Hong Kong, 27 June 2018

ICC Expedited Procedure Provisions (‘EPP’)

The EPP were introduced in the ICC 2017 Rules in response to a demand by users to introduce an efficient and cost-effective procedure for administering lower value cases (below US$ 2 million). The EPP – from which parties can opt out in their arbitration clause or subsequently – apply if the value of the dispute is below US$ 2 million and the arbitration agreement is dated post 1 March 2017. Even if these pre-conditions are not met, the parties can ‘opt in’ to the EPP by mutual agreement. Under the EPP, a sole arbitrator may be appointed and no Terms of Reference have to be established. The sole arbitrator has to conduct the case management conference within 15 days, establish a procedural timetable, and render a final award within a period of 6 months, which includes an expedited scrutiny of the final award by the Court.

The panelists discussed three principal concerns regarding the EPP: (1) whether the appointment of a sole arbitrator under the EPP violates the parties’ agreement regarding the number of arbitrators; (2) the discretion of the arbitral tribunal in the conduct of EPP proceedings and (3) whether the EPP is suitable for complex low value cases. On the first issue, the panelists agreed that there was a concern that a disgruntled Respondent may obstruct enforcement of an arbitral award rendered by a sole arbitrator on account of the award violating the parties’ initial agreement to have three arbitrators. On the second issue, it was emphasized that the application of the EPP does not automatically mean there will be no hearing which may be held at the sole arbitrator’s discretion. On the third issue, the panelists commented that the EPP may not be suitable for complex cases involving multiple parties and issues or where a state entity is involved.

Pui-Ki Ta (Counsel, ICC International Court of Arbitration, Hong Kong) noted that the parties retained the flexibility to opt out of the EPP if during the course of the proceedings the parties felt that the EPP was no longer suitable.

In conclusion, the panelists emphasized that the EPP is not a truncated proceeding at the cost of the parties’ rights. On the contrary, it is a condensed and efficient procedure that is focused on the completion of the proceedings in 6 months.

Belt and Road: Infrastructure and risk on an unprecedented scale

This panel, moderated by Chiann Bao (Vice President of the ICC Court; Editorial board member, ICC Bulletin), featured speakers with a diverse range of experiences involving disputes that companies might see along the Belt and Road and showcased the ICC’s advantages for Belt and Road disputes.1 Hew Kian Heong (Partner, Herbert Smith Freehills, China) provided a backdrop of the Belt and Road Initiative (‘BRI’) and noted that a significant proportion of BRI disputes are likely to be high value construction disputes. Multi-tiered dispute resolution mechanisms, such as Dispute Adjudication Boards (‘DAB’), will play a significant role as they allow for timely and speedy resolution of ‘every day’ disputes arising during the course of construction of BRI projects and are sometimes more effective than litigation and arbitration.

Zhiyong Li (Deputy General Manager - Legal and Risks, Powerchina International Group Limited, China), who is directly engaged in Belt and Road contract negotiations, explained the complex contract structure of a typical BRI project and reiterated the importance of standing and ad hoc DAB mechanism for timely adjudication of disputes between the parties.

Jessica Bartlett (Director Financial Crimes Legal – APAC, Barclays, Hong Kong) made an interesting presentation on the role of banks as financial and risk advisors to clients involved in BRI projects.

Robert Pé (Independent Arbitrator, Arbitration Chambers, Hong Kong/United Kingdom; Member of the ICC Court) discussed the perspective and potential of Myanmar in the BRI and made a reference to the Myitsone Dam and Kyaukphyu Special Economic Zone projects. He stated that only 30% of the people of Myanmar have access to electricity and hoped that the BRI can change these statistics. He also mentioned that the state is in the process of introducing international dispute resolution methods to provide comfort to investors who are keen to invest in Myanmar under the BRI.

Nominchimeg Odsuren (Partner, Avinex Partners LLP, Mongolia) stated that Mongolia sees the BRI as a good opportunity to improve its economy. Key risks faced by infrastructure projects in Mongolia include the unpredictable legal environment, Mongolia’s credit rating of B-, business and political instability and the mandatory provision of Mongolian law that provides for a four-year defect liability period for any construction project which cannot be contracted out of. In light of these risks, she commented that it is important for international investors to choose their Mongolian partner carefully.

Arbitral tribunals and courts: The eve of a new era?

Speakers addressed the Emergency Arbitrator procedure from the perspectives of their jurisdictions.

  • Hong Kong. Mary Thompson (Chartered Arbitrator, Pacific Chambers, Hong Kong; Chair, Chartered Institute of Arbitrators, East Asia Branch) stressed the importance of interim measures early on in the arbitration where going to court for relief is not always an option. In these circumstances, emergency arbitrator (‘EA’) provisions can provide relief to parties seeking interim measures before the constitution of the arbitral tribunal. M. Thompson referred to the Hong Kong Arbitration Ordinance, under which emergency arbitrator orders granted in or outside Hong Kong are enforceable (as an order or decree of the court) but only with the leave of the court.
  • People’s Republic of China. Helen Shi (Partner, Fangda Partners, Beijing, China; Member of the ICC Court) discussed three unique aspects of the interplay between the courts and arbitral tribunals in China. First, a challenge on the validity of an arbitration agreement filed by a party before a domestic court results in a stay on the arbitration proceedings which may become a hurdle to the continuation of the proceedings. Second, Chinese courts do not provide support to emergency arbitrator proceedings conducted under the rules of foreign arbitration institutions. Third, emergency arbitrator orders are not enforceable in China even if they are issued within the auspices of domestic institutions. She concluded by saying that she hopes that the legislation will be updated in due course to provide greater support to emergency arbitration.
  • India. Justice Sikri (Judge, Indian Supreme Court) indicated that Indian law does not explicitly recognize emergency arbitration. To overcome this lacuna, the Bombay High Court adopted a novel way to accept the emergency arbitration decision – on the basis of the award passed by the emergency arbitrator seated in Singapore, an application seeking interim measure on the lines of the emergency arbitrator’s award was filed and the court passed an order to this effect. However, Justice Sikri commented that this only enhances the intervention of the courts in the arbitration proceedings and defeats the purpose of emergency arbitration, which is to avoid recourse to the national courts. Justice Sikri concluded by commenting that absent clear laws, the fate of enforceability of emergency arbitrator relief in India is unclear.

David Bateson (International Arbitrator, 39 Essex Chambers, Singapore) provided an insight into EA provisions under the ICC and SIAC Rules. The common features of the EA provisions include quick appointment of emergency arbitrator, fast track procedure, broad discretionary powers of the emergency arbitrator to order relief which can extend to any relief deemed necessary, the decision is binding on parties but can be modified, varied, terminated or annulled by a tribunal once constituted, and access to local courts not prohibited or usurped if an emergency arbitrator is appointed. He concluded by stating that the EA provisions are not appropriate where relief is sought against a third party or where it is sought on an ex parte basis.

Lawrence Teh (Senior Partner, Dentons Rodyk & Davidson LLP, Singapore) indicated that the complimentary and competing aspects of arbitration and litigation mean that parties now have a real choice. In his opinion, there is now a growing school of thought which perceives efficient dispute resolution of international public interest. The new era of arbitration and litigation should serve that interest.

Conflict of interests: Beyond the IBA Guidelines?

Panelists considered the issue of conflicts of interest and how it is handled by various stakeholders including counsel, arbitrators, parties and experts.

Sundra Rajoo (Managing Director, Sundra Rajoo Arbitration Chambers, Malaysia) discussed the ethical issues arising out of misconduct of proceedings by arbitrators, repetitive appointments and issue conflict in light of the recent UK decision of Halliburton v Chubb ([2018] EWCA Civ 817), the use of tribunal secretaries and the ‘fourth arbitrator’ dilemma, and partisan witnesses and disclosure obligations with respect to third party funders. He commented that while there are efforts to regulate conduct at the national, institutional and supranational levels, there remain thorny issues of who should be the regulator, how should legal and cultural differences be harmonized and what sanctions should be imposed. Mr Rajoo concluded that a balance between regulation and self-policing needs to be found. Institutions should take a more proactive approach towards enforcing ethics and the arbitral tribunal itself can be the guardian of ethical principles and the integrity of the proceedings.

Smitha Menon (Partner, Wong Partnership LLP, Singapore) addressed the issue of third party funders. The IBA Guidelines contain the clearest standard regarding the disclosure obligation of a third party funder who may be considered a party if it has a ‘direct economic interest in, or a duty to indemnify a party for, the award to be rendered’ or contributes funds or other material support (see General Standard 6(b) and Explanation). However, this definition has been critiqued as being both over-inclusive and under-inclusive. While some jurisdictions make it mandatory to disclose third party funding, there is debate in other jurisdictions about whether disclosure should be made at all as it may affect settlement negotiations and the arbitral tribunal’s decision regarding costs. There is also uncertainty over when disclosure should be made and how best to make such disclosure. She concluded by saying that as the scope of involvement of third party funders increases there will be case law clarifying the scope of obligations.

Jingzhou Tao (Managing Partner, Dechert LLP, Beijing; Member of the ICC Court) discussed the ethical guidelines used in China and opined that future revisions of the IBA Guidelines should indicate a positive duty on the arbitral tribunal to safeguard the arbitration proceedings and dismiss counsel if they intentionally create a conflict of interest.

Andrew Aglionby (Independent Arbitrator, Arbitration Chambers, Hong Kong/United Kingdom) detailed the earlier mentioned case Halliburton v Chubb, where the English Court of Appeal held that overlapping and multiple appointments are not by themselves enough to show any apparent bias, as the arbitrator is obliged to decide the case based on the facts on file, irrespective of other information he may have received on a related case. The case is currently under appeal. Mr Aglionby concluded by saying that arbitrators should consider carefully the disclosures that are to be made throughout the arbitration proceedings.

60 years of the New York Convention: Still in its infancy?

Rory McAlpine (Partner, Skadden, Arps, Slate, Meagher & Flom LLP, Hong Kong) recalled that since 1953, when ICC produced the first draft of the Convention, the Convention has proven to be ubiquitously influential as evidenced by the recent addition of Sudan as the 159th signatory and the impact it has had in Asia.

Minjung Kim (Legal Expert, UNCITRAL Regional Centre for Asia and the Pacific, United Nations Commission on International Trade Law, Seoul) presented the UNCITRAL Secretariat’s Guide on the Convention which was launched at the request of the UN General Assembly to increase efforts to ensure wider adherence to and uniform implementation of the Convention. She emphasized that the Secretariat’s guide is not an official guide on the interpretation of the Convention but serves as a tool to uncover key trends on how the Convention is applied in practice.

Panelists then shared their experience with respect to enforcement of foreign arbitral awards in their respective jurisdictions:

  • People’s Republic of China. Judge Jianli Song (Judge, Supreme People’s Court) referred to the Reporting System whereby the Intermediate People’s Court has to report its decision of refusal to enforce a foreign arbitral award to the High People’s Court which in turn has to refer the same to the Supreme People’s Court for its approval. He also indicated the success rate of enforcement of foreign arbitral awards is above 90% and this trend is likely to continue in light of China’s commitment to the comply with the Convention.
  • Hong Kong. Paul Teo (Partner, Chartered Arbitrator, Head of International Arbitration Greater China, Baker & McKenzie) stated that the success rate of foreign awards enforcement in Hong Kong is very high (97%), although enforcement in Hong Kong is not without challenges as considerable discretion is granted to courts to set aside foreign awards. Courts in Hong Kong have however adopted a pragmatic approach in exercising this discretion and sought to exercise it in a way to give effect to the spirit of the Convention.
  • Japan. Yoko Maeda (Partner, City-Yuwa Partner; Member of the ICC Court) discussed the Supreme Court’s first decision on the setting aside of an arbitral award based on an arbitrator’s failure to disclose facts allegedly constituting a conflict of interest. She stated this was a watershed decision as, although Japan was an early signatory to the Convention, case law on the interpretation of the Convention has been few and far between.
  • Republic of Korea. Kevin Kim (Senior Partner, Bae, Kim & Lee LLC; Vice-President of the ICC Court) mentioned that no foreign award sought to be enforced in South Korea has been set aside by domestic courts. Enforcement proceedings take between 8-12 months referring to the court’s pro-enforcement stance towards foreign awards.
  • Singapore. Amanda Lees (Partner, Simmons & Simmons) discussed Singapore court’s willingness to stay court proceedings brought in defiance of arbitration agreements going so far as to enforce seemingly pathological arbitration clauses on the basis that the parties had shown a clear intention to submit the dispute to arbitration.

For more information on ICC and the Belt and Road development strategy, see https://iccwbo.org/dispute-resolution-services/belt-road-dispute-resolution.