other not his or her copy. A petition to set aside can no longer be filed after
mentioned70 except on grounds of public policy.71 the lapse of the three month period.86 Failure to file such petition
The court shall not vacate the award of the arbitral tribunal shall preclude a party from raising grounds to resist enforcement
merely on the ground that the arbitral tribunal committed errors of the award.
of fact, of law or of fact and law, as the court cannot substitute its The grounds to set aside or resist enforcement under the
judgment for that of the arbitral tribunal.72 Further, it should be Special ADR Rules87 are a replication of the same grounds pro-
noted that the failure of the tribunal to rule on matters submitted vided under the Model Law.88 In the same vein, courts shall dis-
for their resolution is not a ground to vacate a domestic arbitral regard any other ground to set aside or enforce the arbitral award
award. Rather, it is a ground to correct and modify a domestic other than those enumerated,89 except if the ground amounts to
arbitral award. a violation of public policy.90 The court shall not set aside the
award of the arbitral tribunal merely on the ground that the arbi-
Arbitration of construction disputes tral tribunal committed errors of fact, of law or of fact and law,
Once a final award has been rendered in an arbitration of con- as the court cannot substitute its judgment for that of the arbi-
struction disputes, any party may file a motion to correct the final tral tribunal.91
award within 15 days from receipt upon any of the grounds73
enumerated in the Revised Rules of Procedure Governing CIAC International commercial arbitration outside the Philippines
Arbitration (Revised CIAC Rules of Procedure). The recognition and enforcement of foreign arbitral awards shall
A final award rendered by the CIAC shall become executory be governed by the New York Convention and the ADR Rules.92
upon the lapse of 15 days from receipt thereof by the parties74 and At any time after receipt of a foreign arbitral award,93 any party
need not be confirmed by the regional trial court, as provided to a foreign arbitration may petition the court to recognise and
under EO No. 1008.75 However, a petition for review from a final enforce a foreign arbitral award.94 While there is no time bar as to
award may be taken76 on ‘questions of fact, of law, or mixed ques- petitions to recognise and enforce foreign arbitral awards, laches
tions of fact and law’.77 Notably, these grounds are not available to may apply should the petition be filed for an unexplained and
challenge domestic or international commercial awards. Further, unreasonable length of time. Thus, it may be wise to file any such
the petition for review shall not stay the execution of the final petition within a reasonable period of time in order to foreclose
award, unless the Court of Appeals directs otherwise.78 Should it any challenge based on laches.
direct the stay of execution of an arbitral award, the posting of a It is important for the applicant to establish that the country in
bond in an amount equal to the award is required. which the foreign arbitral award was made is a party to the New
Once the final award becomes executory, the arbitral tribunal York Convention.95 This particular fact is important since a con-
or its surviving members, shall upon motion of the prevailing vention award96 is recognised and enforced in accordance with the

Philippines
New York Convention and the ADR Rules. On the other hand, a In Chung Fu Industries v Court of Appeals,108 the Supreme
non-convention award97 shall be recognised and enforced in either Court held that, where the parties agree that the decision of the
two ways. The court may recognise and enforce a non-convention arbitrator shall be final and unappealable, the subject arbitration is
award as if it were a convention award when such country extends not necessarily beyond the ambit of the court’s power of judicial
comity and reciprocity to awards made in the Philippines.98 If that review. Chung Fu Industries further held that should the courts
country does not extend comity and reciprocity to awards made refuse or neglect to inquire into the factual milieu of an arbitrator’s
in the Philippines, a non-convention award shall be enforced as award to determine whether it is in accordance with the law or
a foreign judgment under the Philippine Rules of Court.99 This scope of its authority, the proper remedy is certiorari. Such action,
distinction plays a significant role as the rules applicable dictate however, will lie only where a grave abuse of discretion or an act
the grounds available to challenge such arbitral award.This will be without or in excess of jurisdiction on the part of the arbitrator
discussed in further detail below. is clearly shown. The court will not engage in a review of the
Unlike domestic arbitral awards and international commercial facts and determination of the law as applied ‘unless the supposed
awards made in the Philippines, courts have no power to vacate or errors of fact or law are so patent and gross and prejudicial as to
set aside a foreign arbitral award.100 A foreign arbitral award may, amount to a grave abuse of discretion or an exces de pouvoir on the
instead, be refused recognition and enforcement on any of the part of the arbitrator’.
grounds mentioned in the Special ADR Rules.101 The grounds In view of the presumption109 enjoyed by arbitral awards,
to refusing recognition and enforcement under the New York courts are commanded to vacate or set aside the decision of an
Convention are the same as the grounds enumerated under the arbitral tribunal only upon a clear showing that the award suffers
Special ADR Rules. Moreover, there is no provision under the from any of the grounds provided. Courts should not entertain any
ADR Act of 2004 or Special ADR Rules that authorise the fil- ground other than those provided except if the same amounts to a
ing of a petition to refuse recognition and enforcement ahead violation of public policy.110 The court shall not disturb the arbitral
of any petition to recognise and enforce a foreign arbitral award. tribunal’s determination of facts and interpretation of law.111
Any such application to refuse recognition and enforcement may The decisions of the regional trial courts may be appealed to
be done only by way of opposition to a petition for recogni- the Court of Appeals and may even reach the Supreme Court,
tion and enforcement.102 Similarly, the public policy defence is albeit on very limited grounds. In order to dissuade a losing
available to oppose the recognition and enforcement of a foreign party from raising groundless appeals to frustrate the execution
arbitral award.103 of an arbitral award, the Special ADR Rules require the party
A foreign arbitral award, when confirmed by a court of a appealing from the decision of the regional trial court to post a
foreign country or by a Philippine court, shall be enforced as bond. Otherwise, such failure shall be a cause for the dismissal of
such and not as a judgment of a foreign court.104 This distinction the petition.112
is material in that a foreign arbitral award may not be refused Moreover, a review by the Supreme Court is not a matter of
recognition and enforcement on the ground of a clear mistake of right, but of sound judicial discretion, which shall be granted only
law or fact. In fact, courts are mandated not to disturb the arbitral for serious and compelling reasons resulting in grave prejudice to
tribunal’s determination of facts and interpretation of law.105 On the aggrieved party.113
the other hand, a foreign judgment, under section 48, rule 39
of the Philippine Rules of Court, may be repelled by evidence Challenges to arbitration in the Philippines
of ‘clear mistake of law or fact’. In this sense, therefore, foreign Practising arbitration practice in the Philippines is not without its
arbitral awards are more difficult to resist enforcement as they can challenges. For one, the legal framework for judicial review, while
only be challenged on narrow grounds that do not include a ‘clear limited only to narrow grounds, may pose a challenge since losing
mistake of law or fact’. parties can challenge the confirmation, recognition and enforce-
In resolving the petition for recognition and enforcement, the ment of arbitral awards filed by prevailing parties all the way up
court shall either recognise and enforce the foreign arbitral award to the Supreme Court.While courts cannot delve into the merits
or refuse to recognise and enforce. The court shall not disturb of an arbitral award and substitute their own judgment as regards
the arbitral tribunal’s determination of facts and interpretation of the findings of fact, and interpretation and application of law, the
law. The ruling is such since it is presumed that a foreign arbitral tedious process of litigating an enforcement claim all the way up
award was made and released in due course of arbitration and is to the Supreme Court means that actual enforcement and execu-
subject to enforcement by the court, unless a ground to refuse tion might take longer than expected. In certain cases, the Court
recognition or enforcement is fully established. The decision of of Appeals, in its discretion, may even order the stay the execution
the court recognising and enforcing a foreign arbitral award is of a foreign arbitral award.114 Prevailing parties seeking enforce-
immediately executory. ment can, however, find solace in the fact that a party appealing
from the decision of the regional trial court is required to post
Judicial review under Special ADR Rules a bond in an amount equal to the arbitral award. The comfort
An agreement to refer a dispute to arbitration shall mean that the afforded by such provision, however, is lost when the enforcement
arbitral award shall be final and binding. Consequently, a party to claim is against the state since the state, its agencies and instrumen-
an arbitration is precluded from filing an appeal or a petition for talities are exempt from paying legal fees under the Special ADR
certiorari questioning the merits of an arbitral award.106 Appellate Rules.115 The other challenges against enforcing against the state
courts, however, are not precluded from ruling on the decision of will be dealt in further detail below.
the trial courts. The remedy of an appeal through a petition for As discussed above, arbitral awards are subject to challenge on
review or the remedy of a special civil action of certiorari from a very narrow grounds. Should arbitral tribunals decide on a mat-
decision of the regional trial court shall be allowed in the instances ter submitted for its resolution under its mistaken appreciation
and instituted only in the manner as provided under the Special of the facts of the case and the relevant laws applicable to the
ADR Rules.107 dispute, the parties are precluded from questioning such arbitral
Philippines
award for being erroneous. Except when the error committed is where the state gives its consent to be sued by private entities either by
so egregious and harmful to a party as to amount to an undeniable general or special law, it may limit [the] claimant’s action only up to the
excess of jurisdiction,116 the Supreme Court will not disturb the completion of proceedings anterior to the stage of execution and that the
findings of an arbitral tribunal even when the award contains an power of the Courts end when the judgment is rendered, since govern-
erroneous interpretation of the law. The Supreme Court has noted ment funds and properties may not be seized under writs of execution or
that ‘because arbitrators do not necessarily have a background in garnishment to satisfy such judgments, is based on obvious considerations
law, they cannot be expected to have the legal mastery of a mag- of public policy. Disbursements of public funds must be covered by the
istrate.There is a greater risk that an arbitrator might misapply the corresponding appropriation as required by law.119
law or misappreciate the facts en route to an erroneous decision.
This risk of error is compounded by the absence of an effective No less than section 29(1), article VI of the 1987 Philippine
appeal mechanism.’117 This poses a challenge as well to arbitration Constitution commands that ‘no money shall be paid out of the
practice in the Philippines as parties might be hesitant to agree to Treasury except in pursuance of appropriation made by law’.
submit their disputes to arbitrators, in view of the inherent ‘gam- The rule that government funds and properties may not be
ble’ attached to such proceedings. seized under writs of execution or garnishment is, in fact, embod-
The availability of the ‘public policy defence’ to challenge an ied in Supreme Court Administrative Circular No. 10-2000, dated
arbitral awards presents yet another intriguing question. As to what 25 October 2000. The same circular clarified, however, that only
constitutes public policy as a ground to challenge an arbitral award, properties held for public use, and generally everything held for
there is a paucity of rulings on the matter. The lack of case law governmental purposes, are not subject to execution. Property held
defining public policy as a ground to challenge an arbitral award for public purposes is not subject to execution merely because it is
gives courts considerable leeway to determine what constitutes a temporarily used for private purposes. If the public use is wholly
legitimate public policy defence. However, this trepidation appears abandoned, such property becomes subject to execution.
to have been already addressed in light of the recent pronounce- The Commission on Audit (COA) has primary jurisdiction
ment of the Supreme Court. over money claims against the government or any of its subdivisions,
In Mabuhay Holdings Corporation v Sembcorp Logistics Limited,118 agencies and instrumentalities.120 Under section 1, rule VIII of the
the Supreme Court adopted a narrow and restrictive approach 2009 Revised Rules of Procedure for the Commission on Audit, a
in defining public policy. In Mabuhay, a dispute arose regarding money claim against the government should be filed directly with
the joint venture of two corporations. Mabuhay argued that a the commission secretary. In Department of Environment and Natural
contractual stipulation in its agreement with Sembcorp violated Resources v United Planners Consultants, Inc,121 the Supreme Court
Philippine laws on partnership. The sole arbitrator ruled against ruled that the primary jurisdiction of the COA over money claims
Mabuhay and ordered a payment to Sembcorp with interest of against the government extends to confirmed arbitral awards. In
12 per cent from the date of the final award. The regional trial University of the Philippines v Dizon,122 the Supreme Court reiter-
court refused to recognise and enforce the arbitral award for being ated that the primary jurisdiction to examine, audit and settle all
contrary to Philippine laws on partnership and interest. Ergo, the claims of any sort due from the government or any of its subdivi-
trial court ruled that to enforce the final award would be contrary sions, agencies and instrumentalities pertains to the Commission
to public policy. The Court of Appeals reversed the ruling of the on Audit (COA). The Supreme Court determined that it was of
regional trial court, which prompted Mabuhay to elevate the case no significance that a final and executory decision already vali-
before the Supreme Court. dated the claim against a government instrumentality. In City of
The Supreme Court ruled that the ‘restrictive approach to Caloocan v Allarde,123 the Supreme Court emphasised that gov-
public policy necessarily implies that not all violations of the law ernment funds may not be subject to garnishment or levy in
may be deemed contrary to public policy’. The Supreme Court the absence of a corresponding appropriation law. The immunity,
further ruled that it is not uncommon for the courts in contracting however, of public funds from garnishment or levy does not apply
states of the New York Convention to enforce awards that does not where the funds sought to be levied are already allocated by law
conform to their domestic laws. While the Supreme Court ruled for the satisfaction of the money claim against the government.
that the stipulation did not violate Philippine law on partnership, No issues arises if there already exists an appropriation law
it stated that the enforcement of an award that supposedly violates to cover the prevailing party’s money claim or if the state will-
Philippine partnership law would not amount to a violation of ingly enacts such appropriation law. In the absence, however, of an
public policy. As regards the contention that the imposition of 12 appropriation law and should the state insist on not enacting one,
per cent interest was contrary to law and again, violated public is the prevailing party left without any recourse to seek enforce-
policy, the Supreme Court ruled that ‘mere incompatibility of a ment and execution against the state? In a number of cases,124
foreign arbitral award with domestic mandatory rules on interest the Supreme Court ruled that the special remedy of mandamus
rates does not amount to a breach of public policy’. may lie in order to compel the enactment and approval of the
Thus, mere errors in the interpretation of the law or factual necessary appropriation law. It must be noted, however, that these
findings would not suffice to warrant refusal of enforcement under cases involved an appropriation to be enacted by a city through
the public policy ground. The illegality of the award must reach an ordinance. One may question, nevertheless, the propriety of
a certain threshold such that enforcement of the same would be availing of mandamus in an enforcement claim against the national
against the state’s fundamental tenets of justice and morality or government as it may have constitutional underpinnings in light
would be blatantly injurious to the public or the interests of society. of a possible breach of the principle of separation of powers.
The biggest challenge, however, that may be encountered by
any prevailing party in the Philippine jurisdiction involves the fil- Conclusion
ing of an enforcement claim against the state. In itself, litigating Despite the relative infancy of arbitration in the Philippines and
against the state already poses serious challenges. Enforcing against the challenges in its continuing development, the increasing resort
the state, however, is another matter. The rule is that to arbitration by parties and practitioners, coupled with the state

Philippines
policy of promoting and encouraging the use of arbitration as 48 Section 32, RA 9285, article 18, UNCITRAL Model Law.
implemented by the courts reveal a positive and vibrant outlook 49 Section 20, RA 876.
for the future. 50 Article 31, UNCITRAL Model Law.
51 Article 30, UNCITRAL Model Law.
Notes 52 Section 20, RA 876.
1 AM No. 07-11-08-SC. 53 Section 32, RA 9285, otherwise known as the Alternative Dispute
2 Circular No. 098-09. Resolution (ADR) Act of 2004; rule 2, section 1.6, D(9), Department
3 Section 25, RA 9285. of Justice Circular No. 98, Series of 2009, otherwise known as the
4 Rule 2.4, Special ADR Rules. Implementing Rules and Regulations of the Alternative Dispute
5 Rules 2.1 and 2.2, Special ADR Rules. Resolution (ADR) Act of 2004 define Domestic arbitration as
6 Section 25, 40, and 46 of the ADR Act of 2004. arbitration that is not international as defined in article 1(3) of the
7 Rules 3, 5, 7, 8, 9, 10, 11, 19.1, 19.2 and 19.26 of the Special ADR Rules. Model Law. In turn, article 1(3) of the Model Law states:
8 Rule 2.2, Special ADR Rules. an arbitration is international if : (a) the parties to an arbitration
9 Article 2035, New Civil Code of the Philippines and Section 6, RA 9285. agreement have, at the time of the conclusion of that
10 Section 5, RA 876. agreement, their places of business in different States, or (b) one
11 Article 21, UNCITRAL Model Law. of the following places is situated outside the State in which the
12 Section 6, RA 876. parties have their places of business: (i) the place of arbitration,
13 Article 4, UNCITRAL Model Law. if determined in, or pursuant to, the arbitration agreement;
14 Article 25, UNCITRAL Model Law. (ii) any place where a substantial part of the obligations of
15 Rule 4, Special ADR Rules. the commercial relationship is to be performed or the place
16 Section 24, RA 9285. with which the subject-matter of the dispute is most closely
17 Section 7, RA 876. connected; or (iii) the parties have expressly agreed that the
18 LM Power Engineering Corporation v Capitol Industrial Construction subject-matter of the arbitration agreement relates to more
Groups, Inc, GR No. 141833, 26 March 2003. than one country.
19 Rule 3.2, Special ADR Rules. 54 SEC 33, Applicability to Domestic Arbitration, article 8, 10, 11, 12, 13,
20 Rule 3.3, Special ADR Rules. 14, 18 and 19 and 29 to 32 of the Model Law and section 22 to 31 of
21 Rule 2.4, Special ADR Rules. the preceding Chapter 4 shall apply to domestic arbitration.
22 Rule 3.12, Special ADR Rules. 55 Section 23, RA 876.
23 Rule 2.4 and 3.8, Special ADR Rules. 56 Rule 11. 2 (A), Special ADR Rules.
24 Rule 3.18, Special ADR Rules. 57 Rule 11.2 (B), Special ADR Rules.
25 In domestic arbitration, section 10, RA 876 requires the following 58 Rule 11.2 (F), Special ADR Rules.
qualifications for arbitrator: they must be of legal age; in full 59 Rule 11.4 (B), Special ADR Rules.
enjoyment of his civil rights; and knows how to read and write. 60 Rule 11.2 (D), Special ADR Rules.
Section 10 likewise prohibits the appointment of an arbitrator who 61 Rule 11.2 (E), Special ADR Rules.
is related by blood or marriage within the sixth degree to either 62 Rule 11.5, Special ADR Rules.
party to the controversy; has or has had financial, fiduciary or other 63 Rule 11.2 (C), Special ADR Rules.
interest in the controversy or cause to be decided or in the result of 64 Rule 11.2 (D), Special ADR Rules.
the proceeding; or has any personal bias, which might prejudice the 65 Rule 11.2 (E), Special ADR Rules.
right of any party to a fair and impartial award. 66 Section 24, RA 876.
26 Article 2045, Civil Code of the Philippines. 67 Rule 11.4. (A), Special ADR Rules.
27 Section 26, RA 9285. 68 Rule 34, UNCITRAL Model Law.
28 Rule 6.1, Special ADR Rules. 69 Rule 19.10, Special ADR Rules.
29 Article 12(2), UNCITRAL Model Law. 70 Rule 11.4., Special ADR Rules.
31 Rule 8, Special ADR Rules. 72 Ibid.
32 Rule 8.1 and 8.2, Special ADR Rules. 73 Section 17.1, Revised CIAC Rules of Procedure.
33 Article 9. 74 Rule 18.1, Revised CIAC Rules of Procedure.
34 Section 28. 75 Section 40, RA 876.
35 GR No. 146717, 19 May 2006. 76 Rule 18.2, Revised CIAC Rules of Procedure.
36 Section 28(a), RA 9285; rule 5.2 and rule 5.15, Special ADR Rules. 77 The petition for review shall be filed before the Court of Appeals
37 Section 28(b)(6) and section 29, RA 9285; rule 5.6(e) and rule 5.16, pursuant to rule 43 of the Rules of Court; section 3, rule 43 of the
Special ADR Rules. Rules of Court.
38 Section 29, RA 9285. 78 Rule 18.4, Revised CIAC Rules of Procedure.
39 Article 17, UNCITRAL Model Law. 79 Rule 18.5, Revised CIAC Rules of Procedure as amended by CIAC
40 Rule 5.4, Special ADR Rules. Res No. 07-2007.
41 Rule 5.15, Special ADR Rules. 80 Rule 18.5, Revised CIAC Rules of Procedure as amended by CIAC
42 Rule 5.13, Special ADR Rules. Res No. 13-2007.
43 Rule 5.14, Special ADR Rules. 81 Such petition to recognise and enforce or set aside, at the option
44 Rule 2.3, Special ADR Rules. of the petitioner, may be filed with the Regional Trial Court: where
45 Rule 19 (2), UNCITRAL Model Law. arbitration proceedings were conducted; where any of the assets
46 Section 14, RA 876. to be attached or levied upon is located; where the act to be
47 Section 15, RA 876. enjoined will be or is being performed; where any of the parties
Philippines
to arbitration resides or has its place of business; or in the National 106 Rule 19.7, Special ADR Rules.
Capital Judicial Region. 107 Rule 19.8, Special ADR Rules.
82 Rule 12.1, Special ADR Rules. 108 GR No. 96283, 25 February 1992.
83 Article 33 (1), UNCITRAL Model Law. 109 Rule 12.12, Special ADR Rules; rule 11.9, Special ADR Rules.
84 Article 33 (3), UNCITRAL Model Law. 110 Rule 19.10, Special ADR Rules.
86 Ibid. 112 Rule 19.25, Special ADR Rules.
88 Article 34, UNCITRAL Model Law. 114 Rule 19.22, Special ADR Rules.
90 Rule 19.10, Special ADR Rules. 116 Rule 19.36(d), Special ADR Rules.
91 Ibid. 117 Fruehauf Electronics Philippines Corporation v Technology
92 Section 42, RA 9285. Electronics Assembly and Management Pacific Corporation, GR No.
93 Rule 13.2, Special ADR Rules. 204197, 23 November 2016.
94 Rule 13.1, Special ADR Rules. 118 GR No. 212734, 5 December 2018.
95 Section 42, RA 9285. 119 Commissioner of Public Highways v San Diego, GR No. L-30098, 18
96 Article 1.6, C (5), IRR of the RA 9285. February 1970.
97 Article 1.6, C (10), IRR of the RA 9285. 120 Section 26, Presidential Decree No. 1445 otherwise known as the
98 Section 43, RA 9285; Rule 13.4, Special ADR Rules. Government Auditing Code of the Philippines.
99 Rule 13.12, Special ADR Rules. 121 GR No. 212081, 23 February 2015.
100 Rule 19.11, Special ADR Rules. 122 GR No. 171182, 23 August 2012.
101 Rule 13.4, Special ADR Rules. 123 GR No. 107271, 10 September 2003.
102 Section 45, RA 9285; rules 13.6 and 13.7, Special ADR Rules. 124 Star Special Watchman and Detective Agency v Puerto Princesa
103 Rule 19.10, Special ADR Rules. City, GR No. 181792, 21 April 2014; Spouse Ortega v Cebu, GR No.
104 Section 44, RA 9285. 18156-63, 2 October 2009; Municipality of Makati v Court of Appeals,
105 Rule 13.11, Special ADR Rules. GR Nos. 89898-99, 1 October 1990.

Philippines
Jan Vincent S Soliven Camille Ross G Parpan

Desierto & Desierto Law Desierto & Desierto Law
Jan Vincent S Soliven is an associate at Desierto & Desierto Law Camille Ross G Parpan is an associate at Desierto & Desierto Law,
where he is engaged in general litigation and arbitration. handling general litigation and arbitration cases.
He graduated with a degree in political science from the She obtained her BA in journalism from the University of
University of the Philippines. He obtained his LLB from the Santo Tomas and subsequently obtained her JD degree from
University of the City of Manila in 2012 and was admitted to the Angeles University Foundation. She was admitted to the Bar
Philippine Bar in 2013. in 2016.
Prior to joining the Desierto & Desierto, he was chief legal Before entering private practice, she served in the trial
officer of a Philippine publicly-listed company where he was court as a court decongestion officer and volunteered for the
engaged in corporate housekeeping and transactional and regula- decongestion project implemented by the Philippine Supreme
tory advice. Previously, he was an associate at a Makati-based law Court, in partnership with the American Bar Association and the
firm where he was engaged in criminal and civil litigation with Asia Foundation.
particular focus on family law cases.
Suite 2505, 25th Floor Desierto & Desierto Law is a firm is dedicated to addressing the needs of both institutional and indi-
The Orient Square Building vidual clients seeking assistance in matters pertaining to southeast international law, Asian invest-
F Ortigas Jr St ment law and trade practices, cross-border transactions, international and domestic arbitration,
Ortigas Center, Pasig City intellectual property claims, criminal cases, family law, commercial litigation, corporate law, appel-
Metro Manila 1605
late practice, administrative, banking, estate planning and labour law.
Philippines
The firm’s arbitration arm is led by Professor Dr Diane A Desierto, who is a holder of a doctor’s and
Tel: +632 470 2036
Fax: +632 470 2974 master’s degree from Yale Law School. She has lectured at the International Council for Commercial
Arbitration; the Chartered Institute of Arbitrators; the International Centre for Settlement of Investment
Jan Vincent S Soliven Disputes; the Mauritius International Arbitration Centre; the Philippine Dispute Resolution Centre Inc
jv.soliven@dapdlaw.com and the Philippine Institute of Arbitrators. Dr Desierto’s stellar academic record gives clients the assur-
ance that they will be ably and masterfully represented before any arbitration forum.
Camille Ross G Parpan
camillerossparpan@gmail.com
www.desiertolaw.com
Singapore
Alvin Yeo SC, Chou Sean Yu and Lim Wei Lee
WongPartnership LLP
Introduction working group to discuss the SIAC’s proposed Cross-Institution

International arbitration in Singapore hit new milestones in 2018. Consolidation Protocol.
The Singapore International Arbitration Centre (SIAC) In October 2018, the SIAC also entered into a memoran-
reported the receipt of 402 new cases from parties in 65 jurisdic- dum of understanding with the Peking University Law School
tions in 2018 (compared to 452 new cases from 58 jurisdictions in (PKU Law). Under the memorandum of understanding, the
2017). Out of these, 375 new cases were administered by the SIAC parties will work together to place law students from PKU Law
(421 in 2017) with the remaining 27 being ad hoc appointments. in internships at the SIAC, collaborate to incorporate a module
Overall, the SIAC’s caseload has expanded more than fourfold entitled ‘SIAC and Institutional Arbitration’ into PKU Law’s
over the past decade. programme. Upon request by the SIAC or PKU Law, both
In addition, the SIAC’s total sum in dispute for all new case fil- parties will also conduct joint training programmes, seminars,
ings spiked to US$7.06 billion (against US$4.07 billion in 2017). workshops or other events in China to promote the develop-
The Queen Mary University of London International ment and practice of international arbitration.
Arbitration Survey released on 9 May 2018 ranked the SIAC as
the most preferred arbitral institution in Asia and the third out Case Law
of the top five arbitral institutions in the world. Singapore was We summarise below some of the significant judgments released
further identified as the most preferred seat in Asia and the third- since our last report (from February 2018 to January 2019).
most preferred seat worldwide, after London and Paris, and ahead • In Swissbourgh Diamond Mines (Pty) Ltd and others v Kingdom
of Hong Kong, Geneva, New York and Stockholm. of Lesotho (2019) 1 SLR 263, the Court of Appeal held
that it had jurisdiction to set aside an investor-state arbi-
Public consultation by Ministry of Law on third-party tral award under article 34(2)(a)(iii) of the UNCITRAL
funding framework Model Law on International Commercial Arbitration (the
It may be recalled that, on 1 March 2017, the Civil Law Act (Cap Model Law).
43, 1999 Rev Ed) was amended to introduce, among other things, • In Rakna Arakshaka Lanka Ltd v Avant Garde Maritime Services
a framework to permit third-party funding for Singapore-seated Pte Ltd (2018) SGHC 78, the High Court held that, where
international arbitrations and related proceedings. The Civil Law a tribunal ruled on jurisdiction as a preliminary question,
(Third-Party Funding) Regulations 2017 also came into force on section 10 of the International Arbitration Act (Cap 143A)
1 March 2017 and a number of related statutory amendments, (the IAA) and article 16(3) of the Model Law required the
rules and guidelines have been issued. dissatisfied party to challenge that finding in the supervisory
On 3 April 2018, the Ministry of Law initiated a public court within 30 days of the tribunal’s decision. Failure to
consultation to seek feedback on the operation of the current do so would have a preclusive effect on subsequent setting
third-party funding framework as well as suggestions on how the aside proceedings at the seat.
framework might be improved; its response to the public consulta- • In Marty Ltd v Hualon Corp (Malaysia) Sdn Bhd (2018) 2
tion is pending. SLR 1207, the Court of Appeal found that the commence-
ment of court proceedings by a party bound by an arbitra-
Memoranda of understanding tion agreement can constitute prima facie repudiation of
In August 2018, September 2018 and October 2018, the SIAC the arbitration agreement.
entered into various memoranda of understanding with the • In China Machine New Energy Corporation v Jaguar Energy
Shenzhen Court of International Arbitration, the Xi’an Arbitration Guatemala LLC (2018) SGHC 101, the High Court held
Commission, and the China International Economic and Trade that the imposition of an ‘attorney-eyes-only order’ did not
Arbitration Commission (CIETAC) to promote international amount to a breach of natural justice.
arbitration as a preferred method of dispute resolution for resolv- • In Man Diesel & Turbo SE v IM Skaugen Marine Services Pte
ing international disputes. Ltd (2018) SGHC 132, the High Court upheld an order
Under the memoranda of understanding, the parties will work granting leave for the immediate enforcement of an arbitral
together to promote international arbitration to serve the needs award even though there was a pending challenge of the
of businesses. They will, among other things, hold annual joint award in the seat court.
signature events on international arbitration in either China or • In Sanum Investments Limited v ST Group Co Ltd (2018)
Singapore, co-organise conferences, seminars and workshops on SGHC 141, the High Court interpreted an arbitration
international arbitration, and (upon request and where appropri- clause referring to ‘internationally recognised arbitration
ate) provide recommendations of arbitrators to each other. company in Macau’ as requiring parties to arbitrate using
In addition, SIAC and CIETAC will conduct train- an internationally recognised arbitration company, with the
ing programmes for each other’s staff and establish a joint seat of the arbitration in Macau.

Singapore
• In Sinolanka Hotels & Spa (Private) Limited v Interna Contract SpA The Court of Appeal also observed that an investment treaty
(2018) SGHC 157, the High Court held that a court has no claim is brought not in respect of an investment per se, but in
power to determine the arbitral tribunal’s jurisdiction under respect of a dispute that arises out of the alleged violation of
section 10(3) of the IAA or article 16(3) of Model Law, if the a right that constitutes, or is part of or attaches to, an investor.
arbitral tribunal had decided the issue of its jurisdiction in the An investment is generally not limited to a single right, such as
final award and not as a preliminary question. the primary right to exploit the investment, instead it generally
• In BAZ v BBA and others (2018) SGHC 275, the High encompasses a bundle of rights, which includes, among other
Court set aside an arbitral award issued against, among others, things, the secondary right to seek remedies and vitiate the pri-
minors on the ground that this went against the public policy mary right.
of Singapore. Accordingly, the court found that the mining leases comprise a
bundle of rights that may, in principle, include the secondary right
PCA award set aside under article 34(2)(a)(iii) of the Model to bring a claim. However, the Investors’ asserted right to refer its
Law dispute to the SADC Tribunal could not have been part of the
In Swissbourgh Diamond Mines (Pty) Ltd and others v Kingdom of mining leases’ bundle of rights. The right to refer to the SADC
Lesotho (2019) SLR 263, the Court of Appeal set aside an investor- Tribunal arose out of the SADC treaty instead, and it did not
state arbitral award under article 34(2)(a)(iii) of the Model Law. satisfy the territorial nexus requirement. In addition, the SADC
In 2009, a South African national and his associated trusts Tribunal could have been dissolved by a majority of the SADC
and companies (the Investors) commenced proceedings against member states and the State acting alone would not have been
the Kingdom of Lesotho (the State) before a tribunal (the able to prevent this.
SADC Tribunal) established by a treaty of the Southern African The Court of Appeal, therefore, held that the PCA Tribunal
Development Community (the SADC Treaty), of which the State lacked jurisdiction to hear and determine the Investors’ claim
was a member, in respect of the State’s alleged expropriation of the and upheld the High Court’s decision to set aside the PCA
Investors’ mining leases. The SADC Tribunal was later dissolved Tribunal’s award.
by a resolution of the Summit of the Heads of State of the SADC
before the Investors’ claim was determined. Preclusive effect of failure to challenge preliminary
In 2012, the Investors commenced arbitration proceedings determination of jurisdiction by tribunal within time limit
against the State before an ad hoc tribunal constituted under the Rakna Arakshaka Lanka Ltd v Avant Garde Maritime Services Pte Ltd
auspices of the Permanent Court of Arbitration (the PCA Tribunal) (2018) SGHC 78 concerned an application to set aside an award
pursuant to a Protocol on Finance and Investment of the SADC on jurisdiction. In April 2015, the defendant commenced arbitral
(the Investment Protocol), alleging that the State had breached proceedings against the plaintiff. The plaintiff did not respond to
various obligations under the SADC Treaty and the Investment the notice of arbitration and did not participate in the arbitration
Protocol by participating in the dissolution of the SADC Tribunal. despite being given notice at various stages and having had ample
The State challenged the jurisdiction of the PCA Tribunal. The opportunity to do so.
PCA Tribunal rejected the State’s challenge to its jurisdiction and In dismissing the plaintiff ’s application, the High Court held
found that the State had breached its treaty obligations. that, where the tribunal ruled on jurisdiction as a preliminary
The State then commenced court proceedings to set aside the question, section 10 of the IAA and article 16(3) of the Model
PCA Tribunal’s award in its entirety. Law required the dissatisfied party to bring that question to the
In its decision, the Court of Appeal rejected the Investors’ con- supervisory court within 30 days of having received notice of the
tention that article 34(2)(a)(iii) of the Model Law (which provides tribunal’s decision. Article 16(3) was intended as an early avenue
that an award may be set aside if it ‘deals with a dispute not con- for parties to promptly and finally resolve jurisdictional disputes
templated by or not falling within the terms of the submission to so as to save costs and time, and it would defeat these purposes
arbitration’) did not apply to a situation where (as here) the State to allow a party to reserve jurisdictional challenges to the award
was contesting the very existence of the tribunal’s jurisdiction.The on the merits.
court held that article 34 should be read flexibly as it was intended It was, therefore, intended that a failure to raise a plea within
to prescribe an exhaustive mechanism for the setting aside of all the 30-day limit should have a preclusive effect on subsequent
types of awards. setting aside proceedings at the seat; the dissatisfied party would
The court accepted that the arbitration clause in this con- have lost its right to the active remedy of setting aside. However,
text was analogous to a unilateral contract, that is, when a state that party has not lost its passive remedy of resisting enforcement
enters into an investment treaty that provides for the submission and may still challenge enforcement on that basis.
of disputes to arbitration, it effectively makes a unilateral offer to
arbitrate, which is accepted once an investor initiates arbitration Commencement of court proceedings held to constitute
proceedings in accordance with those terms.Thus, when an inves- repudiatory breach of arbitration agreement
tor purports to rely on an arbitration clause contained in an invest- In Marty Ltd v Hualon Corp (Malaysia) Sdn Bhd (2018) 2 SLR 1207,
ment treaty, but the dispute falls outside the scope of that clause, the Court of Appeal found that the commencement of court
the seat court would have jurisdiction to set aside the award on the proceedings by a party bound by an arbitration agreement could
basis of article 34(2)(a)(iii). constitute prima facie repudiation of the arbitration agreement.
In considering the question whether the PCA Tribunal could The underlying dispute concerned the respondent’s share-
assume jurisdiction over the dispute, the Court of Appeal observed holding in its Vietnam subsidiary. In 2008, the Vietnam subsidiary’s
that, to qualify as an ‘investment’ to be submitted to arbitration, the company charter was revised to include a new article 22, which
asset must both satisfy the definition of an ‘investment’ provided provided for disputes to be resolved by SIAC arbitration.
in the investment treaty as well as have a territorial nexus with In 2014, the respondent, acting through its receiver and man-
the host state. ager (the Receiver), commenced court proceedings in the British
Singapore
Virgin Islands (BVI) against the appellant for wrongful depriva- appellant’s position could not have known that the respondent
tion of the respondent’s shareholding in the Vietnam subsidiary commenced the BVI Action only because it was ignorant of
(the BVI Action). article 22.
In 2015, the Receiver on behalf of the respondent com- • The innocent party may elect to accept a repudiation and
menced arbitration proceedings at the SIAC for the same cause bring the contract to an end, or it may choose to reject the
of action. The Receiver’s explanation was that he had only dis- repudiation and affirm the contract. The decision to accept
covered the existence of the new article 22 in 2015.The appellant the repudiation is irrevocable; thus, an innocent party is only
challenged jurisdiction of the tribunal, contending that, inter alia, taken to have accepted the repudiation if its words or actions
the respondent had, by its actions in the BVI Action, waived its clearly and unequivocally demonstrate this.
right to submit the dispute to arbitration or had repudiated the • The appellant accepted the repudiation by taking out its sum-
arbitration agreement. mary judgment application in the BVI Action, which clearly
Later in 2015, the appellant applied to the BVI court for engaged the jurisdiction of the BVI court because it requested
summary judgment or to strike out the BVI Action. While the the BVI court to determine the claim on the merits. It did not
respondent applied for the BVI Action to be stayed in favour of matter that the summary judgment application was made after
arbitration, it also took other steps in the BVI Action, including the Notice of Arbitration. Once a repudiatory breach has been
an application to extend an interim injunction granted in support committed, it persists and is capable of acceptance until the
of the litigation.The court and arbitration proceedings continued breaching party resumes performance of the contract and thus
to run in parallel until the BVI Action was eventually struck out ends any continuing right in the innocence party to accept the
in 2016. repudiation. The respondent could only resume performance
In 2016, when the arbitral tribunal ruled that it had jurisdic- of the arbitration agreement by discontinuing the BVI Action.
tion over the dispute, the appellant challenged that decision in the While the respondent did seek a stay of the BVI Action, the
Singapore courts, arguing, among other things, that the respond- stay application was only filed after the summary judgment
ent had repudiated the arbitration agreement by commencing application, by which time the appellant had already accepted
the BVI Action and taking steps in the litigation even after the the repudiation.
arbitration had commenced.
The Court of Appeal held that, like any other contract, an The Court of Appeal therefore held that the arbitral tribunal
arbitration agreement can be repudiated, giving the innocent lacked jurisdiction over the arbitration.
party the right to accept the breach and bring the agreement
to an end. In the context of arbitration agreements, one relevant Imposition of ‘attorney-eyes-only’ order held not to
factor to determine whether the breaching party has repudiatory amount to breach of natural justice
intent is whether it has an explanation for commencing litigation In China Machine New Energy Corporation v Jaguar Energy Guatemala
other than its rejection of the arbitration agreement. In this regard, LLC (2018) SGHC 101, the High Court declined to set aside an
whether an agreement has been repudiated is an objective inquiry. arbitral award, finding that an ‘attorney-eyes-only’ (AEO) order
Any explanation given by the breaching party for commencing did not amount to a breach of natural justice.
litigation is only relevant if it is manifested in the breaching party’s The plaintiff and the defendant entered into an engineering,
conduct such that it would be apparent to a reasonable person in procurement and construction contract (the EPC Contract) under
the position of the innocent party. which the plaintiff was to construct a power plant for the defend-
The Court of Appeal found that the respondent had com- ant. After a number of delays in the project, the defendant termi-
mitted a repudiatory breach of the arbitration clause, which was nated the EPC Contract. The parties’ relationship became very
accepted by the appellant, holding, inter alia, the following. acrimonious and a violent confrontation between the defendant’s
• The commencement of the BVI Action alone could constitute guards and the plaintiff ’s employees also took place.
a prima facie repudiatory breach. While there are a number The defendant then commenced arbitration proceedings.The
of authorities that have expressed a contrary view, the court arbitration clause in the EPC Contract provided for an expedited
considered that parties who enter into a contract containing arbitration. In the arbitral proceedings, the defendant stated that
an arbitration agreement are entitled to expect that disputes it was withholding a number of documents, which the defend-
arising out of the contract would be resolved by arbitration ant was willing to provide on an AEO basis. The defendant’s
and indeed have a contractual obligation to do so.Thus, where position was that those documents contained sensitive informa-
court proceedings are commenced without an accompanying tion and there was reason to believe the plaintiff would misuse
explanation or qualification, the defending party in the court that information.
proceedings is entitled to take the view that the claimant no The arbitral tribunal gave directions for a two-stage disclosure
longer intends to be bound by the arbitration agreement. process (the AEO Regime): first, the documents would be dis-
• It is open to the plaintiff in the court proceedings to displace closed to external counsel only (including the plaintiff's experts);
this prima facie conclusion by giving an explanation for the and secondly, the plaintiff would be entitled to apply to the arbitral
commencement of court proceedings. However, in this case, tribunal for its employees to be given access to the documents for
the respondent’s assertion that it did not know of the exist- the purpose of giving instructions to counsel. The plaintiff never
ence of the new article 22 at the time it commenced the made any application for its employees to be shown the docu-
BVI Action was rejected as it was not substantiated by the ments under the second stage of the AEO Regime.
evidence. On the contrary, in the BVI Action, the respondent Subsequently, the plaintiff applied to lift the AEO Regime,
had filed an affidavit, which exhibited an English translation submitting that the redaction of certain information from the
of the entire revised company charter, including article 22. In documents would suffice to address the plaintiff ’s concerns.
any event, the alleged lack of knowledge was something only Some four weeks after the AEO Regime was ordered, the tribu-
the respondent was aware of; thus, a reasonable person in the nal agreed to lift the AEO Regime and replace it with an order

Singapore
for limited redaction for most of the documents, with the AEO adjournment to arrive at an outcome that would be the most just
Regime to remain in place for other documents. Some months or the least unjust.
later, the plaintiff applied again to lift the AEO Regime. Following Having said that, the High Court considered the following
discussion and agreement between counsel, the tribunal recorded factors to be relevant.
an order lifting the AEO Regime altogether. • First, the merits of the setting aside application. The applicant
The arbitral tribunal eventually found in favour of the defend- must at least show, from the strength of his or her arguments,
ant on the merits.The plaintiff then applied to set aside the award that he or she is demonstrably pursuing a meritorious applica-
in the High Court, alleging, among other things, that the award tion in the seat court. If the setting aside application had no
had been made in breach of the rules of natural justice because the properly arguable basis and was not bona fide or was simply a
AEO Regime both deprived the plaintiff of a reasonable oppor- delay tactic, there would be little prejudice to the award debtor
tunity to present its case. if an adjournment was refused. If foreign law was involved, the
The High Court held that the imposition of the AEO Regime enforcing court would normally require expert evidence on
did not breach the plaintiff ’s right to natural justice, finding that the foreign law in question to assess the strength of the argu-
the following. ments before the seat court. However, the enforcing court will
• AEO orders are rare in international arbitrations but are not not engage in a detailed assessment of the facts or legal bases
unheard of, and the tribunal was empowered to impose an of the setting aside proceedings.
AEO order, under the applicable rules, or alternatively pur- • Second, the likely consequences caused by an adjournment. In
suant to its broad powers of case management under arti- particular, the length of the adjournment.The longer the delay,
cle 19(2) of the Model Law. There was a possibility that the the greater the prejudicial effect on the award creditor as assets
disclosed documents could be used for improper purposes, amenable to enforcement might be diminished or transferred
which could interfere with the project or the arbitration. In out of the jurisdiction.
light of the great acrimony between the parties, the arbitral
tribunal had basis for imposing the AEO Regime. On the facts of the case, the High Court found that:
• The second stage of the AEO Regime safeguarded the plain- • the defendant failed to demonstrate the merits of its case in
tiff ’s interests as access could be granted to specific employees the Danish challenge proceedings;
of the plaintiff for the purpose of taking instructions. In any • based on the procedural history and the parties’ estimated
event, the plaintiff never sought such access. timelines, the Danish proceedings would likely conclude only
• The EPC Contract expressly provided for an expedited arbi- in 2019 or 2020, resulting in too long a delay that would
tration. In assessing the plaintiff ’s claims about prejudice that unfairly prejudice the plaintiff; and
it allegedly suffered, it must be kept in mind that the tribunal • in light of the defendant’s past conduct, as demonstrated by its
was constrained by the parties’ agreement to an expedited financial records, there were valid concerns over the risk that
arbitration. As such, due process had to be adhered to within undisclosed assets might be dissipated if enforcement was to
the strictures that the parties themselves had imposed on the be further delayed.
arbitral tribunal. That agreement required the procedural
timelines for the arbitration to be compressed with concomi- The High Court therefore dismissed the defendant’s adjourn-
tant implications for the quality of due process that could be ment application.
afforded to the parties.
Interpretation of arbitration clause referring dispute to
Under the circumstances, the High Court dismissed the plaintiff ’s 'internationally recognised arbitration company in Macau'
setting aside application. In Sanum Investments Limited v ST Group Co Ltd (2018) SGHC
141, the High Court dealt, inter alia, with an arbitration clause
Order for immediate enforcement of arbitral award upheld that required parties to arbitrate disputes ‘using an internationally
despite ongoing challenge in seat court recognised mediation and arbitration company in Macau’. The
In Man Diesel & Turbo SE v IM Skaugen Marine Services Pte Ltd plaintiff had, in reliance on this clause, commenced arbitration in
(2018) SGHC 132, the High Court upheld an order grant- the SIAC, adopting the SIAC Rules.
ing leave for the immediate enforcement of an arbitral award, The High Court emphasised that where parties have evinced
although there were ongoing proceedings challenging the award a clear intention to settle any dispute by arbitration, the court
in the seat of the arbitration in Denmark. should give effect to such intention, even if certain aspects of the
In rejecting the defendant’s application to adjourn the pro- agreement may be ambiguous, inconsistent, incomplete or lacking
ceedings to enforce the arbitral award under section 31(5) of the in particulars, so long as the arbitration can be carried out with-
IAA, the court recognised the tension between promoting the out prejudice to the rights of either party and so long as giving
enforceability of foreign arbitral awards and preserving judicial effect to such intention does not result in an arbitration that is not
oversight of the award by the curial court; pointing out that the within the contemplation of either party.
concern most often raised is the award debtor’s deployment of Regarding the clause in question, the court considered
an application to set aside an award or an application to resist whether the reference to Macau pointed to the institution chosen
enforcement of an award as a delay tactic. by the parties or the parties' chosen seat. The High Court held
The High Court noted that the granting of an adjournment that properly construed, the clause required parties to arbitrate
of the enforcement proceedings is a matter of discretion for the disputes, using an internationally recognised arbitration company,
enforcing court. In the exercise of this discretion, the court takes a with the reference to Macau as the parties’ chosen seat.The court
multifactorial approach for which it is not possible to exhaustively noted that there was no centre that would qualify as an ‘interna-
list out all the factors to be considered. The enforcing court's task tionally recognised mediation and arbitration company’ located
was to weigh in the balance all the factors in favour of and against in Macau and so parties could not have intended the reference
Singapore
to Macau to be part of the institution chosen by the parties. The Arbitral award against minors set aside on public
plaintiff ’s choice of SIAC as the arbitration institution with an policy grounds
international reputation was an acceptable one. In BAZ v BBA and others [2018] SGHC 275, the High Court set
aside an arbitral award that had been issued against, among oth-
Setting aside of final award under section 10(3) of IAA or ers, minors on the ground that this went against the public policy
article 16(3) of Model Law not permitted of Singapore.
In Sinolanka Hotels & Spa (Private) Limited v Interna Contract SpA Five minors were between the ages of three and eight when
[2018] SGHC 157, the High Court held that a party may apply their fathers entered into a share sale and purchase agreement (the
for a jurisdictional ruling under section 10(3) of the IAA or article SSPA) on their behalf. The SSPA contained an arbitration agree-
16(3) of the Model Law only where the arbitral tribunal has made ment. Arbitration proceedings were subsequently brought by the
a finding as to jurisdiction as a preliminary question and not as counter-party against the minors, among others, for fraudulent
part of the final award. misrepresentation. The majority of the arbitration tribunal issued
The plaintiff and the defendant were parties to a contract for an arbitral award against, among others, the minors for a sum of
the provision of interior fit-out and furnishing works. After dis- approximately S$720 million. The minors were between the ages
putes arose, the defendant commenced ICC arbitration in accord- of eight and 12 during the arbitration.
ance the arbitration clause in a letter issued by the plaintiff, which The minors (through their litigation representatives) applied
was one of the documents parties had agreed formed part of the to the High Court to set aside the arbitral award.
contract between them. In the arbitration, the plaintiff objected Finding in favour of the minors, the High Court held that
to jurisdiction, contending that the parties had instead agreed to the principle of protecting the interests of minors in commercial
arbitration in Sri Lanka, relying on an arbitration clause contained transactions is part of the public policy in Singapore. Minors have
in another document in the tender package. The plaintiff did not limited capacity to enter into binding contracts and the effect of
ask the tribunal to deal with its objection as a preliminary matter. the arbitral award on the minors would be to enforce the SSPA as
The arbitral tribunal addressed the jurisdictional issue as well against them. This would violate the protection given to minors
as the merits of the dispute in a single final award and found in contractual relationships under Singapore law.
against the plaintiff on both matters. The plaintiff then applied to In addition, the arbitral award imposed liability on the minors
the High Court under section 10(3) and article 16(3) for a ruling for the fraudulent misrepresentation of their guardian or prin-
on the jurisdiction of an arbitral tribunal. cipal on matters which the minors had no knowledge of. The
The High Court ruled that, on a construction of the con- High Court found that this violated the protection given to
tractual documents, the ICC arbitration clause applied and the minors under section 35(7) of the Civil Law Act, which protects
tribunal accordingly had jurisdiction. Even if not, it was clear a minor from liability for the procurement of contracts by fraudu-
from the language of both section 10(3) and article 16(3) that an lent misrepresentation.
application to the High Court for a jurisdictional ruling is avail- Finally, the High Court held that the arbitral award against
able only if the arbitral tribunal had ruled that it had jurisdiction the minors, which saddled them with legal liability for an amount
as a preliminary question.Where (as here) the arbitral tribunal has exceeding S$720 million, was morally questionable and violated
decided the issue of its own jurisdiction in the final award, which Singapore’s most basic notions of justice.
also dealt with the merits of the substantive dispute, the appropri- The High Court therefore granted the application to have the
ate remedy would be for the plaintiff to seek recourse against the arbitral award against the minors set aside.
final award in the form of setting aside application.

Singapore
Alvin Yeo Chou Sean Yu

WongPartnership LLP WongPartnership LLP
Alvin Yeo, senior counsel, is the chairman and senior partner of Chou Sean Yu is a partner in the international arbitration practice
WongPartnership LLP. He is a preeminent arbitration and litiga- at WongPartnership LLP. He is also the head of the banking and
tion counsel who has acted for and advised international clients in financial disputes practice, the joint head of the restructuring and
complex, cross-border disputes and multi-jurisdictional enforce- insolvency practice and a partner in the financial services regula-
ment proceedings. tory and the Malaysia practices.
His extensive experience covers investor–state treaty disputes, Sean Yu graduated with first class honours from the University
banking and corporate disputes, contentious investigations, insol- of Bristol and is admitted to the English Bar (Middle Temple) and
vency and restructuring, construction and civil engineering mat- to the Singapore Bar.
ters and financial services regulatory matters, including corporate He is recognised as a leading lawyer for international arbitra-
fraud, anti-money laundering and insider trading. tion in Best Lawyers 2017, for dispute resolution and litigation in
Chambers Global describes Alvin as ‘the most impressive, as Asialaw Leading Lawyers 2017 and was acknowledged as one of
an advocate, out of all the Singapore firms’. Chambers Asia-Pacific the ‘Local Disputes Stars’ in the inaugural edition of Benchmark
2018 has said that Alvin ‘is hailed as one of the leading names in Asia Pacific.
arbitration in Singapore’ who ‘regularly advises clients on high- Sean Yu is named for banking – regulatory in Who’s Who
value SIAC and ICC proceedings’. Who’s Who Legal: Arbitration Legal 2017 and is ranked as a leading lawyer for banking and
2017 lauded Alvin as ‘a leading light in the market who possesses finance in Asialaw Leading Lawyers 2017. He is also endorsed in
strong arbitration credentials and experience’. The Legal 500: Asia Pacific for Restructuring & Insolvency and a lead-
He is recognised as a leading litigation and arbitration coun- ing restructuring and insolvency lawyer in Best Lawyers 2017 and
sel in international legal directories such as Chambers Asia-Pacific, Expert Guides.
Chambers Global, IFLR1000 and The Legal 500 Asia Pacific. Sean Yu is a fellow of the Insolvency Practitioners Association
Alvin is vice president of the London Court of International of Singapore and is on the panel of arbitrators of the Singapore
Arbitration Asia Pacific’s Users’ Council and sits on the panel of International Arbitration Centre, Korean Commercial Arbitration
arbitrators in the Hong Kong International Arbitration Centre, the Board and the Kuala Lumpur Regional Centre of Arbitration. He
International Dispute Resolution Centre, the Korean Commercial is also a fellow of the Chartered Institute of Arbitrators and cur-
Arbitration Board, the Kuala Lumpur Regional Centre for rent chairman of the board of its Singapore branch.
Arbitration, the Shenzhen Court of International Arbitration and
the Singapore Institute of Arbitrators’s (SIArb) Panel for Sports
in Singapore. He is also a fellow of SIArb and a member of the
Court of the Singapore International Arbitration Centre and the
International Chamber of Commerce Commission.
Singapore
Lim Wei Lee

WongPartnership LLP
Lim Wei Lee is a partner in the international arbitration and bank- the Singapore chapters for the Asia Arbitration Handbook, the IBA
ing and financial disputes practices. Arbitration Guide and Arbitration of M&A Transactions (Oxford
Her main areas of practice involve litigation and arbitration University Publishing, the International Bar Association, and Globe
across a wide range of matters including commercial, corporate, Law and Business) and the forthcoming Practitioner’s Handbook on
and banking disputes, fraud, cross-border trade and investment dis- International Commercial Arbitration (Oxford University Publishing),
putes, insolvency, and judicial review. In addition to an active court as well as the chapter on arbitrators in Arbitration in Singapore: Law
practice as counsel in the High Court and Court of Appeal, Wei and Practice (Sweet & Maxwell) and the chapter on Interim Reliefs
Lee has acted as counsel in arbitrations conducted under various in Singapore International Arbitration: Law & Practice (LexisNexis).
arbitral rules, including the Singapore International Arbitration Wei Lee is recognised as a leading practitioner in the area of
Centre, UNCITRAL, the Kuala Lumpur Regional Centre for commercial arbitration in the Expert Guides – Guide to the World’s
Arbitration, and International Chamber of Commerce rules. Leading Experts.
Wei Lee is very active in regional arbitrations, and in
arbitration-related court proceedings. She is the co-author of
12 Marina Boulevard Level 28 WongPartnership is a market leader in Singapore for the provision of high-quality legal services. Our
Marina Bay Financial Centre Tower 3 profile extends beyond the shores of Singapore, with a particular focus on the Asia-Pacific region,
Singapore 018982 and we presently have over 300 lawyers, with offices in Singapore, Beijing, Shanghai and Yangon,
Tel: +65 6416 8000 as well as in Abu Dhabi, Dubai, Jakarta, Kuala Lumpur and Manila, through member firms of WPG,
Fax: +65 6532 5711/5722
a regional law network.
WongPartnership prides itself on its twin strengths in transactional work and dispute resolution,
Alvin Yeo
alvin.yeo@wongpartnership.com and is recognised for its involvement in landmark mergers and acquisitions and capital markets trans-
actions, as well as complex and high-value litigation, investment treaty disputes and international
Sean Yu Chou commercial arbitration matters.
seanyu.chou@wongpartnership.com With more than 130 lawyers in our international arbitration practice including four senior counsel,
the firm handles the full spectrum of international investment and commercial arbitration across
Lim Wei Lee various industry sectors, including banking, financial, commercial, construction, energy, international
weilee.lim@wongpartnership.com sales, investment, medical, telecommunications and trade.
We have established our reputation as a leading international arbitration practice with clients
www.wongpartnership.com
from multinational corporations, governments and high-profile business leaders and individuals from
all over the world.
We have extensive expertise in managing and conducting arbitrations across the world’s major
arbitral institutions, including the China International Economic and Trade Arbitration Commission,
the Hong Kong International Arbitration Centre, the International Chamber of Commerce, the
International Centre for Dispute Resolution, the International Centre for Settlement of Investment
Disputes, the London Court of International Arbitration, the Kuala Lumpur Regional Centre for
Arbitration and the Singapore International Arbitration Centre.
We are consistently ranked as one of the top Asian firms for international arbitration and rec-
ognised by Global Arbitration Review as one of the Top 100 specialist arbitration firms in the world.

Vietnam
Nguyen Ngoc Minh, Nguyen Thi Thu Trang and Nguyen Thi Mai Anh
Following the development of dispute resolution in the Asia- Arbitration. The objective of the new decree is to simplify the
Pacific area in particular and the world in general, alternative dis- registration procedures for arbitration centres and their branches,
pute resolution (ADR) is becoming a favoured option for settling as well as representative offices and branches of foreign arbitration
disputes not only between Vietnamese parties and their foreign centres in Vietnam.
partners but also among themselves. Since 2017, the Vietnamese Another recent legislative change that could have a positive
government has announced new regulations that facilitate the impact on the development of commercial arbitration is the pub-
usage of ADR in Vietnam, especially concerning commercial lication of court judgments and decisions and the recognition of
arbitration and mediation. Accordingly, there was an increase in precedents as a source of law. In principle, within 30 days since the
both the quantity and quality of dispute resolution in 2018, which date of effectiveness, the court judgments and decisions will have
is demonstrated through the remarkable numbers of arbitration to be publicised on the court’s portal. In addition, pursuant to the
institutions, arbitrators and disputes involved in ADR. This year 2015 Civil Code, for the first time, precedents have been officially
also witnessed a change in the attitude of the Vietnamese courts regarded as one of the sources of law that the judges as well as the
toward commercial arbitration and welcomed a pilot programme arbitrators can refer to when other sources have been exhausted.5
of court-annexed mediation, which is expected to bring a more It should be noted that, unlike the system in other traditional
efficient and expeditious procedure for disputing parties. common law countries, only judgments and decisions that are
selected and announced by the Judge Council of the Supreme
Commercial arbitration in Vietnam: remarkable numbers People’s Court would have a binding effect on subsequent courts.
General statistics about commercial arbitration Until now, a number of court judgments and decisions relating
The development of commercial arbitration in Vietnam in 2018 to arbitration have been made public, although none of them has
is, firstly, demonstrated through remarkable figures. More arbitra- been selected to have precedent value. However, it is expected
tion centres have been established to meet the growing demand that this new mechanism will facilitate transparency and quality in
of the business community. Notably, on 6 January 2018, Ho Chi general court proceedings and in arbitration-related cases.
Minh City Commercial Arbitration Association (HCCAA) – the
first professional association of commercial arbitrators in Vietnam Significant court decisions on annulment of arbitral awards
– was established.1 With more than 100 members, the HCCAA is in 2018
expected to shape the standard values for Vietnamese arbitrators, The development of arbitration in Vietnam in 2018 is not only
as well as to promote international cooperation in the field of presented through the remarkable statistics and legislative changes
commercial arbitration.2 mentioned above, but also through the support of Vietnamese
As a leading arbitration centre in Vietnam, the Vietnam courts toward the enforceability of the arbitral awards. Overall,
International Arbitration Centre (VIAC) enrolled 180 new the statistics show that annulment was sought against only a lim-
requests for arbitration in 2018, the highest number since its ited number of arbitral awards. According to a report of the VIAC
establishment in 1993, with the total value of disputes being over published in a conference on annulment of arbitral awards, from
US$400 million.3 Significantly, the VIAC has also administered 2003 to 2014, 46 out of 679 arbitral awards were challenged and
a number of US$100 million arbitrations. Previously, disputes only 19 were set aside.6 Recently, in 2017, there were 17 applica-
resolved by arbitration in Vietnam mainly involved foreign parties, tions for annulment of the VIAC’s arbitral awards and only three
especially from Singapore, South Korea and China, as at that time of them were set aside by the courts.
commercial arbitration was not well-known to domestic enter- Notably, a number of recently rendered court decisions in
prises. However, over the past 10 years with significant efforts of 2018 show a gradual move towards the pro-arbitration approach
the VIAC and relevant authorities in helping Vietnamese enter- of Vietnamese courts in interpreting and applying the grounds
prises understand and opt for arbitration, the portion of domestic for setting aside arbitral awards. To be specific, under article 68(2)
disputes (in the sense that there is no involvement of foreign par- of the Law on Commercial Arbitration, there are five grounds
ties) being settled at the VIAC has rose rapidly. According to the for challenging an arbitral award that are further explained and
VIAC’s latest report, domestic and international disputes in 2018 guided by article 14 of Resolution 01/2014/NQ-HDTP of the
account for almost equivalent percentages, with 49 per cent for Judge Council of the Supreme People’s Court. Accordingly, the
the former and 51 per cent for the latter.4 arbitral award shall be annulled if it falls within one of these fol-
lowing cases:
Legislative changes • there is no arbitration agreement, or the arbitration agreement
In terms of legislation, on 19 September 2018, the government is null and void or incapable of being performed;
of Vietnam approved Decree No. 124/2018/ND-CP to amend • the composition of the arbitral tribunal or the arbitration pro-
some provisions of Decree No. 63/2011/ND-CP on detail- ceedings was inconsistent with the agreement of the parties or
ing and guiding some articles of the 2010 Law on Commercial contrary to the Law on Commercial Arbitration;
Vietnam
• the dispute falls outside the jurisdiction of the arbitral tribunal; completely separate from and not a part of the employment con-
• the evidence supplied by the parties on which the arbitral tract.Therefore, the court found no ground to consider the NDA
tribunal relied to issue the award is forged, or an arbitrator as non-arbitrable. In other words, the Ho Chi Minh City People’s
receives money, assets or some other material benefits from Court decided that a dispute about non-disclosure agreement may
one of the parties in dispute, which affects the objectivity and be arbitrable if it is separated from the employment contract.
impartiality of the arbitral award; or
• the arbitral award is contrary to the fundamental principles of Waiver of the right to object
the law of Vietnam. In Decision No. 04/2018/QD-PQTT, dated 24 July 2018, the
Hanoi People’s Court, based on the provision of waiver of right
Limited ground to annul arbitral awards to object, affirmed that:
In Decision No. 01/2018/QD-PQTT, dated 4 January 2018, the • because the respondent in the arbitration case did not request
Hanoi People’s Court affirmed that statute of limitations is not the court to decide on the tribunal’s decision on jurisdiction,
regarded as a ground to annul an arbitral award. In this case, a they lost the right to raise the jurisdiction issue as a ground to
dispute arose from a construction contract between a Korean con- annul the award; and
tractor and Chinese sub-contractors.The Chinese sub-contractors • a party is not allowed to raise the forgery of evidence as
initiated an arbitration at the VIAC to claim for outstanding pay- a ground to annul the award if they previously accepted
ment. During the arbitration proceedings, the Korean contractor its authenticity.
as respondent asserted that the Chinese sub-contractors’ claim had
already been time-barred, pursuant to the Law on Commercial To be specific, a Korean seller, being the claimant, brought a dis-
Arbitration. However, the tribunal relied on article 162 of the pute arising from two sale agreements and one mortgage agree-
2005 Civil Code, which allows for the recommencement of ment against a Vietnamese buyer to the VIAC and was granted a
statute of limitations and therefore decided that the claim was favourable award. In the arbitration proceedings, the Vietnamese
still admissible. buyer made objections to the tribunal’s jurisdiction. However,
Consequently, the Korean contractor sought to set aside the when the tribunal rendered a decision affirming its jurisdiction,
arbitral award at the Hanoi People’s Court. They argued that the the Vietnamese respondent did not challenge this decision to the
arbitral tribunal decided the statute of limitations not in conform- competent court. Consequently, the Hanoi People’s Court held
ity with the Law on Commercial Arbitration, which violated the that the Vietnamese respondent lost its right to now request for
arbitral procedures and the fundamental principles of Vietnamese annulment of the award.
law pursuant to article 68(2)(b) and (e) of the Law on Commercial The Vietnamese respondent opined that the signatures on
Arbitration. In its decision No. 01/2018/QD-PQTT, the Hanoi the sale contracts of the person representing the Korean claimant
People’s Court held that the rule on recommencement of time were forged and thus, pursuant to article 68(2)(d) of the Law on
limit under the 2005 Civil Code is applicable in this case and Commercial Arbitration, the award should be set aside.The court,
thus, the tribunal was correct when relying on this provision to however, found that when concluding the mortgage agreement,
decide the matter. In addition, the court also found that statute of the parties confirmed the validity of the two sale agreements and
limitations is not a ground for annulment of arbitral awards and, did not object to the authenticity of the signatures.
accordingly, dismissed the request of the Korean contractor. In a As a result, the respondent was not allowed to later raise the
way, the court again confirmed that statute of limitations is a mat- forgery of the agreements as a ground to challenge the arbi-
ter of substantive, but not procedural nature. tral award.
Arbitrability of dispute arising from non-disclosure agreements Recognition and enforcement of foreign arbitral awards
In another case, a dispute arose out of an employment relation- in Vietnam
ship between a Vietnamese employer and an employee.7 As widely General statistics on recognition and enforcement of
accepted, labour disputes are not arbitrable. However, in this case, foreign arbitral awards in Vietnam
the employer and the employee signed an employment contract In contrast to the challenge against domestic arbitral awards, the
and a non-disclosure agreement (NDA). Pursuant to the NDA, the situation of foreign arbitral awards has long been a critical issue,
employee commits to not work for any competing company for creating a negative impression of the Vietnamese judicial system.
12 months after the termination of their employment contract. According to information provided by a representative of the
The employer then found that the employee violated this provi- Supreme People’s Court in a conference held by the Ministry of
sion of the NDA and thus sued the employee to the VIAC. An Justice, from 2005 to 2014, 24 out of 52 applications for recogni-
award in favour of the employer was issued and then challenged tion and enforcement of foreign arbitral awards in Vietnam were
by the employee at the Ho Chi Minh City People’s Court. During dismissed, accounting for 46.2 per cent of all applications.8
the annulment proceeding, the employee raised that, as this dis- As reported in our article in The Asia-Pacific Arbitration Review
pute about the NDA was a labour dispute, it was non-arbitrable 2017, the newly adopted 2015 Civil Procedure Code made sig-
and belonged to the court’s jurisdiction. nificant changes to the recognition and enforcement of foreign
The Ho Chi Minh City People’s Court held that, pursu- arbitral awards in Vietnam. Since then, a number of training work-
ant to article 2(2) of the Law on Commercial Arbitration, the shops for local judges have been held by the Supreme People’s
arbitral tribunal would have jurisdiction to resolve a dispute if it Court and the Ministry of Justice with assistance from interna-
involves at least one party engaging in commercial activities. In tional organisations. As a result, the recognition and enforcement
this case, this requirement was satisfied as the employer is a com- of foreign arbitral awards have witnessed some positive changes.
pany pursuant to the Law on Commerce. In addition, the court For instance, according to an unofficial report of the Supreme
further held that in its statement of defence, as well as during the People’s Court, the dismissal ratio dropped to 33 per cent at the
arbitration proceedings, the employee asserted that the NDA was Hanoi People’s Court during 2014–2017 and to 31 per cent at the

Vietnam
Ho Chi Minh City People’s Court during 2011–2018. Although Ad hoc arbitral awards
compared to other countries in the region, the rejection ratio of It should also be noted that under the Law on Commercial
foreign arbitral awards in Vietnam is still exceptionally high,9 it is Arbitration, domestic ad hoc arbitral awards must be registered at
hoped to be continually improved in the short run. the competent court to be enforced by the enforcement agency.
Therefore, under their mindset of Vietnamese laws, local courts
Recognition and enforcement of foreign arbitral awards in may request that the foreign ad hoc awards must also be registered
2018: double exequatur? or verified by the competent authority in the rendering state. In
It is noted that in 2018, two court decisions were rendered in rela- fact, the High People’s Court in Ho Chi Minh City as an appel-
tion to the verification of foreign arbitral awards as a requirement late court issued Decision No. 27/2015/QDPT-KDTM, dated
for recognition and enforcement. 19 August 2015, requiring a Singapore ad hoc arbitral award to
Pursuant to article 459(1)(e) of the 2015 Civil Procedure be verified. Unfortunately, in its Notice No. 131/TB-TANDTC-
Code, which is a local adoption of article V(1)(e) of the New York VGDKTII, the Supreme People’s Court refused to conduct judi-
Convention to whichVietnam is a member, a foreign arbitral award cial review against the decision, holding that the procedural law
may not be recognised if it is proved that the award has not become applicable at the material time (the 2004 Civil Procedure Code
binding on the parties. Neither the convention nor the code define as amended in 2011) did not grant the Supreme People’s Court
the term ‘binding’. Generally, it is accepted that the award creditor jurisdiction to review an appellate court’s decision relating to the
does not need to obtain the consular recognition or the decision recognition and enforcement of foreign awards.
allowing them to do so by the court of the country where the This case involved a demurrage claim of Singapore shipowner
award was issued, or of the country whose law is applied to issue towards a Vietnamese charterer under a voyage charterparty. An
the award.10 This abrogation of the ‘double exequatur’ has been ad hoc arbitral award was issued in Singapore in favour of the
recognised as one of the innovations of the New York Convention Singapore shipowner. When the award was not honoured, an
compared to the 1927 Geneva Convention on the execution of application was made in Vietnam for recognition and enforce-
foreign arbitral awards. In fact, this verification requirement for the ment. The Ho Chi Minh City People’s Court, as a first instance
recognition and enforcement of foreign arbitral awards is not often court, made a favourable judgment allowing enforcement, but this
invoked by the Vietnamese award debtor and most Vietnamese was subsequently overturned by the High People’s Court in Ho
courts do not require the arbitral award to be verified for its validity Chi Minh City as an appellate court.
and enforceability by competent authorities of the seat. However, One of the objections that the Vietnamese charterer raised was
some recent court decisions show a different view of local courts. that under article 12(5) of Singapore International Arbitration Act:
the award must be verified by the competent Singapore court for
Institutional arbitral awards its enforcement. The award debtor also submitted the wordings
In a recent decision No. 25/2018/QDKDTM-PT, dated 28 June of such provision (Chapter 143A) translated by Law Soft JSC.
2018, the High People’s Court in Ho Chi Minh City decided not Nevertheless, the first instance court disregarded the document
to recognise a foreign arbitral award based on, among others, the on the grounds that the document had not been authenticated or
fact that there was no verification on the validity and enforceability certified by any competent authority of Vietnam or Singapore.
of the award by competent authorities in the seat. Conversely, the appellate court decided that, pursuant to article
In this case, the claimant was a Singapore energy company 365 of the 2005 Civil Procedure Code as amended in 2011, the
that had concluded a contract with a Vietnamese buyer, the award creditor should bear the burden of proof that the arbitral
respondent. When the dispute arose, the Singapore seller initiated award is enforceable and satisfies all requirements for enforcement.
an arbitration at the Swiss Chambers’ Arbitration Institution. On As a result, it was held to be not reasonable for the first instance
8 December 2016, an award was issued by a sole arbitrator, deciding court to disregard the document submitted by the Vietnamese
in favour of the Singapore seller. The award, however, was refused charterer. The appellate court finally decided to reverse the first
recognition and enforcement inVietnam by the first instance court. instance decision and refused to recognise such arbitral award.
This rejection decision was then upheld by the appellate court, the Still, as discussed in our article in The Asia-Pacific Arbitration
High People’s Court in Ho Chi Minh City. One of the grounds Review 2017, pursuant to the new 2015 Civil Procedure Code,
for rejection that was invoked by the Vietnamese debtor was that the burden of proof shall be borne by the award debtors.The new
the award had not become binding on the parties because there Civil Procedure Code also supplements the provision on how the
had not been any verification on the validity or enforceability of contents of foreign law shall be provided, which implicitly allows
the award by competent Swiss authorities, such as the Swiss courts. the use of foreign lawyers’ affidavits.11 These new amendments are
As a general principle, the court should presume the enforce- expected to improve the quality of adjudication in Vietnamese
ability of the arbitral award unless the opposing party can prove courts in relation to this matter.
the opposite. It is unclear about whether the High People’s Court
requested the debtor to provide proof for their objection such as Investment treaty arbitration
Swiss laws, Vietnamese laws or applicable rules that require veri- According to unofficial information from the Ministry of Justice,
fication of the award. It appears that the court only relied on the the number of disputes brought by foreign investors against
mere objection of the award debtor to question the enforceability the Vietnamese government is on the rise, although very lim-
of the award. Even if the court did require so and found that the ited information is disclosed about the initiated claims. As per
arbitral award was being reviewed by the competent authority, the the public database, in 2017 and 2018, Vietnam has become the
court should have issued a decision to suspend the consideration respondent in at least two pending investment treaty arbitra-
of the application in accordance with article 457(2)(a) of the 2015 tions: ConocoPhillips and Perenco v Vietnam and Shin Dong Baig v
Civil Procedure Code to wait for the final decision of the Swiss Vietnam. In ConocoPhillips and Perenco v Vietnam, the claim was
competent authority. brought based on the UK–Vietnam bilateral investment treaty
(BIT) (2002) and under the UNCITRAL Arbitration Rules, and
Vietnam
regarded a dispute arising out of the Vietnamese government’s deliberation. According to Vietnamese law, a foreign arbitral award
intended imposition of a US$179 million capital gains tax in shall be subject to recognition and enforcement:
respect of a 2012 transaction whereby ConocoPhillips sold its • if the rendering state and Vietnam are members of an inter-
business in Vietnam to Perenco.12 In Shin Dong Baig v Vietnam, the national treaty on recognition and enforcement of foreign
claimant brought a claim about its real estate project in Vietnam arbitral awards; or
under the Republic of Korea–Vietnam BIT (1993) pursuant to • on the basis of reciprocity principle.
ICSID Additional Facility Rules.13
Besides the existing treaties, Vietnam has recently concluded While the EVIPA and CPTPP, being the treaties of a new gen-
or been negotiating several new free trade agreements or invest- eration, specifically regulate that the awards issued under these
ment agreements that also provide for investor-state arbitration treaties shall be treated as awards relating to claims arising out of
mechanisms. The two most remarkable treaties include the EU– commercial relationships under the New York Convention and
Vietnam Free Trade Agreement and the Comprehensive and thus subject to the recognition and enforcement procedures as laid
Progressive Agreement for Trans-Pacific Partnership (CPTPP). down in the convention and domestic law, most existing BITs of
As regards the trade deal with the European Union, although Vietnam are silent in this matter. Meanwhile, the act of Vietnam
the agreement has been concluded since 2 December 2015, it joining the ICSID Convention, which also covers the recogni-
has not been ratified yet. In the light of the European Court of tion and enforcement of the ICSID awards, may still take years
Justice’s ruling, the issues involving investor-state disputes are not to be realised. Therefore, there remains a risk that Vietnamese
covered in the EU’s shared decision-making powers in the sense courts may not treat investment treaty awards rendered under the
that the European Union could not ratify a trade deal involv- ICSID Additional Facility Rules or the UNCITRAL Arbitration
ing investor-state dispute resolution issues without the accept- Rules, as regulated in most existing BITs, as foreign arbitral awards
ance of all member states. As a result, the original EU–Vietnam qualified for recognition and enforcement under the New York
Free Trade Agreement was proposed to be split into two agree- Convention and domestic law. As a matter of fact, no request for
ments: the EU–Vietnam Free Trade Agreement (EVFTA) and enforcement of investment treaty award has been reported to be
the EU–Vietnam Investment Protection Agreement (EVIPA).14 brought to the Vietnamese courts so far, therefore their view in
The EVFTA needs to be approved by the European Council and this matter would remain to be seen.
ratified by the European Parliament, while the EVIPA must be
additionally ratified by the parliament of each EU member state Facilitation of commercial mediation and court-annexed
and thus is expected to take longer to come into force. Under mediation
the EVIPA, the regulation on resolution of disputes between Apart from commercial arbitration, as reported in our article in
a foreign investor and a state is laid down under section (b) of The Asia-Pacific Arbitration Review 2018, over the past few years, the
Chapter 3.15 Accordingly, in case a dispute cannot be resolved legislation for mediation has gradually been finalised, including
amicably, an investor is allowed to bring it to the permanent tri- • the 2015 Civil Procedure Code, which enables the recog-
bunal, which will be comprised of nine members: three nationals nition of out-of-court mediated agreements, effectively
each appointed from the European Union and Vietnam and three granting mediated agreements the force of ordinary court
nationals appointed from third countries.The case shall be decided judgments; and
by a division of the tribunal comprising of three members or one • Decree No. 22/2017/ND-CP on Commercial Mediation,
member selected by the president of the tribunal. If disagreement which came into force on 15 April 2017.
occurs regarding the tribunal’s provisional award, each party may
appeal it to the appeal tribunal, which would be comprised of six With these regulations, Vietnam took the first step toward fol-
members: two nationals each appointed from the European Union lowing the international trend on promoting mediation to settle
and Vietnam and two nationals from third countries.The decision business disputes.
of the appeal tribunal shall be final and binding. Following these foundations, last year should be regarded as a
As regards the CPTPP, on 14 January 2019, it has officially prominent year for mediation in Vietnam. On 29 May 2018, the
come into effect in Vietnam. In case a dispute cannot be resolved VIAC officially launched the Vietnam Mediation Centre (VMC),
through consultations, an investor may bring a claim to arbitration the first centre to provide a professional service of commercial
under either the ICSID Arbitration Rules, the ICSID Additional mediation in Vietnam, and released the Rules of Mediation, which
Facility Rules, the UNCITRAL Arbitration Rules or other arbi- came into force on 1 July 2018. Furthermore, in order to enhance
tration rules.Whether the rendered awards are subject to appellate the quality of mediation and skills of mediators, a number of train-
mechanism may be discussed at a later stage.16 ing and accreditation courses have been held by the Chamber of
Another recently concluded treaty is the Association of Effective Dispute Resolution, in cooperation with the VMC, with
Southeast Asian Nations–Hong Kong Investment Agreement, the sponsorship of the International Financial Corporation of the
signed on 12 November 2017.17 However, the provisions on the World Bank Group.
investor-state dispute resolution component have not been fin- Notably, apart from the new legislation on commercial media-
ished yet and are reserved for later discussion.18 Vietnam is also tion, a pilot programme on court-annexed mediation has been
in negotiations with the four countries in the European Free launched in 16 main localities throughout Vietnam. Under the
Trade Association group (Switzerland, Norway, Iceland, and pilot programme, court-annexed mediation centres have been
Liechtenstein).Talk with the Regional Comprehensive Economic established to conduct mediation before a dispute can be enrolled
Partnership (RCEP) led by China is also underway for the draft- in ordinary proceedings. Accordingly, whenever a claim is submit-
ing of the investor-state dispute resolution provisions. ted to the court, it shall be first transferred to and resolved at a
With the increasing number of both investment treaty claims mediation centre. The mediators would mainly be retired judges,
and newly signed investment treaties, the enforceability of invest- prosecutors and lawyers who are experienced in resolving disputes
ment treaty awards once rendered would soon have to be under at courts.This new mechanism is expected to help lower the high

Vietnam
workload of the courts and facilitate the dispute resolution process 7 Decision No. 755/2018/QD-PQTT dated 12 June 2018 of the Ho Chi
in general.The pilot programme is projected to pave way to a new Minh City People’s Court.
law on court-annexed mediation and dialogue. 8 Conference on ‘Summary of 20 Years of Implementation of 1958
New York Convention on Recognition and Enforcement of Foreign
Conclusion Arbitral Award’ held by the Ministry of Justice in Hanoi on 21
Recently on 1 January 2019, the Vietnamese government issued November 2014.
Resolution 02/NQ-CP on the ongoing implementation of major 9 For example, in China, from 2011 to 2015, the courts only rejected
duties and measures to improve the business environment and around 15 per cent of the applications for recognition and
enhance national competitiveness from 2019 to 2021. Accordingly, enforcement of foreign arbitral awards. In Hong Kong, during the
Vietnamese government aims to raise Vietnam’s international rank 2004–2011 period, 140 applications for recognition and enforcement
in the Contract Dispute Settlement Index, which will require the were submitted to the courts but only three were refused (Source:
country to complete the legal regime to be closer to interna- http://hkiac.orgiindex.php/enlhkiac-statistics/enforcement-of-
tional laws and improve the quality of dispute resolution by courts, awards, accessed on 20 February 2019).
mediation and arbitration proceedings.The Resolution on Judicial 10 UNCITRAL Secretariat Guide on the Convention on the Recognition
Reform Strategy to 2020 of Vietnam also underscores Vietnam’s and Enforcement of Foreign Arbitral Awards, United Nations 2016,
encouragement of settling disputes via negotiation, reconciliation available at http://www.uncitral.org/pdf/english/texts/arbitration/
and arbitration. NY-conv/2016_Guide_on_the_Convention.pdf.
In addition, remarkably right before the end of 2018,Vietnam 11 Nguyen Manh Dzung & Dang Vu Minh Ha, ‘Vietnam’ in Global
became a member of UNCITRAL.19 This is the first time Vietnam Arbitration Review: The Asia Pacific Arbitration Review 2017, Law
was elected for this position and its tenure will be from 2019 until Business Research.
2025. Over the past several years,Vietnam has participated in the 12 Conoco and Perenco team up against Vietnam, 20 August
UNCITRAL’s affairs as an observer and actively contributed to 2018, Global Arbitration Review, available at https://
the meetings and discussions of some UNCITRAL’s working globalarbitrationreview.com/article/1173270/conoco-and-perenco-
groups, especially the Working Group 2 on Dispute Settlement team-up-against-vietnam, accessed on 01 March 2019.
and Working Group 3 on Investor-State Dispute Settlement 13 Information on Shin Dong Baig v Socialist Republic of Vietnam is
Reform. By becoming a member of the UNCITRAL, Vietnam available at https://icsid.worldbank.org/en/Pages/cases/casedetail.
will have more opportunities as well as pressures in reforming its aspx?CaseNo=ARB(AF)/18/2, accessed on 01 March 2019.
laws and regulations on commerce, foreign investment and dispute 14 Europe, Vietnam reach towards major trade deal, 01 February 2019,
resolution to be in line with international standards. Asia Times, available at https://www.asiatimes.com/2019/02/article/
For that purpose, more changes and innovations to improve europe-vietnam-reach-towards-major-trade-deal/, accessed on 01
the dispute resolution mechanism are expected to be on the March 2019.
way. Considering the great progress that Vietnam has achieved 15 The text of the EVIPA is available at http://www.trungtamwto.vn/
in recent years, it is verily expected that Vietnam would soon upload/files/fta/196-chua-ky-ket/199-viet-nam---eu-evfta/248-noi-
become a new hub for the dispute resolution in the South-east dung-hiep-dinh/CHAPTER%203%20Dispute%20Settlement.pdf.
Asia in near future. 16 The text of Chapter 9 Investment in the CPTPP is available at https://
investmentpolicyhub.unctad.org/Download/TreatyFile/5673.
Notes 17 The Signing of the ASEAN–Hong Kong, China Free Trade Agreement
1 Launching Ceremony of the Ho Chi Minh City Commercial and ASEAN–Hong Kong, China Investment Agreement, 12
Arbitration Association , Phap Luat Thanh Pho Ho Chi Minh, 06 November 2017, available at https://asean.org/the-signing-of-
January 2018, available at http://plo.vn/phap-luat/ra-mat-hoi-trong- the-asean-hongkong-china-free-trade-agreement-and-asean-
tai-thuong-mai-tphcm-749321.html (in Vietnamese), accessed on 20 hongkong-china-investment-agreement/, accessed on 01 March
February 2019. 2019.
2 https://homnay.com.vn/ho-chi-minh-commercial-arbitration- 18 The text of the ASEAN–Hong Kong Investment Agreement is
association-hccaa/, accessed on 20 February 2019. available at https://www.tid.gov.hk/english/ita/fta/hkasean/files/
3 2018 Annual Report of the VIAC. IPPAASEAN.pdf. For more information: https://www.tid.gov.hk/
4 Ibid. english/ita/fta/hkasean/files/AHKFTA_FAQ.pdf.
5 2015 Civil Code, Article 6; 2015 Civil Procedure Code, Article 45. 19 http://baoquocte.vn/them-mot-diem-sang-trong-ngoai-giao-da-
6 Nguyen Manh Dzung & Nguyen Thi Thu Trang, ‘Vietnam’ in Global phuong-viet-nam-83949.html (in Vietnamese); https://vietnamnews.
Arbitration Review: The Asia Pacific Arbitration Review 2016, Law vn/society/482271/viet-nam-wins-vote-for-uncitral-membership.
Business Research, p 100. html#RZDUZ2DhY4blmYUT.97, accessed on 01 March 2019.
Vietnam
Nguyen Ngoc Minh Nguyen Thi Thu Trang

Dzungsrt & Associates LLC Dzungsrt & Associates LLC
Nguyen Ngoc Minh is a partner at Dzungsrt & Associates LLC and Nguyen Thi Thu Trang is a counsel at the Dzungsrt & Associates
heads the firm’s alternative dispute resolution practice. LLC Hanoi office. She obtained her LLM in business, corpo-
Minh is recognised as an ‘Up and Coming’ dispute resolution rate and maritime law with a focus on international arbitra-
lawyer by Chambers and Partners 2019 and is praised as ‘a bril- tion and business law at the Erasmus University Rotterdam,
liant and articulate, and also very hard-working’ lawyer who can the Netherlands. Currently, Trang is doing PhD research in the
‘provide clear and constructive advice, within very short notice competence of Vietnamese courts in commercial arbitration at
if needed’. According to Benchmark Litigation, he is ‘excellent in the Graduate Academy of Social Sciences of Vietnam. She is
terms of the quality, responsiveness and comprehensiveness of the the co-author of a number of publications, namely the Vietnam
services’, ‘very professional’ and ‘provides quick helpful advice’. chapter in International Handbook on Commercial Arbitration of the
Minh is one of the first practitioners in Vietnam accredited as a International Council for Commercial Arbitration, the Vietnam
Centre for Effective Dispute Resolution mediator. chapter in National Arbitration Laws (Second Edition) and chapter
Minh has represented clients in arbitrations at the Vietnam 9 of Opportunities and Challenges in International Investment Treaties
International Arbitration Centre and proceedings before the and Arbitration Across Asia (2018). Trang has also participated in a
courts of Vietnam. He has also advised clients on Vietnamese law number of arbitrations in Vietnam and assisted clients in pursuing
issues in International Chamber of Commerce and Singapore enforcement proceedings of foreign arbitral awards.
International Arbitration Centre arbitrations to resolve disputes
involving foreign-invested companies and international corpora-
tions. Many of these cases are high-profile, covering a wide range
of matters, such as construction, corporate and joint venture, sales
of good, insurance and real estate.
Unit 6, 11th Floor, Harec Building Dzungsrt & Associates LLC has extensive experience and expertise in arbitration and litigation, cov-
4A Lang Ha Street ering a wide range of matters of different natures. The firm has been involved in various arbitrations
Ba Dinh District and court proceedings to resolve high-profile cases in sale of goods, construction, insurance, bank-
Hanoi ing and finance, share purchase, joint venture, real estate, among others. A number of such matters
Vietnam
are in connection with foreign investors’ treaty claims and against companies backed by regional
Tel: + 84 24 3772 6970
state authorities, thereby making them highly contentious. The firm has often been sought out by
Unit 1605, 16th Floor, Saigon Riverside both international counsel and corporations mainly in banking, shipping, construction, insurance,
Office Center and retailer industries.
2A-4A Ton Duc Thang Street Dzungsrt & Associates LLC has a vast pool of talented lawyers who have been well-trained
Ben Nghe Ward, District 1 abroad, practise to a very high standard and are familiar with the intricacies of dispute resolution in
Ho Chi Minh City Vietnam. The firm has also been involved directly in the legislative process of the Vietnamese laws
Vietnam and guiding by-laws regulating arbitration thereby well-equipped to provide practical and efficient
Tel: + 84 28 3822 0076 solutions to legal problems.
As a testament to its capacity, Dzungsrt & Associates LLC has consistently been accredited as
Nguyen Ngoc Minh
a top-tier law firm in both dispute resolution and shipping practices by The Asia Pacific Legal 500
minh.nguyen@dzungsrt.com
and is recognised as ‘one of the best’ in domestic commercial arbitration heard under Vietnam
Nguyen Thi Thu Trang International Arbitration Centre rules and also is active in international arbitration.
trang.nguyen@dzungsrt.com
Nguyen Thi Mai Anh

maianh.nguyen@dzungsrt.com
www.dzungsrt.com

Vietnam
Nguyen Thi Mai Anh

Nguyen Thi Mai Anh is a junior associate of Dzungsrt & Associates

LLC. She graduated from the Diplomatic Academy of Vietnam
and obtained an LLM in international trade and investment law
at Maastricht University (the Netherlands). Having background in
international commercial, trade and investment laws with a spe-
cialisation in international dispute resolution, she has frequently
been involved in arbitration and court proceedings and advised
clients on a number of contentious issues arising out of sale and
carriage of goods.
ww
Law
Business
Research
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Overviews Country chapters

DCF: Gold Standard or Fool’s Gold?�������������������� 7

Financial Arbitration in China: Actuality and Japan���������������������������������������������������������������������� 85

vi The Asia-Pacific Arbitration Review 2020

Introduction Damages are typically calculated by preparing a calculation of

8 The Asia-Pacific Arbitration Review 2020

10 The Asia-Pacific Arbitration Review 2020

Montek Mayal Alex Davie

12 The Asia-Pacific Arbitration Review 2020

Introduction appointing authority powers under the Hong Kong Arbitration

14 The Asia-Pacific Arbitration Review 2020

New developments in investment arbitration and Conclusion

16 The Asia-Pacific Arbitration Review 2020

Sarah Grimmer is secretary-general of Hong Kong International

18 The Asia-Pacific Arbitration Review 2020

20 The Asia-Pacific Arbitration Review 2020

22 The Asia-Pacific Arbitration Review 2020

to section 34(2) of the Arbitration and Conciliation Act 1996, Conclusion

24 The Asia-Pacific Arbitration Review 2020

Andre Yeap SC Kelvin Poon

Outlook of financial arbitration compared to courts.Taking Shanghai as an example, from 2013 to

26 The Asia-Pacific Arbitration Review 2020

28 The Asia-Pacific Arbitration Review 2020

Introduction International Arbitration Centre (AIAC) and thereafter launched

30 The Asia-Pacific Arbitration Review 2020

Global economic developments Introducing law students to arbitration

32 The Asia-Pacific Arbitration Review 2020

13 ‘Chamber Ciesp/Fiesp Launches its Interim Arbitrator Proceeding,’ 30 Id.

UNCITRAL Regional Center for Asia and the Pacific website,

34 The Asia-Pacific Arbitration Review 2020

Introduction embracing BITs. BITs were intended to encourage cross-border

36 The Asia-Pacific Arbitration Review 2020

38 The Asia-Pacific Arbitration Review 2020

investigations of bribery allegations.109 All of these cases remain Other developments

40 The Asia-Pacific Arbitration Review 2020

42 The Asia-Pacific Arbitration Review 2020

DCF: Gold Standard or Fool’s Gold?�� 7

Financial Arbitration in China: Actuality and Japan�� 85