BANI Arbitration Seminar 2018 Setting Aside and Refusal of Enforcement of Foreign Awards - Law and Issues 29 November 2018 (Shangri La, Jakarta) Professor Dr. Colin Ong, QC Arbitrator & Queen’s Counsel, 36 Stone Chambers (London) Counsel, Eldan Law LLP (Singapore) Senior Partner, Dr Colin Ong Legal Services (Brunei) [The views expressed in this paper reflect only the personal views of the author] Email: contacts@onglegal.com
( 1): Setting Aside (presented on behalf of Stephen Nathan, QC) * Between 2015 to March 2018, there were 247 appeals to the Commercial Court in London on issues of serious procedural irregularity or a point of law. * Out of those 247 only 6 succeeded. Over the last year, there were 49 challenges to an award on grounds of serious procedural irregularity. Only 2 challenges succeeded (P v D and Oldham v QBE Insurance (Europe) Ltd in 2017). * 56 parties appealed on a point of law . Only 10 were given permission by the Court. Only 1 succeeded . Dr Colin Ong 2
( 1) Setting Aside (presented on behalf of Stephen Nathan, QC) * NYC provisions on Enf set out in S 101 to 103 of AA 1996. Most commonly used route in enforcing foreign awards where enf is applied for b4 the HC. * If Award made in country not a party to NYC, one may try to enforce through S 99 of 1996 Act and Geneva Conv on Execution of Foreign Arb Awards 1927. * If Award made in Commonwealth Country, use Foreign Judg (Reciprocal Enf) Act 1933, provided Award was converted into judgment in foreign commonwealth country. Dr Colin Ong 3
(2 ): Enforcement of Foreign Awards: Statutory Regime * S 101(1) A New York Convention award shall be recognised as binding on the persons as between whom it was made, and may accordingly be relied on by those persons by way of defence, set-off or otherwise in any legal proceedings in England and Wales or Northern Ireland . * (2) A New York Convention award may, by leave of the court, be enforced in the same manner as a judgment or order of the court to the same effect. * (3) Where leave is so given, judgment may be entered in terms of the award. Dr Colin Ong 4
(2 ): Enforcement of Foreign Awards: Statutory Regime * 103 (1) Recog or enf of a New York Convention award shall not be refused except in the following cases. * (2) Rec or enf of the award may be refused if the person against whom it is invoked proves (a) that a party to the arb agmnt was (under the law applicable to him) under some incapacity; (b) that the arb agmnt was not valid under the law to which the parties subjected it or, failing any indication thereon, under the law of the country where the award was made; (c) that he was not given proper notice of the appointment of the arbitrator or of the arb proceedings or was otherwise unable to present his case; Dr Colin Ong 5
(2 ): Enforcement of Foreign Awards: Statutory Regime * (d) …award deals with a difference not contemplated by or not falling within the terms of the submission to arb or contains decisions on matters beyond the scope of the submission to arb (e) …composition of the arb tribunal or the arb procedure was not in accordance with the agmnt of the parties or, failing such agmnt, with the law of the country in which the arb took place; (f) …award has not yet become binding on the parties, or has been set aside or suspended by a competent authority of the country in which, or under the law of which it was made. Dr Colin Ong 6
(2 ): Enforcement of Foreign Awards: Statutory Regime * (3) Rec or enf of the award may also be refused if the award is in respect of a matter which is not capable of settlement by arb, or if it would be contrary to public policy to recog or enf the award. (4) An award which contains decisions on matters not submitted to arb may be recog or enf to the extent that it contains decisions on matters submitted to arb which can be separated from those on matters not so submitted. (5) Where an application for the setting aside or suspension of the award has been made to such a competent authority as is mentioned in subsection (2)(f), the court before which the award is sought to be relied upon may, if it considers it proper, adjourn the decision on the recog or enf of the award. Dr Colin Ong 7
(2 ): Enforcement of Foreign Awards: Statutory Regime * If the Award was made in a country which is not a party to the NYC, one may be able to enforce through Sec 99 of the 1996 Act and the Geneva Convention on the Execution of Foreign Arbitral Awards 1927. * If Award made in a Commonwealth Country - Foreign Judgments (Reciprocal Enforcement) Act 1933. But the Award must first be converted into a judgment in the foreign commonwealth country. Dr Colin Ong 8
Thai-Lao Lignite (Thailand) Co. Ltd v Government of the Lao People's Democratic Republic [Unreported English HC judgment 12 Nov 2018] * Thai-Lao Lignite (Thailand) Co. Ltd v Government of the Lao People's Democratic Republic [12 Nov 2018] * English High Court set aside an order to enforce a US$56 million UNCITRAL award against Laos. * The Court set aside the 2012 order granting enforcement of the award in favour of Thai-Lao Lignite. * Basis of judgment: - The award had been set aside at the arbitral seat in Malaysia. * Malaysian Federal Court confirmed the setting aside. Dr Colin Ong 9
SCM Financial Overseas Ltd v Raga Establishment Ltd [2018] EWHC 1008 (Comm) * HC refused to set aside an award on the ground of serious procedural irregularity. * London-seated tribunal applied the LCIA rules proceeded to issue an award rather than await the outcome of domestic court proceedings. * Court’s decision could have had a significant impact on the issues before the Tribunal. * HC held that wide discretion is accorded to tribunals to manage the proceedings as they see fit. Dr Colin Ong 10
PT Transportasi Gas Indonesia v (2) ConocoPhillips (Grissik) Ltd and (2) PetroChina [2016] EWHC 2834 (Comm) * HC upheld a US$79 million UNCITRAL award in favour of ConocoPhillips and PetroChina. It critised PT TGI for bringing a set aside request “ which should never have been brought .” * HC rejected TGI's reliance upon Indonesian public policy and allegation that the Claim was inconsistent with Indonesian law and regulator’s decrees and public policy. * Tribunal had decided that TGI failed to provide any legal authority to show Indonesia had a public policy preventing the operation of promissory warranties. Dr Colin Ong 11
Taurus Petroleum Ltd v State Oil Marketing Co. of the Ministry of Oil, Iraq (“SOMO”) [2017] UKSC 64 * Taurus enforced award against London branch of Credit Agricole against letters of credit for different oil transactions over the funds receivable by SOMO. * SOMO was sole owner of debts but payment not to be made direct but to beneficiary of letters of credit * Provided for payment into Central Bank of Iraq’s “ Oil Proceeds Account ” at Federal Reserve Bank of NY. * UKSC emphasised - successful intl commerce depends on enf of contracts & enf of arb awards. Clear public policy in UK to ensure recog and enf of arb awards. Dr Colin Ong 12
Taurus Petroleum Ltd v State Oil Marketing Co. of the Ministry of Oil, Iraq (“SOMO”) [2017] UKSC 64 * SOMO had no presence in Englandbut its trade “ involved a long term connection with the jurisdiction ” * Int oil trade conducted through letters of credit. Foreseeable that LoC would be issued in London. * Predictable that, if SOMO failed to honour an Award, it would find itself being sued in the English courts. * UKSC held that letters of credit are no different from any other debt. Debtor under LoC - London branch of Credit Agricole. Means the debt was sited in England. * Means unpaid Awards enforceable against issuing banks in London for Third Party Payment Orders Dr Colin Ong 13
RBRG Trading (UK) Limited v Sinocore International Co Ltd [2018] EWCA Civ 838 * CA confirmed that it adopts a narrow approach to the illegality exception to enforcement under the NYC. * Sinocore presented forged bills of lading for payment under LoC issued by buyer, RBRG. Sinocore obtained a CIETAC award. Tried to enforce in England. * CA rejected RBRG’s attempt to block Enf on ground of illegality. Held: not a sufficient causal connection between the illegality (the forgery) and the underlying obligation to pay under the contract itself. Dr Colin Ong 14
Eastern European Engineering Ltd v Vijay Construction Ltd [2018] EWHC 1539 (Comm) * Creditor seeking to enforce ICC (Paris) Award in several places including Seychelles principal jurisdiction of the dispute. * HC had power to grant a worldwide freezing order but declined. Risk this could interfere with court of principal jurisdiction (Seychelles) might handle question of enf of the Award. No problems of “competing jurisdictions” in a domestic injunction. * HC limited itself to granting a domestic injunction on assumption that Award debtor has assets within UK. Dr Colin Ong 15
Kyrgyz Republic v Stans Energy Corporation and Kutisay Mining LLC [2017] EWHC 2539 * HC refused to stop Enf of award against Kyrgyzstan. * Kyrgyzstan failed to provide sufficient evidence that a word in the Kyrgyz definition of “ investment dispute ” refers exclusively to “sale.” * The court held it was absurd to restrict investment disputes to the sale of investments only and dismissed the application. * CONCLUSION: it is very hard to resist enforcement of a foreign Award in England. Dr Colin Ong 16
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