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www.cdr-news.com Volume 4, Issue 5 September-October 2013
TECHNICAL EVIDENCEExpert reports – whose opinion?
EUROPEAN CLASS ACTIONSThe funding fight
INTERNATIONAL ARBITRATIONNew rules, old complaints
CO
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MAKING LONDON’S COURTS A HOME FROM HOME
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RUSSIAW I T H L O V E
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03Commercial Dispute Resolution
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hile international law firms in London continue to dine out on a feast of high-profile oligarch disputes, back home
efforts are underway to keep those lucrative briefs from leaving Russian shores. Facing up to the fact that its notoriously chilly legal climate means investors are choosing to settle their disputes anywhere but Russia, the Kremlin is attempting to make the country a more attractive venue for dispute resolution.
A proposed law clamping down on bribery in arbitration, tabled in July, came weeks after President Vladimir Putin announced his desire to merge Russia’s two highest courts, thereby potentially creating a stronger and more presentable institution. Yet such measures are unlikely to reverse the country’s legal climate any time soon. Indeed, David Goldberg of White & Case, a prominent Russian litigator in London, says it will take at least a decade for corporates to trust his country with their legal fights. A profile of Goldberg can be found on page 26.
Brussels’ legal fraternity expect to be kept busy by an equally lucrative source of work – representing Russia before the World Trade Organization. The country, whose accession to the global trade club in August 2012 came after nearly two decades of political haggling, recently received its first WTO complaint when the European Union requested consultations with Moscow over a recycling fee for cars and vans. With Japan piggybacking the EU’s complaint, and the US and South Korea eyeing similar claims, trade lawyers expect Russia to be a serial defendant at the Geneva-headquartered WTO in the coming years.
Ukraine, which joined the WTO in 2008, has trade problems of its own. Siding with the EU in its Russian automobile complaint sparked angry reaction from Moscow, which on 14 August allegedly began subjecting Ukrainian exports to lengthy customs inspections. Kiev is also pressing ahead with its controversial plan to raise tariff ceilings on 371 goods, a move which has been met with universal opprobrium among its WTO partners. Turn to page 34 for an in-depth look at the country’s increasingly isolated approach to global trade.
Edward MachinEditor
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Contents04 THIS ISSUE
PEOPLE & FIRMS
NEWS AFRICA & MIDDLE EASTLandmark judgment in Nigeria could put a stop to court interference in arbitration; Egypt’s largest steel firm acquitted of monopoly charges
NEWS EUROPEEU and China settle their solar panel trade fight; UK SFO admits to losing 32,000 pages of data relating to BAE Systems investigation
NEWS AMERICASUS International Trade Commission blocks Apple devices from being imported; US DoJ cartel investigation widens to involve Panasonic
CONFERENCE DIARY
0608
1416
NEWS ASIA-PACIFICJapan follows EU in requesting consultations with Russia over imported vehicle recycling fees; bribery scandal engulfing GSK heightens awareness of Chinese anti-corruption prosecutors12
EditorEdward [email protected] EditorBen [email protected] WriterTom [email protected] WriterDahlia [email protected]
Distribution ManagerMark Carroll [email protected] PublisherAlex [email protected] ManagerKevin [email protected]: 2044-5121
Published byGlobal Legal Group Ltd59 Tanner StreetLondon SE1 3PL, UKTel: +44 20 7367 0720Fax: +44 20 7407 5255www.glgroup.co.uk
© 2013 Global Legal Group Ltd. All rights reserved.This publication is for general information purposes only. It does not purport to provide comprehensive full legal or other advice. Global Legal Group Ltd. and the contributors accept no responsibility for losses that may arise from reliance upon information contained in this publication. This publication is intended to give an indication of legal issues upon which you may need advice. Full legal advice should be taken from a qualified professional when dealing with specific situations.
Group Consulting EditorAlan [email protected] PublisherRichard [email protected] EditorFraser [email protected]
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05Commercial Dispute Resolution
SEPTEMBER-OCTOBER 2013
THIRD-PARTY FINANCERoss Drinnan and Jenny Campbell of Allens consider how the close interrelationship between class actions and third-party funding has changed the Australian class actions landscape
RUSSIA, UKRAINE AND THE CIS
WESTERN EUROPE
CONSTRUCTION DISPUTES
White & Case partner David Goldberg talks about arbitration prospects in the world’s largest country; a range of experts discuss CIS-related litigation, arbitration and mediation; Ukraine looks to the WTO’s dispute mechanism to ease its escalating trade war with Russia
Divining the mind of the European Commission is still a key focus for EU competition lawyers; draft European Directive warns funders of private competition actions to stay away
The value of Middle East construction disputes is falling, but there is still plenty of work to go around; momentum behind dispute boards looks set to reduce arbitration in the construction sector
INTERNATIONAL ARBITRATIONPeter Schradieck of Plesner Law Firm discusses a party’s access to produce technical evidence in Denmark; Mannheimer Swartling experts analyse the HKIAC’s updated Rules
CAPITAL MARKET DISPUTES
INVESTMENT ARBITRATION
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EuropeJean-François Bellis Van Bael & BellisMartin Burkhardt Lenz & StaehelinGönenç Gürkaynak ELIGDaniel Hochstrasser Bär & KarrerJosé-Miguel Judice PLMJJes Anker Mikkelsen Bech-BruunHarmen de Mol van Otterloo NautaDutilhMichel Pitron Gide Loyrette NouelTim Portwood Bredin PratJakob Ragnwaldh Mannheimer SwartlingBenedikt Spiegelfeld CHSH Irene Welser CHSHGerold Zeiler schönherr
UK & IrelandJuliet Blanch Weil, Gotshal & MangesGary Born WilmerHaleRichard East Quinn EmanuelTed Greeno Herbert Smith FreehillsGraham Huntley Signature LitigationRosemary Jackson QC Keating ChambersAndrew Lenny Arthur CoxBruce Macaulay SkaddenPenny Madden Gibson, Dunn & CrutcherJane Player King & SpaldingSue Prevezer QC Quinn EmanuelJeremy Sandelson Clifford ChanceCraig Tevendale Herbert Smith Freehills
USADoak Bishop King & SpaldingPeter Calamari Quinn EmanuelRobert Giuffra Sullivan & CromwellRobert J Gunther Jr WilmerHaleGrant Hanessian Baker & McKenzieChris Paparella Hughes Hubbard and ReedJames Quinn Weil, Gotshal & Manges Asia-PacificJonathan Leach Hogan Lovells Lee & LeeC Rashmikant Federal & RashmikantKyle Wombolt Herbert Smith Freehills
Russia & CISDmitry Dyakin Egorov Puginsky Afanasiev
CDR Editorial Board
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n June 2013, the Hong Kong International Arbitration Centre (HKIAC) announced a revised version of the HKIAC Administered Arbitration Rules (the “2013 Rules”). The 2013 Rules are the result of a two-and-a-half year review and consultation process, and will come into effect on 1 November
2013. The main purpose of the revision has been to codify current practices and to ensure that the HKIAC Administered Arbitration Rules are up to date with the latest developments in international arbitration.
In this article, we will review the 2013
Rules and summarise the key changes that will be introduced on 1 November 2013.
BackgroundThe HKIAC is the leading arbitration institution in Hong Kong. It was established in 1985 and is an independent, non-profit making organisation. The HKIAC administers arbitrations, keeps lists of local and international arbitrators, maintains modern hearing facilities and provides other support services to arbitrations conducted in Hong Kong. The primary
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EXPERT VIEW: ThE 2013 hKIAC RUlES
T H R O U G H A F A M I L I A R W I N D O W
Jakob Ragnwaldh, Nils Eliasson and Åsa Rydstern of Mannheimer Swartling consider the Hong Kong International Arbitration Centre’s updated Rules,
including their landmark provisions on consolidation and joinder
arbitration legislation in Hong Kong, the Arbitration Ordinance, vests certain powers in the HKIAC, such as the authority to determine the number of arbitrators and appoint arbitrators when there is no agreement between the parties on such issues. The HKIAC has seen a steady growth of its case flow in the last decade, and the majority of its cases are international.
The HKIAC has adopted several sets of rules for various types of disputes and proceedings, such as the HKIAC Domestic Arbitration Rules, the Short Form Arbitration Rules, the HKIAC Securities Arbitration Rules, the HKIAC Electronic Transaction Arbitration Rules and the HKIAC Small Claims procedure. The most commonly used rules are the HKIAC Administered Arbitration Rules, which may be adopted in international as well as domestic arbitrations. The previous version of the Rules (the “2008 Rules”) came into force on 1 September 2008.
As with the 2008 Rules, the 2013 Rules are characterised by a ‘light touch’ approach to the HKIAC’s administration of arbitrations conducted under the Rules. The Rules emphasise party autonomy and entrust the arbitrators with the primary decision making. There are no terms of reference and there is no scrutiny of the award.
The most significant innovations introduced with the 2013 Rules are the increased powers given to tribunals and the HKIAC in managing multi-party and multi-contract disputes in the form of detailed rules on joinder and consolidation. Other important changes include the provisions on arbitrators’ fees, an expanded scope of the expedited procedure, emergency arbitrators and standard terms of appointment of arbitrators. These key changes under the 2013 Rules will be addressed below.
The 2013 Rules apply to arbitrations commenced on or after 1 November 2013, save for certain specific provisions which, unless the parties otherwise agree, only apply where the arbitration agreement was concluded on or after 1 November 2013.
Multi-party and multi-contract arbitrationsUnder the 2013 Rules, the arbitral tribunal is given the power to allow an additional party to join an existing arbitration, provided that the additional party is – on a prima facie basis – bound by an arbitration agreement providing for arbitration under the HKIAC Rules (Article 27.1). There is thus no requirement that the parties be bound by the same arbitration agreement, as long as they are bound by an arbitration agreement under the HKIAC Rules.
A party that wishes to join an additional party to an existing arbitration needs to submit a request for joinder to the HKIAC (Article 27.3). A request for joinder may also be made by a third party (bound by an HKIAC arbitration agreement) that wishes to join an existing arbitration (Article 27.6). There is no express time limit for the submission of a request for joinder, but the HKIAC may fix such a time limit (Article 27.3). It will be for the tribunal to decide whether joinder is appropriate in the particular case.
If the request for joinder is made before the constitution of the tribunal, the HKIAC may decide whether the additional party is – on a prima facie basis – bound by the relevant
arbitration agreement. If so, the HKIAC may join the additional party to the arbitration (Article 27.8). That the decision on joinder generally is entrusted to the tribunal, and that the HKIAC is only authorised to make such decisions in cases where a tribunal has yet to be constituted is in line with the overriding light touch administrative approach of the HKIAC.
Where an additional party is joined to the arbitration before the constitution of the tribunal, all parties shall be deemed to have waived their right to designate an arbitrator, and the HKIAC may revoke the appointment of any arbitrators that have already been designated or confirmed. The HKIAC will then appoint the entire arbitral tribunal (Article 27.11).
Under the 2013 Rules, the HKIAC has also been given the power to consolidate two or more arbitrations pending under the Rules, upon the request of a party (Article 28.1). Before making any decision with respect to consolidation, the HKIAC is to consult with the parties and any concerned arbitrators. A decision to consolidate can only be taken where:
• the parties agree to consolidate, or; • all of the claims in the arbitration are made
under the same arbitration agreement, or;• the claims are made under more than one arbitration
agreement, a common question of facts or law arises in both or all of the arbitrations, the rights to relief are claimed in respect of or arise out of the same transaction or series of transactions and the HKIAC finds the arbitration agreements to be compatible (Article 28.1 (a)-(c)).
The arbitrations are generally to be consolidated into the arbitration that commenced first (Article 28.4). As is the case in a situation of joinder, the parties to consolidated arbitrations are deemed to have waived their right to designate an arbitrator (Article 28.6). Nothing in the 2013 Rules prevents consolidation from being made even if one or more tribunals have already been constituted. In those cases, the HKIAC may revoke the appointment of any arbitrator already designated or confirmed (Article 28.6).
In addition to joinder and consolidation, the 2013 Rules provide for claims arising out of or in relation to multiple contracts to be raised in a single proceeding (Article 29).
The rules on joinder and consolidation have been introduced in recognition of the growing number of arbitrations where multi-party and multi-contract issues arise. The expanded powers to join additional parties and to consolidate arbitrations can be expected to play an important role in making the administration of such complex disputes more time and cost efficient. The rules on consolidation do, for example, make it possible to prevent an obstructing party from delaying the resolution of a dispute by insisting on several separate arbitration proceedings concerning a related issue.
The 2013 Rules are more elaborate and provide more far-
International arbitration developments62 EXPERT VIEW: ThE 2013 hKIAC RUlES
The expanded powers to join additional parties and to consolidate arbitrations can be expected to play an important role in making the administration of complex disputes more time and cost efficient
reaching powers for the tribunal and the HKIAC with respect to consolidation and joinder than the powers conferred to tribunals and/or institutions under most other institutional rules.
Expanded scope of the expedited procedureThe 2013 Rules broaden the scope of its expedited arbitration procedure. Under the 2008 Rules, the expedited procedure applied where the amount in dispute did not exceed USD 250,000. Under the 2013 Rules, a party may apply to the HKIAC to have a dispute resolved under the rules of the expedited procedure where the amount in dispute does not exceed HKD 25 million (or approximately USD 3 million).
In addition, the expedited procedure will apply in cases where the parties so agree or in cases of exceptional urgency (Article 41.1). The scope of application of the expedited rules is thus significantly expanded, and a greater number of disputes can be expected to be resolved on a fast-track basis.
The expedited procedure generally means that:
• the case will be heard by a sole arbitrator;
• time limits under the Rules may be shortened by the HKIAC;
• the case is to be decided based on documentary evidence only;
• the award is to be rendered within six months from the date when the arbitrator received the file, and;
• the reasons for the award are to be stated in summary form (Article 41.2).
Fees and terms of appointmentThe 2013 Rules also introduce changes
to the fees and the terms of appointment of arbitrators. Under the existing 2008 Rules, the parties may choose between remunerating the arbitrators on an hourly basis or based on the HKIAC’s schedule of fees calculated based on the amount in dispute (Article 10.1).
For the hourly-fee option, the 2013 Rules introduce a cap on the arbitrators’ fees unless the parties otherwise agree (Article 9.3 of Schedule 2). The capped fee, which is currently fixed at HKD 6,500 per hour (or approximately USD 830 per hour),
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The most significant innovations introduced with the 2013 Rules are the increased powers given to tribunals and the HKIAC in managing multi-party and multi-contract disputes in the form of detailed rules on joinder and consolidation
Jakob Ragnwaldh is a partner in Mannheimer Swartling’s dispute resolution practice and is based in Stockholm. He specialises in international arbitration, representing clients in commercial as well as investment treaty arbitrations. He also frequently sits as an arbitrator. He is a board member of the SCC, a listed CIETAC arbitrator and a member of CDR’s Editorial Board.
Nils Eliasson is a partner in Mannheimer Swartling’s dispute resolution practice. Nils is based in Hong Kong where he heads the firm’s Asian dispute resolution practice. He acts as counsel in commercial and investment treaty arbitrations and he also frequently sits as an arbitrator. He is a member of the ICC Commission on Arbitration.
Åsa Rydstern is a senior associate at Mannheimer Swartling’s Stockholm office and specialises in international dispute resolution. In addition to acting as counsel in a number of litigations, she has been involved in several international arbitrations, including proceedings under the ICC, UNCITRAL and HKIAC rules.
will from time-to-time be reviewed and adjusted by the HKIAC. The possibility to choose between the two remuneration options is often considered to be one of HKIAC’s competitive advantages.
In addition, the 2013 Rules introduce standard terms of appointment for arbitrators (Schedules 2 and 3), which are intended to save the parties the time and effort required to negotiate individual terms with the arbitrators.
Emergency arbitrator proceduresWith the 2013 Rules, the HKIAC follows several other arbitral institutions, such as the SCC, the ICC and the SIAC, by introducing rules on emergency relief. The new Schedule 4 of the 2013 Rules provides for procedures for the appointment of an emergency arbitrator authorised to handle applications for immediate and urgent relief prior to the constitution of an arbitral tribunal.
An application for the appointment of an emergency arbitrator and a request for emergency relief can be made concurrent to or following the filing of a Notice of Arbitration, but prior to the constitution of the arbitral tribunal (Article 1 of Schedule 4). The application must state the reasons why the applicant needs the emergency relief and why it is so urgent that it cannot wait until the constitution of a tribunal (Article 2 of Schedule 4).
If the HKIAC determines that it should accept the application, the HKIAC is to seek to appoint an emergency arbitrator within two days after receipt of the application (Article 5 of Schedule 4). After the appointment has been made, the HKIAC is to notify the parties and transmit the file to the emergency arbitrator (Article 7 of Schedule 4). A party that wishes to challenge an emergency arbitrator is to send notice of its challenge within three days after the confirmation of the arbitrator has been notified to the challenging party. The HKIAC will decide on the challenge (Article 8 of Schedule 4). The emergency arbitrator is to make its decision, order or award within 15 days from the date on which the HKIAC transmitted the file to the emergency arbitrator (Article 12 of Schedule 4).
A decision, order or award by the emergency arbitrator has the same effect as an interim measure granted by an
arbitral tribunal, and is binding on the parties (Article 16 of Schedule 4). The provisions on emergency arbitrators only apply where the arbitration agreement is entered into on or after 1 November 2013 (Article 1.4). By agreeing to arbitration under the 2013 Rules, the parties undertake to comply with any emergency decision without delay (Article 16 of Schedule 4).
A decision, order or award made by an emergency arbitrator ceases to be binding (i) if the emergency arbitrator or tribunal so decides, (ii) upon the arbitral tribunal rendering a final award, (iii) upon the withdrawal of all claims or the termination of the arbitration before the rendering of a final award, or (iv) if the tribunal is not constituted within 90 days from the date of the emergency decision (Article 19 of Schedule 4). In addition, a person who has acted as an emergency arbitrator may not act as arbitrator in any arbitration relating to the same dispute, unless otherwise agreed by the parties (Article 21 of Schedule 4).
The introduction of the emergency arbitrator procedures in the 2013 Rules is coupled with an amendment to the Hong Kong Arbitration Ordinance. This amendment, passed by the legislative council in July 2013, requires the Hong Kong courts – as the first national courts in the world – to recognise and enforce decisions of emergency arbitrators. Interim measures ordered by a tribunal (irrespective of the seat of arbitration) are already enforceable in Hong Kong. The amendment will clarify that this now applies also to interim measures ordered by an emergency arbitrator.
We believe that the introduction of the 2013 Rules and the amendment to the Arbitration
Ordinance will further strengthen Hong Kong’s already well-functioning arbitration framework. The new rules will contribute to fortify the position of Hong Kong and the HKIAC as one of the leading centres for international dispute resolution and will no doubt add to the already growing number of cases being resolved under the auspices of the HKIAC. It will be interesting to see how the 2013 Rules will be applied in practice and whether other arbitral institutions will follow the example set by the HKIAC.
International arbitration developments64 EXPERT VIEW: ThE 2013 hKIAC RUlES
n
About the authors
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