Session 3: Challenges and Enforcement of Arbitral Awards in Asia

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Session 3: Challenges and Enforcement of Arbitral Awards in Asia Moderator: Renato S Grion Partner, Pinheiro Neto Advogados Speakers: Mark Goodrich Partner, White & Case James Rogers Partner, Norton Rose Fulbright Christopher K Tahhaz Partner, Debevoise & Plimpton Peter T Chow Partner, Squire Sanders

Enforcement of Arbitral Awards in Japan 21 June 2013

Japan: Legislative framework New York Convention - Japan a signatory since 1961 Arbitration Law (Law No. 138 of 2003) Arbitral award, irrespective of whether or not the place of arbitration is in the territory of Japan shall have the same effect as a final and conclusive judgment (Art. 45.1) Application to court for enforcement decision Application must include copy of the arbitral award, document certifying that the content of copy is identical to the arbitral award, and Japanese translation of the arbitral award (Art. 46.2) International Arbitration: Overview White & Case 42

Japan: Legislative framework (contd.) Arbitration Law (contd.) Grounds for rejecting enforcement application limited to those set forth in New York Convention (Art. 45.2) E.g., invalidity of arbitration agreement, lack of proper notice, party unable to present case, award contrary to Japanese public policy No reciprocity requirement (i.e., no requirement that award may be enforced only if the state where award was made would enforce an award made in Japan pursuant to New York Convention) Also provides for set aside of awards made in Japan (similarly limited to New York Convention grounds) (Art. 44) International Arbitration: Overview White & Case 43

Japan: Arbitral award enforcement cases Japan still a jurisdiction where relatively few arbitrations are seated and few enforcement actions are pursued Reported case law in Japan reveals no cases involving the New York Convention since 1999 But not all judgments concerning Arbitration Law are publicly available and Japanese lawyers note that courts have issued rulings to enforce arbitration awards No recorded case of Japanese court refusing to enforce foreign arbitral award International Arbitration: Overview White & Case 44

Japan: Arbitral award enforcement cases (contd.) Case 1 (2004) Arbitral award made in May 2004 After parties failed to negotiate voluntary payment of the award, claimant filed petition for enforcement order in Tokyo District Court Simplified hearing process closed to public took place approximately 40 days after filing Court issued enforcement order eight days after hearing International Arbitration: Overview White & Case 45

Japan: Arbitral award enforcement cases (contd.) Case 2 (2009) Respondent applied in Tokyo District Court to set aside 2008 award made in AAA- ICDR arbitral proceeding Respondent argued (a) it had not been able to present its case because claimant failed to make certain allegations at issue in arbitration, and (b) tribunal s ruling conflicted with the public policy or good morals of Japan Court dismissed respondent s application [C]ourts set aside an arbitral award only in cases where serious violation of due process exists in arbitral proceedings by which the party was entirely unable to present its case No set aside where court merely finds the fact findings and legal decision by the arbitral tribunal to be unreasonable ;; instead court may set [award] aside only where it finds that the legal outcome realized by an arbitral award is in conflict with the public policy or good morals of Japan International Arbitration: Overview White & Case 46

Japan: Arbitral award enforcement cases (contd.) Case 3 (2012) In October 2009 respondent applied in Tokyo District Court to set aside arbitral award made in Japan in claimant s favor, principally on grounds that award violated Japan s public policy In June 2011 for first time court set aside arbitral award Note time period to first ruling (then appealed up to Supreme Court) Court s ruling turned significantly on one sentence in section of award entitled Undisputed Facts that referenced a fact disputed by the parties In court s view this implicated potential misapplication of substantive Japanese law and, on this basis, the court concluded that the award contained a serious lapse in violation of Japan s procedural public policy International Arbitration: Overview White & Case 47

Japan: Arbitral award enforcement cases (contd.) Case 3 contd. Ruling subject to criticism Court arguably conflated procedural with substantive issues under rubric of public policy, which was used inappropriately as a cover to review the merits of the award Analysis and reasoning of arbitral award made clear that tribunal did not treat the fact in question as undisputed According to one Japanese law scholar, it is questionable that the Court rightly found the facts related to the fact findings by the arbitral tribunal on this point and thus it is submitted that the Court should have more carefully examined the facts by which the Japanese procedural public policy has been violated International Arbitration: Overview White & Case 48

Japan: Final considerations Notwithstanding third case, Japan is viewed as one of the more arbitration-friendly jurisdictions in Asia But, as noted, relatively few arbitrations are seated in Japan and there are few enforcement actions Thus, Japan s courts have relatively little experience with enforcement actions and arbitration credentials of Japan s courts have not been tested nearly as much as those of Hong Kong or Singapore More concern with Japan seated decisions than foreign seated decisions International Arbitration: Overview White & Case 49

Japan: Final considerations For more information: Mark Goodrich, Joel Greer, and Hiroshi Naito, International Commercial Arbitration Practice in Japan, in International Commercial Arbitration Practice: 21st Century Perspectives, 2012 (Lexis-Nexis) (available at http://www.lexisnexis.com/store/us/) In this chapter of a book that examines arbitral practices around the world, the authors introduce the significant legal and rule changes that took effect in 2004 which gave Japan a modern international arbitration infrastructure. They then consider the current economic crisis and arbitration in Japan and proceed to examine various other issues concerning arbitration in the Japanese context: the arbitration agreement; conduct of arbitral proceedings; settlement and mediation; enforcement of arbitral awards; and training and promotion of arbitration, including suggestions about ways to facilitate more international arbitration in Japan in the future. International Arbitration: Overview White & Case 50

CHALLENGE AND ENFORCEMENT IN ASIA: CHINA James Rogers Partner Norton Rose Hong Kong 21 June 2013

ARE ARBITRAL AWARDS REALLY ENFORCEABLE IN CHINA? Yes! Special reporting system implemented Enforcement of a foreign arbitral award cannot be refused without referring the case to the higher courts and ultimately the Supreme People s Court in Beijing System is imperfect and lacks transparency and a clear, timely procedure but has generated a pro-enforcement environment Public policy Hong Kong awards 52

WHERE TO ARBITRATE: IN OR OUTSIDE CHINA? Do you have a choice? No foreign element: must arbitrate in China Foreign related : (i) one or both parties are foreign (foreign parent not enough); (ii) performance of the contract takes place outside PRC; or (iii) legally relevant facts as to the occurrence, modification or termination of civil rights and obligations outside the PRC Arbitrations in China must be administered by a Chinese arbitration commission - no ad hoc arbitration in China. If you are to arbitrate in China, whether by choice or because contract is not foreign related, your arbitration clause needs very careful drafting 53

THE CIETAC PROBLEM 2012 CIETAC Rules Express authority to administer off-shore arbitrations HK branch opened Default authority to Beijing Shanghai and South China/Shenzen sub-commissions break-away New competing Beijing-authorized sub-commissions to open Result jurisdictional issues aplenty! 54

Disclaimer Norton Rose Fulbright LLP, Norton Rose Fulbright Australia, Norton Rose Fulbright Canada LLP, Norton Rose Fulbright South Africa (incorporated as Deneys Reitz Inc) and Fulbright & Jaworski LLP, each of which is a separate legal entity, are members ( the Norton Rose Fulbright members ) of Norton Rose Fulbright Verein, a Swiss Verein. Norton Rose Fulbright Verein helps coordinate the activities of the Norton Rose Fulbright members but does not itself provide legal services to clients. References to Norton Rose Fulbright, the law firm, and legal practice are to one or more of the Norton Rose Fulbright members or to one of their respective affiliates (together Norton Rose Fulbright entity/entities ). No individual who is a member, partner, shareholder, director, employee or consultant of, in or to any Norton Rose Fulbright entity (whether or not such individual is described as a partner ) accepts or assumes responsibility, or has any liability, to any person in respect of this communication. Any reference to a partner or director is to a member, employee or consultant with equivalent standing and qualifications of the relevant Norton Rose Fulbright entity. The purpose of this communication is to provide information as to developments in the law. It does not contain a full analysis of the law nor does it constitute an opinion of any Norton Rose Fulbright entity on the points of law discussed. You must take specific legal advice on any particular matter which concerns you. If you require any advice or further information, please speak to your usual contact at Norton Rose Fulbright. 55

Enforcement of Arbitral Awards in Hong Kong, Singapore and Korea Christopher K. Tahbaz Debevoise & Plimpton LLP 21 June 2013

Enforcement of Arbitral Awards in Hong Kong Pro-arbitration regime enforcement of arbitral awards is encouraged Enforcement governed by Hong Kong Arbitration Ordinance (Cap. 609) ( HKAO ) Unified law no distinction between international and domestic cases Largely incorporates most recent version of UNCITRAL Model Law Arbitral award enforceable in same manner as Hong Kong court judgment, provided that Court grants leave (HKAO ss 84, 87, 92) Requirements for enforcing NY Convention award (HKAO s 88): Original or certified copy of the arbitration agreement Original or certified copy of the award If award not in English or Chinese, translation of the award

Enforcement of Arbitral Awards in Hong Kong (cont.) New York Convention awards Arbitral award from NY Convention state enforceable under HKAO s 87 Grounds for opposing enforcement in HKAO s 89, incorporates NYC Art. V Mainland China awards Enforceable under HKAO s 92 and Arrangement Concerning Mutual Enforcement of Arbitral Awards Between the Mainland and the Hong Kong Special Administrative Region Grounds for opposing enforcement in HKAO s 95, same as NYC Art. V Only awards made by recognized Mainland Chinese arbitral authority are enforceable (ad hoc arbitration not permitted in Mainland China) Hong Kong awards Subject to set-aside under HKAO s 81 or objection to enforcement under HKAO s 86 Both provisions essentially incorporate UNCITRAL Model Law Art. 34 Awards of other countries For awards made in non-new York Convention states and not Mainland China (e.g. awards made in Taiwan), objections to enforcement also in HKAO s 86 (Model Law Art. 34)

Developments in Hong Kong Enforcement Law Grand Pacific Holdings Ltd v Pacific China Holdings Ltd Hong Kong s Court of Final Appeal decided on 19 February 2013 to refuse leave to appeal, confirming the Court of Appeal s judgment to uphold an arbitral award and refuse a challenge under Article 34(2) of the Model Law Court of Appeal (Hong Kong s intermediate appellate court) had held that to successfully set aside award, applicant must show breaches of Article 34(2) were serious or egregious Court also stated that on a set-aside application, the court will not address itself to the substantive merits of the dispute, or to the correctness or otherwise of the award [i]t will address itself to the process (emphasis added) Case illustrates pro-enforcement approach of Hong Kong courts

Enforcement of Arbitral Awards in Singapore Singapore has a domestic and an international regime governing arbitration The Arbitration Act (Cap. 10) ( AA ) governs the domestic regime and the International Arbitration Act (Cap. 143A) ( IAA ) governs the international regime. Generally speaking, less judicial intervention under the international regime Example: Possibility of appeal on question of law in domestic cases Award enforceable in same manner as court judgment, with leave of court (AA s 46, IAA s 19) Procedure for enforcement of arbitral awards similar under IAA and AA Found in Rules of Court 2006, Order 69 (for arbitrations under the AA) and Order 69A (for arbitrations under the IAA) Requires ex parte application to Court to grant leave to enforce award, supported by original or certified copies of the award and arbitration agreement and a certified translation of the award and/or arbitration agreement (where applicable) If order giving leave is granted, must serve on the award debtor within 14 days. Within the 14-day period, the award debtor may apply to set aside the award, and the award shall not be enforced until after the expiration of the period

Enforcement of Arbitral Awards in Singapore (cont.) Grounds for refusing enforcement Singapore award subject to set-aside under AA (for domestic awards) or IAA (for domestic international awards ) Domestic international awards that is, international commercial arbitral awards made in Singapore subject to s 24 of the IAA, which gives force of law to Art. 34 of UNCITRAL Model Law (1985) For foreign awards rendered in NYC states, grounds for refusing enforcement found in s 31 of IAA, which mirrors Article V of the New York Convention

Developments in Singapore Enforcement Law Astro Nusantara International BV and others v PT Ayunda Prima Mitra and others [2012] SGHC 212 Claimant succeeded in enforcing five arbitral awards worth more than US$250 million against the Respondents Enforcement of arbitral awards challenged on grounds that tribunal lacked jurisdiction over certain parties. Court held that: For a domestic international arbitration award, an unsuccessful party must pro-actively apply to set aside the award within the set timeframe, and cannot just wait until enforcement proceedings are brought If a party objects to jurisdiction as a preliminary issue and is unsuccessful, it must apply to the court for review within the statutory time limit, and cannot just revive a jurisdictional objection upon enforcement of the arbitral award Although the Astro case is in relation to the enforcement of international awards within Singapore, it confirms Singapore s approach of minimum curial intervention and support for arbitration

Enforcement of Arbitral Awards in Korea Korea is generally a pro-arbitration jurisdiction: Arbitral awards are not usually set aside Procedural requirements set forth in Civil Procedure Act All documents need to be translated into Korean General approach: Court may revisit matters decided by Tribunal, but only if necessary to determine whether there are grounds to refuse recognition or enforcement under applicable law Reexamination intended to be restrictive Domestic awards subject to setting aside under Art. 36 of Korean Arbitration Act ( KAA ), which largely reflects UNCITRAL Model Law (1985) Foreign awards enforceable subject to KAA Art. 39(1) (NYC awards) or Art 39(2) (non-nyc awards) - Art. 39(1) incorporates NYC Art. V grounds for refusal of recognition and enforcement

Developments in Arbitration in Korea KT Skylife UNCITRAL arbitration seated in Seoul Arbitral award made July 2012, ordering Skylife to cease using the proprietary data encryption software of NDS, a UK company Tribunal declared that the agreement permitting Skylife to use the software had terminated on 30 December 2010, and ordered Skylife to comply with its obligations under that agreement upon termination Seoul Southern District Court found that the arbitral award did not state with enough specificity what Skylife was required to do on termination of the agreement, and therefore the award could not be enforced in South Korea Possibly a setback in South Korea s efforts to promote itself as an international arbitration seat, but case was more the exception than the rule in terms of enforcement of arbitral awards in South Korea

Obrigado!