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June 2023 - november 2023
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Global International Arbitration Update
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Edition 18
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Introduction
The newly designed eighteenth edition of Mayer Brown’s Global International Arbitration Update (“Update”) summarises key events in international arbitration and public international law between June and November 2023. Explore key legal developments and cases by region under the section “International Arbitration Key Developments”, explore newly registered investment cases (publicly known) by region under the section “Investor-State Arbitration” and explore topical news on numerous public international law topics under the section “Public International Law Key Insights”. Get in touch with our team to discuss any of the issues covered in this Update using the Contact Us buttons.
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What were the important arbitration developments around the world between June and November 2023? Below, we guide you through the key legal developments and the key case developments during this period. Divided by region, dive into the Americas, Europe, Middle East and Africa, and Asia-Pacific sections below to read our informative summaries.
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Click on a region below to discover new ICSID Convention Arbitration cases and publicly known UNCITRAL and institutional cases registered between June and November 2023.
At a Glance
Key legal developments include: ERE survey results and Brazil’s (i) Reform Bill and (ii) action for non-compliance with fundamental precept No. 1,050 concerning arbitrator disclosure. We summarise multiple developments at institutions, including new SVAMC AI Guidelines and CAM Santiago’s new emergency arbitrator rules. We also report on two U.S. Supreme Court judgments and two Circuit Court of Appeals decisions, two Brazilian court decisions, and two cases involving Peru.
Results of ERE’s 2023 Survey released
Key Legal Developments
Key Case Developments
One year after the launch of the Equal Representation for Expert Witnesses (“ERE”) Pledge, ERE has issued its Annual Survey and a Report showcasing the results of the 620 participants (predominantly female and male lawyers and experts from 32 jurisdictions). The Report found that: • In 2022, women were appointed as (or testified as) the sole expert witness in just 10% of disputes worldwide. • 64% of lawyers had not seen any female expert witnesses testify or co-testify in 2022. • Three key reasons for fewer female expert witnesses include: (i) lawyer preferences to use experts they know/have used before; (ii) a lack of women reaching sufficiently senior levels in their professions; and (iii) a lack of experience in an expert witness role. • There is a burgeoning pipeline of aspiring expert witnesses under 40; 80% of respondents who have yet to provide oral expert evidence aspire to do so in the future. The Report highlights that it“is imperative to increase the diversity of … expert witness” appointments and provides potential solutions to increase diversity. These include: counsel and parties requiring gender-diverse shortlists, increased internal support in organisations employing female witnesses and mentoring schemes for aspiring experts and young practitioners. The survey feedback should help drive change in the world of dispute resolution and will help the ERE steering committee “develop impactful strategies for the coming year.”
JUNE 2023
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Brazil’s Reform Bill improves capital market corporate governance standards
The Chamber of Commerce of Lima concludes Cooperation Agreement with ICSID
ICC issues Guide and Report designed to increase awareness of different dispute resolution techniques and settlement facilitation
ICDR establishes Global Working Group for the resolution of technology and life science disputes
Santiago Chamber of Commerce’s Arbitration Center implements new rules on emergency arbitration
Action for non-compliance with fundamental precept no. 1,050 and the arbitrators’ duty of disclosure in Brazil
Silicon Valley Arbitration and Mediation Center Publishes Draft Guidelines on Use of AI in International Arbitration
The Ministry of Finance presented Bill No. 2,925 (the “Bill”) to the Brazilian Chamber of Deputies with the intent of improving corporate governance standards in the Brazilian capital market. Among other changes, the key proposed changes: i. authorize arbitration to adjudicate collective claims for damages, provided that other investors can intervene in the arbitration and that the proceedings are public; and ii. create new conditions to confirm settlements that terminate arbitration proceedings aimed at compensating investors for losses arising from violations of securities market laws or regulations. The Bill was submitted to the Congress in June 2023 and is now under analysis by the standing committees. These committees will hear opinion from experts on the subject matter and the public in general and then submit the Bill to be voted by the Brazilian Congress. If approved, the Bill’s proposed changes will create better conditions for investors to submit their claims against companies listed in the Brazilian capital market to arbitration.
2 JUNE 2023
The International Center for Settlement of Investment Disputes (“ICSID”), established by the 1965 Convention on the Settlement of Investment Disputes (the “ICSID Convention”), announced that it entered into a Cooperation Agreement with the Lima Chamber of Commerce (“CCL”) based in Peru. The Cooperation Agreement is based on Article 63 of the ICSID Convention, which provides that ICSID proceedings may be held “if the parties so agree, (a) at the seat of the Permanent Court of Arbitration or of any other appropriate institution, whether private or public, with which the Centre may make arrangements for that purpose; or (b) at any other place approved by the Commission or Tribunal.” On this issue, item 44 of the Report of the Executive Directors on the ICSID Convention explains that Article 63 allows for conciliation and arbitration proceedings to be held outside the ICSID Center. Item 44 also emphasizes that, in dealing with proceedings away from the ICSID Center, specific arrangements must be made between the Center and the chosen institution for the proper conduct of the proceedings. Those arrangements are likely to vary based on the institution. In addition, this Cooperation Agreement provides the possibility of holding ICSID hearings at the National and International Arbitration Center of the CCL’s facilities. Moreover, the Cooperation Agreement encourages the ICSID and the CCL to share knowledge related to arbitration, mediation and any other methods of dispute resolution.
6 JUNE 2023
The ICC’s Commission on Arbitration and ADR published the Guide on Effective Conflict Management and a Report on Facilitating Settlement in International Arbitration. The publications are part of a larger series delivering on the ICC’s pledge to drive thought leadership on innovations, best practices and evolving standards in dispute resolution that meet the evolving needs of a growing range of businesses and markets using ADR. Both publications target a wide range of businesses, from SMEs to multinational corporations, as well as states, external counsel, arbitrators, mediators and other ADR service providers. The Guide on Effective Conflict Management offers guidance in selecting the most appropriate ADR techniques and explains how to efficiently use them to avoid escalation, resolve disputes and reduce the cost of unavoidable disputes, both before and after the commencement of arbitration proceedings. It describes the available ICC Dispute Resolution Services and gives examples of how they can be used together or as standalone mechanisms. The Report on Facilitating Settlement in International Arbitration proposes ways for parties to settle disputes and preserve business relationships even after arbitration has begun. The three main sections of the Report describe case management techniques, mediation windows and protocols, and preliminary views and settlement conferences.
2 JULY 2023
The International Centre for Dispute Resolution (“ICDR”), the international arm of the American Arbitration Association, has established a Global Working Group (“GWG”) for the resolution of technology and life sciences disputes. The working group is a part of the ICDR’s worldwide effort to cater to the growing demand in this area of dispute resolution and create a set of practical proposals for what the international arbitration community should do to assist the information technology, life sciences, construction, energy, aviation, aerospace and other related industries in resolving technology and intellectual property-related disputes. One of the GWG’s first major initiatives was to launch a survey to gather information on disputes in the technology, life sciences and intellectual property sectors and the potential for arbitration to resolve them. The survey, released in July 2023, was jointly drafted with the International Technology Law Association. It aims to identify concrete, practical solutions to resolve more disputes in the technology, life sciences and IP sectors through arbitration and other forms of alternative dispute resolution and is targeted at all involved in such disputes, including in-house counsel, arbitration practitioners, arbitrators and mediators. The GWG plans to publish the results in late 2023, along with proposals for ensuring that arbitral procedures evolve in a manner that suits the needs of the target technology and life sciences industries.
18 JULY 2023
The Santiago Chamber of Commerce’s Arbitration and Mediation Center (“CAM Santiago”) in Chile has implemented new rules on emergency arbitration (“EA Regulation”), which were incorporated into the 2021 National Arbitration Rules (the “CAM Santiago Arbitration Rules”). The EA Regulation outlines, among other issues, the procedure for emergency arbitrations and criteria for requesting an emergency measure. Before the inclusion of the EA Regulation, the CAM Santiago Arbitration Rules did not provide rules on emergency measures. The advantages brought by the new EA Regulation include the confidential nature of emergency arbitrations, and the convenience of concentrating pre-trial requests and the arbitral proceedings themselves under the same proceedings. Moreover, distinct from other arbitration rules, the EA Regulation entitles emergency arbitrators to conduct proceedings ex parte when the applicant provides serious reasons for this measure. The applicant must demonstrate (i) “serious and justified reasons” for seeking the measure, (ii) a likelihood of success on the merits (fumus boni iuris) and (iii) a risk of irreparable harm (periculum in mora). Under the EA Regulation, emergency arbitration applications can only be made before the arbitral proceedings begin. Once all pending issues have been resolved, the emergency arbitrator must issue a decision within five days. If relief is granted, the applicant must file a request for arbitration within ten days, if the applicant has not already done so. CAM Santiago’s EA Regulation is an important development as it provides parties with an efficient mechanism to submit their emergency claims to arbitration rather than having to resort to State courts.
11 AUGUST 2023
The action for non-compliance with fundamental precept (ação de descumprimento de preceito fundamental or ADPF, a Brazilian remedy for questioning laws that violate constitutional principles) No. 1,050 (“ADPF 1,050”) currently under review by the Brazilian Supreme Court gives rise to debates concerning the duty of disclosure by arbitrators in arbitrations. ADPF 1,050 specifically questions the interpretation of Article 14 of the Brazilian Arbitration Act, which addresses the rules governing the disqualification, exclusion or rejection of arbitrators, as well as the arbitrators’ duty to disclose information that could give rise to justifiable doubts as to impartiality. According to União Brasil – the political party that filed the ADPF 1,050 – the “justifiable doubts” criterion to challenge an arbitrator’s impartiality in Article 14 of the Brazilian Arbitration Act should be replaced by a broader criterion of “minimum doubt” as to an arbitrator’s impartiality. In addition, União Brasil argues that the duty of disclosure falls upon the arbitrator; thus, the arbitrator has the obligation to disclose circumstances that could affect his/her impartiality, and the parties are not obligated to conduct investigations about said arbitrator. The Attorney General’s Office argues that a mere failure in the duty of disclosure should not automatically imply a presumption of partiality against the arbitrator. Therefore, it is the judge´s responsibility to assess the relevance of the undisclosed information and its impact on the outcome of the arbitration before deciding on the annulment of the arbitral award. If the ADPF is granted by the Federal Supreme Court, the relevant standard for arbitrators’ duty to disclose under Brazilian law will be affected, changing from “justifiable doubts” (in line with most international rules and guidelines) to “minimal doubts”. Arbitrators hearing cases governed by Brazilian law will, accordingly, have to comply with the new standard.
21 AUGUST 2023
The Silicon Valley Arbitration and Mediation Center (“SVAMC”), a vanguard in technology-related dispute resolution, recently released draft guidelines designed to help navigate the advent of artificial intelligence (“AI”) tools and their inevitable use in and impact on international arbitration. The guidelines are also intended to demonstrate SVAMC’s attentiveness and expertise in responding to technological advancements, as well as its leadership in shaping ethical and legal frameworks that will govern the use of AI in arbitration. The guidelines, as currently drafted, are organized around cardinal principles common in various legislative frameworks for AI regulation around the world, including transparency, accountability and fairness. They are structured into four distinct segments: (1) delineating the applicability of the draft guidelines and reaffirming the continued applicability of extant mandatory legal stipulations or constraints; (2) discussing the uses, limitations and risks of AI applications; (3) discussing methods of safeguarding confidentiality; and (4) discussing disclosure and the protection of records. In addition to the above, the guidelines also incorporate paradigms of both compliant and non-compliant utilization of AI within arbitration settings, as well as model clauses for incorporation into procedural orders. The draft guidelines were open for public comment until 15 December 2023.
31 AUGUST 2023
SCOTUS confirms foreign plaintiffs may use RICO to enforce foreign arbitral awards
In Yegiazaryan v. Smagin et al, the U.S. Supreme Court provided welcome relief to foreign plaintiffs seeking to enforce foreign arbitral awards against judgment debtors fraudulently concealing assets. The case involved fraud committed by Ashot Yegiazaryan, a California resident, against Russian resident Vitaly Smagin. Yegiazaryan stole shares in a joint real estate venture in Moscow from Smagin, for which an LCIA tribunal seated in London awarded Smagin over US$84 million in damages. When Yegiazaryan failed to pay the award, Smagin filed an enforcement action in the U.S. District Court for the Central District of California, which confirmed the award and entered judgment in Smagin’s favor. Smagin obtained a preliminary injunction from the district court, freezing Yegiazaryan’s assets in the United States. In 2020, Smagin filed a complaint citing a private cause of action under the Racketeer Influenced and Corrupt Organizations Act (“RICO”) and alleged Yegiazaryan illegally shielded his assets from collection. The complaint was dismissed by the district court for failure to allege a “domestic injury.” The Supreme Court clarified that RICO’s “domestic injury” requirement is based on a “contextual” approach, considering the circumstances around the alleged injury, rather than a “residence-based” approach. While this decision opens the door to RICO claims being advanced by foreign award creditors, plaintiffs still need to demonstrate the effects of racketeering activity manifested in the United States to invoke RICO.
22 JUNE 2023
SCOTUS holds that district courts must stay proceedings pending appeal of orders denying arbitration
The Supreme Court of the United States (“SCOTUS”) in Coinbase v. Bielski held that when a party files an immediate appeal of a federal district court order denying arbitration, the district court must stay its proceedings relating to the merits, including discovery, during the appeal. The U.S. Congress had authorized immediate appeals of orders denying arbitration when it enacted Section 16 of the Federal Arbitration Act (“FAA”), but, prior to Coinbase, circuit courts of appeals were divided over whether stays pending appeal were automatic. SCOTUS sided with circuit courts’ majority view that stays should be automatic on the grounds that further litigation on the merits eliminates the benefit of the claimed right to arbitrate subject to an immediate appeal. SCOTUS reasoned that, because Section 16 of the FAA does not address stays, Congress intended courts to follow the “divestiture” principle in Griggs v. Provident Consumer Discount (1982). Further, the majority view “reflects common sense” that allowing proceedings to go forward would nullify the decision to allow an interlocutory appeal in the first place. This decision will have a significant impact on federal courts in California and New York in particular, where many arbitrations are seated and where district courts were previously allowed wide discretion over whether to grant full or partial stays pending appeal or to deny stays altogether. SCOTUS noted that circuit courts should avoid delays in the resolution of these appeals.
23 JUNE 2023
Court of Justice of São Paulo favours arbitral tribunal’s jurisdiction in spite of issues with arbitration clause
Real estate developer FOC Empreendimentos Imobiliários Ltda. (“FOC”) filed an appeal against a decision by the 1st Civil Court of the District of Itapetininga that ordered the termination of the contract between FOC and the Barbozas, FOC’s clients in a project. The dispute arose due to the alleged delay of the appellant, FOC, in carrying out a project, which led the appellees, the Barbozas, to terminate the contract unilaterally and make the properties – objects of the dispute – available for negotiation. However, after the decision rendered by the 1st Civil Court of the District of Itapetininga that favored the contract termination, FOC claimed that there was an arbitration clause in the contract and, thus, that it was for the tribunal to rule on the termination of the contract. The Barbozas said that they attempted to initiate an arbitration proceeding at the Chamber of Mediation, Conciliation, and Arbitration of Sorocaba, TAS, as indicated in the contract. However, this arbitration chamber was dissolved. The Court of Justice of the State of São Paulo (“TJSP”) decided that the original arbitration clause remains valid, despite the dissolution of the arbitration chamber, but it is no longer a “full arbitration clause.” Instead, the arbitration clause would be treated as an “empty clause,” meaning that it does not specify the process for appointing arbitrators, only stipulating that the parties will resolve their disputes through arbitration. Thus, despite the issues with the arbitration clause’s selection of an arbitration chamber, the TJSP favored the arbitral tribunal’s jurisdiction, excluding the jurisdiction of State courts. This decision contrasts with a recent decision from the Swiss Federal Supreme Court, which found that the selection of a nonexistent arbitration chamber in an arbitration clause rendered the entire arbitration clause invalid (decision on case 4A_19/2023).
27 JUNE 2023
Arbitration clause in employee stock ownership plan struck for violating U.S. Employment Retirement Income Security Act
In Henry, on behalf of BSC Ventures Holdings, Inc. Emp. Stock Ownership Plan v. Wilmington Trust NA, 72 F.4th 499 (3d Cir. 2023), the U.S. Court of Appeals for the Third Circuit held that a class action waiver within an arbitration agreement is unenforceable if it waives statutory remedies. In Henry, a beneficiary brought a claim against the trustee of an employee stock ownership plan (“ESOP”) for breach of fiduciary duties. The ESOP’s mandatory arbitration clause contained a class action stipulation where claims against the ESOP “must be brought solely [in an] individual capacity” and prohibited relief “which has the purpose or effect of providing additional benefits or monetary relief” to anyone other than the claimant. Under the Employment Retirement Income Security Act of 1974 (“ERISA”), ESOP participants can bring breach of fiduciary duty suits “in a representative capacity on behalf of the plan as a whole.” Further, ERISA expressly permits recovery of “all plan losses caused by a fiduciary breach.” The Third Circuit held that the ESOP’s arbitration clause waived the rights created in ERISA, and thus the statute prevails. The court determined that, since the beneficiary requested “appropriate equitable relief,” the plan wide remedies identified in ERISA were sought and denied by the ESOP. Since the class action waiver was expressly non-severable from the arbitration clause, the court struck the entire arbitration provision.
30 JUNE 2023
Second Circuit Court of Appeals reinforces that tribunals’ jurisdictional findings are entitled to substantial deference
The U.S. Court of Appeals for the Second Circuit in Olin Holdings Ltd. v. Libya affirmed the recognition and enforcement of a Paris-seated ICC award without conducting an independent review of the tribunal’s jurisdiction and affirmed a “considerable deference” standard toward jurisdictional decisions made by tribunals. The case involved a dispute between a Cypriot company, Olin, and the State of Libya over the dispossession of a juice and dairy factory Olin was building in Libya. Olin sued Libya in the South Tripoli Court of First Instance. After the court denied its claims, Olin commenced ICC arbitration against Libya under the Cyprus-Libya bilateral investment treaty (“BIT”). Libya argued that the tribunal lacked jurisdiction over the dispute, because the BIT requires investors to choose between litigation and arbitration, and Olin, having first litigated the dispute, was precluded from then seeking relief in arbitration. Olin argued that the choice offered in the BIT was not final or preclusive of other choices. The tribunal rejected Libya’s arguments and awarded Olin over $20 million. Olin was granted recognition and enforcement of the award in a U.S. district court. On appeal, Libya argued that Article V(1)(c) of the New York Convention required the court to independently confirm the tribunal’s jurisdiction. The Second Circuit rejected that argument, holding that, by agreeing to apply the ICC Rules, the parties delegated the arbitrability determination to the arbitrators.
12 JULY 2023
Sociedad Aeroportuaria Kuntur Wasi S.A fights for the concession of the Chinchero International Airport
The arbitral tribunal in ICSID Case No. ARB/18/27, filed by Sociedad Aeroportuaria Kuntur Wasi S.A (“KW”) against the Republic of Peru (“Peru”, together, the “Parties”), issued a Decision on Jurisdiction, Liability And Certain Aspects of Quantum. The dispute regards a concession agreement signed by the Parties on 4 July 2014 allowing KW to design, construct and operate Chinchero International Airport (the “Concession Agreement”). Following a change in Peru’s Government in 2017, the Concession Agreement was terminated, allegedly because termination was in the national interest. In June 2018, KW submitted a request for arbitration before ICSID against Peru, claiming that Peru’s unilateral termination of the Concession Agreement was arbitrary, lacked proper justification, and was inconsistent with the terms of the Concession Agreement and Peruvian law. Regarding jurisdictional issues, the tribunal concluded that KW is a “national of another Contracting State” within the meaning of the ICSID Convention and is effectively controlled by Corporación América, a “juridical person” of another State Party under Article 1(2)(c) of the Bilateral Investment Treaty between Argentina and Peru, therefore qualifying as an “investor.” With respect to liability, the tribunal determined that Peru breached the Concession Agreement because of how it terminated the concession but found that Peru’s breaches were not characterized by wilful misconduct or gross negligence as defined in Peruvian law. As a result, the tribunal awarded KW quantum in the total amount of US$ 62,887,826 million.
Brazil Superior Court of Justice’s position regarding the validity of arbitration clauses in judicial recovery proceedings
INEPAR S.A. Indústria e Construções, currently under judicial recovery, filed an internal appeal (No. 1,692,425/SP) to the Superior Court of Justice (“SCJ”) against a decision issued by the São Paulo Court of Appeals that upheld the validity of an arbitration clause, emphasizing that (i) unliquidated credits held against a party under judicial recovery shall be determined by the tribunal since the commencement of judicial recovery proceedings by a party does not render arbitration clauses previously signed by said party null and void. The dispute revolves around INEPAR S.A.’s judicial recovery proceeding and a parallel dispute related to a contract between INEPAR and Tupi B.V., which contains an arbitration clause (referring contractual disputes between the parties to arbitration). The SCJ’s ruling highlights that, in accordance with Article 6, Paragraph 1, of the Brazilian Bankruptcy and Judicial Recovery Law (“proceedings involving an unliquidated amount shall continue in the court where the action is pending”), the Judicial Recovery Court lacks jurisdiction to decide on unliquidated credits, which shall be decided on by the tribunal if there is an underlying arbitration agreement. Accordingly, the SCJ held that the tribunal had jurisdiction to rule on unliquidated credits to which the contractual parties are entitled and denied INEPAR’s internal appeal. The SCJ’s position reinforces that, if there is an arbitration agreement in the relevant contract, the Judicial Recovery Court’s jurisdiction is restricted to matters associated with the execution or supervision of actions related to the liquidation of the assets of the company undergoing judicial recovery.
14 August 2023
Canadian court decides ICC award against Peruvian government entities is enforceable against Peru itself
A Canadian court has issued a ground-breaking decision regarding ICC awards in Court File No. CV-23-00695293-00CL worth US$190 million, setting a new precedent in international arbitration. The ruling relates to a dispute between Redes Andinas de Comunicaciones and the Peruvian Ministry of Transport and Communications (“MTC”), shedding light on the legal identity of government entities in such cases. The dispute originated from project financing agreements signed in 2015, through which Redes undertook the obligation to construct vital telecoms transportation and access networks in Peru. Despite initial commitments, the projects faced numerous challenges, including extreme weather conditions and community opposition. Pronatel, an entity within MTC, terminated the agreements in 2019, leading Redes to initiate two ICC arbitrations, which ultimately concluded that MTC and Pronatel were in breach of their obligations. Justice Michael Penny of the Ontario Superior Court of Justice declared that the ICC awards were not only enforceable against MTC and Pronatel, but also against Peru itself. The decision was issued based on the absence of legal separation between these entities and the Peruvian State itself. Further, the decision highlighted that, although the State Immunity Act of Canada had been considered, the parties have "waived" state immunity. This is because the parties had agreed to arbitrate any disputes under the relevant contracts such that any arbitration awards rendered against the parties arising from those contracts could be recognized and enforced against the parties. This case sets an important precedent for future disputes involving sovereign States and their associated entities.
25 September 2023
EUROPE
Key legal developments include: the passage of the Arbitration Act 2024 through the UK Parliament, the UK Government seeking to reverse the PACCAR decision and Ireland amending its arbitration law to permit third-party funding. We report on developments concerning the LCIA, ICC, SCC and Delos Dispute Resolution. Our case section includes summaries of important English court decisions, various Paris Court of Appeal cases and a DIS arbitration involving Germany.
ICC announces collaboration with Opus 2 for Case Management System and releases Guide on Disability Inclusion in Arbitration
In March, the International Chamber of Commerce (“ICC”) announced it is teaming up with Opus 2 to introduce an innovative case management system. This follows the 2022 launch of ICC Case Connect, which marked the initial phase of the ICC’s case management platform, linking parties, arbitral tribunals and the ICC Secretariat. The upcoming platform, scheduled for a 2024 release, will finalise the transformation and integration of multiple internal systems currently in operation, aligning with the ICC’s objective to transition case management into the digital realm. On 18 March, the ICC Commission on Arbitration and ADR (the “Commission”) also approved a guide on Disability Inclusion in International Arbitration and ADR (the “Guide”), which was released in October. Prepared by a Task Force “Disability Inclusion in International Arbitration” created within the Commission, the Guide provides clear, actionable guidance to address and accommodate the needs of people with disabilities participating in arbitration and ADR procedures. Aimed at practitioners, arbitrators, arbitral institutions and organisations, the Guide discusses disability, provides examples of how disability inclusion may intersect with the practice of international arbitration and ADR, and sets out 10 recommendations on how to improve inclusion for persons with disabilities in arbitration/ADR. These recommendations are “capable of adaptation to specific situations and needs, with the overall goal of removing impediments, facilitating participation, and fostering inclusion for persons with disabilities.”
MARCH 2023
SCC publishes new Model Clauses for the SCC Express
Third-party funding of international commercial arbitration signed into law in Ireland
Paris Arbitration Centre set to reopen in February 2024
SCC publishes report comparing ad hoc and SCC arbitration for construction disputes
UK Government seeks to reverse the UK Supreme Court’s ruling in PACCAR through Bill amendment
Arbitration Act 2024: Parliamentary approval is under way
LCIA issues updated Guidance Note for Parties and Arbitrators plus revised Schedules of Costs and T&Cs
The Arbitration Institute of the Stockholm Chamber of Commerce (“SCC”) published three new Model Clauses for the SCC Express Dispute Assessment (“SCC Express”), a fast-track dispute resolution mechanism introduced in 2021. Under the SCC Express procedure, the SCC appoints a neutral legal expert to make an assessment of the merits of the case within a period of three weeks for a fixed fee of EUR 29,000. The neutral’s findings are neither binding nor enforceable unless the parties explicitly agree otherwise. The SCC has published three different Model Clauses for the SCC Express, namely: 1) Submission of an existing dispute to the SCC Express procedure. 2 Submission of a dispute regarding a specific contractual provision to the SCC Express procedure. 3) Multi-tier clause providing first for the submission of the dispute to the SCC Express procedure and then to arbitration.
28 June 2023
The President of Ireland signed the Courts and Civil Law (Miscellaneous Provisions) Act 2023 (the “CCL(MP)A”), which, inter alia, amends the Arbitration Act 2010 to permit third-party funding of international commercial arbitration in Ireland. The amended law is effective from 31 July 2023. The criminal offences and torts of maintenance (the giving of assistance by a third party that has no interest in litigation to a party in the litigation) and champerty (where the third party that is giving assistance will receive a share if the litigation succeeds) still exist in Ireland on grounds of public policy. However, the CCL(MP)A inserts a new Section 5A into the Arbitration Act 2010 that explicitly provides the offences of maintenance and champerty do not apply to: 1) international commercial arbitration; 2) any proceedings arising out of an international commercial arbitration; or 3) any mediation or conciliation proceedings arising out of an international commercial arbitration or proceedings arising out of same. This legislative update has been widely welcomed. Minister for Justice Helen McEntee noted that it “should assist the broader Government policy of promoting Ireland as a destination of choice for international commercial legal business under the Ireland for Law initiative.”
5 JULY 2023
Delos Dispute Resolution confirmed in October that the Paris Arbitration Centre (“PAC”) will welcome visitors once again at a new location in the heart of Paris on 15 February 2024, addressing the city’s previous space constraints. The PAC has been curated by Delos Dispute Resolution with the support of an international Design Committee and partners of PAC. Their goal is to ensure that the Centre is well equipped to meet the changing requirements of its users, whilst maintaining Paris’s position as one of the largest and most appealing arbitration hubs globally. This Centre will be conveniently located in the heart of Paris at 82-92 rue Réaumur in the 2nd arrondissement. It will offer four hearing rooms and 12 breakout rooms, all fully equipped and situated on the same floor. This setup allows the PAC to accommodate a wide range of hearing needs, from small procedural meetings and mediations to large proceedings with up to 100 participants. Additionally, the PAC will provide translator booths, an arbitrator lounge and office space for visitors. It will be equipped with the latest audio and visual technology, meeting modern standards for hearings. This new facility, offering partial views of the Eiffel Tower, will bridge the gap resulting from the ICC’s closure of its two-room venue and the ongoing renovation of the World Bank office in the French capital.
OCTOBER 2023
The Arbitration Institute of the Stockholm Chamber of Commerce (“SCC”) published a report titled “Ad hoc vs. Institutional Arbitration in Construction Disputes”. The report is based on data from 35 ad hoc and 25 SCC arbitrations, comparing and analysing the value, cost, duration and number of arbitrators in construction disputes in Sweden between 2017 and 2022. The key findings are as follows: 1) Ad hoc arbitrations are comparatively longer and more time-consuming. 2) The average cost of ad hoc arbitrations was 40% higher than that of SCC arbitrations. 3) The average time for a three-member tribunal to render an award in an ad hoc arbitration was 18 months, while the average time for a three-member tribunal at the SCC to render an award was 15.8 months, and the average time for a sole arbitrator in an SCC expedited arbitration was 6.4 months. 4) The average value of claims in SCC arbitrations (EUR 64 million) was much higher than the average value of claims in ad hoc arbitrations (EUR 5 million), although the average cost of resolving disputes in ad hoc arbitrations (EUR 440,000) was significantly higher than in SCC arbitrations (EUR 262,000). The report concludes that, “[d]espite higher costs, ad hoc arbitration offers less procedural efficiency and predictably, and entails a higher risk of procedural complications. It is therefore questionable, from an arbitration user’s perspective, whether ad hoc arbitration is the most suitable dispute resolution mechanism for construction disputes.” SCC’s Deputy Secretary General also comments that, “[w]hen companies opt for SCC arbitration instead of ad hoc arbitration, they generally get a quicker procedure at a lower cost, something that companies should prefer.”
2 OCTOBER 2023
In PACCAR Inc & Ors v. Competition Appeal Tribunal & Ors [2023] UKSC 28, the Supreme Court ruled that the litigation funding agreements in this truck cartel case met the statutory definition of damages-based agreements (“DBAs”) (since the funder was entitled to a percentage of the damages obtained) and, having not complied with the relevant statutory criteria for DBAs, were unenforceable. This decision rendered many current litigation funding agreements unenforceable. The UK Government responded to ensuing lobbying by including an amendment to the Digital Markets, Competition and Consumers Bill in mid-November, which is “treated as always having had effect.” According to the Member’s explanatory statement, the new clause, headed “Use of damages-based agreements in opt-out collective proceedings,” provides that DBAs are “only unenforceable in opt-out collective proceedings before the Competition Appeal Tribunal if the agreement is with a provider of advocacy or litigation services.” According to a Law Gazette report, those in the arbitration and funding industry appreciate the Government’s prompt action but feel that this is only a partial fix, as it does not deal with cases heard outside of the Competition Appeal Tribunal. The Association of Litigation Funding is said to be engaging with the UK Government to address the issue. The PACCAR decision, and any consequential reversal of it, is relevant to arbitration because funders are likely to assume that PACCAR applies to any funding agreements in place in English-seated arbitrations, too.
15 NOVEMBER 2023
An Arbitration Bill to fine-tune the UK’s Arbitration Act 1996 (based on the Law Commission’s Final Report and Draft Arbitration Bill) was introduced into the House of Lords. It is following a fast-track procedure and a new Arbitration Act 2024 is expected to be implemented by mid-2024. The most significant changes for arbitral users are:
21 NOVEMBER 2023
The London Court of International Arbitration (“LCIA”) has published a suite of new measures relating to its arbitration and mediation services reflecting the “LCIA’s commitment to ensuring the best possible service for its users.” The measures include: 1. Updated Guidance Note for Parties and Arbitrators intended to provide “best practice” guidance on the practical application of the LCIA Rules 2020. It integrates the three previously issued “Notes for Parties,” “Notes for Arbitrators” and “Notes on Emergency Procedures.” The Guidance Note says that some guidance will be relevant to all LCIA arbitrations. 2. A Revised Schedule of Costs, effective 1 December 2023, which applies to LCIA arbitrations registered on or after that date. It makes changes to arbitrator/emergency arbitrators’ (“EA”) fees and to the LCIA Secretariat’s fees. For example, the LCIA Secretariat’s hourly fees will rise by 7% in line with inflation, an EA’s fee will increase from £22,000 to £25,000, with the EA application fee also rising from £9,000 to £10,000, and the maximum fee for arbitrators will increase from £500 per hour to £650 per hour. The range of arbitrator fees will be between £250 and £650 with the new Guidance Note providing examples of cases that might justify these lower and higher rates. 3. A Revised Schedule of Costs for Mediations conducted under the LCIA Mediation Rules, effective 1 December 2023, and applicable to LCIA mediations commenced on or after that date. 4. Revised Terms and Conditions for its non-LCIA arbitration services (fundholding, administering UNCITRAL arbitrations, services as appointing authority, etc.), also effective 1 December 2023. 5. A Revised policy on Receipt of Funds. From 1 December 2023, the LCIA will only accept payments from the parties or from an account held in the name of a person or law firm that is authorised to act on legal matters for a party.
7 NOVEMBER 2023
Paris Court of Appeal confirms requirement to formally raise all irregularities before the arbitral tribunal
Back in mid-June 2021, the Paris Court of Appeal ruled that a party’s failure to raise an irregularity in the arbitral tribunal’s constitution, before the arbitral tribunal itself, constitutes a waiver of its right to avail itself of such irregularity before French courts in set-aside proceedings. The French Supreme Court upheld this decision on 7 June 2023. In ICC arbitration proceedings, the respondents’ challenges to the arbitrator appointed by the opposing party for lack of independence and impartiality were rejected, and the arbitral tribunal handed out an award in favour of the claimants. The respondents, considering that the tribunal had not been duly constituted, sought to set aside the award in France on the basis of Article 1520, 2°. The Supreme Court confirmed the Court of Appeal ruling which considered the set-aside application inadmissible on the basis of Article 1466 of the French Code of Civil Proceedings, which provides that “[a] party which, knowingly and without a legitimate reason, fails to object to an irregularity before the arbitral tribunal in a timely manner shall be deemed to have waived its right to avail itself of such irregularity.” According to both courts, the respondent should have invoked the irregularity before the arbitral tribunal and not only before the arbitration institution. This decision is important as it can be expected to be extended to any procedural irregularity during arbitral proceedings.
7 JUNE 2023
English High Court rules invalid service does not equate to a failed appointment procedure under s18 of Arbitration Act
In Global Aerospares Limited v. Airest AS, the English Commercial Court dismissed a claim for directions under section 18 (“s18”) of the Arbitration Act 1996 (“Act”), stating that there had been no failure in the procedure for the appointment of a tribunal. The Claimant, Global Aerospares Limited (“GAL”), initiated arbitration proceedings against the Defendant, Airest AS (“Airest”), based on a contract that contained a straightforward arbitration clause: “This Agreement is subject to English jurisdiction. If a dispute cannot be settled by negotiation it shall be settled by arbitration in London.” GAL’s request for arbitration (“RfA”) contained suggestions for the appointment of a sole arbitrator. GAL sought directions under s18 of the Act in relation to the appointment of the sole arbitrator. Airest opposed the application, contending that the court did not have jurisdiction under s18. Airest also applied, pursuant to CPR 11(1), for an order declaring the court had no jurisdiction to try the claim and for the claim form and order of service to be set aside. The court determined that the defendant’s arguments pertained to the merits of the claim rather than the court’s jurisdiction and therefore rejected the CPR 11 application. As to the substantive issue under s18, the court said that, on the facts, the default provisions of s14(4) and s16(3) of the Act applied. The court acknowledged that the RfA met the requirements for commencing an arbitration. However, the court found that the method of service – email – did not adhere to the terms of the parties’ contract, which required notices to “be in English, in writing and…served personally.” Consequently, the notice of arbitration had not been served in accordance with s14(4) of the Act; hence, it was unable to trigger the appointment process. As that appointment process had not yet failed, there was no basis for an order under s18. The case is therefore a useful reminder (i) of the interlocking nature of section 18 with the default procedures under that Part of the Act which “are to be read together” and (ii) that “if there has been no failure in the appointment process, an application for directions under s18 will fail”.
13 JUNE 2023
Paris Court of Appeal specifies the conditions for extending arbitration clauses to non-signatory parties
The Paris Court of Appeal has affirmed a partial award supporting jurisdiction over a claim filed by the Algerian Energy Company (“AEC”) regarding a desalination plant project in northern Algeria against Malakoff, Hyflux and their French subsidiary, TDIC. To implement the project, AEC, Malakoff and Hyflux concluded an association agreement, and AEC and TDIC signed a framework agreement that included an option for AEC to acquire TDIC’s shares. Project difficulties occurred, and the claimant sought to acquire those shares, but objections were raised. The ICC claim was introduced in 2019, seeking to have Malakoff and Hyflux declared jointly and severally liable for malfunctions at the plant and to order the share transfer. The tribunal’s partial award affirmed jurisdiction to hear AEC’s claims under the association and the framework agreement. Challenges were brought before French courts against the extension of arbitration clauses to non-signatories. The French Court of Appeal dismissed these challenges on the basis that the framework agreement expressly referred to the association agreement and that the contracts’ arbitration clauses referred to the project and disputes arising from it as a whole. The court also considered that the intention of the parties was clearly to include any third party concerned by a dispute in connection with the project. Finally, the participation of Malakoff and Hyflux in contractual negotiations meant that the arbitration clauses could be extended to them.
Germany settles arbitration to end car toll dispute
The Federal Republic of Germany and autoTicket GmbH (“autoTicket”), a joint venture of Kapsch TrafficCom AG and CTS Eventim AG Co. KGaA, agreed to a proposed settlement by the arbitral tribunal to end their dispute. The dispute concerns a 12-year contract that Germany awarded autoTicket in 2018 to build and operate a passenger car toll system. The agreement was terminated in 2019 by the German Ministry of Transport, because the European Court of Justice ruled that the planned toll system violated EU law. In 2020, the joint venture partners filed an arbitration against Germany at the German Arbitration Institute (“DIS”) claiming lost profits and compensation for termination costs for the total value of EUR 560 million. The parties reached a settlement that was facilitated by the arbitral tribunal. This is a common practice in German arbitration, and it is provided for in Article 26 of the DIS Rules. The settlement was recorded in a final award issued on 5 July 2023 and has been complied with.
English Court refuses to enforce California-seated JAMS award on public policy grounds
English courts rarely refuse to enforce arbitral awards, but, in Payward Inc v. Chechetkin, the Commercial Court did so on public policy grounds, finding that a contract between a UK-domiciled cryptocurrency trader and a trading platform was subject to the Consumer Rights Act 2015 and UK Financial Services and Markets Act 2000 (“FSMA”) (which both have the status of UK public policy), despite it being a foreign law-governed contract with foreign-seated arbitration. Chechetkin sought to recover significant losses trading on Kraken through English litigation, arguing that Payward’s operations were not authorised in the UK, and, hence, his contract was unenforceable under FSMA. Payward then obtained an arbitral award declaring that it bore no liability to Chechetkin, in respect of which Chechetkin resisted enforcement. Under UK consumer legislation, an arbitration agreement in a consumer contract must be fair to be valid. Refusing enforcement, the court held that a reasonable consumer in Chechetkin’s position would not have agreed to arbitration in California, under JAMS Rules and subject to the US Federal Arbitration Act (although UK arbitration under the Arbitration Act 1996 may have been a suitable forum).
14 JULY 2023
Paris Court of Appeal holds that enforcement of awards can be stayed on the basis of the impecuniosity of a party
In two decisions from September 2023, the Paris Court of Appeal (“Paris CA”) held that the impecuniosity of a party may justify the stay of enforcement of an arbitral award pending the end of the annulment proceedings. In the first case, the Paris CA studied the set-aside application of Italian company S, which had been held liable in a dispute against the Georgian Ministry of Infrastructure. S sought to stay the enforcement of the award by arguing that it would put its financial stability at risk and that it risked not recovering the award sums in case the award was subsequently annulled. The Paris CA, after carefully assessing the company’s financial statements with the aid of an external auditor, agreed that the enforcement of the award could jeopardize S’s operation, causing severe prejudice to its rights. In the second case, the German company GBO, which had been held liable by an arbitral tribunal to a French company to pay $0.8 million, argued that it could not pay these sums and that the granting of enforcement would force it to enter insolvency proceedings in Germany. While it followed the same general approach as the first case (above), the Paris CA held that the financial risk should be sufficiently substantiated, which was not supported in this case. Accordingly, it rejected GBO’s request for the stay of enforcement.
12 and 28 September 2023
English Court of Appeal finds in favour of court-mandated ADR
In an important judgment in Churchill v. Merthyr Tydfil County Borough Council (the “Council”), the English Court of Appeal has overturned Halsey (2004), confirming that the English court can mandate ADR in certain circumstances. In Halsey, the Court of Appeal said that ordering unwilling parties to mediate would “impose an unacceptable obstruction on their right of access to the court” and would likely breach the right to a fair trial under Article 6 of the European Convention on Human Rights (“ECHR”). This appeal in Churchill involved interventions from, inter alia, the Law Society, the Bar Council and prominent ADR bodies and included a review of domestic, ECHR and CJEU jurisprudence on the topic. Sir Geoffrey Vos gave the leading judgment, confirming that: • The judge’s views in Halsey (that the court could not compel mediation) were obiter dicta and hence not binding as a matter of law. • The court does have the power to lawfully order a stay of proceedings and compel parties to engage in a “non-court-based dispute resolution process,” provided that the order “does not impair the very essence of the claimant’s right to proceed to a judicial hearing, and is proportionate to achieving the legitimate aim of settling the dispute fairly, quickly and at reasonable cost”. • It is a matter for the court’s discretion as to which factors apply when deciding to make such an order, and the court cannot lay down “fixed principles” in this regard. Sir Geoffrey Vos also relied on the conclusion in the Civil Justice Council’s June 2021 Report on Compulsory ADR that mandatory ADR is compatible with Article 6 of the ECHR. This judgment is important as it clarifies that the court has the power to stay proceedings for (or order) the parties (willing or not) to engage in “negotiation…, mediation, early neutral evaluation or any other process that has a prospect of allowing the parties to resolve their dispute”. The decision may encourage parties to spend more time strategizing how they can best resolve their disputes speedily, fairly and cost-effectively and may lead to an increase in the use of mediation and other ADR procedures.
29 November 2023
English High court issue anti-suit injunctions to restrain Russian litigation
Claims are increasingly being brought in Russian courts in breach of arbitration agreements following Russian law amendments in 2020 granting Russian courts exclusive jurisdiction over disputes involving Russian sanctioned entities and individuals (the "Russia Amendment"). In response, there have been more anti-suit injunction ("ASI") applications. In three cases appearing in the English courts in the summer, ASIs were sought to restrain parties from bringing proceedings in Russia contrary to arbitration clauses stipulating a Paris seat for arbitration, in English-law governed contracts. ASIs were granted in two of the three cases. - In August, in SQD v. QYP, the Commercial Court refused to grant an ASI since ASIs are not available under French law and it would be inconsistent with the anti-ASI approach of the French courts and French law’s “philosophical objection” to ASIs. - In a separate August judgment, the Commercial Court granted an ASI on the basis England was the proper place to bring the claim and French law evidence suggesting that French courts would recognise an English ASI. - The Court of Appeal (“CA”) overturned the SQD decision in early September, finding the English court a suitable forum for the ASI since such a claim cannot be given effect to in France. Fresh French law evidence also showed French courts would recognise an English ASI. - In late September, in G v. R, the Commercial Court refused to grant an ASI, finding the arbitration agreement was governed by the law of the seat (French law). The judge was not persuaded that England was the proper forum in which to enforce a Paris-seated arbitration agreement and only took limited assistance from the SQD CA case as it was an ex parte appeal. Accordingly, English courts are willing to enforce Paris-seated arbitration agreements using ASIs, which restrict foreign proceedings even where they are permitted under foreign law (like the Russia Amendment), if (i) England is the proper forum for seeking such relief and (ii) there are no exceptional circumstances militating against it. In November, the High Court also granted another ASI restraining Russian litigation commenced by sanctioned parties in breach of a London-seated LCIA arbitration clause in agreements governed by English law, acknowledging that the sanctions regime might otherwise be bypassed if the Russian litigation proceeded.
August, September and november 2023
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A new statutory rule that the arbitration agreement will be governed by the law of the seat, unless parties expressly agree otherwise (a default rule will apply to all arbitration agreements whatever their date but will not apply to arbitral/court proceedings commenced before the rule comes into effect); Codification of an arbitrator’s common law duty of disclosure whilst also specifying an arbitrator’s state of knowledge (not addressed in case law); Strengthening arbitrator immunity by ensuring arbitrators are not liable for resignation or the costs of their removal (save for where unreasonableness or bad faith, respectively, are proven); A new power of summary disposal enabling awards to be dismissed on a summary basis if a party has “no real prospect of succeeding” on a claim, defence or issue; Clarification of court powers in support of (i) arbitration proceedings in respect of third parties and (ii) emergency arbitrators (including provisions promoting the enforcement of emergency arbitrator orders); and A revised framework for challenges to the tribunal’s jurisdiction where a party has objected to jurisdiction during the arbitration and the tribunal has ruled on its jurisdiction.
These revisions may bolster London's position as a leading seat of arbitration for international disputes. They should also maintain London’s attractiveness as a place to enforce arbitral awards efficiently and effectively.
middle east and africa
Key legal developments: amended UAE Arbitration law, launch of CIArb Rwanda, formal cross-institutional collaborations, KSA adopts Model Submission Agreements, Nigeria’s ratification of the Singapore Convention on Mediation, plus the launch of DIAC’s Mediation Rules and CRCICA’s draft 2023 Arbitration Rules. We cover cases concerning parties in the region, including judgments from the Dubai Court of Cassation, the DIFC Court of Appeal, the UK Court of Appeal, the UK Supreme Court, and US and Turkish courts, plus an arbitration involving Chad.
The launch of CIArb Rwanda Branch
The UK-headquartered Chartered Institute of Arbitrators (“CIArb”) has launched a Rwanda branch as the 43rd in its global network, which aims to contribute to the global development of the CIArb community. The newest branch’s other stated objectives are to encourage the use of arbitration and other modes of private dispute resolution in Rwanda through a continued working relationship with the Kigali International Arbitration Centre (“KIAC”). Prior to the branch’s launch, KIAC was the sole provider of dispute resolution training in the jurisdiction. The CIArb Rwanda branch will also work closely with the justice sector and the Judiciary of Rwanda, CIArb headquarters, and local and international stakeholders to build better access to justice, capacity and a broader cohort of qualified arbitrators. Chair of the branch, Athanase Rutabingwa FCIArb, expressed in a statement that the launch was “the first step in establishing training and networking opportunities on a domestic basis” for the country’s over 390 dispute resolution professionals. He added that “[b]etter access to training will give added impetus to the development of our fast-growing community.”
2 June 2023
Kingdom of Saudi Arabia adopts Model Submission Arbitration Agreements for Government Contracts
Further to Resolution No. (1321) dated 17/11/1444 (AH) issued by the Kingdom of Saudi Arabia’s (“KSA”) Minister of Finance, the KSA has now adopted a (i) Model General Arbitration Submission Agreement (in which the parties select the arbitration center/institution of their choice) and (ii) Model Arbitration Submission Agreement for those wishing to refer their disputes to the Saudi Center for Commercial Arbitration. These are intended for use in government contracts, although government agencies must still adhere to certain conditions in the local law to enable recourse to arbitration. The Model Submission Agreements are very detailed, covering the usual elements in an arbitration agreement (scope, institution or administering authority, applicable law, rules and procedure, seat and language of arbitration, and formation of the tribunal), as well as matters like intervention and joinder, period for rendering award, correspondence and notices, “arbitration effective date,” provisional/precautionary measures, and termination of the arbitration. Some terms are mandatory while others are optional and hence can be amended by the parties. An example of a mandatory term is that the parties are obliged to negotiate and find “amicable solutions” and exhaust that process before initiating arbitration. This development is a positive step for KSA and reflects KSA’s intention to facilitate increased use of arbitration in government contracts.
LACIAC and LCAM sign Memorandum of Understanding
The London Chamber of Arbitration and Mediation (“LCAM”) announced that it has signed a Memorandum of Understanding with the Lagos Chamber of Commerce International Arbitration Centre (“LACIAC”) following a successful meeting during London International Disputes Week 2023. The LACIAC is an independent arbitration institution established by the Lagos Chamber of Commerce and Industry with the aim of providing efficient alternative dispute resolution services in Africa. The partnership has been described by LCAM as the “beginning of a promising journey to connecting London and Lagos” and should enable LCAM and LACIAC to collaborate meaningfully to promote the resolution of international disputes through arbitration (and other alternative dispute resolution methods) in the region. This agreement was struck in the same month that the LACIAC also signed a cooperation agreement with the Mauritius International Arbitration Centre, demonstrating the LACIAC’s determination to position Lagos as a reliable hub for international arbitration.
Mid-June 2023
Permanent Court of Arbitration signs Cooperation Agreement with LACIAC
The Permanent Court of Arbitration (“PCA”) announced that it had entered into a Cooperation Agreement with the Lagos Chamber of Commerce International Arbitration Centre (“LACIAC”) with a view to collaborate in promoting the resolution of international dispute resolution through arbitration and other alternative dispute resolution in Africa. The signing ceremony, which took place on 23 May 2023, was held at the Permanent Court of Arbitration’s Mauritius Office in Port Louis. It also coincided with other Cooperation Agreements signed between the LACIAC and (i) the Mauritius International Arbitration Centre (“MIAC”) and (ii) the London Chamber of Arbitration and Mediation (“LCAM”) (see above entry). Under the PCA-LACIAC Cooperation Agreement, the signatories will work toward the organisation of PCA meetings and hearings at LACIAC’s facilities in Lagos, Nigeria and LACAIC meetings and hearings at PCA’s facilities in Port Louis, Mauritius. They will also cooperate in information exchanges and hold conferences, seminars and specialised events. PCA secretary Dr. Martin Czepelak said in a statement that this was “yet another symbol of the ever-strengthening relationship between the Permanent Court of Arbitration and African states” and expressed hope that the Cooperation Agreement would lead to greater cooperation with Nigeria and other Contracting Parties.
19 June 2023
Release of the draft CRCICA Arbitration Rules 2023
The Cairo Regional Centre for International Commercial Arbitration (“CRCICA”) released a draft of its updated Arbitration Rules (“2023 Draft Rules”) and invited the legal community to comment on it before 26 July 2023. The 2023 Draft Rules are available in English, Arabic and French and contain important updates, including: 1) allowing for the joinder of third parties in an ongoing arbitration subject to specific conditions; 2) allowing the parties to consolidate ongoing arbitrations into a single arbitration; 3) clarifying that confidentiality is a crucial part of the arbitration process; 4) allowing the parties to seek emergency interim relief before the tribunal is constituted; 5) implementing an expedited procedure for claims under US$ 2 million; 6) requiring transparency in respect of third-party funding; 7) accommodating electronic evidence and promoting online dispute resolution; and 8) incorporating a revised schedule of fees and costs for arbitration proceedings. In early January 2024, CRCICA announced that “its new CRICA Arbitration Rules shall enter into force as from January 2024”. We will report on the final rules adopted by CRCICA in our next edition.
24 JUNE 2023
Amendments to the UAE Arbitration Law come into effect
UAE Federal Arbitration Law No. 6 of 2018 was recently amended by Federal Law No. 15 of 2023, which came into force on 16 September 2023. Some of the significant amendments to the UAE Federal Arbitration Law include: 1) providing that the arbitration proceedings shall be confidential by default; 2) clarifying that arbitration proceedings may be held virtually and imposing a duty on arbitration institutions to provide the parties with the required technology; 3) extending the prohibition for those holding positions with arbitration institutions to sit as arbitrators in arbitrations administered by those institutions and subjecting that prohibition to exceptions; and 4) confirming tribunals’ discretion and authority to determine the procedures and rules of evidence. The amendments are designed to make the UAE arbitration framework more flexible and attractive for domestic and international parties. It nevertheless remains to be seen how they will be applied in practice.
16 SEPTEMBER 2023
Launch of the DIAC Mediation Rules
The Dubai International Arbitration Centre (“DIAC”) launched the DIAC Mediation Rules. Effective 1 October 2023, the Rules apply to all new requests for mediation submitted to the Centre after 1 October 2023. Some of the key provisions of the DIAC Mediation Rules (the “Rules”) include the following: 1) A party may refer a dispute to mediation before DIAC irrespective of whether there is a pre-existing agreement to arbitrate or not. However, the mediation shall proceed only if the Responding Party confirms its agreement that the dispute be referred to mediation under the Rules. 2) The parties may nominate their mediator. However, all the mediators shall be ultimately appointed by the DIAC Arbitration Court. 3) The mediator has broad powers to determine the procedure in light of the relevant circumstances and subject to the requirement to give each party a reasonable opportunity to present its position. 4) The mediator may assist the parties in preparing a settlement agreement. 5) The mediation is subject to a general duty of confidentiality, preventing a party from using statements made during the mediation in subsequent judicial or arbitration proceedings. The DIAC Mediation Rules may help promote the use of mediation as an alternative dispute resolution mechanism in the UAE and the Middle East.
1 OCTOBER 2023
Nigeria ratifies Singapore Convention on Mediation
Nigeria has deposited its instrument of ratification at the UN Headquarters in New York to make it the thirteenth State Party to the United Nations Convention on International Settlement Agreements Resulting from Mediation (known as the “Singapore Convention on Mediation”). It will enter into force for Nigeria on 27 May 2024. The Singapore Convention aims to establish a consistent and effective system for recognising and enforcing mediated settlement agreements in cross-border disputes, promoting mediation as an internationally recognised dispute resolution mechanism. The Singapore Convention has been signed by several countries, including the UK, the USA, China, India and Singapore; a full list of signatories countries is available here. In Edition 17, we reported on the UK’s signature of the Singapore Convention on Mediation, but the UK is not one of the 13 State Parties to have ratified it. For more details of the Singapore Convention’s key provisions, see our April 2023 Legal Update.
27 November 2023
Dubai Court of Cassation addresses procedural issues in UAE-seated arbitrations
The Dubai Court of Cassation issued its ruling in Case No. 1514 of 2022, addressing procedural issues that frequently arise in UAE-seated arbitrations under the UAE Federal Arbitration Law of 2018. First, the Dubai Court of Cassation deviated from the jurisprudence of the UAE courts and qualified, albeit obiter, a party’s failure to comply with the pre-arbitral steps as a matter of admissibility rather than jurisdiction. The Dubai Court of Cassation found that the arbitral tribunal may decide on the merits of the parties’ dispute once the preconditions to arbitration are fulfilled. Second, the Dubai Court of Cassation derogated from its previous rulings and concluded obiter that the parties’ failure to pay the advance on costs in DIAC proceedings does not qualify as a waiver of the obligation to arbitrate and cannot trigger the jurisdiction of UAE courts where there is a valid arbitration agreement. Finally, the Dubai Court of Cassation clarified, in the context of arbitration proceedings governed by the 2007 DIAC Arbitration Rules (which are silent with respect to awarding legal costs), that the tribunal’s power to award legal costs is subject to party agreement. The impact of the judgment is two-fold: it not only clarifies the silence in the 2007 DIAC Arbitration Rules, but also further preserves the parties' choice to arbitrate their dispute.
8 June 2023
NIOC loses appeal over its s67 challenge vis-à-vis a US$2.4 billion award in favour of Crescent Petroleum
The England and Wales Court of Appeal dismissed National Iranian Oil Company (“NIOC”)’s appeal against the summary dismissal of its application to set aside a US$2.4 billion award (in favour of UAE-based Crescent Petroleum (“Crescent”)) under section 67 of the Arbitration Act 1996 on the basis that the tribunal lacked jurisdiction. In 2001, NIOC and Crescent entered into an Iranian law gas supply contract (the “Agreement”) for NIOC to supply gas from the Persian Gulf to Sharjah in the UAE for 25 years. After NIOC failed to supply any gas, Crescent commenced a first arbitration in 2009 claiming US$ 14 billion. In 2014, the tribunal issued an award upholding jurisdiction and found NIOC in breach of the Agreement. In 2021, the tribunal issued a partial award on remedies and ordered NIOC to pay Crescent US$ 1.33 billion for loss of profit and US$ 1.1 billion in respect of Crescent’s liability to sell NIOC’s gas to a joint venture between Crescent and Dana Gas. NIOC raised a section 67 challenge, arguing that, under Iranian law, the parties’ arbitration agreement cannot give the tribunal jurisdiction to decide on Crescent’s liability towards the joint venture, which was not a party to the Agreement. The Commercial Court dismissed the challenge in October 2022. On appeal, NIOC argued that the judge had erred in his evaluation of the evidence presented by an Iranian lawyer. The Court of Appeal disagreed, concluding that the judge had accurately summarised the evidence and had given effect to the words of the arbitration agreement in accordance with the principles presented. NIOC’s application to overturn the Commercial Court decision was thus rejected on the basis that the section 67 application had no real prospect of success. The case is a useful reminder of the proper role of expert evidence on foreign law as an interpretative aid for the English court (rather than a tool to argue the case).
13 JULY 2023
Turkish court refuses to enforce an ICC award after conviction of a witness
The Istanbul 19th Commercial Court of First Instance (“Istanbul Court”) refused to enforce a US$ 600 million ICC award in light of the decision by the 13th Criminal Court in Ankara convicting a witness in the arbitration of forging evidence. The Istanbul Court concluded that enforcement would violate Turkish public order. The application for the enforcement of the ICC award was filed by International Chrome Holdings (“ICH”), a Cayman private equity vehicle, against Turkish businessmen Mahmut, Halil Ibrahim and Aziz Çevik and related companies and individuals. ICH has been assigned rights to the ICC award obtained in 2018 by its Turkish subsidiary, Turchrome. The underlying dispute relates to Turchrome’s acquisition in 2012 of two chrome-mining companies from the Çevik family. In 2014, Turchrome commenced an ICC arbitration, alleging that the Respondents had misrepresented the quality and quantity of the ore under the parties’ share purchase agreement. The tribunal agreed, concluding that the Respondents had breached the contractual assurances about the assets’ capability. The ICC award has already been enforced in various jurisdictions, including England and Wales, Switzerland, Hong Kong, New York, Texas and Florida. The award has also been upheld by the Paris Court of Appeal, which rejected arguments that the award was obtained by fraud.
17 JULY 2023
Savannah Energy secures ICC emergency relief to resist Chad’s efforts to remove it from an oil pipeline venture
The dispute in Savannah Midstream Investment Limited (Bahamas) v. the Republic of Chad and others arose from Savannah’s US$407 million purchase of ExxonMobil’s assets in Chad and Cameroon. Those assets include a 41% interest in Chad’s Doba oilfields project and a stake of the same size in the Cameroon Oil Transportation Company (“COTCO”). Chad alleged that Exxon lacked authorisation to sell the assets and issued a presidential decree in March 2023 declaring them nationalised. Savannah entities launched two ICC arbitrations in response. Savannah filed a third ICC arbitration in July 2023, when Chad attempted to oust it from COTCO. Savannah argued that Chad had sought to effect significant corporate governance changes at COTCO, including by appointing two government ministers to its board and purporting to remove all of Savannah’s appointed directors. Savannah thus brought an ICC emergency arbitration, resulting in an order issued on 28 July 2023 by a sole arbitrator, who ordered Chad to suspend the effects of resolutions to replace directors on the board of COTCO until the merits could be heard and suspended scheduled board and general meetings. He refused, however, to suspend COTCO from making any payments from its accounts. Savannah then obtained interim relief from the Libreville Commercial Court in July 2023 freezing COTCO’s Citibank accounts. This case is an example of the utility of emergency arbitrator proceedings, but it also shows that unsatisfied parties can, and do, still go to court to obtain further interim relief if they do not get all forms of relief they are seeking within the emergency arbitration.
28 July 2023
South African investment fund seeks to US courts to enforce an LCIA award against Ghanaian businessman
In LCIA Case No.215062, Vantage Mezzanine Fund II Partnership v. John Taylor, Vantage Capital, a South African investment fund, applied to courts in the United States and England and Wales to enforce a US$60 million LCIA award against John Taylor (Ghanaian businessman) arising from a loan guarantee. Vantage agreed in 2014 to provide a US$30 million loan to Surfline Communications, a Ghanaian internet provider controlled by Taylor, with Taylor as guarantor. The contracts were amended the following year to add German development bank DEG as co-lender. After Surfline failed to make its first payment on the loan, Vantage issued a notice of default in 2017 and appointed a receiver to commence Ghanaian court proceedings to enforce the share charge. Taylor agreed to a settlement with Vantage in 2018, under which Vantage would acquire shares in Surfline in partial satisfaction of outstanding loan amounts. A dispute arose over whether alleged conditions of the settlement had been met, and the shares were never transferred. In her award in the second arbitration in this dispute, the sole arbitrator found that the assignment of DEG’s rights was effective and that Taylor was liable for the full US$59.4 million. In addition to enforcement efforts in other jurisdictions, including England and Wales, in August 2023, Vantage sought to enforce the award before both the Northern District of Illinois in the United States and the Southern District of New York (or, in the alternative, to recognise the money judgment entered by the Supreme Court of Bermuda against John Taylor (“Bermuda Judgment”)). In September and October, Taylor filed his opposition motions, arguing that the U.S. courts should refuse to convert the award and to recognise the Bermuda Judgment on grounds, inter alia, that the award is “contrary and repugnant to the public policies” of Illinois, New York, and the United States generally “in its attempt to exact egregious and usurious interest rates.” Vantage has also sought a preliminary injunction to attach Taylor’s bank accounts at Northern Trust Company, JPMorganChase and Bank of America. The outcome of this action is not yet known at the time of writing (early December).
4 August 2023
DIFC Court of Appeal overturns a worldwide freezing order due to absence of nexus to the DIFC
In (1) Sandra Holding Ltd (2) Nuri Musaed Al Saleh (the “Respondents”) v. (1) Fawzi Musaed Al Saleh (2) Ahmed Fawzi Al Saleh (3) Yasmine Fawzi Al Saleh (4) Farah El Merabi (the “Appellants”) [2023] DIFC CA 003, the DIFC Court of Appeal overturned a Worldwide Freezing Order (“WFO”) issued by the DIFC Court of First Instance on the basis that the DIFC Courts did not have jurisdiction to grant the WFO against the parties who had no jurisdictional nexus to the Dubai International Financial Centre (“DIFC”). The Respondents requested the DIFC Courts to issue the WFO to prevent the dissipation of assets pending the determination of ongoing foreign civil court proceedings in Kuwait regarding alleged fraud in executing certain transactions involving a Cayman Islands entity. Although the Appellants were not licensed in the DIFC, had no assets there and did not perform any contract in the DIFC, the DIFC Court of First Instance granted the WFO requiring the Appellants to disclose all of their assets worldwide. The Appellants appealed against the WFO. In its judgment, the DIFC Court of Appeal limited the availability of interim remedies to cases where the jurisdiction of the DIFC Courts can be established on the basis of Article 5A(1)(a)-(d) or 5A(2) of the Dubai Judicial Authority Law 12/2004. Accordingly, the key takeaway from the decision is that, where the potential judgment debtor is not based in and/or licensed in the DIFC, the contracts were not concluded or performed in the DIFC, and the parties have not agreed to jurisdiction of the DIFC Courts, the DIFC Courts may refuse to grant interim remedies pending the outcome of foreign court proceedings.
6 September 2023
UK Supreme Court renders important decision concerning Republic of Mozambique regarding s9 stays under Arbitration Act 1996
In Republic of Mozambique (“RoM”) v. Privinvest Shipbuilding SAL (Holding) & Ors, the UK Supreme Court handed down a judgment clarifying the proper approach to section 9 applications under the Arbitration Act 1996 (the “Act”). The dispute concerned three supply contracts between three corporate SPVs (wholly owned by RoM) and three Privinvest supply companies (the “Supply Contracts”) that were backed by RoM sovereign guarantees. RoM issued English court proceedings accusing the Privinvest supply companies, the lenders and other concerned individuals of bribing RoM’s officials and sought damages for being exposed to a potential liability of US$2 billion. While RoM was not a signatory to the Swiss law-governed Supply Contracts, Privinvest argued that RoM was a party to them by virtue of Swiss law and hence bound by the arbitration agreements in them. On that basis, they sought a stay of all of RoM’s claims under section 9 of the Act, which enables a party to an arbitration agreement against whom legal proceedings are brought “in respect of a matter which under the agreement is to be referred to arbitration” to apply to the court to stay the proceedings so far as they concern that matter. The Supreme Court held that, for section 9 applications, the courts must adopt a two-stage test to ascertain: 1. what are the matters which the parties have raised (or will foreseeably raise) in the court proceedings; and 2. whether each matter falls within the scope of the arbitration agreement. A “matter” is a “substantial issue” that is legally relevant to a claim or (foreseeable/actual) defence and is susceptible to be determined by an arbitrator as a discrete dispute. The Supreme Court found that the validity, commerciality and genuineness of the Supply Contracts were not essential to any relevant defence to RoM’s claims and so were not “matters” under section 9 in relation to Privinvest’s liability. As to scope, it also said there was no question of the arbitration agreements extending to cover RoM’s allegations on which it relies to establish the legal liability of Privinvest.
20 SEPTEMBER 2023
Djibouti v. DCT: Djibouti’s enforcement action to quash 10 bank subpoenas fails
In Edition 17, we reported that a US court upheld two awards rendered in the Djibouti v. DCT LCIA arbitration. Djibouti appealed. However, as it failed to post a supersedeas bond, execution of the judgment was not stayed. DCT thus proceeded to seek post-judgment discovery by serving subpoenas on 10 non-party banks requesting SWIFT messages of at least US$25,000 during an 11-year period referring to 338 entities or individuals related to Djibouti. This led Djibouti to commence a new action in U.S. District Court for the District of Columbia to quash the subpoenas, characterised by that court as a “disguised attempt” to delay discovery without providing the bond. The two grounds relied upon by Djibouti were (i) the subpoenas being “patently overbroad” and (ii) invalid service of the subpoenas (it alleged that only DCT’s provisional administrator – and not its counsel at Quinn Emanuel – had authority to serve them). The court refused to quash the subpoenas, concluding: (1) while the authority issue had been raised in prior enforcement proceedings, as this was a different case, it could be raised again and would be considered by the court. It found that DCT’s counsel “has authority” to serve the subpoenas; and (2) the subpoenas were within the realm of what is permitted and were “proportional to and in aid of” DCT’s enforcement attempts vis-à-vis the US$541 million judgment. DCT cross applied for attorneys’ fees and costs incurred to litigate this motion (on the basis Djibouti had acted in bad faith by raising frivolous arguments). The court refused to sanction Djibouti but warned the party that further attempts to delay post-judgment discovery could result in future sanctions.
21 September 2023
Asia pacific
Key legal developments: ACICA’s new Diversity Committee, AIAC’s new Sport Arbitration Rules, various cross-institutional collaborations (including cross-institutional rules (TIAC-HKIAC)), HKIAC’s 100th application under the PRC-HK Interim Measures Arrangement and a new Bill to amend Pakistan’s arbitration law. We also report on important cases from Hong Kong’s Court of First Instance and Court of Final Appeal and Singapore’s High Court and Court of Appeal.
ACICA forms diversity committee
The Australian Centre for International Commercial Arbitration (“ACICA”) has announced the formation of a diversity committee. The committee consists of the ACICA President and two members of the Secretariat, as well as a wide range of Australian and international practitioners. Gender diversity initiatives that have been put forth by the committee include identifying female arbitrators on the panels of other centres, as well as suitably qualified Australian female barristers, to apply to be fellows of ACICA. This move is part of a broader focus within the international arbitration community on issues of diversity, including diversity of gender and nationalities. This announcement by ACICA is one of a number of recent industry developments in the region around diversity in arbitration.
20 June 2023
CIETAC signs Memorandum of Understanding with SCCA
During China Arbitration Week, China International Economic and Trade Arbitration Commission (“CIETAC”) and the Saudi Center for Commercial Arbitration (“SCCA”) signed a Memorandum of Understanding (“MOU”) to strengthen cooperation between the two International Arbitration Centers. According to the SCCA’s website, the MOU will ensure the two arbitration centers can collectively support arbitration cases they both administer, particularly by “providing hearing rooms, nominating arbitrators from each center’s roster to the other organisation as needed, exchanging functional expertise, and seconding staff.” The agreement is signed at a time when there are “burgeoning relationships between Saudi Arabia and China,” as demonstrated by the increased volume of trade and investment between the two countries. It is therefore planned to be used as a tool to exchange information on trade, investment and arbitration and to promote arbitration and ADR as effective commercial dispute resolution methods.
6 SEPTEMBER 2023
New TIAC-HKIAC Cross-Institutional Rules of Arbitration come into force
The Tashkent International Arbitration Centre (“TIAC”) and Hong Kong International Arbitration Centre (“HKIAC”) have signed a cooperation agreement to adopt new rules allowing the two institutions to jointly administer cases. The TIAC-HKIAC Cross-Institutional Rules of Arbitration were implemented during Uzbek Arbitration Week. The Rules are designed to offer new dispute resolution opportunities for arbitral users across CIS, Asia and beyond, enabling them to benefit from the TIAC’s cost-effective services and expertise with CIS disputes/Chinese parties, as well as the HKIAC’s experience and quality hallmark when it comes to international arbitration. Key features include: • The TIAC Secretariat will be the administering authority under the rules and will assist HKIAC in procedural decision-making. • HKIAC will “not charge administrative fees, except in limited, pre-defined circumstances” for its procedural decision-making. • HKIAC will be responsible for (i) deciding prima facie jurisdiction (as to existence of an arbitration agreement); (ii) deciding joinder and consolidation requests; (iii) arbitrator and emergency arbitrator appointments; (iv) determining challenges; and (v) scrutinising awards. • Cases will be seated in Hong Kong (unless parties agree otherwise). • The initial language of the arbitration will be the language (or prevailing language) of the arbitration agreement (unless the parties agree otherwise). • A requirement to disclose the existence of a third-party funding agreement and the funder’s identity. • The ability to apply for expedited proceedings if certain conditions are met. • An option to resort to emergency arbitration, if appropriate. • A requirement for the tribunal to send the award to the HKIAC for approval within 30 days from date it declares the proceedings closed.
11 SEPTEMBER 2023
DIAC and HKIAC enter into new Memorandum of Understanding
The Dubai International Arbitration Centre (“DIAC”) and the Hong Kong International Arbitration Centre (“HKIAC”) entered into a Memorandum of Understanding (“MOU”) that reflects a “collective ambition” of both centres to “champion the growth and adaptation of international arbitration.” Given the incremental trade volume between China and the Middle East, with Dubai as one of the top trading partners for Mainland China in the Middle East region, this MOU further bolsters and streamlines this mutual economic development. Similar to DIAC’s reputation and position as a well-recognised and established arbitration institution in the Middle East, the HKIAC holds a similar standing in Asia, with one of the strongest arbitration caseloads in Asia. This MOU followed another separate memorandum of understanding between the Guangzhou Arbitration Commission and DIAC earlier this year. With the “One Belt One Road Initiative,” the increased collaboration between arbitral institutions in the Greater Bay Area and the Middle East reflects the importance of partnership between institutions and to foster the trade relationship between China and the Middle East.
12 september 2023
AIAC launches Sports Arbitration Rules
The Asian International Arbitration Centre (“AIAC”) introduced its inaugural Asian Sports Arbitration Rules (“Sports Rules”). AIAC stated that the Sports Rules were drafted to “address the specific nuances and challenges that often arise in the world of sports.” AIAC joins a range of arbitral institutions from around the world with specialised sports arbitration rules, the most notable being the Court of Arbitration for Sport based in Lausanne, Switzerland. AIAC Director Datuk Sundra Rajoo highlighted a number of key intended features in his introductory remarks about the Sports Rules. Of particular note is an expedient procedure to minimise disruption either to competitions or athlete’s careers. This is reflected, for example, in Art 30.1 of the Sports Rules, which provides that a final award shall be handed down no later than 30 days from the date of the close of proceedings. Other features Mr. Rajoo pointed out include an arbitrator panel with specialisation in sports law, a hands-off approach by the institution and the neutrality of sports determinations by a non-governmental body. AIAC’s introduction of its own Sports Rules provides an additional choice for athletic bodies and athletes in the Asia Pacific region to resolve their disputes.
6 October 2023
HKIAC celebrates receipt of the 100th application under the PRC-HK Interim Measures Arrangement
The Arrangement Concerning Mutual Assistance in court-ordered Interim Measures in aid of Arbitral Proceedings by the courts of the Mainland and of the Hong Kong Special Administrative Region (“PRC-HK Interim Measures Arrangement”), which has been implemented since 1 October 2019, provides parties involved in arbitration proceedings of either jurisdiction to seek interim relief directly from courts of the other jurisdiction. The Hong Kong International Arbitration Centre (“HKIAC”) recently celebrated the receipt of its 100th application for interim relief. The HKIAC’s role in the PRC-HK Interim Measures Arrangement is to certify its administration of arbitration proceedings in question. Some other related statistics reported by the HKIAC include: • Of the 65 decisions that were granted in favour of the applicant for preservation of assets, the total value of assets preserved amounted to RMB15.8 billion or approximately US$ 2.3 billion. • Applications for interim relief have been made to 36 different Mainland courts. • The applicants were approximately 19% Mainland Chinese and 81% foreign parties. • Based on 50 out of the aforementioned 65 decisions, the average time taken by Mainland Chinese courts to issue a decision was 20.5 days. This is an important milestone for Hong Kong as the seat of the arbitration with an effective method for parties to seek protection of their interests in Mainland China.
13 OCTOBER 2023
Draft Bill in Pakistan to consolidate domestic and international commercial arbitration practices
Pakistan has been making immense efforts to promote and commit itself to using arbitration as an alternative dispute resolution process. The Arbitration Law Review Committee of the Law and Justice Commission of Pakistan recently circulated a draft bill aiming to “consolidate and amend the law relating to domestic arbitration and international commercial arbitration” (the “Draft Bill”) for comments. As of now, the current law governing domestic arbitrations in Pakistan is the Arbitration Act 1940 (“Arbitration Act”). Given the year of its enactment, despite Pakistan being a signatory to United Nations Commission on International Trade Law (“UNCITRAL”), the Arbitration Act does not incorporate provisions of the UNCITRAL Model Law. The Arbitration Act has frequently been criticised for a multitude of issues, one being the ineffectiveness of an arbitral award. Due to the wide recourse granted against arbitral awards under the Arbitration Act, enforcing a domestic arbitral award may result in a separate dispute in itself, defeating the finality and certainty of an arbitral award. In comparison, the Model Law limits the availability of parties to challenge the arbitral award. The Draft Bill, which is heavily based on UNCITRAL, is therefore understood to be welcomed by legal practitioners in Pakistan, because, if implemented, the law would be aligned with current international standards for arbitration, and it is expected to reduce the backlog of cases faced by the domestic court system.
16 OCTOBER 2023
ADR in Asia Conference launches arbitrator selection report
The recent ADR in Asia Conference by HKIAC featured the release of the groundbreaking report by Cortex Capital, “The Usual Suspects: Decision-Making in Arbitrator Selection.” That report made a number of findings based on its industry research and made a number of recommendations to improve decision-making around arbitrator selection, including: • Publicising best practices on arbitrator selection within an organisation; • Systematising the evaluation process, including by using a meaningful set of relevant criteria to compare candidates; • Approaching a broader range of contacts for recommendations; • Conducting checks on initial and final shortlists to consider whether any candidates have been omitted; and • Recording the due diligence and decision-making process in writing. A key theme that comes out of the report is that a good process can both increase the quality of arbitrator selections by broadening the pool of considered candidates, as well as promote diversity. The two objectives are not at odds with one another.
18 OCTOBER 2023
Hong Kong Court of Final Appeal confirms that arbitrators have final say on parties’ compliance with pre-arbitral conditions
C v. D [2023] HKCFA 16 is a Court of Final Appeal (“CFA”) decision putting an end to the debate over whether non-compliance with the conditions in a multi-tiered dispute resolution clause (“MDR clause”) is a question of admissibility of the claim or the tribunal’s jurisdiction. As reported in earlier issues of this Newsletter (IA Newsletter Edition 15 and IA Newsletter Edition 14), the lower courts refused to set aside the award concerned on the basis of the tribunal’s decision over compliance with the MDR clause. The CFA upheld the decisions from the lower courts. The distinction between admissibility and jurisdiction has been well established in other jurisdictions, including Singapore, England and New South Wales. In view of the commercial reality when parties enter into arbitration agreements, the CFA adopted a presumption that, unless there was clear language to the contrary, the question of compliance with an MDR clause should be an admissibility question for the tribunal. On the facts of the case, the CFA also held that, on proper construction of the parties’ agreement, any dispute over the fulfilment of pre-arbitration conditions fell within the parties’ intended submission to arbitration.
30 June 2023
Singapore High Court rejects request to set aside award on quantum
In ONGC Petro additions Ltd v. DL E&C Co, Ltd [2023] SGHC 197, the Singapore High Court refused to set aside an arbitration award on quantum. The claimant in the arbitration had succeeded in obtaining a liability award in its favour but was only awarded nominal damages at the quantum stage. It challenged the quantum award in the Singapore High Court on the grounds that the tribunal exceeded its jurisdiction and breached the rules of natural justice, primarily on the basis that the tribunal reversed three critical findings it had made as part of the liability award. It is a well-known principle that, once a tribunal renders a “final” award, it lacks jurisdiction to revisit that award. However, the High Court found that, on a proper reading of the award, there was no final finding in respect of the “three critical findings.” Rather, the tribunal had at most opined on the availability of certain heads of damage in theory but left their determination as a matter to be established at the quantum hearing. The claimant also argued that parts of the tribunal’s reasoning for the quantum award went beyond the parties’ submissions. The court also rejected this, finding that the reasoning relied upon by the tribunal could be found in the evidence and submissions in the arbitration record. The decision is a useful reminder that, in arbitrations that are bifurcated between liability and quantum or other phases, it is important to identify what issues are to be (or have been) disposed of in each of the phases.
24 JULY 2023
Judicial immunity equally applies to arbitrators when compelled to give evidence in Hong Kong proceedings
In Song Lihua v. Lee Chee Hong [2023] HKCFI 1954, the respondent who lost the arbitration applied to set aside an enforcement order of a Mainland arbitral award in Hong Kong, and also applied for a letter of request to be issued to the Mainland judicial authority to obtain statements from one of the arbitrators and the secretary of the tribunal regarding the conduct of the arbitration hearing, where the arbitrator was allegedly seen moving from place to place in public and using only his mobile telephone without earphones during the hearing. The Hong Kong Court of First Instance (“CFI”) first determined that the setting aside application should be governed by Hong Kong law as to the procedure and the admissibility of evidence. With respect to the request to compel the arbitrator to give statement, the CFI decided that, as a policy matter of encouraging and aiding arbitrations, the same judicial immunity extends to arbitrators and protects them from being compelled to testify in relation to the exercise of their functions at a hearing. In relation to the evidence sought from the secretary, the CFI was not satisfied with the relevance and necessity of the evidence sought, therefore it rejected both requests. The CFI’s decision reiterates the unwillingness of Hong Kong courts to interfere with arbitral procedures, absent any fraud and bad faith, and such immunity is to maintain the integrity of the arbitral process in Hong Kong.
31 JULY 2023
Singapore High Court addresses forum non conveniens doctrine in application for leave to enforce an interim measure
In CXG v. CXI [2023] SGHC 244, the Singapore High Court held that the forum non conveniens doctrine was not a ground for it to refuse leave to enforce a tribunal-ordered interim measure in a Singapore-seated international arbitration. The arbitration was brought by minority shareholders in a fintech company, alleging oppression and seeking a buyout. During the arbitral proceedings, the claimants sought, and the tribunal granted, an interim measure requiring the respondents to do or refrain from doing a number of actions with respect to an allegedly competitive product. The claimants applied to the Singapore High Court seeking leave to enforce the interim measure as a court order. The respondents filed a stay application, arguing that the court should decline to hear the enforcement application, because it was not an appropriate forum. The court’s reasons included that: • The forum non conveniens doctrine primarily governs the appropriate forum for hearing substantive disputes. Interim measures do not involve an adjudication of substantive disputes but preserve the status quo. • The very nature of enforcement means courts in a range of jurisdictions should be capable of exercising jurisdiction (it does not involve a search for the single-most appropriate jurisdiction). • Enforcement at the seat of the arbitration is also consistent with the choice of parties to submit to the curial law of the seat through their seat selection in the arbitration agreement. This decision provides helpful clarification that interim measures ordered by Singapore-seated tribunals can generally be enforced in Singapore, even if the subject matter of the interim measures may have a close connection to other jurisdictions.
12 SEPTEMBER 2023
Singapore Court of Appeal refuses introduction of fresh evidence in an appeal from failed set-aside proceedings
In COD v. COE [2023] SGCA 29, the Singapore Court of Appeal refused an application to allow fresh evidence on an appeal from set-aside proceedings in the Singapore High Court. The underlying arbitration related to a contract for the supply of cranes, and the tribunal issued an award on damages that took into account the “scrap value” of the cranes. The appellant, who was the party ordered to pay damages, brought an application seeking to set aside the award. The set-aside proceedings were based on the ground of natural justice, namely, that the appellant did not have an opportunity to properly address damages. The Singapore High Court had rejected the set-aside application, and the appellant appealed. During the appeal procedure, the appellant applied to introduce new evidence. This evidence related to advertisements that appeared to be for the cranes that were the subject of the arbitration but for an amount substantially exceeding their scrap value. The Court of Appeal found that the application to adduce new evidence was an abuse of process. It was not relevant to the issues properly on appeal, since the appellant was not entitled to take a different position on appeal to what was argued in the court of first instance. Further, the court took into account that the appellant knew about the evidence during the initial set-aside procedure but made a strategic decision to continue without such evidence. The decision is a useful reminder that, where evidence may have been available during the arbitration or during set-aside proceedings, failure to adduce this evidence at these junctures (whether deliberately or inadvertently) may adversely impact a party’s ability to later introduce this evidence during any appeal.
27 September 2023
Singapore High Court dismisses wide-ranging application to set aside award on multiple bases
In CYE v. CYF [2023] SGHC 275, the claimant sought to set aside an award rendered by a sole arbitrator on a wide range of grounds. The Singapore High Court dismissed each of these challenges. First, the claimant asserted that the arbitrator failed to consider three essential issues (implied terms, vicarious liability and combination) or failed to provide sufficient reasons for these issues in his award. The court reviewed the arbitration record and the award and rejected these challenges. In doing so, the court observed that the fact that an award dealt with an issue implicitly rather than expressly is not enough to establish the “inescapable inference” that an arbitrator failed to apply his/her mind to a key issue. Second, the claimant asserted that the arbitrator failed to give it a reasonable opportunity to present its case on two issues. In respect of the first issue, the authenticity of a wet ink signature, the court noted that the issue was presented from the start and was the claimant’s burden to establish. In respect of the second issue – apparent authority – the court disagreed with the claimant’s reading of the award as addressing a different issue to the one the parties presented. Finally, the court also rejected the claimant’s assertion that the award was induced or infected by fraud because of non-disclosure of documents or false testimony. Overall, the outcome is consistent with a longstanding trend that Singapore courts will not lightly find grounds to set aside an arbitral award.
29 September 2023
Hong Kong court sets aside default judgment in favour of arbitration
In 楊佩玲 v. Super Best Investment Limited [2023] HKCFI 2494, the defendant sought leave to file its acknowledgement of service of a court writ out of time, set aside a default judgment entered into against it and apply for the court proceedings to be stayed in favour of arbitration or PRC courts. As Article 8 of the UNCITRAL Model Law obliges the court to refer the parties to arbitration if there is valid arbitration agreement, the setting aside and service out-of-time questions thus depended on whether the proceedings ought to be stayed in favour of arbitration. A court will normally stay the court proceedings if the applicant can demonstrate that there is a “prima facie” case that the parties are bound by an arbitration agreement. However, this test was made complicated when an application to set aside a default judgment was added into consideration, where the threshold was “whether or not the applicant has shown that he has a real prospect of success in the action.” Without any earlier direct authority on this, the Hong Kong Court of First Instance reached a conclusion that showing a “prima facie case established by cogent, as opposed to dubious or fanciful, evidence that the parties were bound by an arbitration agreement” was the appropriate test. The court was not prepared to impose any higher threshold, as doing so would ignore the UNCITRAL regime and offer undue juridical advantage over any default judgment that can be entered into for various reasons. The decision is important as parties have clarity on the applicable threshold when seeking both a stay of court proceedings in favour of arbitration and to set aside a default judgment at the same time.
29 SEPTEMBER 2023
Enforcement of a foreign arbitral award relating to contingency fee arrangement deemed permissible by Hong Kong court
In BB v. KO [2023] HKCFI 2661, the applicant (“KO”) sought to set aside an enforcement order of an arbitral award. The arbitration was conducted in Chicago, with disputes over legal fees from KO’s US-based lawyers (“BB”) for representing KO in court proceedings in Nevada, USA. KO only sought to set aside the enforcement order made in March 2020 after two years. BB’s engagement terms with KO provided for a contingency fee arrangement for the law firm’s representation in litigation, which, under current Hong Kong law, would be champertous. KO argued that the award was an illegal and unconscionable fee arrangement, and the enforcement of such award would be contrary to public policy. The Hong Kong Court of First Instance (“CFI”) dismissed the application, finding that the contingency fee hinged solely upon the successful outcome of the US litigation in Nevada. As highlighted previously by the Hong Kong Court of Final Appeal in Unruh v. Seeberger, the totality of the facts must be examined. The CFI determined that KO had failed to establish that the fee arrangement or the award posed any genuine risk to the integrity of the judicial process or public policy of Hong Kong. The application to set aside the enforcement order was dismissed. This case is an example of how Hong Kong courts analyse a public policy challenge in arbitral award enforcement in the context of a conflict with local laws. Hong Kong courts are prepared to look into the substance over form.
17 OCTOBER 2023
Public International Law Key Insights
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state-to-state disputes
International Space Law
This newsletter explores the symbiotic relationship between Public International Law and International Arbitration, providing insights into the complex terrain where they intersect. Addressing emerging considerations in State-to-State Dispute, European Governance, Treaties and IGOs, Sovereign Immunity and State Responsibility, Law of the Sea & Environmental Disputes, Human Rights, Environmental, Social, and Corporate Governance (ESG) dynamics, Regulatory Changes and Sanctions, International Space Law, we guide you through the latest developments in the field. Acknowledging the inherent unpredictability of Public International Law, each edition captures the most relevant legal developments of the prior 6 month period, offering an informed perspective to navigate this evolving landscape.
International Court of Justice (ICJ)
International Tribunal for the Law of the Sea (ITLOS)
World Trade Organisation’s Dispute Settlement Body (WTO)
ICJ President grants extension for participation in Climate Change Obligations Advisory Proceedings
At the United Nations' request, the International Court of Justice (“ICJ”) is set to issue an advisory opinion concerning the responsibility of nations for climate change-induced damage. This non-binding opinion will serve as a guiding precedent for future climate-related legal proceedings and legislative developments. Notably, the United Nations General Assembly solicited the ICJ for this advisory opinion on 29 March 2023, with the initial deadline for States and international organizations to submit written statements being 20 October 2023. Following a request for an extension by the Republic of Vanuatu and 14 co-signing Member States, ICJ President Joan E. Donoghue, in office since 2021, granted an extension. The updated deadline for written statements is now 22 January 2024, with responses due by 22 April 2024. This process has highlighted the ICJ's stance that UN member States can submit written statements without court approval, while international entities need to request approval, similar to the Amicus Curiae process in U.S. courts. Several entities, including the African Union, the European Union, and the Organization of the Petroleum Exporting Countries (OPEC), have been authorized to participate. The UN Secretariat has already submitted a comprehensive set of supporting documents, spanning areas such as multilateral treaties, scientific reports, and international law development, with a particular focus on agreements like the United Nations Framework Convention on Climate Change, the Kyoto Protocol, the Doha Amendment, and the Paris Agreement. These treaties will form the basis for arguments presented in the written statements from States and international organizations. As the process unfolds, it remains uncertain which States will provide written opinions, whether they will co-sign with others, or potentially abstain. Despite the three-month extension, it is anticipated that the advisory opinion may not be released until 2025.
20 september 2023
ICJ Public Hearings on The Russian Federation’s Preliminary Objections in Ukraine v. Russia
During the preliminary objections hearings for the Ukraine v. Russia case at the International Court of Justice (“ICJ”), a historic turnout of 32 State representatives gathered in the Great Hall of Justice, during which Russia presented multiple legal arguments as part of its preliminary objections, contesting the jurisdiction and admissibility of Ukraine's claims. One of the primary legal arguments raised by Russia questions the existence of a legal dispute between the parties. According to ICJ jurisprudence, a dispute exists when the respondent is aware or should have been aware that the applicant's views were "positively opposed." Russia argues that Ukraine's claims, which revolve around the alleged genocide in Eastern Ukraine and the violation of the Genocide Convention, do not constitute separate disputes. This argument delves into the definition of a dispute under international law and whether these disputes crystallized before Ukraine brought the case to the ICJ. Additionally, Russia has objected to Ukraine's attempts to incorporate a claim about the legality of the 2022 invasion into a claim concerning the interpretation of the Genocide Convention. Russia maintains that there is no obligation under the Genocide Convention itself to act within the limits of international law when taking steps to prevent or punish genocide. This argument challenges the scope and limitations of the Genocide Convention's obligations. Another noteworthy legal argument raised by Russia is the concept of a “reverse compliance request.” Russia asserts that Ukraine's submission, seeking to declare that it has not committed genocide in Eastern Ukraine, is inadmissible because it amounts to a “reverse compliance request”. This is a novel argument in ICJ proceedings, as typically, disputes concerning alleged violations of international law are brought by applications claiming that the respondent State has violated its international obligations. This argument questions the boundaries of permissible claims before the ICJ. In summary, Russia's legal arguments in its preliminary objections pose fundamental challenges to the Ukraine v. Russia case, including the existence of disputes, the extent of obligations under the Genocide Convention, and the admissibility of Ukraine's claims. These arguments will undoubtedly play a pivotal role in the ICJ's eventual judgment on the case, shaping the course of this historic international legal proceeding.
18 september 2023
ITLOS Deliberations: Arbitration Practitioners advise on States' responsibilities in safeguarding oceans from climate change effects
An international tribunal recently concluded a two-week hearing at the International Tribunal for the Law of the Sea (ITLOS) in Hamburg, where over 50 States and international organizations presented their arguments. The tribunal is considering a request for an advisory opinion on States' obligations under the United Nations Convention on the Law of the Sea (“UNCLOS”) concerning the protection of marine environments from the effects of climate change. The Commission of Small Island States on Climate Change and International Law (COSIS) initiated this request, asserting that climate change poses a significant threat to their survival. Legal representation for COSIS included prominent figures from law firms and chambers, while other legal teams represented various nations and organizations, including the African Union, Sierra Leone, and Mozambique. COSIS contends that an advisory opinion from ITLOS would enhance States' abilities to safeguard marine environments and address investment treaty claims related to climate change legislation. The case underscores the critical role of international law in shifting the global dialogue towards legally binding commitments to protect the planet and its inhabitants. Key issues for the tribunal to consider include jurisdiction, the impact of greenhouse gases on climate change, and the use of international climate frameworks like the Paris Agreement as a basis for States' responsibilities. The tribunal is expected to issue its advisory opinion in the next six to eight months, marking the first climate change case heard by an international tribunal. Similar requests have been made to other international courts and tribunals, highlighting the growing significance of climate change in international legal discourse.
26 september 2023
Ukraine Initiates WTO Action against three EU Countries over Agricultural Bans
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Ukraine has submitted legal complaints to the World Trade Organization (“WTO”) against Poland, Hungary, and Slovakia, citing their sustained ban on Ukrainian agricultural products. The bans were implemented by these Central European nations to safeguard their farmers from an increased influx of Ukrainian agricultural exports, prompted by Russia's blockade of Ukrainian Black Sea ports. Poland's ruling party, with strong rural support, aims to regulate the entry of Ukrainian agricultural products for political reasons. The Ukrainian Trade Representative is actively pursuing legal proceedings to validate the legality of these actions. Additionally, Ukraine is considering potential countermeasures against Polish fruit and vegetable exports. Despite prior approval from the European Commission for Ukrainian grain sales throughout the EU, Poland, Hungary, and Slovakia chose to impose their own bans, indicating a perceived decline in trust in the European Commission's decision-making. Ukraine's decision to address this matter through the WTO is framed as a response to what it sees as concerning behavior by these Central European nations, impacting their role as trade partners within the EU. Slovakia extended the existing EU ban on specific grains, while Poland and Hungary expanded their bans to include Ukrainian flour, feed, and various other products. Although some of Hungary's bans may have symbolic significance, Poland's measures notably restrict Ukrainian exports. Ukraine is prepared to implement a real-time export license system to manage exports efficiently and respond promptly to any unexpected surges. Despite justifications presented by Budapest and Warsaw, Ukraine maintains that these bans are unlikely to impact prices and are primarily driven by public sentiment rather than sound economic considerations.
German Federal Supreme Court offer protection to States facing Intra-EU ICSID Claims
In cases I ZB 43/22, I ZB 74/22 and I ZB 75/22, the German Federal Supreme Court (“BGH”) ruled that German courts have jurisdiction to hear a request for a declaration of inadmissibility of arbitral proceedings pursuant to Section 1032 (2) of the German Code of Civil Procedure ("ZPO") in intra-EU arbitral proceedings under the ICSID Convention. The underlying disputes concern Energy Charter Treaty (“ECT”) claims brought before ICSID tribunals by investors from EU Member States against Germany and the Netherlands. Shortly after the cases were registered at ICSID, and before the arbitral tribunals were constituted, the respondent States filed applications before German courts pursuant to Section 1032(2) of the ZPO, which allows parties to ask the courts to determine the admissibility of an arbitration before the arbitral tribunal is formed. The BGH held that, in principle, an application under Section 1032(2) of the ZPO is not admissible once the case is registered because Article 41(1) of the ICSID Convention provides that the arbitral tribunal is competent to decide on its own jurisdiction. However, it also found that the arbitration clause in Art. 26(2) of the ECT is incompatible with European Union law in intra-EU disputes, according to the case law of the ECJ. Therefore, such an application (under section 1032(2)) can be made in the case of intra EU investor-State arbitrations due to the primacy of EU law.
27 July 2023
ECHR Complaint highlights asymmetrical approach on Dual Nationality Recognition Doctrine in Investment Treaty Disputes
A Spanish-Venezuelan businessman has submitted a complaint to the ECHR regarding the Dutch courts' refusal to review a US$240 million investment treaty claim against Venezuela. The businessman asserts that his right to a fair trial has been violated as a result of the Dutch courts' decision not to review arbitral awards that deny jurisdiction due to the absence of a valid arbitration agreement. He alleges that this situation infringes upon his right of access to a court and equality of arms as outlined in Article 6(1) of the European Convention on Human Rights. In 2015, the businessman and seven family members initiated UNCITRAL arbitration, alleging that Venezuela had violated the Spain-Venezuela bilateral investment treaty by seizing their food distribution business in 2010. In 2019, a tribunal in The Hague declined jurisdiction on the basis of the claimants' dual nationality, stating they did not meet the BIT's definition of definition of “investor” and that their “dominant” Venezuelan nationality precluded them from invoking the BIT. The Hague Court of Appeal upheld the award in 2021, and the Dutch Supreme Court affirmed that ruling in April. The Dutch Code of Civil Procedure permits the annulment of awards with no valid arbitration agreement but only if the tribunal declared itself competent. The businessman argues that this approach is disadvantageous to investors pursuing annulment of negative jurisdictional awards arising from investor-state arbitration and leads to arbitrary and contradictory outcomes. The businessman’s complaint to the ECHR contends that Dutch law wrongly assumes the dispute can still be pursued in domestic courts, despite being Dutch-seated international arbitration based on a BIT. He emphasizes that the Dutch position denies his family the right to have the dispute determined and points to a case in 2021 where Dutch courts reviewed a positive jurisdictional award against Egypt, highlighting the asymmetry in their approach. The complaint raises concerns about the inconsistent application of law and its implications for investor protection.
21 august 2023
London Court rejects ECJ Ruling, refusing Spanish Judgment Enforcement in oil spill saga
In the case of London Steam-Ship Owners' Mutual Insurance Association Ltd v Kingdom of Spain [2023] EWHC 2473 (Comm), the English Commercial Court delivered a significant ruling. It upheld an appeal against the recognition of a Spanish judgment that had been made against the appellant P&I club under the 2001 Brussels Regulation. Additionally, the court dismissed challenges to an arbitration award between the same parties, which were brought under sections 67 and 69 of the Arbitration Act 1996. The dispute in question revolved around the Prestige, an oil tanker responsible for a major oil spill in 2002, leading to significant environmental damage along the Spanish, French, and Portuguese coastlines. Spain and France sought compensation, initiating a series of arbitration proceedings. Initially, the Commercial Court had upheld arbitration awards in 2013, concluding that the London Steam-Ship Owners' Mutual Insurance Association was not liable to either country and that its liability was capped at $1 billion. However, Spain later obtained an €855 million judgment against the insurer, leading to the enforcement dispute. In this context, the English Commercial Court's decision to reject the enforcement of the Spanish judgment was notable, emphasizing that the Spanish judgment would be "irreconcilable" with the earlier arbitral awards. During the final days of the Brexit transition period, English courts sought a reference from the ECJ, addressing three EU law issues related to enforcing a Spanish judgment. In a recent ruling, the ECJ's Grand Chamber clarified that a decision granting recognition of an award does not qualify as a “judgment”, allowing enforcement of an opposing decision in an EU member state under the Brussels Regulation, provided it aligns with the regulation's fundamental objectives. This case underscores the complexities of enforcing foreign judgments, especially within the framework of the EU's regulatory landscape, even after the UK's departure from the European Union. It highlights the importance of legal consistency and the challenges that can arise when interpreting and applying international legal standards.
6 october 2023
Key Dev 4
EUROPEAN COURT OF HUMAN RIGHTS (ECHR)
EUROPEAN COURT OF JUSTICE (ECJ)
This section includes developments related to: (i) Treaty Signatures - Bilateral Investment Treaties (“BIT”) and Multilateral Investment Treaties (“MIT”); (ii) UN Intergovernmental Conferences - exploring recent conferences directly linked to vital Treaty Signatures or international cooperation; and (iii) Intergovernmental Developments - unveiling pivotal NATO Decisions and Consultations, shaping the landscape of intergovernmental collaboration.
UN Member States adopt ICSID and UNCITRAL Code Of Conduct for Arbitrators in International Investment Disputes
The United Nations Commission on International Trade Law (“UNCITRAL”) adopted the Code Of Conduct For Arbitrators In International Investment Disputes (the "Code”) which, has been under development since 2017 in the context of UNCITRAL Working Group III (ISDS reform) and the recently amended ICSID Rules and Regulations. A joint work product of the UNCITRAL and ICSID Secretariats, the Code primarily focuses on ensuring the key principles of independence, impartiality, and stringent disclosure in the arbitration process. One significant provision is the absolute prohibition of "double-hatting". There are specific requirements but in essence, this means that arbitrators cannot simultaneously act as legal representatives or expert witnesses in cases involving the same parties, measures, or provisions unless all parties agree otherwise. This is a pivotal change, emphasizing the importance of avoiding potential conflicts of interest. Additionally, the Code introduces new, comprehensive disclosure requirements. Arbitrators and potential arbitrators must disclose various aspects, such as financial and personal relationships with disputing parties and their representatives, prior involvement in related proceedings, and prospective concurrent appointments. These strict disclosure rules promote transparency and help identify any potential non-compliance. The Code applies where the parties to an arbitration agree to its use or the instrument giving rise to the arbitration provides for its application. Parties need to rely on the instrument of consent or the applicable rules to bring challenges, or seek any other remedy for breach of the Code. The code also includes Guidelines on Mediation for International Investment Disputes. Note: the above information is based on the advanced draft of the Arbitrator’s Code presented to UNCITRAL at its 56th annual session in July 2023.
14 July 2023
Fourth round of negotiations for a Free Trade Agreement (“FTA”) between the UK and the Gulf Cooperation Council (“GCC”)
The fourth round of negotiations for a FTA between the United Kingdom and the GCC was conducted from 17 July 2023 to 28 July 2023 in London, adopting a hybrid format. Several GCC negotiators were physically present, while others participated virtually. In this round, substantial progress was made as a draft was developed, with notable advancements evident across the majority of the agreement's chapters. These negotiations included in-depth technical discussions that spanned 23 policy areas and comprised a total of 44 sessions. The comprehensive nature of these talks exemplified the commitment of both the UK and the GCC to establishing an ambitious, comprehensive, and modern agreement that aligns with the demands of the 21st century. The GCC represents the UK's seventh-largest export market, boasting a substantial total trade value of £61.3 billion in 2022. The FTA holds considerable economic potential and signifies a momentous development in the UK-GCC relationship. Government data indicates that the FTA is projected to enhance trade by a minimum of 16%, underlining the significant advantages of this partnership, as the GCC’s demand for imported goods and services is forecast to grow by 35 percent — or £800 billion — by 2035. Looking ahead, the fifth round of negotiations is expected to be hosted by the GCC later in the year.
17 july 2023
Saudi Arabia accession to United Nations Convention on Contracts for International Sale Of Goods (“CISG”)
On 3 August 2023, the Kingdom of Saudi Arabia (“KSA”) deposited its instrument of accession to CISG, a pivotal step in enhancing international trade and business practices. This accession, announced on 21 August 2023, underscores KSA's commitment to align with global standards and promote foreign investment as part of its Vision 2030. The CISG, established by the UN in 1980, serves as a framework for harmonizing international trade law by providing a uniform set of rules governing contracts for the sale of goods between different countries. KSA's accession means it joins over 90 other States that have embraced this convention, creating a common legal foundation that simplifies cross-border transactions. The CISG will officially take effect in KSA on 1 September 2024. While KSA will adopt the CISG in its entirety, the KSA has opted to exclude itself from Part III of the CISG. This exclusion is primarily due to KSA's adherence to Islamic law, which prohibits "riba" or interest in financial transactions. This singular reservation will be further examined in relation to the CISG. The examination process will be led by the Minister of Commerce, Chairman of the Board of Directors of the National Competitiveness Centre or their deputy, in coordination with the Ministry of Foreign Affairs. The aim is to ensure full compliance with the CISG while safeguarding KSA from specific provisions related to Article 78 and Article 84(1) of the CISG. KSA's accession to the CISG simplifies dispute resolution within KSA’s borders, and offers a clear legal framework for cross-border transactions. It means that the CISG's uniform rules for international sales contracts will apply, ensuring consistency in contract interpretation, and reduces the discretion of KSA courts, thereby providing international investors with greater legal consistency and less uncertainty, ultimately promoting international trade. Additionally, the CISG encourages alternative dispute resolution methods like mediation and conciliation, facilitated by the Saudi Centre for Commercial Arbitration (SCCA), and since the CISG does not require a specific venue for dispute resolution, KSA and its contracting parties have the freedom to opt for a more appropriate forum, including a national court, arbitration, or any other available alternative mechanism for resolving disputes. The practical implementation of these changes is likely to pose challenges, but the accession to the CISG is anticipated to increase certainty in commercial transactions, reduce transaction costs, enhance the ease of doing business, and provide international investors with greater confidence and transparency in their dealings with KSA, supporting the broader goals of Vision 2030.
3 August 2023
Kenya-Singapore BIT enters into force
Japan accedes to the United Nations Convention on International Settlement Agreements Resulting from Mediation
Ecuador signs the “Beijing Convention on the Judicial Sale of Ships”
UK Government commits to joining Hague Judgments Convention: streamlining international enforcement and boosting trade confidence
Nigeria ratifies the United Nations Convention on International Settlement Agreements Resulting from Mediation
On 20 August 2023, the Kenya-Singapore Bilateral Investment Treaty (BIT) entered into force, a pivotal development in the promotion of economic cooperation and investment between the two countries. Originally signed on 12 June 2018, this treaty is expected to facilitate increased investment flows and instil a greater sense of confidence among investors looking to explore opportunities in both Kenya and Singapore. Indeed, in 2022, the total bilateral trade in goods reached a substantial US$212.2 million, with US$195.1 million stemming from exports of goods to Kenya. Investors are provided with typical BIT protections, including fair and equitable treatment and protection against unlawful nationalization. The BIT applies to investments made by investors of one contracting party within the territory of the other, including investments made before the treaty's formal commencement. However, it restricts investors from seeking remedies for claims arising from events that occurred before the BIT's entry into force. The treaty's definition of "investors" and "investments" is broad, encompassing a wide range of assets directly or indirectly owned or controlled by investors, provided they possess certain characteristics such as capital commitment, profit expectations, or risk assumption. Certain exclusions are expressly outlined, including debt securities issued by governments, legal judgments, and claims arising solely from commercial contracts or credit extensions related to commercial transactions. Notably, the treaty also permits States to deny corporate investors treaty benefits if they are owned or controlled by non-contracting parties, subject to prior notification and consultation. The BIT designates arbitration as the dispute resolution mechanism but includes carve-outs such as the exclusion of Investor-State Dispute Settlement (“ISDS”) provisions for disputes concerning measures related to tobacco and tobacco-related products that aim to protect human health. Additionally, it empowers States to adopt necessary measures to safeguard public health, animal and plant life, and the conservation of natural resources, provided these measures are not applied in an arbitrary or unjustifiably discriminative manner or as disguised restrictions on investments. The Kenya-Singapore Bilateral Investment Treaty therefore represents a notable milestone in the strengthening of investment and trade relations between both countries.
20 August 2023
Japan officially became the twelfth State Party to the United Nations Convention on International Settlement Agreements Resulting from Mediation, commonly known as the "Singapore Convention on Mediation" (the “Singapore Convention”), when it deposited its instrument of accession at the United Nations Headquarters in New York on 1 October 2023. However, Japan's accession comes with a reservation, stipulating that the Singapore Convention will apply only when the parties involved in a settlement agreement have mutually agreed to its application. The Singapore Convention, set to take effect for Japan on 1 April 2024, establishes a comprehensive framework for enforcing international settlement agreements achieved through mediation. Its primary goal is to promote the use of mediation as an effective method for resolving international commercial disputes. Japan's formal commitment to the Singapore Convention is expected to bring about several notable benefits. Firstly, it will encourage the broader use of mediation, both at home and in the international arena. This is likely to bolster Japanese companies' overseas business endeavours and make Japan more appealing to foreign investors, ultimately contributing to the country's economic growth. The Singapore Convention has garnered significant international support, with a total of fifty-six States signing the Convention since it opened for signature on 7 August 2019. An up-to-date list of signatories and Convention Parties can be accessed via the United Nations Treaty Collection.
1 october 2023
On 17 November 2023, Ecuador signed the "Beijing Convention on the Judicial Sale of Ships," officially titled the United Nations Convention on the International Effects of Judicial Sales of Ships (the “Convention”). This signing ceremony took place at the United Nations Headquarters in New York, making Ecuador the 17th State to sign the treaty. The Convention, developed by the United Nations Commission on International Trade Law (“UNCITRAL”) and adopted by the United Nations General Assembly on 7 December 2022, establishes a standardized framework for conferring international effect to judicial sales of ships. Ecuador joins a group of sixteen other signatory states, including Burkina Faso, China, Comoros, El Salvador, Grenada, Honduras, Kiribati, Liberia, Sao Tome and Principe, Saudi Arabia, Senegal, Sierra Leone, Singapore, Switzerland, Syria, and the United Republic of Tanzania. The Convention harmonizes procedures for judicial sales while respecting domestic laws governing such sales and the conditions under which they confer a clean title. Its primary objective is to enhance legal certainty regarding ship ownership during international navigation. By maximizing the market appeal of ships and ensuring clarity in the title acquired by purchasers, the convention aims to optimize sale prices and the subsequent distribution of proceeds among creditors. Additionally, the Convention seeks to facilitate and promote international trade. The Convention is open for signature, ratification, accession, or approval by both States and regional economic integration organizations. It will come into force 180 days after the deposit of the third instrument of ratification, acceptance, approval, or accession.
17 november 2023
The UK government announced on 23 November 2023 that it will join the “Hague Convention on the Recognition and Enforcement of Foreign Judgments in Civil or Commercial Matters” (“Hague Judgments Convention”). This decision follows a consultation on the matter. The government aims to sign and ratify the convention promptly, with its entry into force expected around early 2025. The Hague Judgments Convention is a multilateral agreement facilitating the recognition and enforcement of civil and commercial judgments among contracting states. Unlike diverse national laws, this convention establishes uniform rules, streamlining the often unpredictable, lengthy, and costly process of enforcing foreign judgments. The convention applies to judgments on the merits in civil and commercial matters, including decisions on proceedings costs, but excludes certain areas such as revenue, customs, insolvency, intellectual property, and administrative law. It does not cover arbitration or related proceedings. The convention mandates that contracting states recognize and enforce judgments from other contracting states, without reviewing the merits of the judgment. Recognition and enforcement can only be refused on specified grounds, including fraud, public policy concerns, lack of notification to the defendant, and inconsistency with an earlier judgment on the same subject and between the same parties. This decision holds importance in the context of the post-Brexit landscape, as the UK has discontinued its participation in EU instruments related to the recognition of judgments. The Hague Judgments Convention offers a broader framework compared to the 2005 Hague Convention, addressing judgments from all types of jurisdiction agreements. The inclusion of the EU as a contracting state is particularly noteworthy, potentially simplifying the enforcement of judgments in EU member states. The uniform approach and procedure provided by the convention enhance certainty and simplicity in enforcing foreign judgments between contracting states. The UK government anticipates that participation in the Hague Judgments Convention will enhance the credibility of recognizing and enforcing UK judgments, potentially fostering increased confidence in trade and investment. Additional information on the government's response to the consultation is available here.
23 november 2023
Nigeria has ratified the United Nations Convention on International Settlement Agreements Resulting from Mediation, commonly known as the "Singapore Convention on Mediation" (“Singapore Convention”). This ratification, deposited at the UN Headquarters in New York on 27 November 2023, marks Nigeria as the thirteenth State Party to join the Singapore Convention. Scheduled to come into effect for Nigeria on 27 May 2024, the Singapore Convention aims to facilitate international trade and encourage the use of mediation for resolving commercial disputes. The Singapore Convention offers a robust mechanism for enforcing international settlement agreements arising from mediation. Since its opening for signature on 7 August 2019, a total of fifty-six States have signed the convention, emphasizing its global relevance. The latest developments and the current status of the Singapore Convention can be tracked on the UNCITRAL website: uncitral.un.org.
27 november 2023
This section includes developments related to: (i) Sovereign Ownership and Regulation of Transboundary Natural Resources (both onshore and offshore – including Energy Charter Treaty (“ECT”) developments); and (ii) Law of the Sea issues (international boundary issues including questions of transboundary damage caused by activity in the energy industry, rights related to cross-boundary pipelines, and rights in transboundary mining or oil concessions).
European Commission’s Statement proposing a Coordinated EU Withdrawal from the ECT
The European Commission has proposed a coordinated withdrawal of the European Union (“EU”), its Member States, and Euratom from the ECT, citing the treaty's incompatibility with the EU's heightened climate ambitions outlined in the European Green Deal and the Paris Agreement. The ECT, largely unchanged since its inception in the 1990s, is said to no longer align with the EU's goals for a sustainable future. The Commission's proposal seeks to ensure equal treatment of investors across the EU and beyond by orchestrating a synchronized and orderly exit from the treaty. The Commission is also retracting its previous proposal to ratify the modernized version of the treaty, which failed to garner the necessary majority support among Member States. Frans Timmermans, Executive Vice-President for the European Green Deal, emphasized the need for the EU to shift its focus toward building an efficient and competitive energy system that supports investments in renewable energy. Commissioner for Energy, Kadri Simson, highlighted that the current, unmodernized Energy Charter Treaty does not align with the EU's investment policy, energy objectives, or climate goals. The legal proposals will undergo consideration in the Council of the EU, where a qualified majority vote is required for approval. Informal discussions among Energy Ministers are expected to take place during the Informal Meeting of the Transport, Telecommunications, and Energy Council in Valladolid, Spain, under the Spanish Presidency.
7 July 2023
Swiss Investor fails to resurrect ECT claim against Romania
Swiss energy company Alpiq's attempt to revive its US$341 million Energy Charter Treaty (“ECT”) claim against Romania for cancelled supply contracts has failed after an ICSID committee declined to partially annul the 2018 award that had previously dismissed Alpiq's claim. The ICSID committee, chaired by a UK national with members from Singapore and Finland, upheld the original award in its entirety. In the original 2018 tribunal ruling, it was determined that Romania's jurisdictional challenge, contending that the claim was contractual in nature and thus in breach of the ECT's "fork in the road" provisions, lacked merit. However, the tribunal also concluded that the State was not responsible for the termination of the contracts, as this decision had been made by an insolvency administrator. Additionally, a denial of justice claim related to actions taken by Romanian courts was also dismissed. The dispute originated in 2014 when the Swiss company initiated an ICSID claim against Romania, alleging that the termination of supply contracts between its subsidiaries and Romania's State-owned energy company Hidroelectrica constituted expropriation and violated the fair and equitable treatment provisions under the ECT, alongside a bilateral investment treaty between the two nations. This recent decision marks a definitive endpoint to a complex legal journey that has spanned several years.
15 August 2023
UK contemplates exit from ECT over modernization impasse
The UK government is currently considering the prospect of withdrawing from the ECT unless the proposed modernisation reforms are accepted. Originally established in 1994 with the aim of promoting investments in the energy sector, the ECT has come under increasing criticism for its provisions that safeguard fossil fuel investments, potentially hindering the transition to cleaner energy sources. In June 2022, ECT members reached a provisional agreement on an updated version of the treaty following two years of formal negotiations. The revised text permits Member States to exclude protections for new fossil fuel investments and gradually phase out protections for existing investments in this sector. The UK has put forward terms that would eliminate protection for new investments in all forms of fossil fuel within nine months of adopting the modernized treaty. A vote on the adoption of the modernized treaty was initially scheduled for November 2023 but was delayed due to a lack of support from a majority of EU Member States. Several countries, including France, Germany, Poland, and Luxembourg, have officially submitted withdrawal notifications, while Spain, the Netherlands, Slovenia, and Denmark have expressed their intent to do the same. The European Commission's proposal for a coordinated withdrawal of EU Member States from the treaty was met with disappointment by the Energy Charter Secretariat. The UK asserts that the modernization process is currently deadlocked and underscores the importance of reaching an agreement swiftly. Critics argue that the ECT predominantly favours fossil fuel investments, overlooking its history of protecting renewable projects. They contend that the treaty could continue to promote cleaner energy investments if it is updated periodically. The UK government asserts that its robust legal framework renders the country an attractive destination for foreign energy investors, regardless of its ECT membership.
1 September 2023
Spain seeks to overturn ECT awards in renewable energy subsidy dispute with Japanese and Dutch investors
UK invokes ECT to withdraw protections for Russian investors impacting investors and Sanctioned Entities
Spain has applied to annul two Energy Charter Treaty awards that found it liable to Japanese and Dutch investors over reforms to its renewable energy subsidy regime. The International Centre for Settlement of Investment Disputes (“ICSID”) recently registered Spain's applications for annulment concerning a €106.2 million award in favour of Japanese wind power company Eurus Energy and a €6.8 million award held by Dutch solar investor Sevilla Beheer and its affiliates. Both disputes revolve around Spain's reforms to its renewable energy subsidy system, enacted in response to the 2008 global financial crisis to address the country's electricity tariff deficit. The Japanese company, Eurus Energy, was awarded €106.2 million due to the adverse effects of the reforms on its wind farm projects in Galicia and Asturias. In the case of Sevilla Beheer and its affiliates, the arbitration tribunal issued a partial award on jurisdiction, liability, and quantum principles. The arbitrators dismissed Spain's arguments against intra-EU arbitration under the Energy Charter Treaty. In both cases, Spain is utilizing government lawyers for its annulment applications, whereas the award creditors have retained their arbitration counsel for their respective proceedings. This ongoing legal battle highlights the contentious nature of Spain's renewable energy subsidy reforms, which have resulted in more than 50 investment arbitration cases against the government.
26 September 2023
The United Kingdom has invoked the denial of benefits provision within the Energy Charter Treaty (ECT) to withdraw investment protections for specific categories of Russian investors. These include "mailbox" investors and entities controlled by Russian nationals with no substantial business activities within the ECT Contracting State where they are organized. The UK's Department for Business and Trade notified the Energy Charter Secretariat of this decision on 29 September 2023 citing Article 17 of the ECT, which grants signatories the right to deny treaty benefits under certain circumstances. This move affects not only Russian-owned or controlled investments but also extends to investors from Russia, classified as a "third State" under the ECT, who are included on the UK sanctions list. Notably, Russia is not a contracting party to the ECT, as it signed but never ratified the treaty. Nevertheless, the UK's decision acknowledges that some Russian investments structured through contracting parties could claim coverage under the treaty. The UK is not the only country to restrict ECT protections for Russian investors, particularly in the aftermath of Russia's invasion of Ukraine. Germany, for example, invoked Article 17 to deny ECT protection to Russian-controlled entities with limited business activities and to investments of Russian investors without specifying sanctions. Ukraine similarly exercised Article 17 after facing the potential threat of investment arbitration from energy companies allegedly owned by Russian citizens.
This section includes developments related to: (i) Customary International Law Conflicts (cases arising from customary international law conflicts; governments of foreign States and their instrumentalities are, with specified exceptions, immune from the jurisdiction of the national courts of other States); and (ii) Diplomatic Protection (including State-to-State Foreign Investment Protection).
French Court denies State Immunity allowing seizure of Iraqi bank assets to enforce ICC awards
The Paris Court of Appeal has recently ruled in favour of Dutch company Instrubel, allowing them to seize assets belonging to Rasheed Bank, Iraq's second-largest bank, in order to satisfy two International Chamber of Commerce ("ICC") awards issued against Iraqi ministries two decades ago. Instrubel had entered into contracts with various Iraqi public entities in the late 1980s to supply night vision goggles and thermal imaging technology. However, due to a UN embargo imposed on Iraq after its 1990 invasion of Kuwait, these contracts faced disruption. Instrubel filed ICC proceedings in 1992, citing non-performance and lost profits. The tribunal issued a partial award in 1996, followed by a final award in 2003, both ordering different Iraqi ministries to pay substantial sums. Iraq did not participate in these proceedings, and the awards were granted ex parte enforcement in 2013. In 2021, Instrubel took action by issuing a writ of attachment over €46 million of Rasheed Bank's funds held with a French trading bank. The Paris enforcement judge upheld the attachment, deeming the funds commercial in nature and asserting that Rasheed Bank did not have State immunity. This ruling is part of Instrubel's long-standing efforts to collect on these awards, which have involved targeting various assets related to Iraq. The dispute even led to a ruling by the European Court of Justice in December last year. According to the applicable EU sanctions regulation, Montana retained ownership of the frozen funds unless a competent national authority decided to transfer them to a development fund. It's worth noting that the matter is still currently under consideration by the French Court of Cassation.
6 July 2023
English Court upholds dismissal of Nigeria's appeal on State Immunity Grounds
The Court of Appeal of England and Wales declined the Federal Republic of Nigeria's ("Nigeria") appeal to re-open the dismissal of Nigeria's initial appeal to an ex parte order. The order enforced an arbitral award rendered in favour of Zhongshan Fucheng Industrial Investment Co. Ltd. ("Zhongshan") by the High Court. The initial arbitration was brought by Zhongshan under the China-Nigeria Bilateral Investment Treaty ("BIT"). Zhongshan alleged that Nigeria had deprived it of substantial investments contrary to the relevant provisions of the BIT. The tribunal awarded Zhongshan US$55.6 million in compensation ("Award"). In response, Nigeria filed a challenge to the Award under section 67 of the English 1996 Arbitration Act on the purported basis that the tribunal lacked jurisdiction. However, Nigeria discontinued its challenge on 11 October 2021. Following several failed attempts to petition for the sums owed under the award, Zhongshan brought an application under section 66 of the Arbitration Act to enforce the award as a judgment. This order was awarded ex parte on 21 December 2021. In September 2022, Nigeria filed a late application which sought a 28-day extension for making an application to set aside or vary the order. In doing so, it relied on points of state immunity. The justice of the case weighed in favour of not granting relief from the sanctions. Nigeria sought to appeal this decision, which was refused by the Court. Nigeria sought to re-open the refusal of permission to appeal against the judgment of the court under CPR 52.30 on grounds of state immunity. The court established the test to re-open was whether "it is necessary to re-open a final determination of an appeal in order to avoid real injustice". However, the Court of Appeal rejected the application on several grounds: firstly, the court noted that Nigeria's delay was "conscious if not fully deliberate" and lacked a valid justification. Secondly, none of the appeal grounds, including the claim of state immunity, demonstrated a genuine likelihood of success, leading to a conclusion that there were no points of public importance at stake. Lastly, the Court found no substantive cause, either in fact or error of law, to warrant interference with the judge's prior decision. This instance underscores the English courts' reluctance to reopen refusals to appeal, particularly where there have been procedural failures on the part of the appellant. This will be the case even in instances where state immunity is relied upon.
20 July 2023
The shift of China’s Foreign State Immunity – from Absolute to Restrictive
The People’s Republic of China (“PRC”) recently passed the Foreign State Immunity Law (“FSIL”), which will be implemented on 1 January 2024 and shift the treatment of foreign states from granting them absolute immunity to restrictive immunity. The introduction of the FSIL aligns PRC with the modern doctrine of sovereign immunity, where a state is immune from another state’s jurisdiction regarding sovereign-related matters, but not regarding its commercial activities in the other state. The FSIL is structured with the general rule that foreign states and its property enjoy immunity from PRC courts. However, there are exceptions to such a presumption. These exceptions include: (1) where the foreign state has expressly submitted to the jurisdiction of the PRC courts, (2) commercial activity and related commercial property in relation to the PRC, (3) certain employment and service provision matters, (4) certain intellectual property matters, and (5) arbitration related matters etc. An important caveat to this restrictive immunity is that the FSIL does not impact the privileges and immunities enjoyed by the foreign state in accordance with other PRC laws, international agreements to which the PRC is a party to and international customs. All in all, this brings the PRC’s treatment of immunity granted to foreign states more in line with global practice and subject to judicial enforcement, it remains to be seen how the FSIL will be implemented.
UK Court rejects Russia's Sovereign Immunity claim in Yukos case: awards valued at nearly $60 billion remain enforceable
UK Government Commits to Joining Hague Judgments Convention: Streamlining International Enforcement and Boosting Trade Confidence
On 1 November 2023, the Commercial Court in London ruled that Russia's claim of sovereign immunity could not be used as a defense against enforcing arbitration awards worth nearly US$60 billion granted to former majority shareholders of the Yukos Oil Company. The court found that this immunity defense was precluded as Dutch courts had previously ruled that there was a valid agreement to arbitrate in the Energy Charter Treaty ("ECT") and those findings by the Dutch courts were final and binding, such that an issue estoppel arose. Russia was denied permission to appeal, and the court ordered Russia to cover the shareholders' legal costs and interest, including a £1.5 million payment within 28 days. Russia still has the option to apply directly to the Court of Appeals for leave to appeal. The court also instructed Russia to submit its substantive defense to enforcement by 31 January 2024, with a hearing scheduled for late May or early June 2024. The former Yukos shareholders sought to collect their nearly US$60 billion in awards, which they claimed were compensation for the politically motivated expropriation of Yukos. These awards, initially issued in 2014, have grown in value with interest. The shareholders initially applied to enforce these awards in the UK, where over £25 billion in Russian State assets were frozen. However, the proceedings were halted while Russia contested the awards in Dutch courts. This judgment by the UK court means that the Yukos shareholders are now one step closer to being able to collect on their ECT awards. The UK court acknowledged that there was no clear precedent in relation to issue estoppel vis-à-vis a foreign State based on a foreign judgment found nothing in the UK State Immunity Act that would prevent this and cited two English court decisions that implicitly and recognized this possibility. The judge determined that the Dutch court's final and binding decision regarding the validity of the arbitration agreement was identical to the issue raised by Russia in the UK proceedings, meeting the criteria for issue estoppel.
1 November 2023
This section covers cases and developments where companies find themselves the subject of conflicting directives by territorial sovereign or government: (i) export control laws (including anti-boycott legislation); and (ii) trade embargo laws (antitrust laws and labour laws).
UK's Path to CPTPP accession and its benefits for traders and investors
The United Kingdom reached a milestone on 16 July 2023, with the signing of the Accession Protocol to the Comprehensive and Progressive Agreement for Trans-Pacific Partnership ("CPTPP"). This Protocol outlines the terms of the UK's inclusion in the CPTPP, market access commitments, and necessary modifications. The CPTPP, a robust trade agreement known for its comprehensive scope, covers various sectors such as goods, services, investment, digital trade, and more. Additionally, it incorporates provisions related to environmental protection, labour standards, and anti-corruption measures. For traders and investors, the UK's participation in the CPTPP provides fresh opportunities, including preferential tariff commitments and modern rules for services and investment. Furthermore, improved provisions on business travel benefit investors and traders, providing greater assurance. A Bill is presently going through UK Parliament which will enable the implementation of CPTPP. It will become the Trade (Comprehensive and Progressive Agreement for Trans-Pacific Partnership) Act 2024 once it has received Royal Assent. The UK's entry into the CPTPP comes with a 'modern' Investor-State Dispute Settlement ("ISDS") clause in Section B of Chapter 9. This clause enables investors to initiate arbitration directly against the host State without prior recourse to domestic proceedings. Claims may arise if the host State breaches the minimum standards of treatment, such as fair and equitable treatment and full protection and security, afforded to investors under the CPTPP. Consequently, by becoming a CPTPP member, the UK could face arbitration proceedings initiated by investors from other member States in response to actions breaching these protections. The UK is required to submit its instrument of accession within 12 months, although the CPTPP Commission may extend this period. The Protocol will enter into force for the UK 60 days after it submits its instrument of accession or the date on which all 11 current CPTPP parties confirm the completion of their respective legal procedures (whichever is later). However, if it does not enter into force within 15 months of its signing date (i.e. 15 October 2024), then it shall enter into force 60 days after it submits its instrument of accession or the date on which six existing CPTPP parties provide the necessary notifications (whichever is later for the UK and those six CPTPP parties). If those latter two conditions both occur within 15 months of the signing date then it comes into force for both the UK and those six parties to the CPTPP 60 days after that 15-month period.
16 July 2023
Ukraine launches the State Register of Sanctions
On 27 July 2023, Ukraine enacted the "Law on Amendments to Certain Legislative Acts of Ukraine on the Application of Sanctions", which introduces key legal provisions relating to sanctions. An important provision is the creation of the State Register of Sanctions, referred to as the "Register" because it establishes a centralized and official repository for information on sanctions imposed by Ukraine, a fundamental step in ensuring legal compliance and transparency. It enables the public and relevant entities to access comprehensive data (in both Ukrainian and English) on individuals and entities subject to sanctions. The lack of a centralized database has been a legal obstacle to implementing sanctions effectively. The introduction of the Register significantly streamlines the process for legal entities, such as banks, notaries, and financial monitoring agencies, by providing a one-stop platform for verifying and applying sanctions. Furthermore, by including grounds for sanctions and disclosing the initiating authority, this legal framework strengthens accountability and aligns Ukraine with international legal standards. The law also addresses legal concerns raised by international partners regarding the existing procedure for imposing and appealing sanctions, especially related to asset seizures. By amending the Code of Administrative Procedure, the law introduces legal safeguards to ensure a more transparent and fair process. This includes setting limits on asset seizures during martial law, extending timelines for case consideration, and mandating proper notifications to involved parties. These legal changes aim to facilitate the efficient application of sanctions and ensure a fair and accountable process for all parties involved.
The Central Bank Of Iran preparing a treaty claim to recover US$7 billion of Iranian assets frozen by South Korean banks due to sanctions
The Central Bank of Iran is set to pursue a treaty claim against South Korea to recover approximately US$7 billion in frozen Iranian assets on the basis of an alleged violation of the Iran-Korea bilateral investment treaty (“Iran-Korea BIT”), particularly in relation to the safeguarding of Iranian assets and economic interests. The Iranian assets in question were frozen by South Korean banks in 2019 as a result of U.S.-imposed sanctions on the Iranian banking sector following the U.S. withdrawal from the 2015 nuclear agreement with Iran. The Iran-Korea BIT provides for either ICSID or ad hoc UNCITRAL arbitration. However, as Iran is not a signatory to the International Centre for Settlement of Investment Disputes (“ICSID”), potential arbitration proceedings are expected to be conducted under UNCITRAL Rules. Simultaneously, Texas private equity group Lone Star is attempting to annul an ICSID award that limited its US$4.7 billion claim against South Korea. The legal dispute arises from alleged violations of the bilateral investment treaty between South Korea and the Belgium-Luxembourg Economic Union. The legal arguments in this case centre on issues such as alleged State interference in a proposed sale transaction and the reduction in the sale price of a controlling stake in Korea Exchange Bank (“KEB”). A dissenting opinion by a member of the ICSID tribunal also questioned the liability of South Korea based on the sequence of events involving a prior conviction and subsequent regulatory actions.
1 August 2023
New US Executive Order imposes strict outbound investment controls on China
Russian cargo airline threatens treaty claim against Canada over aircraft seizure
Africa's tech-driven potential: UNCTAD's 2023 Economic Development Report on Global Supply Chain Opportunities
Russian Arbitration Centre unaffected by US sanctions on RSPP
Resolution of Iranian Fund Freeze: South Korea transfers billions after US sanctions, avoiding investment treaty claim
On 9 August 2023, President Biden issued an executive order titled "Executive Order on Addressing United States Investments in Certain National Security Technologies and Products in Countries of Concern." This order establishes a new national security regulatory framework focused on outbound investment from the United States into certain sensitive industry sectors in China, including the People's Republic of China (“PRC”), Hong Kong, and Macau. The framework will be administered primarily by the US Department of the Treasury and the US Department of Commerce and is known as the Outbound Investment Program (“OIP”). The executive order (“EO”) aims to limit and regulate outbound investments into China in specific areas, including semiconductors and microelectronics, quantum information technologies, and certain artificial intelligence (“AI”) systems. The technologies and products covered are deemed critical for military, intelligence, surveillance, or cyber-enabled capabilities. Detailed regulations for the program will be determined through a rulemaking process by the Treasury. The EO applies to "US persons", including US citizens, lawful permanent residents, and US-based entities. Foreign subsidiaries of US entities are not initially subject to these restrictions, but the EO empowers the Treasury to broaden the program's scope to cover certain actions of foreign subsidiaries, if needed. The covered transactions under this program include acquisitions of equity interests, greenfield investments, joint ventures, and debt financing. Some exemptions may apply, such as publicly traded securities or exchange-traded funds, subject to specified criteria. The notification requirement and prohibition will only go into effect once the Treasury has issued detailed regulations. The EO authorizes the Treasury to enforce these regulations using powers granted by the International Emergency Economic Powers Act (“IEEPA”) and can nullify, void, or compel divestment of prohibited transactions. The justification for the OIP is a declared "national emergency" due to a perceived threat to US national security arising from the advancement of sensitive technologies by countries of concern, with China being the sole country of concern mentioned in the EO. The next steps in the implementation of this program include the issuance of detailed regulations by the Treasury, which will define the program's scope. Public comments on the proposed regulations are being solicited, and the deadline for submission was 28 September 2023. After considering these comments, the Treasury will promulgate draft regulations for the Outbound Investment Program.
9 August 2023
Russia's largest cargo airline, Volga-Dnepr, has threatened to issue a potential investment treaty claim against Canada. This comes in response to the seizure of one of its aircraft at Toronto Pearson International Airport, where the aircraft has been grounded since February 2022. Volga-Dnepr contends that the aircraft was involved in a humanitarian flight commissioned by the Canadian government to transport COVID-19 test kits from China. However, Canadian authorities prohibited the aircraft from departing after the cargo was unloaded, citing a ban on Russian-operated planes using Canadian airspace. This ban was imposed in response to Russia's invasion of Ukraine. In June, Canadian Prime Minister Justin Trudeau announced plans to transfer the confiscated aircraft to Ukraine to support their war effort. Volga-Dnepr has indicated its willingness to initiate arbitration under the Canada - Russian Federation Bilateral Investment Treaty (“BIT”) if the matter remains unresolved for six months. The airline, however, remains open to negotiations with Canadian authorities to seek a resolution and the return of the aircraft. Following sanctions imposed on an individual, the previous majority owner of Volga-Dnepr, the airline divested its ownership to other members of the management team. Consequently, Canada placed Volga-Dnepr on its sanctions list, and it fell under blanket sanctions imposed on the Russian aviation sector. Canada is the only Western country with legislation allowing the confiscation of Russian assets without an underlying claim. While Canada has faced multiple NAFTA claims in the past, this case would be only the second BIT arbitration against the State. Previously, subsidiaries of the Russian-owned telecoms group Veon brought a US$1.8 billion BIT claim against Canada at ICSID, which was ultimately dismissed in 2020. The aviation industry faces various other disputes due to disruptions caused by the Russian invasion of Ukraine. These include Airbus pursuing an ICC claim against Russian State-owned leasing company Avia Capital Services, and Irish company Celestial Aviation Trading filing LCIA claims against Russian flag carrier Aeroflot under lease agreements for planes stranded in Russia. Additionally, a sanctioned Russian chemicals group is considering issuing an international arbitration case following the seizure of its stake in a fertilizer producer by Polish authorities. Reports also suggest that Russian investors are contemplating treaty claims against Belgium and Luxembourg over the freezing of assets within securities depositaries in those countries.
On 16 August 2023, UNCTAD launched the Economic Development in Africa Report 2023, entitled "The Potential of Africa to Capture Technology-intensive Global Supply Chains." This discusses Africa's development challenges and relevant policy considerations. It explores the continent's potential to play a significant role in global supply chains, especially in high-technology sectors like automobiles, mobile phones, renewable energy and healthcare. According to the report, in recent times, global supply chains have faced disruptions due to various factors, including trade uncertainties, economic fluctuations, the global pandemic, and geopolitical events. Consequently, there is growing interest in diversifying production locations, creating a unique opportunity for Africa to become a preferred manufacturing destination. The report also highlights Africa's appeal as a manufacturing hub, emphasizing that it lies in its vast reservoir of critical minerals and metals essential for technology-intensive industries. Furthermore, the report mentions that the continent possesses advantages like easier access to primary inputs, a youthful, tech-savvy, and adaptable workforce, and a growing middle class. The African Continental Free Trade Area (“AfCFTA”) further enhances these advantages by facilitating access to regional markets and strengthening production chains, thereby better preparing domestic industries for the global stage. (For further insights into Africa's economic development and the role of the AfCFTA, you can review our previous publication on the AfCFTA by clicking here.) To fully harness this potential, the report recommends a series of policy actions aimed at overcoming the obstacles that African countries encounter within their supply chains. These challenges, as detailed in the report, encompass issues such as inadequate logistics, limited technological capabilities, fragmented markets, restricted access to capital, and the need for improved institutions and regulations. According to the report, by addressing these issues, Africa can better position itself in global supply chains.
16 August 2023
On 11 August 2023, the US imposed sanctions on the Russian Union of Industrialists and Entrepreneurs ("RSPP"), ostensibly due to its activities in the technology sector. It was initially believed that the RSPP, an established arbitral institution in Russia known as the Arbitration Centre at the RSPP (the "Arbitration Centre”), was the target of these sanctions. However, subsequent clarifications have revealed that the sanctioned entity and the Arbitration Centre are distinct organizations sharing a similar name. The Arbitration Centre made a formal statement on 22 August 2023 highlighting the disparity between the RSPP association of employers that was subjected to sanctions and the public organization that manages the Arbitration Centre. It said that these entities are autonomous, separate legal entities with distinct purposes and organizational structures. The RSPP association of employers has no role in the administration of the Arbitration Centre and does not exercise any managerial authority over it. Crucially, the sanctions imposed on the RSPP association of employers do not extend to the Arbitration Centre. Therefore, the administration of cases, including international disputes, handled by the Arbitration Centre remains unaffected. The institution has also expressed its readiness to offer guidance and support in the event that sanctions create any difficulties, particularly concerning the enforcement of awards. Both RSPP entities share Alexander Shokhin as their president, a prominent figure in Russian politics. The Arbitration Centre at the RSPP, established in 2006, operates as one of Russia's licensed arbitral institutions and had 471 cases, including international disputes, with a total value of 26.5 billion rubles (approximately US$265 million) in 2022. The Arbitration Centre is chaired by Viktor Blazheev, who serves as the rector of Kutafin Moscow State Law University.
22 August 2023
South Korea has confirmed the release of approximately $6 billion (potentially up to $7 billion depending on exchange rates) in Iranian funds, which were frozen in May 2019 when former US President Donald Trump imposed sanctions on Iran's banking sector. The South Korean Ministry of Foreign Affairs announced that the funds were successfully transferred to Qatar, where they will be utilized for humanitarian purposes, including the purchase of food and medicine. US Secretary of State Anthony Blinken authorized the transfer, which required the cooperation of financial institutions from Germany, Ireland, Qatar, South Korea, and Switzerland, and it was deemed necessary to secure the release of detained US citizens. This transfer did result in the release of five US citizens detained in Iran and five Iranians held in the US. Both Qatar and Switzerland played pivotal roles in resolving the dispute, as stated by the South Korean Ministry. Meanwhile, the Iranian Foreign Ministry denounced the US-imposed sanctions as "illegal" and asserted that the assets are under the control of the CBI. The resolution of this financial dispute presented a diplomatic challenge for South Korea, as it aimed to strengthen its relations with both Washington and Tehran.
19 September 2023
Ontario Court upholds NAFTA award amid allegations of bias
In the case of Vento Motorcycles Inc v. The United Mexican States, the Ontario Superior Court of Justice issued a decision on 31 October 2023, related to a NAFTA arbitration claim. The court's ruling addressed allegations of bias in the arbitration process during Vento’s set-aside application. The dispute originated from Mexico's imposition of a 30% customs duty on motorcycles assembled by Vento in Mexico using Chinese parts. An arbitral tribunal had previously dismissed Vento's claims, asserting that the customs duty did not discriminate in favour of Mexican competitors and that Mexican officials were not acting under explicit instructions to target Vento. Following the issuance of the award, it was revealed that there were undisclosed communications between one of the arbitrators and Mexico's lead arbitration counsel. These communications involved the arbitrator's potential appointment to arbitrator rosters for international trade agreements. The court acknowledged that these communications could give rise to a reasonable apprehension of bias. However, the court ultimately concluded that this bias did not undermine the overall reliability of the arbitration award. This was because the award was unanimous, all arbitrators had signed the award, and there was no evidence to suggest that the other arbitrators had been biased. Additionally, the court rejected Vento's argument that it had been denied the opportunity to challenge a recording presented by Mexico, which questioned the credibility of one of Vento's witnesses. The judge found that Vento had adequate opportunity to present its case, and the witness's statement was intended to provide context rather than substantiate the case. The Ontario Superior Court of Justice emphasized that setting aside an award on grounds of fairness required a serious violation of morality and justice, and the tribunal's conduct regarding the witness did not meet this standard. In summary, the Ontario Superior Court of Justice refused to set aside the $3 billion NAFTA claim against Mexico, despite finding that the conduct of one party involved in the arbitration gave rise to an appearance of bias. That court determined that this bias did not undermine the arbitration's overall reliability and dismissed Vento's request to overturn the award.
31 October 2023
This section includes developments related to: (i) International Standards in Corporate Foreign Investments (cases or developments with respect to increasing expectations that the treatment of corporate workers, third parties, and other stakeholders in their foreign investments will comply with various human rights and other international standards); and (ii) Climate Change and Global Governance (cases or developments related to climate change and G7, G20 and COP28).
UNCITRAL Colloquium on Climate Change and the Law of International Trade
The Colloquium on Climate Change and the Law of International Trade, held on 12-13 July 2023, was organized by the UNCITRAL Secretariat, in cooperation with other relevant international organizations. This event was in response to a request from the Commission on International Trade Law at its fifty-fifth session in 2022, which recognized the importance of addressing climate change through legal mechanisms and saw UNCITRAL as well-placed to contribute to global efforts in this regard. At the heart of the Colloquium's discussions was the exploration of how international trade law can effectively align with and support the international community's climate action goals. Participants also examined the potential for legal harmonization in this context and the necessity for providing international guidance to legislators, policymakers, courts, and dispute resolution bodies. The Commission's request to the Secretariat for the Colloquium was driven by the understanding that addressing climate change is a fundamental part of the United Nations' agenda, and UNCITRAL, as a subsidiary body of the General Assembly, could play a significant role within its mandate. It was expected that UNCITRAL would not only provide support to other United Nations bodies and Secretariat units but also contribute to the development of new legal mechanisms and the updating of existing private law instruments related to climate change. It also sought to explore how UNCITRAL's existing instruments in areas like contract law, electronic commerce, insolvency, secured transactions, public procurement, public-private partnerships, and dispute resolution could be applied to advance climate action. The comprehensive report of the Colloquium is now available, offering valuable insights into the nexus of international trade law and climate change.
12-13 July 2023
EU's Corporate Sustainability Due Diligence Directive: Implications for US companies
The European Union (“EU”) is progressing towards enacting two significant pieces of legislation: the Corporate Sustainability Reporting Directive (“CSRD”) and the Corporate Sustainability Due Diligence Directive (“CSDDD”). The CSDDD, first published by the European Commission on 23 February 2022, places an obligation on companies to conduct due diligence to prevent adverse human rights and environmental impacts within their operations and value chains. On 1 June 2023, the European Parliament adopted the CSDDD as a negotiating text. The next step in passing the Directive will be a "Trialogue" negotiation process to resolve the differences between these three proposals*, which is expected to conclude by 2024. The CSDDD will have implications for companies worldwide, including those in the United States, as it extends its reach to businesses in the global value chains. US companies, irrespective of their direct involvement, may be affected if they are part of an EU business' value chain. Proactive measures include conducting gap analyses to align with CSDDD requirements, performing due diligence, risk management, and adjusting contractual relationships with value chain partners. In conclusion, the CSDDD is set to have a significant impact on global businesses, including those in the United States, by necessitating comprehensive due diligence to prevent adverse environmental and human rights impacts across value chains. Companies will need to prepare and proactively adapt their operations to meet these new requirements and maintain a competitive edge in the evolving global regulatory landscape. *(COM(2002)0071 - C9-0050/2022 - 2022/0051(COD)
1 June 2023
State Practice and Freedom of Movement: Mayer Brown's ECHR Amicus Brief analysis on COVID-19 restrictions
Mayer Brown, on behalf of its clients, submitted an amicus curiae brief before the European Court of Human Rights (“ECHR”). The amicus brief addresses limitations on the freedom of movement of older persons during the COVID-19 pandemic. It identifies the key emerging principles pertaining to limitations on the freedom of movement, drawing from State practice in over one hundred jurisdictions and from recommendations of leading international organizations. The case of Vesna Pešić and Others v Serbia (Application Nos. 48973/20, 54565/20, and 54676/20) addresses the Serbian authorities' actions in response to the COVID-19 pandemic, specifically restrictions on the freedom of movement for individuals aged 65 and older. The freedom of movement is protected by Article 2 of Protocol No. 4 of the European Convention on Human Rights. The central question before the Court is whether these measures constitute justified limitations on the freedom of movement and whether they justifiably differentiate between various categories of people within Serbia's jurisdiction.
Challenges and controversies surrounding the proposed global Cybercrime Treaty: balancing security, Human Rights, and international cooperation
2023 African Forum on Business and Human Rights
LBMA's Sustainability and Responsible Sourcing Report 2023
In accordance with General Assembly resolution 75/282 and the road map and mode of work approved at its first session, the Ad Hoc Committee to Elaborate a Comprehensive International Convention on Countering the Use of Information and Communications Technologies for Criminal Purposes, established by the General Assembly in its resolution 74/247, held its sixth session from 21 August to 1 September 2023 in New York. The culmination of two weeks of intense deliberations over a proposed global cybercrime treaty was characterized by the inability of participating governments to achieve a consensus on crucial matters that form the bedrock of the treaty. These pivotal issues encompassed the treaty's scope, the definition of cybercrimes, and the integration of human rights principles into its implementation. This proposed treaty holds the potential to reshape cybercrime legislation worldwide and redefine the landscape of international law enforcement in relation to cybercrimes (See comments from Human Rights Watch’s on the Draft Text, Submitted to the UN Committee in August 2023). After nearly four years of development, there remains a substantial divide on whether the treaty should exclusively address computer-related offenses or encompass a broader range of crimes that could potentially stifle online expression. Moreover, the treaty proposes global cooperation in gathering electronic evidence for severe offenses, encompassing a scope beyond the cybercrimes specifically outlined in the agreement. However, some governments are hesitant to apply human rights protections to this collaborative effort, which could result in countries independently defining which offenses warrant international cooperation, potentially disregarding international human rights obligations. Under the proposed treaty, governments could be compelled to cooperate on cases that include seemingly disproportionate offenses, which may strain international cooperation and divert resources from actual cybercrime investigations. The draft also proposes investigative powers without sufficient safeguards, granting governments the authority to conduct intrusive surveillance without judicial authorization or clear connections to criminal activities.
The 2023 African Forum on Business and Human Rights, hosted in Ethiopia between 5-7 September 2023, brought together a diverse array of stakeholders, including business enterprises, governments, civil society, Indigenous Peoples groups, labour organizations, and international bodies. The central focus of the Forum was to explore localized perspectives and solutions for implementing the UN Guiding Principles on Business and Human Rights ("UNGPs") within the framework of the African Continental Free Trade Area (“AfCFTA”). (For further insights into Africa's economic development and the role of the AfCFTA, you can review our previous publication on the AfCFTA here). A recurring theme throughout the Forum was the need for Business and Human Rights (“BHR”) frameworks tailored to the African context. Discussions also highlighted concerns regarding the potential impact of the EU's Corporate Sustainability Due Diligence Directive ("CSDDD") on African businesses. Criticism was directed at the perceived lack of involvement of stakeholders from the Global South in the CSDDD drafting process. The Forum underscored the growing importance of human rights protection in Africa. Regional and national initiatives are gaining prominence, with the African Union poised to adopt its Business and Human Rights Policy Framework, offering a roadmap for regulating business conduct's impact on human rights in Africa. Several African States are actively developing National Action Plans (“NAPs”) on BHR, each outlining its specific priorities, strategies, and commitments. Integration of human rights into the AfCFTA, which has been ratified by 47 African States, was another significant theme. Stakeholders stressed the need to ensure that AfCFTA implementation does not adversely affect human rights. Ongoing negotiations for the AfCFTA Protocol on Women and Youth demonstrated the growing importance of BHR principles in trade agreements, particularly under “Pillar 3” of the UNGPs. The importance of stakeholder engagement was emphasized, with a focus on involving a wide range of participants in the development of BHR initiatives in Africa. This included efforts to ensure that marginalized and indigenous communities have a comprehensive understanding of available policies and protections. Access to remedies for victims of adverse human rights impacts was also discussed. African courts and non-judicial grievance mechanisms are becoming more influential in resolving BHR-related disputes, particularly under “Pillar 3” of the UNGPs. The Forum highlighted the need to raise awareness and reduce barriers to justice.
5-7 September 2023
The London Bullion Market Association (“LBMA”) has recently released its "Sustainability and Responsible Sourcing Report 2023" offering insight into the developments in its Responsible Sourcing agenda since the second report's publication in November 2022. The report's primary objective is to increase transparency within the LBMA Responsible Sourcing Programme. In this report, LBMA delves into the performance of refiners and auditors over the past year, shedding light on the Country of Origin (“CoO”) of mine supply and refinement by Good Delivery List (“GDL”) refiners across the globe. The CoO data holds a pivotal role in comprehending the global flows of gold and silver and has introduced a heightened level of transparency to the refining industry. Moreover, the report highlights the performance of refiners under the Responsible Sourcing Programme, utilizing case studies to illustrate any corrective actions taken in response to non-conformance issues. This comprehensive update from LBMA seeks to provide stakeholders with a clearer picture of the organization's commitment to responsible sourcing and sustainability. However, that LBMA's Responsible Sourcing agenda has faced scrutiny and legal challenges, as seen in a recent legal case where the LBMA was accused of wrongly certifying gold from a Tanzanian mine associated with human rights abuses. This legal action raises pertinent questions regarding the effectiveness of certification bodies in ensuring responsible sourcing in the precious metals industry. The release of this report comes at a time when the industry is grappling with these issues and working to address concerns related to responsible sourcing.
October 2023
Registered: 23 August 2023 Arbitral Rules: ICSID (Case No. ARB/23/37) Treaty: Contract Economic Sector: Information and Communication
TV Azteca S.A.B. de C.V. and Anor v. Republic of Peru
New ICSID, UNCITRAL* And Institutional* Investment Cases Registered between June and November 2023
Registered: 29 August 2023 Arbitral Rules: ICSID (Case No. ARB/23/39) Treaty: Spain – Argentina BIT 1991 Economic Sector: Transportation
Abertis Infraestructuras, S.A. v. Argentine Republic
Registered: 30 August 2023 Arbitral Rules: ICSID (Case No. ARB/23/40) Treaty: Central America – Panama Free Trade Agreement 2002 Economic Sector: Electric Power and Other Energy
Inversiones y Desarrollos Energéticos, S.A. v. Republic of Honduras
Registered: 12 September 2023 Arbitral Rules: ICSID (Case No. ARB/23/42) Treaty: Contract Economic Sector: Transportation
Palmerola International Airport, S.A. de C.V. v. Republic of Honduras
Fernando Paiz Andrade and Anor v. Republic of Honduras
Registered: 9 November 2023 Arbitral Rules: ICSID (Case No. ARB (AF)/23/2) Treaty: Venezuela – United Kingdom of Great Britain and Northern Ireland BIT 1995 Economic Sector: Other Industry
Kellogg Latin America Holding Company (One) Limited v. Bolivarian Republic of Venezuela
Registered: 16 November 2023 Arbitral Rules: ICSID (Case No. ARB/23/50) Treaty: Colombia – Switzerland BIT 2006 Economic Sector: Oil, Gas and Mining
Glencore International A.G. and Ors v. Republic of Colombia
Registered: 2023 (Exact date unknown) Arbitral Rules: UNCITRAL Treaty: Spain – Venezuela BIT 1995 Economic Sector: Insurance and Pensions, Finance
Banreal Holding, S.L. v. Bolivarian Republic of Venezuela
Registered: 2023 (Exact date unknown) Arbitral Rules: Unknown Treaty: Canada – Columbia Free Trade Agreement 2008, China – Columbia BIT 2000 Economic Sector: Mining
Zijin Continental Gold v. Republic of Colombia
Registered: 23 June 2023 Arbitral Rules: ICSID (Case No. ARB/23/22) Treaty: NAFTA (North American Free Trade Agreement), USMCA (United States – Mexico – Canada Agreement) Economic Sector: Oil, Gas and Mining
Enerflex US Holdings Inc. and Anor v. United Mexican States
Registered: 20 July 2023 Arbitral Rules: ICSID (Case No. ARB/23/24) Treaty: NAFTA (North American Free Trade Agreement), USMCA (United States – Mexico – Canada Agreement) Economic Sector: Oil, Gas and Mining
Silver Bull Resources, Inc. v. United Mexican States
Registered: 20 July 2023 Arbitral Rules: ICSID (Case No. ARB/23/25) Treaty: NAFTA (North American Free Trade Agreement), USMCA (United States – Mexico – Canada Agreement) Economic Sector: Food and Beverages
Arbor Confections Inc. and Ors v. United Mexican States
Registered: 21 July 2023 Arbitral Rules: ICSID (Case No. ARB/23/27) Treaty: Netherlands – Venezuela BIT 1991 Economic Sector: Oil, Gas and Mining
Highbury International AVV and Ors v. Bolivarian Republic of Venezuela
Registered: 21 July 2023 Arbitral Rules: ICSID (Case No. ARB/23/28) Treaty: NAFTA (North American Free Trade Agreement), USMCA (United States – Mexico – Canada Agreement) Economic Sector: Oil, Gas and Mining
First Majestic Silver Corp. v United Mexican States
Registered: 21 July 2023 Arbitral Rules: ICSID (Case No. ARB/23/29) Treaty: NAFTA (North American Free Trade Agreement), USMCA (United States – Mexico – Canada Agreement) Economic Sector: Transportation
Mario Noriega Willars v. United Mexican States
Registered: 4 August 2023 Arbitral Rules: ICSID (Case No. ARB/23/32) Treaty: United States of America – Argentina BIT 1991 Economic Sector: Construction
BA Desarrollos LLC v. Argentine Republic
Registered: 11 August 2023 Arbitral Rules: ICSID (Case No. ARB/23/33) Treaty: NAFTA (North American Free Trade Agreement), USMCA (United States – Mexico – Canada Agreement) Economic Sector: Financial Services
Cyrus Capital Partners, L.P. and Anor v. United Mexican States
Registered: 13 September 2023 Arbitral Rules: ICSID (Case No. ARB/23/43) Treaty: CAFTA – DR (Dominican Republic – Central America Free Trade Agreement) Economic Sector: Electric Power and Other Energy
Registered: 8 September 2023 Arbitral Rules: ICSID (Case No. ARB/23/41) Treaty: Panama – Spain BIT 1997 Economic Sector: Finance
Banesco Holding Latinoamérica, S.A. and Anor v. Republic of Panama
* Publicly known Sources: ICSID website IAReporter and Jus Mundi.
Cases allocated based on the State/State entity (typically the Respondent)
Cases allocated based on the State/State entity (typically the Resondent)
Click on a region below
Registered: 2023 (Exact date unknown) Arbitral Rules: UNCITRAL (ICSID Case No. UNCT/23/4) Treaty: NAFTA (North American Free Trade Agreement), USMCA (United States-Mexico-Canada Agreement) Economic Sector: Oil, Gas & Mining
Alberta Petroleum Marketing Commission v. United States of America
Registered: 24 October 2023 Arbitral Rules: ICSID (Case No. ARB/23/49) Treaty: ECT (Energy Charter Treaty) Economic Sector: Oil, Gas and Mining
Klesch Group Holdings Limited and Anor v. Federal Republic of Germany
Registered: 24 October 2023 Arbitral Rules: ICSID Additional Facility (Case No. ARB(AF)/23/1) Treaty: ECT (Energy Charter Treaty) Economic Sector: Oil, Gas and Mining
Klesch Group Holdings Limited and Ors v. European Union
Registered: 2023 (Exact date unknown) Arbitral Rules: Unknown Treaty: Belarus – Lithuania BIT 1999 Economic Sector: Oil, Gas and Mining
JSC Belaruskali v. Republic of Lithuania
Registered: 31 July 2023 Arbitral Rules: ICSID (Case No. ARB/23/31) Treaty: North Macedonia – Italy BIT 1997 Economic Sector: Construction
FCL Ambiente S.r.l. v. Republic of North Macedonia
Registered: 18 August 2023 Arbitral Rules: ICSID (Case No. ARB/23/35) Treaty: Albania – North Macedonia BIT 1997 Economic Sector: Construction
Amadeus Group and Anor v. Republic of North Macedonia
Registered: 20 October 2023 Arbitral Rules: ICSID (Case No. ARB/23/47) Treaty: ECT (Energy Charter Treaty) Economic Sector: Electric Power and Energy
Azienda Elettrica Ticinese v. Federal Republic of Germany
Registered: 24 October 2023 Arbitral Rules: ICSID (Case No. ARB/23/48) Treaty: ECT (Energy Charter Treaty) Economic Sector: Oil, Gas and Mining
Klesch Group Holdings Limited and Ors v. Kingdom of Denmark
Registered: 11 August 2023 Arbitral Rules: ICSID (Case No. ARB/23/34) Treaty: Morocco – France BIT 1996 Economic Sector: Water, Sanitation and Flood Protection
Groupe Pizzorno Environnement v. Kingdom of Morocco
Registered: 21 August 2023 Arbitral Rules: ICSID (Case No. ARB/23/36) Treaty: Saudi Arabia – Turkey BIT 2006 Economic Sector: Construction
Güriş Inşaat ve Mühendislik Anonim Şirketi v. Kingdom of Saudi Arabia
Registered: 28 August 2023 Arbitral Rules: ICSID (Case No. ARB/23/38) Treaty: Investment Law: Democratic Republic of the Congo (2002) Economic Sector: Finance
Afriland First Group SA and Ors v. Democratic Republic of the Congo
Registered: 28 September 2023 Arbitral Rules: ICSID (Case No. ARB/23/44) Treaty: Contract Economic Sector: Construction
Elsewedy Electric for Transmission and Anor v. Republic of South Sudan
Registered: 9 November 2023 Arbitral Rules: ICSID (Case No. unknown) Treaty: Liberia – Switzerland Treaty of Friendship and of Commerce 1963 Economic Sector: Mining
Solway Investment Group v. Republic of Liberia
Registered: 20 November 2023 Arbitral Rules: ICSID (Case No. ARB/23/51) Treaty: Senegal – France BIT 2007 Economic Sector: Transportation
NGE Contracting and Anor v. Republic of Senegal
Registered: 5 June 2023 Arbitral Rules: ICSID (Case No. ARB/23/18) Treaty: Tunisia – United Kingdom BIT 1989 Economic Sector: Oil, Gas and Mining
Zenith Energy Africa Limited and Ors v. Republic of Tunisia
Registered: 8 June 2023 Arbitral Rules: ICSID (Case No. ARB/23/19) Treaty: Nigeria – Korea BIT 1997 Economic Sector: Oil, Gas and Mining
Korea National Oil Corporation and Ors v. Federal Republic of Nigeria
Registered: 8 June 2023 Arbitral Rules: ICSID (Case No. ARB/23/20) Treaty: Mining Code: Democratic Republic of the Congo Economic Sector: Oil, Gas and Mining
AVZ International Pty Limited and Ors v. Democratic Republic of the Congo
Registered: 8 June 2023 Arbitral Rules: ICSID (Case No. ARB/23/21) Treaty: Cameroon – Italy BIT 1999 Economic Sector: Construction
Gruppo Officine Piccini S.p.A. v. Republic of Cameroon
Registered: 20 July 2023 Arbitral Rules: ICSID (Case No. ARB/23/26) Treaty: United Kingdom of Great Britain and Northern Ireland – Tanzania BIT 1994, Mauritius – Tanzania BIT 2009 Economic Sector: Tourism
Brian Malcolm Thomson and Anor v. United Republic of Tanzania
Registered: 26 July 2023 Arbitral Rules: ICSID (Case No. ARB/23/30) Treaty: Switzerland – Algeria BIT 2004 Economic Sector: Transportation
United Agencies Limited SA and Ors v. People’s Democratic Republic of Algeria
Registered: 26 June 2023 Arbitral Rules: ICSID (Case No. ARB/23/23) Treaty: Georgia – Switzerland BIT 2014 Economic Sector: Construction
Basel LLC and Anor v. Georgia
Registered: 3 October 2023 Arbitral Rules: ICSID (Case No. ARB/23/45) Treaty: United States of America – Georgia BIT 1994 Economic Sector: Transportation
Mirian G. Dekanoidze and Anor v. Georgia
Registered: 16 October 2023 Arbitral Rules: ICSID (Case No. ARB/23/46) Treaty: Azerbaijan – United Kingdom of Great Britain and Northern Ireland BIT 1996 Economic Sector: Construction
Libra LLC and Ors v. Republic of Azerbaijan
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This section includes developments related to: Treaty Signatures: Bilateral Investment Treaties (“BIT”) and Multilateral Investment Treaties (“MIT”). UN Intergovernmental Conferences: Exploring recent conferences directly linked to vital Treaty Signatures or international cooperation. Intergovernmental Developments: Unveiling pivotal NATO Decisions and Consultations, shaping the landscape of intergovernmental collaboration.
UN Member States Adopt ICSID And UNCITRAL Code Of Conduct For Arbitrators In International Investment Disputes
Fourth Round Of Negotiations for a Free Trade Agreement (“FTA”) Between the UK and the Gulf Cooperation Council (“GCC”)
Saudi Arabia Accession to United Nations Convention on Contracts for International Sale Of Goods (“CISG”)
On 3 August 2023, the Kingdom of Saudi Arabia (“KSA”) deposited its instrument of accession to CISG, a pivotal step in enhancing international trade and business practices. This announcement, made following a declaration on 21 June 2023, underscores KSA's commitment to align with global standards and promote foreign investment as part of its Vision 2030. The CISG, established by the UN in 1980, serves as a framework for harmonizing international trade law by providing a uniform set of rules governing contracts for the sale of goods between different countries. KSA's accession means it joins over 90 other States that have embraced this convention, creating a common legal foundation that simplifies cross-border transactions. The CISG will officially take effect in KSA on 1 September 2024. While KSA will adopt the CISG in its entirety, the KSA has opted to exclude itself from Part III of the CISG. This exclusion is primarily due to KSA's adherence to Islamic law, which prohibits "riba" or interest in financial transactions. This singular reservation will be further examined in relation to the CISG. The examination process will be led by the Minister of Commerce, Chairman of the Board of Directors of the National Competitiveness Centre or their deputy, in coordination with the Ministry of Foreign Affairs. The aim is to ensure full compliance with the CISG while safeguarding KSA from specific provisions related to Article 78 and Article 84(1) of the CISG. KSA's accession to the CISG simplifies dispute resolution within KSA’s borders, and offers a clear legal framework for cross-border transactions. It means that the CISG's uniform rules for international sales contracts will apply, ensuring consistency in contract interpretation, and reduces the discretion of KSA courts, thereby providing international investors with greater legal consistency and less uncertainty, ultimately promoting international trade. Additionally, the CISG encourages alternative dispute resolution methods like mediation and conciliation, facilitated by the Saudi Centre for Commercial Arbitration (SCCA), and since the CISG does not require a specific venue for dispute resolution, KSA and its contracting parties have the freedom to opt for a more appropriate forum, including a national court, arbitration, or any other available alternative mechanism for resolving disputes. The practical implementation of these changes is likely to pose challenges, but the accession to the CISG is anticipated to increase certainty in commercial transactions, reduce transaction costs, enhance the ease of doing business, and provide international investors with greater confidence and transparency in their dealings with KSA, supporting the broader goals of Vision 2030.
Kenya-Singapore BIT Enters into Force
On 20 August 2023, the Kenya-Singapore Bilateral Investment Treaty (BIT) entered into force, a pivotal development in the promotion of economic cooperation and investment between the two countries. Originally signed on 12 June 2018, this treaty is expected to facilitate increased investment flows and instil a greater sense of confidence among investors looking to explore opportunities in both Kenya and Singapore. Indeed, in 2022, the total bilateral trade in goods reached a substantial S$212.2 million, with S$195.1 million stemming from exports of goods to Kenya. Investors are provided with typical BIT protections, including fair and equitable treatment and protection against unlawful nationalization. The BIT applies to investments made by investors of one contracting party within the territory of the other, including investments made before the treaty's formal commencement. However, it restricts investors from seeking remedies for claims arising from events that occurred before the BIT's entry into force. The treaty's definition of "investors" and "investments" is broad, encompassing a wide range of assets directly or indirectly owned or controlled by investors, provided they possess certain characteristics such as capital commitment, profit expectations, or risk assumption. Certain exclusions are expressly outlined, including debt securities issued by governments, legal judgments, and claims arising solely from commercial contracts or credit extensions related to commercial transactions. Notably, the treaty also permits States to deny corporate investors treaty benefits if they are owned or controlled by non-contracting parties, subject to prior notification and consultation. The BIT designates arbitration as the dispute resolution mechanism but includes carve-outs such as the exclusion of Investor-State Dispute Settlement (“ISDS”) provisions for disputes concerning measures related to tobacco and tobacco-related products that aim to protect human health. Additionally, it empowers States to adopt necessary measures to safeguard public health, animal and plant life, and the conservation of natural resources, provided these measures are not applied in an arbitrary or unjustifiably discriminative manner or as disguised restrictions on investments. The Kenya-Singapore Bilateral Investment Treaty therefore represents a notable milestone in the strengthening of investment and trade relations between both countries.
InvesTMENT cASES
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Newly Registered Investment Cases
Click on a region below to discover new ICSID Convention Arbitration cases and publicly known UNCITRAL and institutional cases registered between December 2022 and May 2023
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