Most of the leading arbitral institutions in the Mainland PRC experienced strong growth in 2023, according to the most recent statistics.

Key themes include: generally substantial increases in the number of new cases and the total amount in dispute; increases in the number and proportion of foreign-related cases (which represented 25% of the total value in dispute); an increase in appointments of foreign arbitrators; substantial growth in online case filings; and a drop in the numbers of virtual hearings (which nevertheless remain substantial).

This post reviews and compares the statistics published in the 2023 annual reports of five leading institutions:

• CIETAC (China International Economic and Trade Arbitration Commission).
• BAC (Beijing Arbitration Commission).
• SHIAC (Shanghai International Economic and Trade Arbitration Commission).
• SHAC (Shanghai Arbitration Commission).
• SCIA (Shenzhen Court of International Arbitration).

The links above are to the English versions of the annual reports where available (those of BAC and SHAC are available in Chinese only).

Presentation of data

This post seeks to compare institutions on a like-for-like basis and provide year-on-year comparisons for individual institutions where possible.  This has not been feasible in all cases in relation to the data on (i) total caseloads and amounts in dispute and (ii) caseloads and amounts in dispute for foreign-related cases.  This is due to a change in calculation methodology for these data categories in the 2023 annual report of SCIA, which presents data in these categories only for SCIA headquarters (referred to below as SCIA (headquarters)), excluding SCIA Jiangmen and SCIA Hong Kong.  In contrast, although CIETAC and SHIAC (the other institutions with sub-branches) do not specify the scope of their statistics in their annual reports, it is understood that they generally cover all branches.  These differences should be taken into account when reviewing the data below in relation to caseloads and amounts in dispute, which should be treated as broadly indicative only.

Unless otherwise indicated, USD figures given below are the approximate equivalent of original RMB figures.  Percentages given in the text are rounded to the nearest percent while those given in tables are generally also rounded to the nearest percent (except in a small number of cases where the level of the percentages makes it appropriate to round to 1 or 2 decimal places).

Increasing caseloads and amounts in dispute

A total of 36,453 new cases were filed with the five leading PRC institutions in 2023, with the total amount in dispute in all arbitration cases handled by those institutions being RMB 529.2 billion (USD 73.6 billion).

Most of the five institutions reported a significant increase in caseload and/or amounts in dispute in 2023, possibly reflecting economic headwinds in key market sectors.  The headline points for each institution are as follows (with a tabular breakdown of the figures being set out below):

• CIETAC set a new record with 5,237 new arbitration cases in 2023, an increase of 28% on the figure for 2022 (when 4,086 new cases were filed).  The total amount in dispute in arbitration cases handled by CIETAC in 2023 was RMB 151 billion (USD 21 billion), the highest of the five institutions and a 19% increase on the 2022 figure of RMB 126.9 billion (USD 17.6 billion) in 2022.  This was the sixth consecutive year in which the total amount in dispute surpassed RMB 100 billion (USD 13.9 billion).
• BAC reported 12,222 new arbitration cases for 2023, an increase of 45% on the figure for 2022 (when 8,421 new cases were filed) and the highest of any of the five institutions.  The total amount in dispute was RMB 124.8 billion (USD 17.4 billion), a 29% increase on the previous year’s figure of RMB 97 billion (USD 13.5 billion).
• SHIAC reported its highest number of new arbitration cases in over 10 years, with 4,879 cases in 2023, a year-on-year increase of 89% against the 2022 figure of 2,576 cases.  The total amount in dispute reached RMB 70.8 billion (USD 9.8 billion), representing a 13% increase on the 2022 figure of RMB 62.9 billion (USD 8.7 billion).
• SHAC registered a total of 7,348 cases, representing nearly 30% year-on-year growth from the 2022 figure of 5,671 cases.  The total amount in dispute was RMB 44.3 billion (USD 6.2 billion), an increase of 4% compared with the 2022 figure of RMB 42.4 billion (USD 5.9 billion).
• SCIA (headquarters) reported 12,004 commercial arbitration filings in 2023 (second only to BAC), worth RMB 138.3 billion (USD 19.2 billion) in total.  Year-on-year comparisons are not possible due to the change in calculation methodology mentioned above, but the caseload and amount in dispute suggest that SCIA experienced a notably busy year.

To place these figures in a regional perspective (with the qualification that comparisons between institutions in different markets and with different characteristics should generally be drawn with caution), in 2023 the Hong Kong International Arbitration Centre (HKIAC) received 500 new cases and the total amount in dispute in all arbitration cases was USD 12.5 billion, while the Singapore International Arbitration Centre (SIAC) received 663 new cases and the total sum in dispute was USD 11.9 billion.

The following tables set out the number of new cases and the total amount in dispute for each of the five institutions, ranked from highest to lowest and with a comparison (where possible) between the 2022 and 2023 figures.

Number of new cases

Total amount in dispute (rounded to nearest 0.1 billion)

More foreign-related cases

There was also an increase in the number and value of “foreign-related” or “international” cases in 2023 (meaning cases with at least one factor, such as a party or subject matter, involving a non-Mainland PRC jurisdiction).

The rise in foreign-related cases was less pronounced than the increase in the number of new cases and total amount in dispute as a whole.

Nevertheless, and although foreign-related cases represented only 3% of the total number of new cases filed in 2023, they accounted for 25% of the total value in dispute.

The headline points for each institution are again set out below, followed by a tabular breakdown:

• CIETAC reported 645 new foreign-related cases (12% of all new cases filed with the institution in 2023), with a small increase of 0.5% on the figure of 642 cases for 2022.  The total value of foreign-related cases increased to RMB 52.8 billion (USD 7.3 billion), an increase of 41% on the 2022 figure of RMB 37.4 billion (USD 5.2 billion).  Foreign-related cases therefore represented more than one third (35%) of CIETAC’s total caseload by value in 2023.
• BAC received 251 foreign-related arbitration cases (2% of all new cases filed in 2023), representing a year-on-year increase of 14% against the 2022 figure of 221 cases.  The total amount in dispute in foreign-related cases reached RMB 11.5 billion (USD 1.6 billion), marking a 20% increase from the amount of RMB 9.6 billion (USD 1.3 billion) in 2022.  Foreign-related cases accounted for 9% of BAC’s total caseload by value in 2023.
• SHIAC received 215 foreign-related cases in 2023 (4% of all new cases filed in 2023), an increase of 10% on the 2022 figure of 196 cases.  The total amount in dispute in foreign-related cases was RMB 10.2 billion (USD 1.4 billion), representing a 49% increase from RMB 6.8 billion (USD 1 billion) in the previous year.  Foreign-related cases represented 14% of SHIAC’s total caseload by value in 2023.
• SHAC handled 77 foreign-related cases (1% of all new cases filed in 2023), totalling RMB 426 million (USD 59.2 million) in 2023.  The figures for 2022 are unavailable.  Foreign-related cases represented approximately 1% of SHAC’s total caseload by value in 2023.
• SCIA (headquarters) handled 414 foreign-related commercial arbitration cases (3% of all new cases filed in 2023).  The total amount in dispute in foreign-related disputes was RMB 59.3 billion (USD 8.3 billion), and foreign-related disputes represented 43% of the total amount in dispute in 2023 (in each case, the highest of any of the five institutions).

Summarising the overall picture, it can be seen that:

• CIETAC (which has the longest history and most established track-record in this area) had the highest number of foreign-related cases by a significant margin (more than 1.5 times the number of SCIA (headquarters), the institution with the second-highest number, and more than 2.5 times the number of BAC, the institution with the third-highest number).
• SCIA (headquarters) had the highest total amount in dispute in foreign-related cases, followed closely by CIETAC.  The total value of foreign-related disputes at each of SCIA (headquarters) and CIETAC was approximately 5 times that of the next ranked institution by value of foreign-related cases (BAC).
• As a proportion of the total amount in dispute in cases filed with them, SCIA (headquarters) and CIETAC had (by a significant margin) the highest levels of foreign-related cases (namely, 43% and 35% respectively).

The following tables set out the number of new foreign-related cases and the total amount in dispute in foreign-related cases for each of the five institutions, ranked from highest to lowest and with a comparison (where possible) between the 2022 and 2023 figures.

Number of foreign-related / international cases

Total amount in the foreign-related / international disputes (rounded to nearest 0.1 billion)

Other international elements

The statistics on the geographical origins of parties, languages used, governing laws, appointment of foreign arbitrators and cross-border enforcement of awards are summarised below.

Geographical origin of parties

There was significant geographical diversity in the parties using all five institutions in 2023:

• CIETAC administered cases involving parties from 71 countries and regions.
• SCIA handled new cases involving 44 countries and regions.
• SHIAC served parties from 33 countries and regions, including 18 “Belt and Road”
• BAC and SHAC arbitrations involved parties from 19 and 14 countries and regions respectively.

Language of arbitration

There was a slight reduction in the number of arbitrations conducted bilingually or in a language other than Chinese:

• CIETAC reported 93 cases (2% of the total caseload and equivalent to 14% of foreign-related cases) using English or both English and Chinese as the language(s) of the arbitration, compared with 115 cases of the same category in 2022.
• SHIAC reported 12 cases using English and 11 cases using both English and Chinese (together, 0.5% of the total caseload and equivalent to 11% of foreign-related cases), compared with 20 cases using English in 2022.
• BAC reported 7 cases using English and 1 case using Chinese and Russian (together, 0.1% of the total caseload and equivalent to 3% of foreign-related cases), compared with 7 cases using languages other than Chinese (including 2 English cases and 1 Chinese-Russian bilingual case) in 2022.
• The data of SCIA and SHAC for 2023 is unavailable.

Governing laws

A range of treaties and laws were applied as the governing law of the disputes administered by the five institutions, including the laws of the PRC, Hong Kong, Macau, Taiwan, England and Wales, Australia, and the United Nations Convention on Contracts for the International Sale of Goods.

Foreign arbitrators

There was an increase in the number of foreign (i.e. non-Mainland PRC) arbitrators appointed by CIETAC, BAC and SHIAC (although such appointments remained broadly flat as a percentage of total appointments).  Notably, 90 CIETAC cases were heard by tribunals exclusively consisting of foreign arbitrators.  SCIA appointed the highest number (203) of foreign-arbitrators, although a year-on-year comparison is not possible.  SHAC did not disclose statistics regarding appointments of foreign arbitrators.

The relevant statistics are summarised in the table below:

BAC and SCIA also stated in their annual reports that the percentages of foreign arbitrators on their institutional lists were 24.78% and 36.84% respectively.

Cross-border enforcement of awards

CIETAC indicated that its arbitral awards were recognised and enforced by courts in various countries and regions, including the United States, Argentina, Russia, Hong Kong and Taiwan.

BAC indicated that awards in two of its administered cases were enforced in Singapore and Chile.

Types of disputes

Each of the five major institutions published statistics regarding the types of cases registered in 2023.  The top 5 sectors for each institution are set out in the table below.

In addition, CIETAC and SHIAC shared observations on emerging categories of disputes in 2023:

• CIETAC observed that the number of disputes in the finance, intellectual property and new energy sectors are growing, and that new types of disputes in relation to carbon emissions trading and environmental, social and governance (ESG) issues have emerged.
• SHIAC highlighted emerging disputes in relation to air transportation, new energy, e-commerce, high-tech industries, the digital economy, biomedicine and sport.

Virtual arbitration services

The statistics for online case filings and virtual hearings for each of CIETAC, SHIAC, SHAC and SCIA are summarised below.  BAC upgraded its online case system on 1 March 2024 and no specific statistics for virtual hearings were disclosed in its 2023 annual report.

Online case filings

There was an increase in online case filings in 2023, both in absolute terms and as a percentage of total cases registered:

* The figure for the number of online case filings given in SHIAC’s 2023 annual report represents a year-on-year increase of more than 600% and amounts to 110% of the total number of new cases.  The reasons are unclear.

Virtual hearings

The statistics in relation to virtual hearings were more mixed.  CIETAC, SCIA and SHA all reported falls in the number of virtual hearings.  In the case of CIETAC (the only institution for which a year-on-year comparison is possible), virtual hearings fell from 50% to 33% of all hearings.  SHIAC was the only institution to see an increase in the total number of virtual hearings.

These statistics are perhaps unsurprising in a post-pandemic environment and are consistent with international trends.  HKIAC, for example, experienced a substantial drop in the proportion of virtual hearings between 2022 and 2023 (as reported here).  At the same time, the proportion of virtual hearings is still significant (for example, 33% in the case of CIETAC and 43% in the case of HKIAC).  Although it may be too early to assess whether the downward trend will continue, the fact that a substantial proportion of hearings continue to be virtual after the lifting of pandemic-era restrictions may suggest that parties and tribunals increasingly recognise the convenience and efficiency offered by virtual hearings in appropriate circumstances.

The number of virtual hearings for SCIA, SHAC, CIETAC and SHIAC in 2022 and 2023 is set out below.  Where the necessary data is available, the percentage of total hearings which were virtual is also indicated (some institutions did not provide data on total hearing numbers in 2022 and/or 2023).

Looking ahead

A number of institutions shared their experience of handling ad hoc arbitrations in 2023.  SCIA Hong Kong handled two ad hoc arbitrations, SHIAC reported one case in which it was requested to provide assistance services under the UNCITRAL Arbitration Rules, and BAC handled one case under the UNCITRAL Arbitration Rules.  Although these numbers are currently small, it is notable that leading Mainland PRC institutions are building their experience of ad hoc arbitration, which remains prohibited for arbitrations with a Mainland PRC seat.  This experience will be helpful in the event that ad hoc arbitration with a Mainland PRC seat is permitted pursuant to the revisions of the PRC Arbitration Law which are currently under consideration by PRC lawmakers.

Significant revisions to the rules of CIETAC (reported here) and SHIAC (reported here) were introduced with effect from 1 January 2024.

Finally, SHIAC is planning to complete the establishment of the Shanghai International Arbitration (Hong Kong) Center as its sub-branch, joining the CIETAC Hong Kong Arbitration Center (which was established in September 2012) and SCIA Hong Kong (established in September 2019).  An inauguration event is scheduled to take place on 5 May 2024.

This article has been co-authored by Herbert Smith Freehills (in relation to non-PRC law matters only) and Herbert Smith Freehills Kewei, a joint operation between Herbert Smith Freehills LLP and Kewei Law Firm based in the Shanghai Free Trade Zone (which is exclusively responsible for any statements or commentary in relation to PRC law).

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The Hong Kong International Arbitration Centre (HKIAC) has released its new 2024 Administered Arbitration Rules (2024 HKIAC Rules), which will come into effect on 1 June 2024.

The new rules were announced on 3 May 2024 against the backdrop of the 2024 Congress of the International Council for Commercial Arbitration being held in Hong Kong from 5-8 May 2024.

They introduce a range of robust new powers and duties for tribunals and the HKIAC.  Many of these focus on maintaining the efficiency and integrity of the proceedings by combatting guerilla tactics and other obstacles to the swift and cost-effective resolution of disputes.  Diversity, environmental and information security considerations are also expressly addressed for the first time.

The publication of the new rules follows an extensive consultation process which provided users of HKIAC arbitration with the opportunity to comment on the proposed changes.  The revision process was guided by a committee of experienced practitioners which was chaired by Herbert Smith Freehills alumnus Briana Young and included two recent HKIAC Secretaries-General, Dr Mariel Dimsey and Sarah Grimmer.

Read on for the headline points, a detailed review of the changes, and commentary.  References in this post to Articles, Schedules and paragraphs are to the 2024 HKIAC Rules, unless otherwise indicated.

HEADLINE POINTS

• The tribunal has a new power to exclude a party’s proposed new legal representatives, and take any other necessary measure, in order to avoid a conflict of interest (Article 13.9).
• The HKIAC has a new power to take any measure necessary to preserve the efficiency or integrity of the arbitration (Article 13.10).
• In exceptional circumstances, the HKIAC can revoke the appointment of an arbitrator who is unable to fulfil their duties, as part of the general power mentioned above (Article 13.10).
• If deposits for costs are not paid in full, the HKIAC has the power, before the constitution of the tribunal, to suspend or cease to administer the arbitration (Article 41.4).
• The HKIAC also has new powers in relation to the determination, review and adjustment of the tribunal’s fees and expenses (paragraph 5 of Schedules 2 and 3).
• Diversity considerations must be taken into account by the HKIAC when appointing arbitrators, and the parties and co-arbitrators are encouraged to do the same when designating arbitrators (Article 9A).
• Environmental impact and information security must be taken into account by tribunals when adopting procedures for the conduct of the arbitration (Article 13.1), and the tribunal has new express powers in relation to the protection of information security (Article 45A).
• The tribunal’s power to determine preliminary issues and bifurcate proceedings is expressly confirmed (Article 13.6).
• The power of emergency arbitrators to make preliminary or interim orders (also known as “interim-interim” orders) pending the issuance of their emergency decision is expressly confirmed (paragraph 10 of Schedule 4).
• There is now a fixed time limit for the tribunal to declare the proceedings closed, namely, 45 days from the last directed submissions (Article 31.1).

DETAILED REVIEW OF CHANGES

Preliminary issues, bifurcation and sequential stages

• The tribunal is now expressly empowered to determine preliminary issues, bifurcate the proceedings, conduct the arbitration in sequential stages and decide the stage at which any issue or issues shall be determined (Article 13.6).  The tribunal’s discretion to adopt such procedures must be exercised in consultation with the parties.
• It was already widely accepted that HKIAC tribunals had such powers and they are widely adopted in practice.  The inclusion of express wording is a welcome clarification.
• The new language complements the existing early determination procedure, whereby tribunals have the power to dispose of points of law or fact where such points are manifestly without merit, beyond the tribunal’s jurisdiction, or could not (even if upheld) result in an award in favour of the party asserting them (Article 43 of each of the 2018 HKIAC Administered Arbitration Rules (2018 HKIAC Rules) and the 2024 HKIAC Rules).

Efficiency and integrity of arbitral process

• Many of the amendments are directed at maintaining the integrity and efficiency of the arbitral process.  There are new or clarified powers for the tribunal and the HKIAC in this area, as well as new obligations or responsibilities for the tribunal, the HKIAC and the parties.
• General power of HKIAC.  The HKIAC has a new general power to “take any measure necessary to preserve the efficiency or integrity of the arbitration” (Article 13.10).  This power must be exercised after consultation with the parties and the tribunal.
• Appointment and revocation of appointment of arbitrators.  The rules on appointment and revocation of appointment of arbitrators now expressly include considerations of efficiency and integrity (discussed below in the separate section headed “Arbitrators – number and appointment”).
• Changes of legal representation.  Where a party proposes to change or add to its legal representatives after the tribunal has been constituted, this must be communicated promptly to the other parties, the tribunal and the HKIAC (Article 13.8).  This represents a tightening of the previous rule, which only required notification once a change or addition had been made.  Where a proposed change in legal representation could result in a conflict of interest, the tribunal now has the power (after consulting the parties) to take any measure necessary to avoid a conflict of interest, including by excluding the proposed new party representatives from participating in the arbitration (Article 13.9).  Taken together, these changes provide tribunals with significant new tools to combat attempts by parties to derail the proceedings by engineering conflicts of interest through tactical changes in legal representation.
• Information security.  In adopting suitable procedures for the conduct of the arbitration, the tribunal is now expressly required to have regard to information security (Article 13.1).  The tribunal may give directions to protect the security of information shared, stored or processed during the arbitration (Article 45A.2), and may also make a decision, order or award in respect of any breach of the information security measures agreed by the parties or directed by the tribunal (Article 45A.3), in each case, after consulting with the parties.  These provisions reflect the increasingly widespread use of technology, including electronic bundles, cloud-based storage and services and virtual hearing platforms, in arbitral proceedings.
• Non-payment of deposits.  Where deposits for costs are not paid in full by the parties, the HKIAC has a new power, prior to the constitution of the tribunal, to suspend or cease to administer the arbitration (Article 41.4(a)).  After the constitution of the tribunal, the position remains unchanged from the 2018 HKIAC Rules: the tribunal may order the suspension or termination of the arbitration, or the continuation of the arbitration on such basis and in respect of such claim or counterclaim, as the tribunal considers fit (Article 41.4(b)).
• Expedited procedure.  It has been clarified that, where the expedited procedure applies, the tribunal shall decide the dispute on the basis of written submissions as well as documentary evidence (Article 42.2(e)).  The HKIAC may now extend the six-month deadline for the issuance of the award in an arbitration conducted under the expedited procedure in “appropriate” circumstances, a lower threshold than the “exceptional” circumstances required previously under the 2018 HKIAC Rules (Article 42.2(f)).  In addition, the expedited procedure may now be disapplied by the HKIAC at the request of the tribunal, and not only upon the request of a party (Article 42.3).
• Closure of proceedings.  The tribunal must declare the proceedings, or a discrete phase of the proceedings, closed: (i) when it is satisfied that the parties have had a reasonable opportunity to present their case (as previously required under the 2018 HKIAC Rules); and (ii) no later than 45 days from the last directed substantive oral or written submissions (excluding submissions on costs) (Article 31.1).  To the extent that specific proceedings are closed sooner than they otherwise would have been as a result of the new language, this should also result in speedier delivery of awards by tribunals, for which the default deadline continues to be 3 months from the closure of proceedings (Article 31.2).

Arbitrators – number and appointment

• Proposals on number of arbitrators.  Proposals by the parties as to the number of arbitrators made in the Notice of Arbitration and Answer to Notice of Arbitration are now expressly required to be reasoned (Article 4.3(g) and Article 5.1(e)).  This change essentially reflects existing practice.
• Confirmation of appointment.  When confirming the appointment of arbitrators, the HKIAC shall take into account any factors that may affect the efficiency or integrity of the arbitration (Article 9.3).
• Revocation of appointment.  In exceptional circumstances, the HKIAC may revoke the appointment of an arbitrator who is unable to fulfil their duties, as part of the general power to take measures necessary to preserve the efficiency or integrity of the arbitration (Article 13.10).  This new power is in addition to the existing provision for parties to challenge arbitrators in such circumstances (Article 11.6 of each of the 2018 HKIAC Rules and the 2024 HKIAC Rules).  Accordingly, it appears to provide the HKIAC with the ability, in exceptional cases, to take the initiative and revoke the appointment of an arbitrator even where there has been no challenge to that arbitrator by the parties.  The HKIAC must, however, consult with both the parties and the tribunal before exercising this power.
• Designation and appointment in multi-party and multi-contract scenarios.  There are new provisions in relation to the waiver of the right to designate an arbitrator, and the power of the HKIAC to revoke previous appointments and appoint the tribunal, in certain multi-party and multi-contract scenarios (as discussed below).

Arbitrators – fees and expenses

• Review and determination of tribunal fees and expenses.  In cases where the remuneration of the tribunal is based on hourly rates, the HKIAC is now empowered to review and adjust the fees and expenses of the tribunal where it considers it appropriate in the circumstances (paragraph 5.1 of Schedule 2).  Where the remuneration of the tribunal is based on the sum in dispute, the HKIAC now has the final say in determining the amount of fees and expenses to be paid, taking into account factors such as the work done by the tribunal and the complexity of the subject matter (paragraph 5 of Schedule 3).  These are significant new powers which will enable the HKIAC to ensure that tribunal fees appropriately reflect the specific circumstances of each case and to take appropriate action in those rare cases in which there are concerns or questions (whether raised by one or more parties, or otherwise) about the level or nature of tribunal fees.  While the new powers to reduce tribunal fees can be expected to be used sparingly in practice, their inclusion represents an important “safety valve” which should help to maintain the confidence of users in the integrity of arbitration as a dispute resolution mechanism.
• Model clause language on fees and expenses.  The model arbitration clause included with the 2024 HKIAC Rules includes new optional drafting with which the parties can stipulate whether the fees and expenses of the tribunal shall be determined on the basis of hourly rates or the sum in dispute.  The default position in the absence of such language is that the parties shall agree the method for determining the fees and expenses within 30 days of the receipt by the Respondent of the Notice of Arbitration, failing which the tribunal’s fees and expenses shall be determined on the basis of hourly rates (Article 10.1).  The intention of the new model language therefore appears to be to reduce the scope for additional expense and distraction to parties which can arise where there is disagreement, after a dispute has arisen, as to which method to adopt.

Multi-party and multi-contract provisions

• Prima facie requirement for single arbitration under multiple contracts to proceed.  Where a party seeks to make claims under multiple contracts in a single arbitration, there is now express language to clarify that the arbitration will only be permitted to proceed if the HKIAC is satisfied, prima facie, that the single arbitration under multiple contracts has been properly commenced in accordance with the requirements of Article 29 (Article 29.1, referencing Article 19.5).
• Single arbitration under multiple contracts – designation and appointment of arbitrators.  Where the HKIAC determines that a single arbitration under multiple contracts has been properly commenced under Article 29, the parties will be deemed to have waived their rights to designate an arbitrator, and the HKIAC will appoint the tribunal with or without regard to any party’s designation (Article 29.2).  This change ensures consistency with the provisions on consolidation of arbitrations, which already include such language (Article 28.8 of each of the 2018 HKIAC Rules and the 2024 HKIAC Rules).
• Joinder – designation and appointment of arbitrators.  Where an additional party is joined to the arbitration at any stage in the proceedings, the HKIAC may revoke any confirmation or appointment of an arbitrator and appoint the tribunal with or without regard to any party’s designation (Article 27.13).  Previously, the HKIAC had this power only where joinder occurred before the tribunal was constituted.

Emergency arbitrator powers

• Interim-interim orders.  An emergency arbitrator now has the express power to make “any preliminary or interim order” they deem necessary before making their emergency decision (paragraph 10 of Schedule 4).  This helpful clarification confirms the ability of emergency arbitrators to grant urgent interim relief pending their “main” emergency decision.
• Emergency decision after transmission of case file to tribunal.  It has been clarified that an emergency arbitrator may proceed with the emergency arbitration proceedings and render their decision within the mandated time period (namely, 14 days from the date on which HKIAC transmitted the case file to the emergency arbitrator), even if the case file has been transmitted to the main arbitral tribunal in the meantime (paragraphs 12 and 13 of Schedule 4).  It remains the case that the emergency arbitrator has no other power once the tribunal is constituted (paragraph 14 of Schedule 4).

Diversity, inclusion and environment

• Diversity and inclusion.  The parties and co-arbitrators are encouraged to take considerations of diversity into account when designating arbitrators, and the HKIAC is obliged to take such considerations into account when appointing arbitrators (Article 9A).  In the press release for the launch of the 2024 HKIAC Rules, the HKIAC noted that this provision is consistent with its commitment to improving diversity in arbitral appointments, including as a signatory since 2016 to the ERA Pledge for Equal Representation in Arbitration.  The HKIAC joins a growing group of institutions which include diversity-related language in their rules or guidance on arbitrator appointments (as discussed previously here).  Other examples include: the ICC (paragraph 40 of the ICC Note to National Committees and Groups on the Proposal of Arbitrators); the Belgian Centre for Arbitration and Mediation (CEPANI) (Article 15 of the CEPANI Rules); and the Scottish Arbitration Centre (SAC) (Article 8.1 of the SAC Rules).  The Singapore International Arbitration Centre (SIAC) has also consulted on the proposed inclusion of such language in the upcoming 7^th edition of the SIAC Rules (Article 19.5 of the consultation draft).
• Environmental impact.  The tribunal is now expressly required to have regard to environmental impact when making directions for the conduct of the arbitration (Article 13.1), and to take account of any adverse environmental impact when deciding whether the costs of the arbitration are reasonable and whether and how to apportion costs (Article 34.4).  With environmental, social and governance (ESG) issues increasingly pervading the business environment, these provisions respond to expectations of users that arbitral institutions and tribunals should actively take account of such considerations.  For additional background on the ESG landscape in arbitration, see the keynote lecture delivered by Justin D’Agostino, CEO of Herbert Smith Freehills, at the Edinburgh International Arbitration Festival in September 2023.

Costs

• Factors relevant to apportionment of costs.  There is now a non-exhaustive list of factors which the tribunal must take into account when exercising its discretion to apportion costs (Article 34.4).  In addition to the existence of any third party funding arrangement (which was a stand-alone factor in the 2018 HKIAC Rules), the 2024 HKIAC Rules now add: the relative success of the parties; the scale and complexity of the dispute; the conduct of the parties; the existence of any outcome-related fee structure agreement (following the legalisation of such arrangements for arbitration in Hong Kong with effect from 16 December 2022, discussed here); and (as noted above) any adverse environmental impact.
• Emergency arbitration costs.  The reasonable costs of emergency arbitration proceedings are now expressly included in the definition of the “costs of the arbitration” to be determined and apportioned by the tribunal (Article 34.1(e)).  This is a clarification of the existing position, since the detailed provisions on emergency arbitration set out in Schedule 4 already made clear that the tribunal had this power (paragraph 15 of Schedule 4 to the 2018 HKIAC Rules and paragraph 16 of Schedule 4 to the 2024 HKIAC Rules).

Scope of application

• The 2024 HKIAC Rules apply in full to all relevant arbitrations commenced from 1 June 2024 (unless otherwise agreed by the parties).  Relevant arbitrations are those commenced pursuant to arbitration agreements providing for (i) the HKIAC Administered Arbitration Rules to apply or (ii) arbitration “administered by HKIAC” or words to similar effect.
• There is no longer any “saving language” disapplying certain limited provisions in the case of arbitration agreements concluded before certain dates.
• Although the 2018 HKIAC Rules generally applied to arbitrations commenced from 1 November 2018, they included certain potentially significant carve-outs (Articles 1.4 and 1.5 of the 2018 HKIAC Rules).  First, provisions on early determination and certain aspects of the emergency arbitration regime (relating to the ability to apply for the appointment of an emergency arbitrator prior to the filing of the notice of arbitration) were disapplied in the case of arbitration agreements concluded before 1 November 2018.  Second, provisions on emergency arbitration, consolidation, and single arbitration under multiple contracts were disapplied in the case of arbitration agreements concluded before 1 November 2013, the date on which the previous version of the rules had come into effect.
• The rationale for these carve-outs was to account for the fact that parties might have chosen HKIAC arbitration prior to the introduction of the provisions mentioned above.  Those provisions had a potentially significant impact on various rights and interests of parties, including in certain cases on the right of parties to designate arbitrators.  Accordingly, the default position was that they would not apply where the arbitration agreement had been concluded before they came into effect.
• The relevant provisions have now been in force for a significant period and are well-established and understood, having gained widespread acceptance and popularity amongst users of HKIAC arbitration.  Against that backdrop, and presumably taking account of its own data on the number of cases in which the carve-outs were relevant, the HKIAC appears to have taken the view that it was appropriate to remove them and simplify the position under the 2024 HKIAC Rules.

COMMENT

The HKIAC stated when it launched the public consultation that the 2018 HKIAC Rules have been working well since they came into effect more than five years ago.  Accordingly, the 2024 HKIAC Rules were not intended to be a comprehensive “overhaul”, and the overall structure and approach of the 2018 HKIAC Rules remain in place.

At the same time, the 2024 HKIAC Rules represent a significant update which arguably goes beyond the mere fine-tuning of the existing provisions.  The changes fall into three main categories:

1. Provisions which create significant new powers and duties.  These include, for example: the power of the tribunal to “veto” proposed changes in legal representation in order to avoid a conflict of interest; the power of the HKIAC in exceptional circumstances to revoke the appointment of an arbitrator who is unable to fulfil their duties; the incorporation of diversity, environmental and information security considerations; and the power of the HKIAC to review and adjust the fees and expenses of the tribunal.  These are innovative provisions which genuinely “push the envelope” in order to address key concerns within the arbitration community around issues such as efficiency and cost-effectiveness, the increasing use of guerilla tactics, diversity, the environment and the use of technology.  They therefore represent an important contribution to the maintenance of confidence in, and the integrity of, arbitration as a system of dispute resolution which remains fit for purpose in a rapidly changing global environment.
2. Provisions which extend, supplement or update existing powers and duties.  Examples include: the new power of the HKIAC, prior to the constitution of the tribunal, to suspend or terminate the arbitration if deposits for costs are not paid (extended from a power of the tribunal only, once constituted); the provision of a specific deadline for the closure of proceedings by the tribunal (extended from the more general provision under the 2018 HKIAC Rules described above); and the provision of a non-exhaustive list of factors which the tribunal must take into account in relation to costs (amplifying the tribunal’s existing discretion in relation to costs).  These provisions represent an important effort on the part of the HKIAC to refine and improve existing provisions, with a view to maintaining efficiency and integrity, and further improving processes, in HKIAC arbitrations.
3. Provisions which essentially codify or confirm existing powers, duties and practices.  These include, for example: the express confirmation of the tribunal’s power to determine preliminary issues and bifurcate the proceedings; the clarification that emergency arbitrators may make “interim-interim” orders pending the issuance of their decision; the power of the tribunal to give directions in relation to information security; and the requirement for proposals by the parties as to the number of arbitrators to be reasoned.  These provisions arguably do not create additional powers or duties, and can be seen as useful clarifications “for the avoidance of doubt”.  They help to make the rules more user-friendly and accessible, and reduce the scope for disputes as to the existence or extent of tribunal powers in relation to particular points.

Taken together, the changes represent a significant and welcome package of enhancements.  It is particularly notable that many of the key changes involve new or clarified powers and duties for tribunals and the HKIAC.  The way in which these and other new provisions operate in practice, as well as the response of users to the new rules, will no doubt be closely observed by the HKIAC and the wider Hong Kong arbitration community.

Simon Chapman KC

Partner, Head of Asia Disputes

+852 2101 4217

Kathryn Sanger

Partner

+852 2101 4029

Antony Crockett

Partner

+852 2101 4111

Helen Tang

Partner

+86 186 2137 8873

Dana Kim

Partner, Global Co-Chair of Korea Group

+852 2845 6639

Murphy Mok

Partner

+852 2101 4224

Martin Wallace

Professional Support Consultant

+852 6388 2660

Ken Yeung

Associate

+852 2101 4228

In a significant decision in Arif Azim Co. Ltd. v. Aptech Ltd. 2024 INSC 155, the Supreme Court of India (Court) has clarified the applicability of the law of limitation to applications made to courts for the appointment of arbitrators under Section 11(6) of the Indian Arbitration & Conciliation Act, 1996 (Arbitration Act) when the agreed appointment mechanism fails, or a party fails to act in accordance with agreement.

The Court found that parties have a period of three years, calculated from the date when the respondent fails to comply with the agreed appointment procedure on receipt of a valid notice invoking arbitration, to apply to the courts for appointment of arbitrators. Failure to do so could mean that parties are left without recourse to pursue the substantive claims in arbitration.

The Court also considered the scope of its power to examine whether the substantive claims in respect of which arbitration has been commenced are within limitation while dealing with such applications. The Court found that courts could refuse to appoint an arbitrator where “the claims are ex-facie and hopelessly time-barred“. The Court held that although limitation “is an admissibility issue“, it is “the duty of the courts to prima-facie examine and reject non-arbitrable or dead claims“.

The Court also observed that a limitation period of three years for filing an application to appoint arbitrators is unduly long and goes against the spirit of the law, which is aimed at expeditious resolution of commercial disputes. The Court recommended that the Parliament of India consider providing a specific limitation period for such applications by way of a legislative amendment.

Background

The petitioner, a company based in Kabul, Afghanistan, filed an application for appointment of an arbitrator in its dispute with the respondent, an Indian company, having invoked arbitration in respect of the dispute. The dispute arose under one of three franchise agreements between the parties under which the respondent granted a non-exclusive licence to establish and operate an English language training academy and involved a claim by the petitioner for non-payment of royalty and renewal fees. The petitioner invoked arbitration pursuant to an arbitration agreement providing for an ad hoc arbitration in India and, when the respondent refused to appoint an arbitrator as per the agreed procedure, the petitioner approached the Court under Section 11(6) of the Arbitration Act.

The respondent argued before the Court that the dispute was barred by limitation, arbitration having been invoked more than three years after the dispute arose. The respondent also claimed that the petitioner had not acted with vigilance in protecting its rights and thus, its application for appointment of an arbitrator should be rejected.

In the context of these arguments, the Court framed the following questions for consideration:

1. Whether the Indian Limitation Act, 1963 (Limitation Act) is applicable to an application for appointment of arbitrator under Section 11(6) of the Arbitration Act? If yes, whether the petition before it was barred by limitation?
2. Whether the court may refuse to make a reference to arbitration (by appointing arbitrators) when approached under Section 11 of the Arbitration Act where the claims are ex facie and hopelessly time-barred?

Decision of the Court

Applicability of the Limitation Act to an Application under Section 11(6) of the Arbitration Act

The Court examined the statutory framework and previous cases and concluded that the Limitation Act was applicable to arbitration proceedings and, also, to applications under Section 11 (6) of the Arbitration Act for appointment of arbitrators. According to the Court, under the Limitation Act, parties have a three-year period from the date when the right to apply accrues to file applications under Section 11(6) of the Arbitration Act.

In respect of applications under Section 11(6) of the Act, the Court concluded that the “right to apply” would accrue when there is a failure or refusal on the part of a party to make an appointment as per the agreed procedure pursuant to a valid notice invoking arbitration issued by one of the other parties.

Courts’ power to refuse applications for appointment of an arbitrator where substantive claims are time-barred

In addition to finding that the application under Section 11(6) of the Arbitration Act was made well within the limitation period, the Court considered its power to refuse such applications where substantive claims sought to be arbitrated are obviously barred by limitation. Although the Court acknowledged that the issue of limitation was one of admissibility (relating to the nature of the claim) rather than one of jurisdiction (relating to the power and authority of the arbitrators to decide a claim), it found that it had a duty to “prima-facie examine and reject non-arbitrable or dead claims, so as to protect the other party from being drawn into a time-consuming and costly arbitration process“. The Court observed that this power is to be used exceptionally and as circumscribed by the “eye of the needle” test referred to in the previous case of NTPC Ltd. v SPML Infra Ltd. 2023 9 SCC 285. This test, as the Court in NTPC explained, advocates “limited scrutiny, through the eye of the needle“, is “necessary and compelling” and is intertwined with the duty of the Courts to protect parties from being forced to arbitrate non-arbitrable matters and, also, to prevent wastage of resources,both public and private.

Applying these findings to the facts of the case, the Court found that neither the application for appointment of arbitrator nor the substantive claim was barred by limitation and proceeded to appoint an arbitrator.

Relevance of the decision

This important decision provides certainty to parties regarding limitation issues that arise at the stage of appointment of arbitrators. However, the Court’s conclusion that there should be an examination of the substance of the claims to answer questions of limitation is the latest in a string of recent cases that mark a clear shift towards an increased scope of review by the Court while exercising its powers under Section 11(6) of the Arbitration Act that goes beyond an examination of the existence of an arbitration agreement, the standard prescribed by the Arbitration Act. Whether the law develops to further expand the scope of review by the Court at the stage of appointment of an arbitrator and, consequently, the impact on timelines for such applications, remains to be seen.

For more information, please contact Andrew Cannon, Co-Head, Global Arbitration Practice, Anuradha Agnihotri, Of Counsel, or your usual Herbert Smith Freehills contact.

Andrew Cannon

Co-Head, Global Arbitration Practice

+44 20 7466 2852

Anuradha Agnihotri

Of Counsel

+44 20 74663915

The authors would like to thank Praveena NS for her contribution to this blog post. 

Now in its fifth year, the much-anticipated London International Disputes Week (LIDW) 2024 will be taking place on 3-7 June 2024, bringing together legal experts from around the globe to engage in insightful discussions on the key trends, themes and talking points in the dispute resolution world. The theme for LIDW24, “Uniting for global challenge and opportunity” will follow up on last year’s theme “Adapting to a changing world” and look not only at what progress has been made in the dispute resolution world over the last year, but also at what we can expect over the next year and beyond. What does the year ahead hold for the global dispute resolution community?

Complementing the LIDW Main Conference on 4 June, Herbert Smith Freehills is delighted to be co-hosting a number of member hosted events throughout the week, with speakers from our International Arbitration team joining panels as part of the International Arbitration Day. You can register for these events via the links below:

3 June, 08:30 – 18.30: International Arbitration Day 

The International Arbitration Day will be hosted across three different locations and will ‘follow the arbitration disputes sun’ across key regions and jurisdictions. The full agenda (and registration for the panels throughout the day) can be found on the LIDW event portal here.

5 June, 16:00 – 17:30 Strong bonds or broken ties? Navigating JVs in Africa’s dynamic markets

Hosted at Herbert Smith Freehills’ London office – MAP

In this discussion, we will discuss key factors that increase B2B risks in Africa. We will explore the importance of selecting the right partners and managing stakeholders, strategies for anticipating and managing those risks, drawing on expertise from arbitration, litigation and asset tracing specialists. We will also share recent case studies to give you a real-world understanding of these issues. Join us for an insightful exploration of risk and dispute resolution in Africa’s dynamic markets.

Member hosts: Herbert Smith Freehills, Control Risks – Register here

6 June, 09:00 – 10:30 Crisis-Ready or Crisis-Prone? Scrutinising International Law and Dispute Resolution mechanisms

Hosted at Herbert Smith Freehills’ London office – MAP

This event will explore the critical question: Has international law and the mechanisms offered by it risen to meet the challenge? Our panel of International Law experts will engage in a dynamic discussion on the growing wave of participation in international courts and the procedural mechanisms being employed, the role of the International Court of Justice (ICJ) and the ever-increasing demands and expectations placed upon it, the standing of state actors and the role and relevance of non-state actors.

Member hosts: Herbert Smith Freehills, Twenty Essex – Register here

6 June, 14:00 – 15:30 From India to the World: rethinking approaches to multi-party and multi-contract arbitration

Hosted at Herbert Smith Freehills’ London office – MAP

Multi-party and multi-contract arbitrations present unique challenges that can hinder the swift and effective resolution of disputes. When multiple contracts are part of a larger transaction and involve claims and counterclaims under different contracts; leading to interrelated claims and counterclaims, consolidating these into a single arbitration process is often preferable. However, traditional principles like privity of contract often obstruct this streamlined approach. In a December 2023 ruling, the Indian Supreme Court advocated for “a modern and pragmatic approach to consent” within the realm of arbitration. A panel of leading international arbitration practitioners will dissect the implications of the Supreme Court’s decision and debate its potential to herald a new international standard for addressing these challenging issues. The panel will offer a convergence of global insights and explore cutting-edge solutions.

Member hosts: Herbert Smith Freehills, the Mumbai Centre for International Arbitration – Register here

About LIDW:

Herbert Smith Freehills is a proud Founding Member of London International Disputes Week (LIDW) – a forward-thinking forum for the disputes community active in London, aiming to drive the future of international dispute resolution. Using London’s position as a major international seat for the dispute resolution business, LIDW24 will engage with international perspectives across all sectors and explore how the industry can adapt, evolve and progress.

Contact

For further information, please contact Paul McKeating, Susanna Barkat or Vanessa Naish.

Paul McKeating

Senior Business Development Manager, Disputes

Susanna Barkat

Business Development Manager, Disputes

Vanessa Naish

Professional Support Consultant

In the case of Republic of Kosovo v ContourGlobal Kosovo LLC [2024] EWHC 877 (Comm), the English High Court (the High Court) has rejected a challenge by the Government of Kosovo (Kosovo) to an arbitral award on the grounds of serious irregularity, pursuant to Section 68 of the Arbitration Act 1996 (the Act). The final award was issued by a London seated ICC tribunal (the Tribunal), which held Kosovo liable to pay ContourGlobal Kosovo LLC (CKL) sums in excess of 20 million euros.

Section 68(2)(a) of the Act provides that an arbitral award can be set aside if an arbitral tribunal fails to comply with Section 33 of the Act, amounting to a “serious irregularity”, that causes “substantial injustice” to a party. Section 33 in turn requires that a tribunal must act fairly and impartially between parties, giving each party a reasonable opportunity to put its case, and to adopt procedures which provide a fair means for the resolution of the issues in dispute.

Kosovo argued that the Tribunal failed to comply with Section 33 of the Act, on the basis that the Tribunal had referred to certain deficiencies in the quantum evidence on record in a procedural order issued following the substantive hearing on the matter, but had not provided Kosovo with the opportunity to make further submissions on quantum in the light of this.  Instead, the Tribunal had issued a final award in favour of CKL. Kosovo alleged that the Tribunal accordingly contravened Section 33, amounting to a “serious irregularity“, thereby giving rise to grounds to set aside the award pursuant to Section 68(2)(a) of the Act.

The High Court dismissed Kosovo’s challenge, once again demonstrating that a challenging party must overcome a significant hurdle in order to successfully challenge an arbitral award for serious irregularity under Section 68.

Background

The arbitration arose out of a series of contracts pursuant to which CKL was to design, construct and maintain a power plant in Kosovo. Kosovo failed to perform certain conditions precedent under one of the agreements, as a result of which CKL terminated the agreements and claimed the contractual cap of up to €19.7 million of its development costs from Kosovo. Kosovo declined to pay the sums claimed, maintaining that it was not liable to CKL, and the dispute was accordingly referred to arbitration.

In the arbitration, Kosovo disputed both liability and quantum. Specifically in relation to quantum, Kosovo claimed that CKL failed to prove that it had incurred the development costs which it had claimed. For its part, CKL relied on quarterly summaries between August 2018 and April 2020 to prove that it had incurred the development costs, while Kosovo challenged this evidence and requested that CKL produce a variety of documents in relation to the issue of quantum. CKL then produced 1,577 invoices in response.

Throughout the arbitration, Kosovo maintained that CKL failed to prove the quantum it sought and argued that there were discrepancies between the quarterly summaries on which CKL relied and the invoices which had been produced.

Following the substantive hearing, the Tribunal issued a procedural order (PO5) which was concerned with the production of additional documents. The Tribunal stated in PO5, among other things, that it had not reached any decision on either the liability or the quantum issues raised in the case. On the quantum issues, the Tribunal remarked that the evidence and analysis was “not sufficiently complete” and that the Tribunal “may decide to appoint an expert to investigate and report on those matters pursuant to Article 25(3) [of the ICC Rules of Arbitration]. If so, the Tribunal will consult with the parties regarding the terms of reference for such an expert and the identification of an appropriate expert”. Following this, the Tribunal issued another procedural order (PO6) which, among other things, reiterated this point.

Thereafter, the Tribunal proceeded to issue its final award, finding in favour of CKL on both liability and quantum.

Kosovo’s Challenge

Kosovo argued that the language of PO5 (as emphasised by PO6) created a reasonable expectation that the Tribunal “would not proceed to determine the quantum issue without further evidence or submissions“. Kosovo argued that in issuing its award without the benefit of such further evidence, the Tribunal breached its obligations under Section 33 of the Act.

Kosovo submitted that in order to comply with its duty to act fairly under Section 33(1)(a), there were only three alternatives available to the Tribunal after issuing PO5: (i) dismissing CKL’s claim for damages, (ii) appointing an expert, or (iii) summoning the parties to provide further evidence or submissions.

The High Court’s Decision

The Serious Irregularity Issue

The High Court rejected Kosovo’s interpretation of PO5. It asserted that a fair and reasonable reading of the text of PO5 made it clear that the Tribunal had not made any decision on either liability or quantum, and indeed this message was repeated in PO6.

The High Court emphasised that in interpreting procedural orders, the language used must be interpreted in a “reasonable and commercial way” considering “what a reasonable person, reading that paragraph in its relevant context, would have concluded the Tribunal was saying” rather than trying to find “technical inconsistencies and faults”.

The High Court held that through the relevant wording in PO5 and PO6, the Tribunal was merely reserving its right to appoint an expert should that be necessary when considering the quantum issues that arose before it. Nothing said in either PO5 or PO6 could reasonably justify the conclusion Kosovo was attempting to draw, to the effect that the Tribunal had decided that it could not proceed further on the quantum issue without additional evidence or submissions.

Additionally, the reference in PO5 to the insufficiency of evidence and analysis in relation to the development costs did not further Kosovo’s argument. The High Court held that this was a reference to a point made by a member of the Tribunal during closing arguments that the Tribunal would itself be required to complete the analysis. The appointment of an expert to carry out this analysis on behalf of the Tribunal was merely a suggestion – one way for the Tribunal to reserve its position regarding the appointment of an expert, and to notify the parties as to how it would proceed should it decide to do so. On that basis, the High Court also rejected the argument that the Tribunal should have notified Kosovo that it would depart from PO5.

The High Court further remarked that the Tribunal, which was comprised of experienced arbitrators, could not reasonably have intended to determine a quantum claim, which it expressly stated it had not decided at the time, through a single paragraph in a procedural order. Indeed, the Tribunal addressed the quantum issues comprehensively during the arbitration and in its award, and in dismissing Kosovo’s challenge, the High Court noted that it appeared to be an “after-the-event construct”.

Substantial Injustice

The High Court considered the substantial injustice limb of the test under Section 68 only in obiter, as it had already rejected Kosovo’s challenge. It commented that, in order for Kosovo to satisfy this requirement, it must have shown what the alternative outcome would have been had the Tribunal acted as Kosovo argued that it should have. In that regard, it noted that Kosovo had not set out what additional evidence or submissions it would have presented to the Tribunal to further support its analysis of the quantum issue, had the Tribunal given the parties the opportunity to do so. It was therefore “entirely unreal” to suggest that if the Tribunal had obtained the additional evidence in question, the consequence would have been the dismissal of the quantum claim in the arbitration.

Comment

This decision is another reminder of the significant threshold which parties must meet to successfully challenge an arbitral award under Section 68 of the Act. The High Court has once again confirmed the non-interventionist approach adopted by English courts in respect of London seated arbitrations, notably reminding parties that court intervention under the Act will only be justified in “extreme cases”, where the conduct of arbitration is so far removed from what can reasonably be expected from a just and fair arbitral process.

It is often the case that Section 68 challenges are founded upon allegations that the Tribunal has failed to take proper account of evidence, including that it has not taken into account additional evidence that may have been important in its decision.  Such challenges are very rarely successful, underlining the wide discretion granted to the Tribunal under Section 34(1) of the Act, which provides that “[i]It shall be for the tribunal to decide all procedural and evidential matters, subject to the right of the parties to agree any matter.”

Finally, the case also underlines the importance of giving careful consideration to the “counterfactual” scenario in order to satisfy the substantial injustice test in a Section 68 challenge: even if something has gone badly wrong in the arbitration, can it be shown that the outcome would have been substantially different had it been done correctly?

For more information, please contact Craig Tevendale, Partner, Arushie Marwah, Associate (India), or your usual Herbert Smith Freehills contact.

Craig Tevendale

Partner

Arushie Marwah

Associate

The authors would like to thank Wajih Jaroudi for his contribution to this blog post. 

Introduction

On 18 April 2024, the Ruler of Dubai established the new Judicial Authority for Resolving Jurisdictional Conflicts between the DIFC Courts and the Judicial Bodies in the Emirate of Dubai (the “New Judicial Authority”). The New Judicial Authority was established by Dubai Decree no. 24 of 2024 (the “New Decree“), and replaced the previous authority, the Joint Judicial Committee (the “JJC”), established by Dubai Decree no. 19 of 2016 (the “Old Decree”).

In what is a major departure from its part-judicial and part-advisory role, the New Judicial Authority is now tasked with a more definitive mandate: to focus solely on being the final arbiter of jurisdictional conflicts in Dubai. As its name suggests, the New Judicial Authority’s purview extends beyond the DIFC Courts and the Dubai Courts, and its decisions now carry significant implications for litigants in the Emirate.

This development is particularly noteworthy for international arbitration practitioners and parties, as it could potentially impact the enforcement of international arbitral awards in Dubai, a key global hub for international business and dispute resolution.

We explore the key changes introduced by the New Decree, below.

Scope

Unlike the previous authority, the New Judicial Authority is no longer responsible for making proposals to the President of the Judicial Council as to the rules and regulations required to avoid conflicts of jurisdiction, or opinions on matters relating to the cooperation and coordination between the Dubai Courts and the DIFC Courts. This is partly due to the JJC’s progress in curtailing the use of the DIFC as a conduit jurisdiction, which previously allowed some award creditors to seek the recognition of onshore non-DIFC awards in the DIFC despite lacking any connection to the DIFC.

Instead, the New Judicial Authority’s sole focus is on resolving jurisdictional conflicts between the DIFC Courts and any “Judicial Bodies”.  “Judicial Bodies” is a new defined term that encompasses the Dubai Courts, the Rental Disputes Resolution Centre, the Judicial Committees that are formed by decree or a decision of the Ruler or the Chairman, and other bodies that are deemed as judicial authorities in Dubai. By contrast, the JJC’s scope was limited to jurisdictional conflicts between the DIFC Courts and the Dubai Courts.

Accordingly, the New Judicial Authority is expected to have a greater case load than the JJC and the body of jurisprudence is also anticipated to grow.

Composition

Despite the added responsibility of resolving jurisdictional conflicts in relation to other “Judicial Bodies”, the New Judicial Authority continues to be made up of the Secretary General of the JJC and three judges from each of the Dubai Courts and the DIFC Courts.

However, the Deputy Chief Justice of the DIFC Courts is now appointed as the Deputy Chairman under the New Decree (a position which did not exist under the Old Decree), and the President of the Court of Cassation in the Dubai Court remains as the Chairman. Further, the two judges selected by the Chief Justice of the DIFC Courts (to be members of the New Judicial Authority) no longer need to be from the Court of First Instance and the Court of Appeal, respectively.

These changes appear to be aimed at addressing the challenges associated with the potential increase in the New Judicial Authority’s caseload.

Implications of the New Judicial Authority’s decisions

Another major change introduced by the New Decree is the adoption of a common law style precedents system for the New Judicial Authority’s decisions.

Article 9(c) of the New Decree provides that the legal rules prescribed by the New Judicial Authority in its decisions are to be deemed as judicial principles which will be binding on all Judicial Bodies, including the DIFC Courts. A judgment rendered in contravention of such judicial principles is recognised as a ground to appeal. The adoption of a form of binding precedent is an interesting development in a civil law jurisdiction such as the Emirate of Dubai.

In terms of the timeframe for decisions, whereas the JJC was required to issue a final decision within thirty working days from the date of application, the New Decree does not prescribe any timeframe for the New Judicial Authority to do so, although the implementing regulations may further clarify this point.

Key takeaways

The apparent objective behind the introduction of the New Judicial Authority – to provide greater predictability for businesses as to the proper forum for resolving their disputes which have a connection to Dubai is an important one and the New Decree should help to achieve that, due to the wider remit of the New Judicial Authority and the introduction of a system of precedent.

Litigants should pay close attention to the New Judicial Authority’s decisions. The judicial principles set out in their decisions will form a body of binding precedent on jurisdictional conflict and can only be re-tested before the New Judicial Authority in a different case, with no option to appeal in the Courts or Judicial Bodies of the jurisdiction where the substantive dispute takes place.

Litigants should also think twice before commencing parallel proceedings, as the automatic stay applied to such proceedings while the New Judicial Authority resolves the jurisdictional conflict could remain in place for an extended period, potentially beyond the 30 days prescribed by the Old Decree.

For further information, please contact Stuart Paterson (Partner), Nick Oury (Partner), Jason Han (Associate), Rania Mostafa (Paralegal) or your usual Herbert Smith Freehills contact.

Stuart Paterson

Partner

+971 4 428 6308

Nick Oury

Partner

+971 4 428 6385

Jason Han

Associate

+971 4 428 6370

Rania Mostafa

Paralegal

+971 4 428 6382

An arbitrator ordered a party to pay certain sums to the counterparty if the counterparty proved sufficiently that it had incurred those expenses.  Could the arbitrator reopen the case later to decide if the condition had been satisfied?

Singapore’s Court of Appeal decided in Voltas Ltd v York International Pte Ltd [2024] SGCA 12 that a conditional award will be considered final if it disposes of all remaining claims in the arbitration. A tribunal is then unable to reopen the case and to issue a further award.  If a tribunal wishes to reserve its jurisdiction to revisit an award already rendered, it must do so expressly as the court will not imply such a reservation.

The conditional award

An arbitrator issued an award in 2014 in a dispute over the quality of five water-cooled dual centrifugal chillers. The arbitrator decided that the claimant (York) was liable to pay certain sums to the Respondent (Voltas) on condition that Voltas could demonstrate later that it had in fact paid those sums to a third party (they had not been paid at the time the award was issued).

However, the Final Award did not specify precisely how this condition could be satisfied.

From 2015 to 2018, Voltas demanded payment of those amounts from York. However, York refused to pay, claiming that there was insufficient evidence of the third party having been paid.

Voltas then applied to the arbitrator for a further award (“Further Award Application“). In a Ruling on Jurisdiction issued in August 2021, the arbitrator decided that he was not functus officio and retained jurisdiction to make the further award. The arbitrator considered that he had not yet determined the precise quantum due from York to Voltas and that the issues raised in the Further Award Application fell within the scope of reference to the arbitration.

York then applied to the Singapore Court under s 21(9) of the Arbitration Act 2001 (“AA“) for an order that an arbitrator lacked jurisdiction to make a further award. The application succeeded.  Voltas appealed to the Court of Appeal.

Conditional awards can constitute a final award

The Court of Appeal began by referring to its decision in PT Perusahaan Gas Negara (Persero) TBK v CRW Joint Operation [2015] 4 SLR 364, where it had held that the term “final award” could be understood in three ways:

1. An award which resolves a particular claim or matter in an arbitration with preclusive effect, such that the same claim or matter cannot be re-litigated.
2. An award which has achieved a sufficient degree of finality under the laws in the arbitral seat, such as where the award is granted ‘confirmation or exequatur’ or can no longer be appealed against or subject to annulment proceedings.
3. An award which disposes of all remaining claims (this being the sense used in Article 32(1) of the Model Law, ‘Termination of Proceedings’).

In the context of a conditional award, the Court of Appeal held that the “key inquiry is whether the conditions in such an award make it necessary for the tribunal to reopen or reconsider the matter. A conditional award may constitute a final award if it disposes of all outstanding claims and if an enforcement court will be able to assess whether the conditions in the award have been satisfied” (at [42]).

Undertaking the inquiry in this case, Sundaresh Menon CJ noted that the substance of the dispute had already been decided in the 2014 Award, with Voltas simply required to show it had paid the sums to the third party. Further, costs of the arbitration had also been decided in the 2014 Award and the arbitrator himself observed in his Ruling on Jurisdiction that the 2014 Award was res judicata. Accordingly, the 2014 Award had disposed of all remaining claims in the arbitration and should be regarded as “final”.  The question of whether the condition had been satisfied could and should have been canvassed before an enforcement court, not the tribunal.

Reservations as to jurisdiction cannot be implied

When a tribunal renders a final award, the tribunal has completed its mandate to decide the dispute and is functus officio.

The finality of an award is reflected legislatively in s 44 of the AA (and correspondingly in s 19B of the IAA), with a tribunal only permitted to revisit an award for three narrow purposes:

1. to correct any computational, clerical or typographical error (s 43(1)(a) AA; Article 33(a)(a) UNCITRAL Model Law 1985);
2. to provide interpretation on a specific point or part of the award if all parties to the arbitration so agree (s 43(1)(b) AA; Article 33(a)(b) UNCITRAL Model Law 1985); or
3. to make an additional award dealing with claims presented during the arbitral proceedings but omitted from the award (s 43(4) – 6) AA; Article 33(3) – (4) UNCITRAL Model Law 1985).

Given the narrowly circumscribed statutory scope for revisiting an award, the Court of Appeal held that it would be inconsistent to hold that a reservation of jurisdiction could be implied. If a tribunal wishes to reserve any part of its jurisdiction for future purposes, it must do so expressly, for example by designating the award as a partial award.  Otherwise, absent an express reservation, the tribunal’s mandate is terminated absolutely and immediately upon the issuance of the final award.

Comment

This decision promotes certainty, finality and expedition in arbitral proceedings. It ensures that parties and tribunals cannot reopen decisions once a final award has been rendered and clarifies that the appropriate forum for working out issues with enforcement is the enforcement courts.  It precludes an argument that reservation of the tribunal’s jurisdiction can be implied.

Although this case was decided under the AA, the relevant statutory provisions are similar to those in the IAA and UNCITRAL Model Law 1985. Accordingly, the principles articulated in this decision would apply with equal force to international arbitrations seated in Singapore.

From a practical perspective, parties should review an award quickly and carefully upon receipt.  If necessary, they must seek recourse on one of the statutory grounds for revisiting the award. Speed is crucial because unless parties have agreed otherwise, these avenues are only available for 30 days after the issuance of the award, following which any issues (including issues as to fulfilment of conditions laid down in the award) must be taken up with the enforcement court. It will not be possible to argue that the tribunal impliedly retains jurisdiction to address such concerns later.

For more information, please contact Alastair Henderson, Partner, Daniel Walek, Partner, Daniel Chia, Managing Director, Prolegis, Gitta Satryani, Partner, Tomas Furlong, Partner, or your usual Herbert Smith Freehills contact.

Alastair Henderson

Partner

Daniel Waldek

Associate

Daniel Chia

Managing Director, Prolegis

Gitta Satryani

Partner

Tomas Furlong

Partner

In highly-anticipated twin rulings, the Hong Kong Court of Appeal has confirmed the approach which should be taken when a debtor opposes insolvency proceedings on the basis of a defence or claim which is subject to an arbitration clause (Re Simplicity & Vogue Retailing (HK) Co., Limited [2024] HKCA 299; Re Shandong Chenming Paper Holdings Limited [2024] HKCA 352).

The practical effect of the decisions is that, generally, the arbitration agreement will be upheld, the insolvency proceedings stayed or dismissed, and the relevant defence or claim referred to arbitration (rather than resolved by the court as part of the insolvency proceedings), provided the debtor can demonstrate certain threshold requirements.  These are that (i) the relevant defence or claim advanced by the debtor does not border on the frivolous or an abuse of process and (ii) the debtor has a genuine intention to arbitrate the defence or claim (which should not be onerous in the case of genuine disputes).

A relevant defence or claim will include: (i) a dispute as to the petition debt itself; or (ii) a claim by the debtor against the petitioner which equals or exceeds the petition debt, such as to put in issue the status of the petitioner as a net creditor (regardless of whether such claim is subject to a legal right of set-off or is a mere “cross-claim”).

The court retains a discretion to assume jurisdiction and determine the relevant defence or claim when it considers it appropriate based on a “multi-factorial” assessment of all the circumstances, including where it considers there to be “strong reasons” or “countervailing factors” at play.  This would include the risk of the debtor’s insolvency affecting third parties as well as a failure by the debtor to demonstrate the threshold points mentioned above (although the courts have stressed that these are non-exhaustive examples).

The decisions of the Court of Appeal provide welcome clarification of the approach to arbitration clauses in the insolvency context.  There had previously been conflicting first instance decisions on this issue, as well as uncertainty as to whether the approach should be the same as that for exclusive jurisdiction clauses which was laid down by the Court of Final Appeal in its landmark decision in Re Guy Kwok Hung Lam [2023] HKCFA 9 (reported here).

The Court of Appeal has now confirmed that the approach in Guy Lam should be applied to arbitration clauses, and hence that the approach to arbitration causes and exclusive jurisdiction clauses in the insolvency context is aligned.

In doing so, the Court of Appeal expressly rejected the application in the arbitration context of the approach traditionally adopted by the Hong Kong courts, pursuant to which a winding-up order would generally be granted unless there was a “bona fide dispute on substantial grounds”.  This necessarily involved the court in making a substantive determination on the merits which was “akin to giving summary judgment”, in the words of the Court of Appeal in Re Shandong Chenming.  The Court of Appeal held that it was “clear” that the traditional approach “would not be appropriate” where an arbitration clause applied, having regard to the statutory framework for arbitration and the strong case for upholding parties’ contractual bargains to resolve disputes by arbitration.

The Court of Appeal adopted the requirement that the debtor should have a genuine intention to arbitrate from Lasmos Ltd v. Southwest Pacific Bauxite (HK) Ltd [2018] HKCFI 426, a first instance decision which had diverged from the traditional approach and held that (providing such an intention could be demonstrated) insolvency proceedings would be stayed or dismissed and the dispute referred to arbitration unless there were “exceptional circumstances”.

There is potentially scope for debate as to precisely where the current approach sits on the spectrum between the traditional approach and the Lasmos approach in practical terms, including as to the precise difference between (i) a defence or claim which is not advanced bona fide on substantial grounds and (ii) a defence or claim which borders on the frivolous or an abuse of process.  Any further decisions touching on such issues will no doubt be watched with interest.

A Herbert Smith Freehills team led by partner Jojo Fan was instructed by the successful petitioner in Re Simplicity & Vogue Retailing (HK) Co., Limited [2024] HKCA 299.  For more details, see the team’s post on our “Asia Disputes Notes” blog here.

Jojo Fan

Partner, Hong Kong

+852 28456639

Kathryn Sanger

Partner

+852 2101 4029

Trevor Ho

Senior Associate

+852 2101 4129

Martin Wallace

Professional Support Consultant

+852 2101 4126

Siqi Huang

Associate

+852 2101 4160

On 26 April 2024, the Singapore Courts issued the first known Singapore International Commercial Court (SICC) judgment granting a post-award anti-suit injunction, protecting their setting-aside jurisdiction and the integrity of Singapore-seated awards.

Commencing proceedings on home turf rather than the proper forum is a common guerilla tactic for dissatisfied parties, especially after a loss at arbitration. The SICC has confirmed that actions to invalidate an award outside the seat contravene the basic principle of arbitration law that only the courts of the seat are empowered to set aside any award rendered there.

The judgment

In the judgment of Pertamina International Marketing & Distribution Pte Ltd v P-H-O-E-N-I-X Petroleum Philippines, Inc [2024] SGHC(I) 13 (Pertamina International), the SICC dismissed an application by a Filipino respondent to discharge an anti-suit injunction earlier granted by the SICC against court proceedings in the Philippines that were in essence an attempt to invalidate a Singapore-seated award.

The court also found the respondent’s continued prosecution of the Philippines proceedings seemed to “clearly constitute” a breach of the anti-suit injunction and contempt of court.

In Pertamina International, the SICC also made several observations about (i) the Court’s discretion to hear a party in contempt of court and (ii) when a party would have been taken to have submitted to the jurisdiction of a court in the context of challenges to jurisdiction.

Why does this matter?

• Parties to arbitrations seated in Singapore now know that the SICC will follow the Singapore Courts in not hesitating to protect their status as the supervisory court and their exclusive power to hear challenges to an award within the strict three-month limit.
• Litigants should be aware that the Singapore Courts, including the SICC, will not hesitate to make a finding of contempt in clear cases and may exercise their discretion to refuse to hear parties until the contempt is purged.
• An applicant seeking to dispute the jurisdiction of the Singapore Courts, including the SICC, should be careful in the drafting of their applications and prayers for relief to ensure that they do not amount to a submission to jurisdiction.

Prolegis LLC successfully acted for the claimant, Pertamina International Marketing & Distribution Pte Ltd (PIMD), in both obtaining the earlier anti-suit injunction and resisting this attempt at discharge.

Herbert Smith Freehills Prolegis acted for the claimant in the underlying arbitration, securing an award of more than US$142 million, and is currently coordinating a multi-jurisdiction enforcement strategy. ACCRA Law in Manila has provided Philippines law advice throughout.

The anti-suit injunction

The award debtor P-H-O-E-N-I-X Petroleum Philippines, Inc (Phoenix) did not apply to the Singapore Courts to set aside the award within the three-month time limit under Singapore law.

Instead, it commenced an action in the Philippine Courts to obtain declarations that the underlying arbitration and award were void – although no enforcement proceedings had been commenced in the Philippine Courts. PIMD applied for and obtained an urgent anti-suit injunction against these proceedings.

Phoenix applied to the SICC to set aside the interim anti-suit injunction earlier obtained by PIMD and a dismissal of the permanent anti-suit injunction application sought by PIMD. International Justice Sir Bernard Eder, who granted the earlier injunction, refused to grant the reliefs sought by Phoenix.

Eder IJ found that the Philippine proceedings were clearly an attack on the Singapore-seated award, and rejected Phoenix’s claims that the proceedings were only a pre-emptive attempt to resist enforcement of the Award (especially as PIMD had not commenced enforcement proceedings in the Philippines at the time of Phoenix’s action).

Eder IJ further reiterated that as supervisory seat court, “it is the function of this court to protect the integrity of the Award… it is well established that this court can and generally will grant appropriate injunctive relief to protect an award to restrain breaches of an arbitration agreement… this applies with equal force even where arbitration proceedings have ended and an award has been rendered“: Pertamina International at [50] – [51].

Notably, the SICC reached this conclusion even though the Philippine Court appears to have decided that it has the jurisdiction to determine whether there is an arbitration agreement between PIMD and Phoenix. This shows that the Singapore Courts, including the SICC, will not hesitate to protect the seat court’s primacy even if another court takes an opposing view.

The discretion to refuse to hear a party in contempt (see [28] to [35] of the judgment)

The SICC further endorsed the general principle that under Singapore law the court has a discretion to refuse to hear a party in contempt – the first time in recent years that the Singapore Courts have made a clear pronouncement on this issue.

In determining that Phoenix’s actions in proceeding with the action in the Philippines clearly constituted a contempt of court, the SICC considered that:

• Phoenix’s representative was present at the hearing of the interim anti-suit injunction application, made certain submissions, and was fully aware of the terms of the order. The terms of the order and the actual order were communicated to Phoenix on multiple occasions.
• In the proceedings in the Philippines, Phoenix sought an order that the underlying arbitration and award were void.
• Phoenix continued to pursue the proceedings in the Philippines by (i) attending a hearing and failing to inform the Philippines Court that an interim anti-suit injunction order had been issued by the SICC, and (ii) filing submissions seeking the advancement of the proceedings in the Philippines and making statements regarding the conduct of the hearing for the interim anti-suit injunction application at the SICC.
• Phoenix was put on notice of its contempt in continuing to pursue the proceedings in the Philippines but continued its actions.

The submission to the jurisdiction of the court

The SICC also made various observations about a party’s submission to jurisdiction in the context of challenges to the jurisdiction of the court.

• It found that Phoenix had submitted to its jurisdiction because the relief sought included a claim that the SICC should, in the exercise of its discretion, decline jurisdiction to hear the application for a permanent anti-suit injunction, and that claim was a primary prayer and not a prayer in the alternative – at [42].
• It found that PIMD had not submitted to the jurisdiction of the Philippines Court. The steps taken by PIMD to assert that the Philippines Court had no jurisdiction over PIMD were defensive in nature and to “parry a blow“, which would not be deemed to be a step in the proceedings amounting to a submission to jurisdiction – at [62].

The power to grant an interim order prior to service of originating process (see [43] of the judgment)

The SICC also confirmed that lack of formal service of originating process is not fatal to the grant of an interim anti-suit injunction order, and that the Singapore Courts regularly issue interim orders before formal service of the originating process in an appropriate case – at [43].

The SICC also noted that PIMD was actively pursuing steps to effect service on Phoenix through diplomatic channels and that such service was expected to take place shortly, and there was no suggestion that such service would be invalid.

How we can help you protect your interests

We, through Prolegis, frequently act for parties to arbitrations in arbitration-related court proceedings including setting aside applications, enforcement applications and anti-suit injunction applications.

To find out more about protecting your interests in Singapore-seated arbitrations, please contact the authors, Yanguang Ker and Charlene Wee, the rest of the Herbert Smith Freehills Prolegis team below, or your usual Herbert Smith Freehills Prolegis contact.

Prolegis LLC and Herbert Smith Freehills LLP (www.herbertsmithfreehills.com) are members of a Formal Law Alliance in Singapore marketed as Herbert Smith Freehills Prolegis (https://www.herbertsmithfreehills.com/content/herbert-smith-freehills-prolegis).

Yanguang Ker

Deputy Head of Litigation, Singapore, Prolegis LLC

+65 6812 1366

Charlene Wee

Associate, Singapore, Prolegis LLC

+65 6812 1367

Daniel Chia

Head of Litigation, Singapore, Prolegis LLC

+65 6812 1363

Gitta Satryani

Partner, Singapore, Herbert Smith Freehills LLP

+65 6868 8067

Tomas Furlong

Partner, Singapore, Herbert Smith Freehills LLP

+65 6868 8085

Ella Wisniewski

Senior Associate, Singapore, Herbert Smith Freehills LLP

+65 6868 8024

Claudia Chan

Associate, Singapore, Prolegis LLC

+65 68688014

In Mordchai Ganz v Petronz FZE & Abraham Goren [2024] EWHC 1011 (Comm), the English Commercial Court (the Court) decided to publish a non-anonymised judgment on an arbitration claim concerning challenges to an arbitration award. In doing so, the Court has provided helpful guidance on balancing party expectations of confidentiality in arbitration against the public interest in arbitration proceedings. In this case, the public interest in the transparent administration of justice outweighed the claimant’s interest in confidentiality.

Background

The factual background to this case is covered in our earlier blog post here. In short, the Court addressed challenges brought under Section 67 (challenge to substantive jurisdiction) and Section 68 (serious irregularity causing substantial injustice) of the English Arbitration Act 1996 (the Act) and found that both the Share Purchase Agreement and the LCIA arbitration agreement within it were not valid and binding in the face of allegations of forgery. As a result, the tribunal had no substantive jurisdiction (the Judgment). In the current case, the Court considered an application from the second defendant, Mr. Goren, who objected to the publication of the Judgment.

Mr. Goren emphasised that he was joined to the arbitration proceedings against his will and that the Judgment covered sensitive and confidential information that may have a detrimental effect on his reputation if published.

Decision

As a starting point, the Court relied on the principles set down in City of Moscow v Bankers Trust [2004] EWCA Civ 314; [2005] QB 207, and emphasised that it must weigh the factors in favour of publicity against the desirability of preserving the confidentiality of the original arbitration and its subject matter. It accepted that a party seeking to protect evidently confidential information “must not necessarily prove positive detriment beyond the undermining of its expectation that the subject matter would be confidential”. However, “the Court should…bear in mind that any judgment should be given in public where this can be done without disclosing significant confidential information“, and that “arbitration is an important feature of international commercial and financial life and there is a legitimate interest in its operation and practice“.

Expectation of confidentiality

Mr. Goren argued that he had an expectation of confidentiality and privacy in the arbitration, and relied in particular on Article 30 of the LCIA Rules, which contains an undertaking to keep awards and material in the arbitration confidential.

The Court did not accept this argument. Given the Court’s determination that there was no arbitration agreement, Mr. Goren did not and could not rely on the fact that he entered into an arbitration agreement with an expectation that, in the event of a dispute, the parties would resort to arbitration and that, in turn, would be confidential.

The Court also commented that once Mr Goren was joined to the arbitration, he may well have had an expectation of privacy and confidentiality. However, Article 30 of the LCIA Rules would still not have prevented publication of the Judgment. Rather, “[t]he supervisory jurisdiction of the Court is an entirely separate process and the decision by the Court whether to publish its judgment involves the consideration of the relevant factors in the circumstances of the case“.

Reputational damage

Mr Goren argued that publication would disclose damaging material (in particular, relating to a procurement agreement which was described as a “side issue” in the proceedings) even though he had successfully defended the claim. However, the Court gave this concern short shrift, finding that “Mr Goren’s reputation may be damaged by his actions in relation to the procurement agreement…but they were his actions and that is not, in my view, a good reason in favour of withholding publication of the judgment“.

The public interest in the publication of judgments

Mr. Goren further contended that the Judgment contained references to the confidential award, submissions and evidence. He argued that publication should not be allowed “because the judgment here contains everything about the underlying dispute“. However, this argument was rejected on the basis that not all of the matters that were put before the tribunal were referred to in the Judgment, which only addressed key elements that were examined by the Court, but that more importantly and in any event, disclosure of confidential information was not a bar to publication. Rather, the confidentiality of the information had to be weighed against the factors militating in favour of publication.

The Court also disagreed with Mr. Goren’s submission that there is no public interest in the outcome of the current case.  Against this:

1. the authorities are clear that there is a legitimate interest in the operation and practice of arbitration. Here, the case entailed issues such as the approach to a re-hearing, the use of the summary procedure in the Commercial Court guide and the issue of expert evidence in the context of case management; and
2. it had to be mindful of the broader issue of public interest, “which is the desirability of public scrutiny as a means by which confidence in the Courts can be maintained and the administration of justice made transparent”.

The Court concluded that the factors in favour of the Judgment’s publication outweighed the contrary considerations.

Comment

This case serves as a helpful reminder that the expectation of confidentiality in arbitration is not absolute once the parties seek the involvement of the relevant supervisory courts: any party expectation as to confidentiality will be weighed against strong public interest considerations.  In particular, the fact that the underlying arbitration may have been subject to an expressly agreed confidentiality regime will not be conclusive.

This judgment also provides useful guidance on the English Court’s approach to balancing confidentiality against transparency in arbitration-related court proceedings. In this case, the finding that there was no underlying arbitration agreement appears to have been a significant factor, as it meant that there could not have been any original expectation of confidentiality. The decision also underscores the Court’s willingness to publish judgments related to arbitration claims in the broader public interest, even in the face of strong objections from one of the parties concerning anticipated reputational damage.

For more information, please contact Craig Tevendale, Partner, Elizabeth Kantor, Professional Support Lawyer, Maria Popova, Associate or your usual Herbert Smith Freehills contact.

Craig Tevendale

Partner

Elizabeth Kantor

Professional Support Lawyer

Maria Popova

Associate

The authors would like to thank Annabelle Proepstl for her contribution to this blog post.