Developments in Arbitration in Asia Pacific – A Regional Perspective

Nish Shetty

Overview

Rise of Asia Pacific as an Arbitration Hub Regional Round-up

• “Twin Asian Cities of Arbitration” Singapore & Hong Kong

• Snapshot of players in the region

India as a ‘seat’ of international arbitration? Future of International Arbitration in Asia

16 July 2011 2ICC Arbitration & Amicable Dispute Resolution – Focus on India

Rise of Asia Pacific as an Arbitration Hub

30 June 2011 3ICC Arbitration & Amicable Dispute Resolution – Focus on India

Twin Asian Cities of Arbitration – Singapore & HK Regionalisation of Arbitration.

• Regional institutions: CIETAC, SIAC, JCAA, KLRCA, PDRC, VIAC, HKIAC …and the list goes on.

• Major European International Institutions establishing in the region e.g. ICC, LCIA etc

Singapore & HK emerging as the leaders NB only Singapore is a‘reciprocating territory’ for the

purposes of NY Convention in India.

16 July 2011 4ICC Arbitration & Amicable Dispute Resolution – Focus on India

Hong Kong “Gateway to China”: HK’s greatest appeal and drawback New Hong Kong Arbitration Ordinance (Cap. 609) effective

since 1 June 2011. Largely modelled on UNCITRAL Model Law: Key features:• Unified system for domestic & international arbitration

• Interim measures (ML provisions adopted)

• Express Duty of Confidentiality

• Med-Arb/Arb-Med

• Bespoke enforcement process for awards rendered in Mainland China

16 July 2011 5ICC Arbitration & Amicable Dispute Resolution – Focus on India

Hong Kong (cont.) - Enforcement Different processes under HK Ordinance for enforcement

of:• Awards rendered in NY Convention States

• Other Awards (e.g. awards rendered in Taiwan)

• Awards rendered in Mainland China (in application of Arrangement Concerning Mutual Enforcement of Arbitral Awards Between the Mainland and the Hong Kong Special Administrative Region, which became effective from 1 February 2000.

• China’s side: In 2010 China Supreme People’s Court issued “Notice Concerning Questions of Enforcement of Hong Kong Arbitral Awards in the Mainland” – streamline enforcement for ad hoc/institutional awards seated in HK

• Conclusion – HK is the ‘seat’ of choice for China-related matters.

16 July 2011 6ICC Arbitration & Amicable Dispute Resolution – Focus on India

Hong Kong (cont.) Med/Arb – Arb/Med

What is it? • Med/Arb – Arbitrator acts as a mediator at the out-set of matter, then

proceeds as arbitrator if matter does not resolve.

• Arb/Med – Arbitrator ‘swaps hats’ to act as mediator

China influence (CIETAC Arbitration Rules – Article 40) Benefits

• Familiarity with the case and parties

16 July 2011 7ICC Arbitration & Amicable Dispute Resolution – Focus on India

Med-Arb cont. Disadvantages:

• Arbitrator wearing ‘two hats’ may not be able to distinguish between roles

• Disclosure requirement under s34 of Arbitration Ordinance on Arbitrator if mediation fails to disclose to all other parties any confidential information obtain during the mediation that is “material to the arbitration proceedings” …may dissuade parties from frank discussions during mediation.

• Recent example: Impression of bias post mediation → enforcement refused: Gao Haiyan v Keeneye Holdings Ltd [2011] HKEC 514.

16 July 2011 8ICC Arbitration & Amicable Dispute Resolution – Focus on India

Med-Arb cont. Gao Haiyan v Keeneye Holdings Ltd [2011] HKEC 514

• Facts of the case: The tribunal wearing their ‘mediator hats,’ wined and dined friend of one of the parties and suggested friend “work on” that party with a proposed settlement figure.

• HK court may refuse to enforce if it would be “contrary to public policy” (s40E(3) of the Arbitration Ordinance (Cap. 341)).

• Public policy: incl. “award made in circumstances that would cause a fair minded observer to apprehend a real possibility of bias on the part of the arbitral tribunal”

• Inherent risk of Med-Arb.

16 July 2011 9ICC Arbitration & Amicable Dispute Resolution – Focus on India

Snapshot #1: Malaysia Recent‘upgrade’to the Arbitration Act 2005: Arbitration

(Amendment) Act 2011 (shortly to come into effect). Highlights:

• Clear wording to preclude court intervention except in limited circumstances

• Power to grant interim measures for arbitrations with seat outside Malaysia

• Narrowing of ground of appeal on a question of law → must be a question of law that “substantially affects the rights of one or more of the parties.”

16 July 2011 10ICC Arbitration & Amicable Dispute Resolution – Focus on India

Snapshot #2: Thailand One step forward – two steps back. Pro-arbitration trends up to the early 00s, incl:

• Arbitration Act BE 2545 2002 (Model Law based);

• Party to the NY Convention

• Arbitration clauses included in government contracts

Anti-arbitration in recent history• 2004: resolution of Cabinet in 2004 that no arbitration clause in any

administrative contracts between private entity & govt. → (Thai govt. loses investor-state arbitration)

• 2009: blanket ban on arbitration clause in all contracts between private entity & govt. (with some exceptions on a case-by-case basis subject to approval by cabinet).

• Anti-arbitration court decisions and obstructive parties.

16 July 2011 11ICC Arbitration & Amicable Dispute Resolution – Focus on India

Snapshot #3: Indonesia State of Play

• Law No. 30 of 1999 on Arbitration and Alternative Dispute Resolution (no Official English language version).

• Indonesian national arbitration institution BANI often required by State entities: (although BPMIGAS (upstream oil and gas regulator), has been known to agree to off-shore in recent times).

• Bad reputation and a number of traps and tricks to bear in mind (especially if arbitration is Indonesia-seated), but Indonesian courts increasingly enforcing foreign awards.

16 July 2011 12ICC Arbitration & Amicable Dispute Resolution – Focus on India

India as a ‘seat’ for International Arbitration

What do arbitration users say makes a good seat?

62%* of in-house counsel say the #1 criteria is Formal Legal Infrastructure, i.e. 3 key components:

• National Arbitration Law;

• Track Record in Enforcing Agreements to Arbitrate and Arbitral Awards;

• Neutrality and Impartiality of Legal System.

*Source: White & Case/Queen Mary 2010 International Arbitration Survey: Choices in International Arbitration”

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India as a ‘seat’ – Singapore Case Study

The 3 Key Components – Singapore example National Arbitration Law

• Most recent amendments to International Arbitration Act implemented in 2010;

• Active legislature – amendments to improve the legislation made in a matter of months.

Track Record in Enforcing Agreements to Arbitrate and Arbitral Awards• Non-interventionist, pro-arbitration approach of judiciary to arbitrations.

• Exemplary record for the enforcement of foreign arbitral awards;

Neutrality and Impartiality of Legal System• Singapore listed as first in the world for neutrality under the Corruption

Perceptions Index

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India as a ‘seat’ – Singapore case study

Additional ‘ingredients’ in a good seat:“…it appears that the promotion of Singapore as an arbitral seat with conferences and the active involvement of more arbitral institutions (such as ICC and AAA/ICDR) have paid dividends and Singapore clearly emerges as the most popular Asian seat”* Source: White & Case/Queen Mary 2010 International Arbitration Survey: Choices in International Arbitration”

Maxwell Chambers opened. Occupiers include: ICC,SIAC, ICDR, ICSID, PCA, LCIA, WIPO, SCMA, CIArb, SIArb

* Source: White & Case/Queen Mary 2010 International Arbitration Survey: Choices in International Arbitration”

16 July 2011 15ICC Arbitration & Amicable Dispute Resolution – Focus on India

Future of Arbitration in the Region

Growth of more be-spoke rules tailored to cultures in the region (e.g. Med-Arb).

Institutional rules likely to increasingly tailor to provide for Expedited Procedures.

Enforceability remains the key factor.

16 July 2011 16ICC Arbitration & Amicable Dispute Resolution – Focus on India

Enforcement of the New York Convention

State Ratification/Accession

Bangladesh 1992Brunei 1996Cambodia 1960Hong Kong SAR (1997 via PRC)India 1960Indonesia 1981Japan 1961Laos 1998Malaysia 1985Mongolia 1994Nepal 1998Pakistan 2005People's Republic of China 1987Philippines 1967Singapore 1986South Korea 1973Sri Lanka 1962Thailand 1959Vietnam 1995

Non-members of the New York Convention include: Bhutan, North Korea, Taiwan and Myanmar

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Arbitration-friendly jurisdictions

Top of the class:• Hong Kong

• Singapore

• Japan

Generally reliable:• Malaysia

• South Korea

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Arbitration-friendly jurisdictions

Improvement / further improvement required:• China

• Vietnam

• Philippines

• Thailand

• India

• Indonesia

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Developments in Arbitration in Asia Pacific – A Regional Perspective