Jonathan Hill – University of Bristol Law School Blog

Enforcement of awards under the New York Convention: choice of remedies and the significance of time limits

Posted on June 25, 2018March 15, 2021 by legalresearch

By Prof Jonathan Hill, Professor of Law (University of Bristol Law School).

It is a truism that, although the ultimate purpose of an arbitration is the rendering of an award which definitively determines the disputes that were referred by the parties to arbitration, in practice, the making of the final award may well not be the end of the road. This truism is graphically illustrated by the events following an arbitration conducted around ten years ago under the auspices of the Singapore International Arbitration Centre (SIAC); the dispute had arisen out of a failed joint venture between two groups of companies, a Malaysian media group (Astro), and various companies, including First Media (FM), which were part of an Indonesian conglomerate known as Lippo. During the arbitration, in which the Astro companies were the claimants, the tribunal made a number of awards; in 2010, the arbitration culminated in a final award of US$250 million in the claimants’ favour. Since then, the Astro companies have been trying to enforce the awards through the courts against FM (and others), most notably in Singapore and Hong Kong. Following decisions by the Singapore Court of Appeal (PT First Media TBK v Astro Nusantara International BV [2013] SGCA 57) and, more recently, by Hong Kong’s Court of Final Appeal (Astro Nusantara International BV v PT Ayunda Prima Mitra [2018] HKCFA 12), those attempts now appear to have failed.

In terms of the substance, the case seems, at first glance, to be a relatively simple one. The problems were, to a large extent, procedural and those problems were exacerbated by the fact that the courts of two jurisdictions were required to address the same – or very similar – questions. In total, there were five judicial decisions – two in Singapore – High Court (SGHC) and Court of Appeal (SGCA) – and three in Hong Kong – Court of First Instance (HKCFI), Court of Appeal (HKCA) and Court of Final Appeal (HKCFA). In both jurisdictions, Astro’s application to enforce the awards succeeded at first instance; it was only at the highest level in each jurisdiction that FM prevailed. This blog is divided into six substantive sections; after a brief consideration of the arbitration (I), the most significant features of each of the five court decisions are analysed (II-VI). Some of the lessons that can be learned from the whole saga are summarised in the Conclusion. (more…)

Do arbitral errors on the law governing the merits of a dispute referred to arbitration justify setting aside or non-enforcement of the award?

Posted on January 8, 2018December 15, 2017 by legalresearch

By Prof Jonathan Hill, Professor of Law (University of Bristol Law School).

Assume that contracting parties (C and R) agree that their contract is governed by English law and that any dispute arising in connection with the contract should be referred to arbitration. A dispute arises which C refers to arbitration. An arbitral tribunal is appointed and, in due course, the tribunal renders an award ordering R to pay damages for breach of contract. R seeks either to have the award set aside (by the courts at the seat of arbitration under the lex arbitri) or to resist enforcement of the award (in another country under the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards (‘NYC’)) on the basis either that the tribunal applied French law to the dispute, instead of English law, or that the tribunal decided the dispute ex aequo et bono (ie, by the application of an equitable standard), rather than through the application of legal rules and principles. In such circumstances, does R have a legitimate ground for having the award set aside or for resisting enforcement?

If the seat of arbitration is in a country which has implemented the UNCITRAL Model Law on International Commercial Arbitration (‘Model Law’ or ‘ML’), such as Singapore, Hong Kong, New Zealand, Australia or Canada, this question should receive the same answer whether the context is setting aside or enforcement under the NYC: this is because the grounds for setting aside under article 34 ML are almost identical to the grounds on which recognition and enforcement may be refused under article V NYC. This blog post discusses this issue in depth. (more…)

Forum shopping for interim measures in international commercial arbitration

Posted on November 13, 2017March 15, 2021 by legalresearch

By Prof Jonathan Hill, Professor of Law (University of Bristol Law School).

Interim measures of protection have an important role to play in international commercial dispute resolution. Because of the inevitable time delay between a dispute coming to a head and the resolution of that dispute by arbitration or another formal dispute-resolution process, a claimant (C) faces a number of risks. For example, the respondent (R) may attempt to make itself ‘award-proof’ by hiding or dissipating the assets against which C, if successful in the arbitration, might reasonably hope to enforce the award; or R might take steps to destroy evidence which is crucial to C’s claims; or R may engage in conduct which, if allowed to continue unchecked, will exacerbate the dispute or even render any arbitration of the parties’ dispute nugatory. Because of such risks, most systems of arbitration law confer on arbitral tribunals the power to order interim measures of protection, whose purpose is, depending on the circumstances, to maintain the status quo, provide a means of preserving assets out of which an eventual award may be satisfied or preserve evidence that may be relevant to the resolution of the dispute (see, eg, art 17.2 of the UNCITRAL Model Law on International Commercial Arbitration).

However, conferring powers on the arbitral tribunal may be inadequate. Unlike national courts, arbitral tribunals do not have coercive powers to back up their orders and have jurisdiction only over the parties to the arbitration. Furthermore, if interim measures are required as a matter of urgency, giving powers to the arbitral tribunal is frequently meaningless; once a dispute has been referred to arbitration, it may well be weeks or months before the arbitrators can be appointed. Accordingly, some mechanism is needed to fill the gap between C’s triggering of the arbitration clause and the constitution of the tribunal. The rules of an increasing number of arbitration institutions fill this gap by making provision for the appointment of an emergency arbitrator (see, eg, art 29 of the ICC Arbitration Rules; art 9B of the LCIA Arbitration Rules). Failing such a procedure, the gap can be filled only by national courts.

But, as with many issues involving the relationship between international commercial arbitration and national legal systems, there is a territorial issue to be addressed: which national court (or courts) should be competent to exercise the power to grant interim measures of protection in support of arbitration and which competent court(s) should actually exercise such powers? This is an issue which had to be addressed by the High Court in the recent case of Company 1 v Company 2 [2017] EWHC 2319 (QB). (more…)

Setting aside of arbitral awards under the Arbitration Act 1996 and the UNCITRAL Model Law on International Commercial Arbitration: failure to deal with all the issues

Posted on September 11, 2017March 15, 2021 by legalresearch

By Prof Jonathan Hill, Professor of Law (University of Bristol Law School).

Back in the 1980s, the Departmental Advisory Committee on Arbitration Law recommended against England adopting the UNCITRAL Model Law on International Commercial Arbitration (‘Model Law’ or ‘ML’). Nevertheless, during the course of the reform process that led to the Arbitration Act 1996, the Model Law played a significant role and its impact can clearly be seen in terms of the 1996 Act’s structure, style and content. Nevertheless, English law retains a number of distinctive features and, even in those areas in which the objectives of the 1996 Act broadly mirror those of the Model Law, there are places where the two legislative schemes diverge.

One significant area of difference is the setting aside of awards. On this issue, the Model Law is, at first blush, simplicity itself. The six grounds for setting aside under art 34 ML replicate bases set out in article V of the New York Convention of 1958 (‘NYC’) on which an award rendered in country A may be refused recognition/enforcement in country B. (For obvious reasons, art 34 ML contains no provision corresponding to art V.1.e NYC.)

The Arbitration Act 1996 approaches setting aside in a very different way. First, in keeping with the traditions of English arbitration law, the 1996 Act provides that, albeit in carefully circumscribed and narrow circumstances, an award may be set aside on the basis that, as regards the merits of the dispute, the arbitral tribunal made an error of English law (s 69). The Model Law, by contrast, follows the modern international practice of making no provision for setting aside because the tribunal did not reach the correct result, either on the facts or the law. Secondly, the 1996 Act separates ‘jurisdictional’ defects (s 67) from ‘procedural’ and other defects (s 68). Thirdly, section 68 lists a total of twelve ‘procedural’ grounds on which an award may be set aside. This contrasts with the ML’s two ‘procedural’ grounds (art 34.2.a.ii and iv). Fourthly, whereas article 34 ML provides simply that an award ‘may’ be set aside if one of the grounds is established (giving the supervisory court a degree of flexibility), an award cannot be set aside under section 68(2) unless the procedural defect relied on by the applicant has caused or will cause substantial injustice to the applicant.

The combined effect of these differences is to produce setting-aside regimes which, although largely seeking to implement the same policies, work in rather different ways. This point can be illustrated by the quite common scenario in which, after an award has been rendered, one of the arbitrants (typically, a respondent whose defence was wholly or partly unsuccessful) challenges the award on the basis that it fails to address an issue which was raised in the arbitration. (more…)

‘Bare’ arbitration clauses under the UNCITRAL Model Law on International Commercial Arbitration

Posted on June 12, 2017March 15, 2021 by legalresearch

By Prof Jonathan Hill, Professor of Law (University of Bristol Law School).

As every student of international commercial arbitration ought to know, an arbitration agreement should not only impose on the parties a binding obligation to refer a certain dispute (or certain types of dispute) to arbitration but also, as a minimum, indicate the place (or seat) of arbitration and provide a mechanism for the appointment of the arbitral tribunal. Unfortunately, the drafting of arbitration clauses in commercial contracts often leaves much to be desired; in a case involving a badly-drafted arbitration clause, disputing parties who are unable to resolve their disputes by negotiation may find themselves getting bogged down in one or more of the procedural problems to which pathological arbitration clauses frequently give rise.

Particular difficulties may be posed by so-called ‘bare’ clauses – that is, clauses which merely provide for submission of disputes to arbitration without specifying the place of the arbitration, the number of arbitrators or the method for establishing the arbitral tribunal. If, once a dispute has arisen, the parties are unable to agree on the appointment of an arbitral tribunal, the claimant may encounter practical difficulties in activating the arbitration machinery and getting the arbitral tribunal established. (more…)

The law governing an arbitration clause

Posted on March 13, 2017February 15, 2017 by legalresearch

By Prof Jonathan Hill, Professor of Law (University of Bristol Law School).

A leading commentator has observed that ‘[t]he choice of the law applicable to an international commercial arbitration agreement is a complex subject’ (Born, International Commercial Arbitration (2^nd edn, 2014) p 472). This complexity is reflected by the case law illustrating that the courts of different countries adopt different approaches to certain common scenarios. One area of divergence is the case where parties to a contract containing an arbitration clause choose state A as the seat of arbitration, but the law of state B as the law governing the matrix contract: which law governs the arbitration clause – the law of the seat or the law of the country chosen to govern the substantive contract?

Some legal systems, influenced in part by the doctrine separability (according to which a contractual arbitration clause is, conceptually, treated as a contract separate and independent from the matrix contract) and article V.1.a of the New York Convention of 1958, take the view that, in the absence of an express choice by the parties of the law applicable to the arbitration clause, the law of the seat should govern questions of material validity. English law, however, has never taken this view – although, arguably, the Court of Appeal came close to doing so in C v D [2007] EWCA Civ 1282. (more…)

Brexit and private international law

Posted on July 6, 2016March 15, 2021 by legalresearch

By Prof Jonathan Hill, Professor of Law (University of Bristol Law School).

It is unlikely that many voters, when deciding how they would vote in the recent EU referendum, would have given any thought to the implications of Brexit for private international law in the United Kingdom. Nevertheless, Brexit is likely to have profound consequences in this (admittedly) complex and specialist field. The greatest effect will be felt in the commercial arena: in the context of cross-border litigation, for example, the EU has established, in civil and commercial matters, a common framework for the jurisdiction of national courts, the determination of the applicable law and the reciprocal recognition/enforcement of judgments granted by Member State courts. Brexit will also take the United Kingdom out of the EU-wide systems for the allocation of divorce jurisdiction and the mutual recognition of divorces and nullity decrees. (more…)

International Commercial Arbitration: the removal of arbitrators for apparent bias

Posted on June 30, 2016June 26, 2016 by legalresearch

By Prof Jonathan Hill, Professor of Law (University of Bristol Law School).

It is a fundamental principle of arbitration law that arbitrators – whether appointed by one of the arbitrants, by the arbitrants jointly or by a third party (such as an arbitral institution or a national court) – must be impartial. This principle is enshrined in institutional arbitration rules and national legislation. It is, therefore, not surprising that, when doubts as to an arbitrator’s impartiality arise, one of the arbitrants will seek to have the arbitrator removed. The importance of the parties’ right to challenge an arbitrator on the basis of justifiable doubts as to the arbitrator’s impartiality is illustrated by the recent decision of the High Court in Sierra Fishing Co v Farran [2015] 1 All ER (Comm) 560. The decision is notable in two respects.

The significance of the IBA Guidelines on Conflicts of Interest in International Arbitration

Because, in international cases, arbitrants and arbitrators often come from different countries and different legal traditions, they may have different conceptions of what types of circumstance give rise to a conflict of interests and different assumptions about how any such conflict might be resolved. The IBA guidelines, which were originally formulated in 2004 and have been subsequently revised (most recently in 2014), aim to assist the arbitration community by providing a typology of different kinds of conflict and a system for grading their seriousness. The guidelines list a wide variety of professional, financial and personal connections and place them in three lists: red (split into waivable and non-waivable); orange (waivable); and green (irrelevant). Since their inception, the guidelines have frequently been used by arbitrators (in assessing what circumstances need to be disclosed prior to appointment, or thereafter) and arbitral institutions (when determining challenges under institutional rules).

(more…)

Conflicting jurisdiction and arbitration agreements: Exmek Pharmaceuticals SAC v Alkem Laboratories Ltd

Posted on April 25, 2016April 12, 2016 by legalresearch

By Prof Jonathan Hill, Professor of Law (University of Bristol Law School).

A previous blog addressed certain problems surrounding the interpretation of arbitration clauses, particularly in relation to a lack of transparency concerning the parties’ choice of the seat of arbitration. This blog continues the same theme – albeit in the context of different interpretative questions.

Although the notion of the ‘pathological’ arbitration clause has been part of the international arbitration literature for nearly half a century, difficulties generated by poor drafting continue to bedevil both arbitral tribunals and the courts. Notwithstanding the availability of a wealth of clear and helpful advice (see, for example, Born, International Arbitration and Forum Selection Agreements: Drafting and Enforcing (4^th edn, 2014), a surprising number of those who draft commercial contracts seem to be either unaware of the available advice or incapable of heeding it. (more…)

The interpretation of arbitration clauses: where is the seat of arbitration?

Posted on March 14, 2016March 15, 2021 by legalresearch

By Prof Jonathan Hill, Professor of Law (University of Bristol Law School).

It is a truism that arbitration clauses are often poorly drafted, not infrequently agreed at the 11th hour or lifted (inappropriately) from unrelated contracts. As a consequence, courts often have to try to make sense of clauses which are unclear or potentially inconsistent. In Shagang South-Asia (Hong Kong) Trading Co Ltd v Daewoo Logistics [2015] EWHC 194 (Comm), [2015] 1 All ER (Comm) 245 the parties had agreed that arbitration was to be ‘held in Hong Kong’, but that ‘English law [was] to be applied’. After the tribunal had rendered its award, the claimant applied to the English court for setting aside of the award under section 67 of the Arbitration Act 1996. As in Dubai Islamic Bank v Paymentech [2001] 1 Lloyd’s Rep 65, the English court’s setting aside jurisdiction depended on England being the seat of arbitration (see Arbitration Act 1996, s 2(1)). (more…)