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Report: Expert Discussion on How to Overturn an International Award


Date: Friday, September 30, 10:00 to 11:30 am CEST | Venue: Zoom

The event was chaired by Mr. Tianze Zhang, founder of SCLA, and moderated by Mr. Philip Hackett KC, President of GIDI. GIDI stands for Geneva International Dispute Resolution Institute focusing its activities on forms of alternative dispute resolution especially in disputes with a link to China.

The topic of the session is a very practical one, and at first sight it seems to express a contraction in itself: Arbitration chosen for its finality shall allow parties to challenge the awards?

After welcome messages by Mr. Zhang and Mr. Hackett Hermann Knott was the first speaker outlining the grounds for challenging arbitral awards in the courts of the country where they were rendered and preventing enforcement in jurisdictions where such enforcement is being sought. Art. V of the UN Convention on the International Recognition and Enforcement of Foreign Arbitral awards (the ‘New York Convention’) which has been ratified by 170 countries sets forth the internationally most recognized set of rules regarding the grounds why awards might be challenged in the enforcement state. Art. 34 of the UNCITRAL Model Law on International Commercial Arbitration (the ‘UNICITRAL Model Law’) – an also widely adopted international standard for domestic arbitration laws – addresses setting-aside procedures in the country of the seat of the arbitration. Art. 36 of the Model Law – in accordance with Art. V of the New York Convention deals with challenging the enforcement in other jurisdictions.

In his presentation which has already been uploaded to GIDI’s website Hermann discusses two cases from each Hong Kong and Singapore, two leading arbitration seats in Asia, showing the arbitration-friendly approach by the courts in these jurisdictions. Given the need to have all aspects discussed in our session Hermann did not elaborate on those cases.

The next speaker was Philip Hackett KC, GIDI’s president. He discussed one particular ground for challenging arbitral awards which is the one relating to recognition and enforcement of the award being contrary to the ‘public policy’ of the enforcing country. He emphasized that it is the public policy of England which is relevant in this context and referred to the Iranian sanctions’ cases. Later on, in the discussion he mentioned the rules of burden of proof applied by the English courts in challenging procedures: The party challenging the award must present prima facie evidence of the circumstances underlying the challenge then the burden shifts to the party which is in possession/control of the relevant details. When discussing efficiency of enforcement in the face of possibilities to challenge awards, Philip Hackett mentioned the procedural instrument which is ancillary to enforcement and is available in the English courts allowing to impose a world-wide freezing order against a person.

The next speaker was Agada Elachi who presented the situation in Africa with a focus on the law of Nigeria. In particular, he discussed the case Nigeria v. PID ([2020] EWHC 2379 (Comm), 2020 WL 05261224). The case related to a dispute arising under a gas services contract which – as was alleged in setting-aside procedures instituted three years after the award had been rendered by the tribunal having its seat in England – was concluded under conditions constituting corruption and bribery. Mr. Elachi Agada reported further details of the case which have not been widely known. They relate to the validity of the arbitration agreement, the fact that individuals involved in the matter had been arrested and that parallel enforcement procedures in New York had also been unsuccessful.

The final speaker with a highly relevant topic was Gary Gao. Gary is a partner of the Zhong Lun law firm, one of the leading law firms in China, and a profound expert on enforcement proceedings in China in particular.

In preparing these minutes and in the interest of being as authentic as possible on the legal situation he kindly agreed to share a summary of his remarks which best summarize his comments given in our session:

My explanations of enforcement of foreign awards in China.

  1. Two jurisdictions

PRC has the sovereignty over Hong Kong which is called a Special Administration Region (HKSAR). But Hong Kong is regarded as an independent jurisdiction. In mainland PRC, there is civil law system while in Hong Kong is common law.

  1. New York Convention is applied both mainland and HKSAR. China made two reservations when it approved the convention. One is the award must be issued in another member state. Second is the disputes solved by the award must be commercial one from Chinese law perspective. Therefore, the dispute between foreign investor and government is excluded.

My general observation is Hong Kong judicial system is one of the friendliest jurisdictions for arbitration. I only practice in mainland PRC, so I can only give a very general observation.

The application for enforcement of a foreign arbitration award must be made in 2 years after the issuance of the award.

To enforce a foreign award, the applicant shall file the case with intermediate court in the defendant’s domicile. The application will include two requests, 1) to recognize the award; 2) to enforce the award. The two requests shall not be separately raised.

The applicant can get the assets frozen. Together with an application to freeze assets, the applicant shall provide guarantee or insurance police.

Chinese parties will challenge the award based on various grounds. The ground will vary from 1) if the tribunal went beyond its jurisdiction; 2) if the members of tribunal committed bribery or corruption; 3) fraud existed when parties entered into the contract, e.g. the applicant committed a crime of illegally conducted business in PRC. In a case, I am currently handling, the defendant reported to the police that the employees of my client promoted derivatives which is illegal. Police accepted the filing and initiate the investigation. Then the defendant applied to the court asking for suspension of the enforcement proceeding due to the ongoing criminal proceedings. Normally in PRC if there was a crime committed then enforcement of the award will be impossible. Additionally, the defendant will file tort case as well to resist the enforcement.

Chinese Supreme Court is friendly to international arbitration. Chinese International Commercial Court (CICC) was established to deal with international commercial disputes including arbitration. But not easy to get cases accepted by CICC.

As I mentioned above the application of the enforcement of foreign arbitration shall filed with the intermediate courts one level higher than basic courts which are equivalent to majesty court in the UK. Supreme Court designed a set of special rules to prevent local protectionism that means local court wants to protect businessman who owns assets under the jurisdiction of the court. The rules provide if the intermediate court decides not to recognize and/or enforce the foreign award, it must internally report to Higher Court. If the higher court holds the same view, the case must be reported to the Supreme Court. So I think the regime of enforcement of foreign award in mainland PRC is somehow reliable.

The session was closed by remarks of Philip Hackett and Tianze Zhang announcing further activities of GIDI in terms of seminars and training.

Dr. Hermann Knott, LL.M. (UPenn)
Rechtsanwalt, Attorney-at-Law (New York), FCIArb FHKIArb FSIArb
KUNZ Lawyers
Phone/WeChat: +49 151 576 28 456
Email: [email protected]