Global Arbitration Highlights of 2012 - a round the world tour of key developments

On Tuesday 11 December, Herbert Smith Freehills held a successful evening seminar, focussing on the global arbitration highlights of 2012 and looking ahead to the key milestones and events of 2013. Similar events are being held in other offices around the global network including Shanghai, Paris, Singapore and Hong Kong.

The evening was chaired by co-head of international arbitration Paula Hodges with members of our international arbitration group participating. They explored the most important changes in arbitration law and practice in all the regions in which our clients operate, considering cases and key developments in England, continental Europe, Asia-Pacific, the Middle East, Africa and the Americas. The aim of the seminar was to look at the practical impact of these developments for your business. The session finally considered changes to the rules of the key arbitral institutions and the impact those will have on the drafting of arbitration clauses.

For a summary of the topics covered in respect of each of these areas, please click below. This link provides an outline of the key developments of 2012, many of which are covered in more detail on this blog.

England and Wales - Matthew Weiniger

• West Tankers v Allianz SpA and another - the case rumbles on. Since the ECJ ruling in 2009, anti-suit injunctions are no longer available within the EU but, in related proceedings:
  • High Court held that it can grant damages for breach of arbitration agreement or an indemnity against consequences of the breach
  • Court of Appeal held that declaratory award can be enforced as a judgment (in the face of an inconsistent judgment)

These provide comfort whilst we await the implementation of the amendments to the Brussels Regulation which are due to come into effect in 2015.

• SulAmerica v Enesa Engenharia - Court of Appeal provides new test to ascertain which law applies to the separable arbitration agreement. But still clearer to stipulate.
• Gécamines v FG Hemisphere Associates - Privy Council considers liability of State-owned corporations for debts owed by the State. Creditors cannot enforce debts of State against an entity distinct from the State. Advisable to include State entities as parties to contract.
• SerVaas Incorporated v Rafidain Bank - Supreme Court guidance on the scope of the "commercial purposes" exception from immunity of States from enforcement against their assets. Only current and intended use of the asset is relevant.
• Jivraj v Hashwani not quite over - Supreme Court (in 2011) upheld the principle of party autonomy regarding choice of arbitrators and declared that arbitrators are not employees and not subject to anti-discrimination legislation. Decision referred to the European Commission for alleged breach of European law.

Europe - Isabelle Michou

France

• Ms X v Banque Privée Edmond de Rothschild - Cour de Cassation holds one-way exclusive jurisdiction clause providing for litigation void and unenforceable on the basis of lack of equality. Query impact on arbitration.

Germany

• Eureko B.V. v Slovakia - Higher Regional Court in Frankfurt confirmed the protection of investors under the dispute resolution clauses in an intra-EU Bilateral Investment Treaty (BIT), despite the European Commission view that these treaties are in conflict with EU law.

Russia

• Nikolay Maximov v JSC Novolipetsk Metallurgic Plant - Supreme Arbitrazh Court declared non-arbitrability of corporate disputes, impacting on transactions with shares in Russian companies.
• Sony Ericsson v Russian Telephone Company - Supreme Arbitrazh Court invalidated unilateral options in dispute resolution clauses. Advisable to include 'arbitration only' provisions in Russia-related agreements.

Americas - Christian Leathley

USA

• Kiobel v Royal Dutch Petroleum Co - US Supreme Court heard arguments in this case, raising the question of how businesses can protect themselves against allegations of complicity in governmental human rights abuses in connection with their operations.
• Re Consorcio Ecuatoriano de Telecomunicaciones v JAS Forwarding - Eleventh Circuit court held that a private commercial arbitral tribunal is a "foreign tribunal" for the purposes of §1782 discovery and ordered broad US discovery in support of the foreign-seated arbitration.
• BG v Argentina - US federal appeals court for the DC circuit vacated $185 million UNCITRAL award against Argentina on the basis that BG should have complied with the 18 month local remedies period in the UK/Argentina BIT by bringing their claim to the Argentine courts before initiating arbitration.

South America

• Denunciation of ICSID Convention by Venezuela (following previous denunciations by Bolivia and Ecuador).

Asia-Pacific - Nicholas Peacock

India

• Bharat Aluminium v Kaiser Aluminium - Supreme Court's landmark decision overrules Bhatia International and paves the way for reduced court intervention in arbitration seated outside of India. But Indian courts no longer empowered to grant interim relief in relation to foreign arbitrations.
• White Industries v India - UNCITRAL tribunal held that India breached a BIT obligation to provide investors with an "effective means of asserting claims and enforcing rights" through undue delay in the Indian court system. White had spent nine years attempting to enforce an ICC Award in India.
• Notification by Indian government of China and Hong Kong as a territory to which the New York Convention applies.

Hong Kong

• Pacific China Holdings v Grand Pacific Holdings - Hong Kong Court of Appeal awarded costs on an indemnity basis against a party that made an unsuccessful application to set aside an arbitral award.

Singapore

• Astro Nusantara International BV and others v PT Ayunda Prima Mitra and others - Singapore High Court rejected attempts to resist the enforcement of an award on the ground that the tribunal lacked jurisdiction. Attempts were raised outside the time limits provided for by the Model Law.

Indonesia

• Hesham al-Warraq v Indonesia - Singapore tribunal ruled that the state of Indonesia had a case to answer under the little known investment treaty of the Organisation of Islamic Cooperation.

Middle East/Africa - Craig Tevendale

Dubai

• International Electromechanical Services v Al Fattan Engineering and Al Fattan Properties - DIFC court stayed court proceedings for a non-DIFC seated arbitration (Dubai seated in this case) even where it otherwise had jurisdiction to hear the case.
• DIFC court issued a White Paper on enforcement of DIFC court and DIFC-LCIA arbitral awards in Dubai, in the other emirates in the UAE and overseas.
• Dubai Court of Appeal upheld decision to enforce two LCIA arbitration awards with an English seat under the New York Convention.

South Africa

• South Africa expressed intention to terminate its BIT with the Belgo-Luxembourg Economic Union and not to renew twelve other BITs with EU member states.

Changes to the rules of the key arbitral institutions - Hannah Ambrose and Joanne Greenaway

• ICC - new rules (in force from 1 January 2012) focus on how to accommodate multi-party/multi-contract disputes. New opt-out emergency arbitrator provisions and new cost incentives for parties and tribunals to run proceedings expeditiously.
• Swiss - new rules (in force from 1 June 2012) follow the general trend amongst the arbitral institutions to seek to promote greater time and cost efficiency in proceedings.
• CIETAC - new rules (in force from 1 May 2012) address the increasing complexity of arbitration, provide greater autonomy and codify and clarify CIETAC’s existing practice
• Split at CIETAC - CIETAC Beijing suspended the authorisation of its Shanghai and South China sub-commissions to accept and administer arbitrations (although those sub-commissions continue to accept and manage cases submitted to them).
• KLRCA (Kuala Lumpur Regional Centre for Arbitration) published new i-Arbitration Rules - a new option for Islamic finance parties.
• Launch of PRIME Finance. Based on a tailored version of UNICITRAL rules.

Looking forward to 2013: key events to look out for

• LCIA Rules revision - changes expected on multi-party/multi-contract provisions.
• Arbitration centre to be set up in London to settle disputes arising out of Saudi Arabia?
• EU investment arbitration policy reform: the Commission's draft regulation will have a second reading in the European Parliament. Establishes the terms under which individual member states are authorised to maintain in force, amend or conclude BITs with third countries.
• Outcome of consultation on ISDA Market Agreements and production of ISDA Model form arbitration agreement.
• Outcome of reference to European Commission in Jivraj v Hashwani.