Header graphic for print


International Arbitration News, Trends and Cases

Will life sciences provide a growth injection for international arbitration?

This blog post was first published on the Practical Law Arbitration blog.

The use of international arbitration has expanded over the years to encompass a wide array of sectors. For example, while the majority of financial services disputes still end up in court, many of them are submitted to arbitration. Of the London Court of International Arbitration’s (LCIA’s) caseload in 2016, 20% comprised of such disputes. This was more than either construction or shipping.

This raises the question of which other industry sectors might provide a larger number of arbitrations in the future. One possibility is life sciences.

This industry sector is already the joint fifth biggest contributor to the LCIA’s caseload. It comprises 15% of arbitrations and mediations sent to the World Intellectual Property Organization (WIPO), and various institutions (including the International Chamber of Commerce (ICC) and American Arbitration Association (AAA)) have seen steady growth in the number of life sciences disputes referred to them. There are also reasons to suggest that the number of life sciences arbitrations may increase.

The life sciences industry has a global reach

The life sciences sector is a truly global industry. Life sciences giants frequently expand out of their home markets in search of better growth opportunities in emerging markets. Many of those emerging markets already have their own life sciences companies with significant annual revenues. For example, Mexico, India, Indonesia and South Africa all have pharmaceutical companies with turnover close to US $1 billion.

In addition, the complex supply and distribution chains employed by many life sciences companies often span multiple jurisdictions, as do the joint venture and licensing arrangements that many of these companies utilise.

Arbitration is well-suited for the resolution of disputes arising out of these types of complex, multi-jurisdiction arrangements, particularly given:

  • The neutrality resulting from neither party submitting to the “home” courts of the other party.
  • That any resulting arbitral award will be enforceable in any of the 157 countries that are signatories to the New York Convention.

The life sciences industry is growing

The life sciences industry has grown considerably in recent years (and is expected to continue growing). A consideration of some of the factors behind that growth suggests that more growth will likely result in the need to resolve a greater number of disputes.

Considerable growth for many companies has also been achieved through the significant consolidation that has occurred in the market in recent years. For example, in 2015, 236 mergers and acquisitions between pharmaceutical companies were closed worldwide, for a total value of over US $403 billion combined. Not only is this a good indicator of the potential future growth of the sector, it may also lead to further disputes. Again, the complex cross-border nature of many of these mergers and acquisitions is an indication that arbitration is likely to be used as a dispute resolution mechanism.

Further growth potential for the industry lies in the proliferation of newer, innovative companies specialising in biotech and medical devices. As these companies seek to compete or seek synergies with more established players, disputes may arise. Many of these disputes will be well suited to arbitration if the commercial arrangements are multi-jurisdictional or confidential.

Arbitration has other benefits for life sciences companies

There are significant additional benefits to arbitration for life sciences companies which, as they become more widely known, may result in those companies choosing arbitration for the resolution of certain disputes.

One such benefit is the confidentiality of arbitration. In particular, this provides a further level of protection for companies concerned about intellectual property or trade secrets being released in the public domain. For companies whose value can rest on the strength and exclusivity of their intellectual property, this is not an advantage to be overlooked. It has been recognised in certain instances already; for example, in Portugal, specific legislation (Decree Law 62/2011) has been enacted, mandating arbitration for intellectual property disputes in the pharmaceutical sector.

A further advantage is the ability for the parties to appoint arbitrators with the specialised skills required to resolve life sciences disputes. There is an increased trend of arbitration clauses in life sciences agreements requiring arbitrators to have certain qualifications or experience. A number of arbitral institutions (such as the International Centre for Dispute Resolution (ICDR)/AAA) now have panels of arbitrators with specific life sciences experience.

Scope for related disputes

In recent years there have been several investment treaty arbitrations relating to life sciences companies. This is in addition to litigation within the EU which considers the impact of EU competition law on arbitral awards involving life sciences companies. This is not surprising given that the sector is heavily regulated.

In conclusion, life sciences disputes already form a significant number of arbitration disputes and the number of arbitrations in the sector looks set to grow. In particular, while litigation will doubtless remain a mainstay for the resolution of life sciences disputes, the combination of the growth and increasing globalisation of the industry, with the benefits that arbitration offers for the resolution of complex multi-jurisdictional disputes, suggests that there are likely to be more life sciences arbitrations too.


CPR Appoints New Cyber Panel Ahead of Anticipated Increase in Data Security Disputes

The International Institute for Conflict Prevention and Resolution, a New York-based organisation offering Alternative Dispute Resolution (ADR) services, has recently announced the launch of a new specialised panel of neutrals, commissioned to deal with cybersecurity disputes. The Cyber Panel is composed of experts in cyber-related areas such as data breaches and subsequent insurance claims. In a press release, Noah Hanft, President of CPR, described the new panel as guiding the “critical effort” by businesses to “prevent and/or resolve cyber-related disputes in a manner that best protects operations, customers and reputation” due to attacks now occurring with increased frequency and sophistication.

CPR’s decision to establish a specialist cyber panel addresses a perceived need for arbitrators and mediators with relevant expertise, given that data protection and security breaches are regarded as an increasingly common cause of technology, media, and telecommunications (TMT) disputes, and therefore a significant growth area for commercial dispute resolution. According to the 2016 International Dispute Resolution survey on TMT disputes conducted by the School of International Arbitration at Queen Mary University of London, respondents predicted a 191% increase in disputes related to data/system security breaches, the largest growth area identified by the survey.  Despite the fact that only 9% of respondents had encountered such disputes over the last five years, 79% of respondents thought that they were either likely or very likely to arise over the next five years. The survey also suggested that data breaches are most often caused by employee action, followed by malicious third party attacks, with both being more common than breaches caused by system failures.

Given the significant reputational and financial damage that can result from a data security breach, it is crucial to resolve subsequent disputes through the use of a reliable procedure which is tailored to the wider commercial context. This is why TMT companies are increasingly often turning to international arbitration which, as the survey shows, was respondents’ preferred mechanism for resolving disputes in the sector. Compared to the 43% of respondents who expressed a preference for arbitration, only 15% chose court litigation as their most favoured option. However, at present, litigation remains the most used mechanism in practice, used in relation to 44% of TMT disputes over the last five years. In that regard, the authors of the survey add that many of these disputes arise from contracts which were concluded long before arbitration grew in popularity and consequently, they do not include an arbitration clause. If this is true, we are likely to witness a significant increase in the number of TMT arbitrations. Indeed, 82% of respondents believed that there was likely to be a general increase in TMT arbitrations.

In general, the survey suggests that TMT companies may require more confidence in international arbitration in order to make this theoretical preference a reality. One way in which this could be addressed is by increasing the number of arbitrators with specialist knowledge of the sector and the specific issues in dispute. This approach appears to correspond with the views of the respondents to the Queen Mary University of London survey, which identified the technical expertise of the decision maker as an important aspect when deciding on a dispute resolution mechanism, as well as decision makers. In light of this conclusion, it was a logical step for CPR, which already has a series of specialist panels in other areas, to appoint a specialised Cyber Panel which may appeal to parties faced with disputes relating from data security breaches. More generally, there seems to be a wide consensus that cybersecurity-related arbitration is going to be an area of future growth.

ICC opens in the Abu Dhabi Global Market

The International Chamber of Commerce (“ICC“) has announced that it will open a new arbitration centre in the Abu Dhabi Global Market (“ADGM“), Abu Dhabi’s financial freezone located in the Al Maryah Island, which began operating in 2014. The centre will be known as the ADGM Arbitration Centre and is expected to open for business in January 2018.

The ICC is a reputable and leading international arbitral institution with its headquarters in Paris. The ADGM Arbitration Centre will be the ICC’s third representative office worldwide – joining Shanghai and Sao Paolo – in addition to the ICC’s case management offices in Hong Kong and New York. Notably, this will be the ICC’s first office in the Middle East and is a reflection of the increasing recourse to international arbitration in the region.

The opening of the ADGM Arbitration Centre will likely compete with the DIFC-LCIA, the offshore arbitration centre established in Abu Dhabi’s neighbouring Emirate of Dubai as well as “onshore” institutions such as the ADCCAC and the DIAC. However, it remains to be seen whether the ADGM Arbitration Centre will become a popular choice for arbitration. The question of enforcement of arbitral awards will likely play an important role in that regard, though the choice of the seat is the more relevant factor for enforcement. It will also be interesting to see if Abu Dhabi state-owned entities opt to choose the ADGM Arbitration Centre for their dispute resolution clauses in contracts which otherwise have no nexus to the ADGM.

We outline below some of the key characteristics of the ADGM:

Arbitration Regulations

  • The ADGM’s Arbitration Regulations 2015 are modelled on the UNCITRAL Model Law (“Model Law“), which is internationally recognised and widely used by many States as the basis of their own arbitration law.
  • ​There are some departures from the Model Law to account for regional considerations, which will likely make it an even more attractive forum for resolving disputes in the region. These include:
  1. Confidentiality and privacy: There is limited scope for the disclosure of the existence of arbitration proceedings and the award. There is a requirement that court proceedings related to arbitration be held in closed court; and
  2. Challenging enforcement of awards: Parties can agree in advance to dispense of or limit their right to bring an action to set aside an arbitral award, making the award final and not subject to any appeal, thereby reducing the involvement of the courts. However, if a party seeks to enforce the award in the ADGM Courts, the other party could still challenge the validity of the award based upon the grounds specified in the ADGM’s Arbitration Regulations 2015.

English common law

  • The ADGM directly adopts English common law (including the principles of equity), as well as a defined list of certain statutes in force in England by reference. It is important to note that not all English statutes apply as ADGM law – only those which have been expressly adopted.
  • The English Arbitration Act 1996 has not been adopted and does not apply. Instead, the ADGM Arbitration Regulations 2015 referred to above are applicable.
  • The ADGM has its own Court Procedure Rules (“CPR“) and Regulations. The CPR deals with applications to the court, including applications for the enforcement of an arbitral award.

This announcement, combined with the anticipated enactment of a new federal arbitration law in the UAE later this year, is a welcome development to the UAE’s arbitration scene and is in line with the region’s efforts to become more arbitration friendly.

Hong Kong court appoints receivers to preserve assets in aid of arbitral proceedings in China

The Hong Kong High Court has appointed receivers over shares in a Hong Kong company as an interim measure to preserve the status quo and the value of the shares, pending the outcome of CIETAC arbitration proceedings in mainland China.

The decision provides useful guidance on how parties can seek interim relief in aid of foreign arbitral proceedings, particularly in Mainland China or other jurisdictions that do not have comprehensive provisions for granting interim relief to preserve of assets pending the outcome of arbitral proceedings.

In particular, the judge noted that the appointment of receivers in this case was not the draconian measure that it was argued to be, as the shares being placed in receivership were shares in an asset holding company (as opposed to an active business where receiver and managers would be required) and accordingly, there would be minimal adverse effect on any business operations.

Given the many businesses operating in China that are under or related to a holding company in Hong Kong, this is a welcome decision for parties engaged in, or considering arbitration proceedings in the mainland.


The case relates to a protracted series of disputes over shares held in China Shanshui Investment Company Limited (“CSI“), which owns a large number of shares in a Hong Kong listed company.

The current case before the Hong Kong court was for interim measures in aid of CIETAC arbitration proceedings in Beijing over ownership of a particular portion of the CSI shares (the “Shares“).  The dispute concerned the validity and enforceability of a Pledge Agreement governed by PRC law whereby the Defendants had purported to pledge the Shares to the applicant as security.  The applicant alleged that in breach of the Pledge Agreement, the Defendants had not only exercised their voting rights in respect of the Shares without the knowledge of the applicant, but had sold and transferred the Shares to a third party under  share purchase agreements (“SPAs“). The applicant sought, inter alia, an order to appoint receivers in respect of Shares.

Power of Hong Kong courts to grant interim relief in aid of arbitral proceedings outside Hong Kong

The Defendants’ argument that the PRC court or the arbitral tribunal was the proper forum for the grant of any relief was rejected by the Hong Kong court.  While it was appreciated that a Mainland court, as the supervisory court of the CIETAC arbitration, would be in the best position to decide questions as to the validity and enforceability of the Pledge Agreement governed by PRC law, it did not follow that a Hong Kong court should not exercise its powers under s.45 to grant a form of interim measure which is appropriate and necessary, to facilitate the arbitral tribunal or the Mainland court which has the primary jurisdiction over the CIETAC arbitration.

The court held that under s.45 of the Arbitration Ordinance, the Hong Kong courts have both power and jurisdiction to grant interim measures to facilitate the process of a court or arbitral tribunal commenced outside of Hong Kong.  In fact, s.45 envisaged that there be a (non-Hong Kong) court with primary jurisdiction over the arbitral proceedings, in this case the PRC court, as the supervisory court over the arbitration.  The Hong Kong court may, however, decline to grant the measure if it considers it “more appropriate” for the interim measure sought to be dealt with by the arbitral tribunal.

The status quo

The court discussed what constituted the status quo.  The Defendants had started to exercise their voting rights in the Shares in January 2017.  The CIETAC arbitration was commenced in February 2017, by which the applicant complained of breaches of the Pledge Agreement.  The Defendants entered into the SPAs to transfer the Shares to a third party in March 2017.  Here, the status quo was prior to the SPAs and prior to the Defendants’ execution of the transfers of the Shares in favour of a third party.  The Court considered the position existing immediately before the commencement of arbitration as the status quo.

The receivership order

It was agreed that under PRC law, there is no concept of a receiver taking over the shares other than in a bankruptcy, and there is doubt as to whether any order for asset preservation that may be made by the Mainland courts can extend to assets which are in Hong Kong.  Nevertheless, the Ordinance is clear that the court may exercise its powers to grant interim measures irrespective of whether or not similar powers may be exercised by an arbitral tribunal.

The court then considered the question of whether a receivership order is a type of measure which the court has power to grant in relation to arbitral proceedings in Hong Kong and whether on the facts of this case, such a receivership order should be made, bearing in mind the established principles for the grant of a receivership.

The court found that the power to appoint receivers was founded under s.21L High Court Ordinance and is a discretionary power to be exercised flexibly on a similar basis to that of an interlocutory injunction, to which the principles in American Cyanamid apply.  On the facts, the court found that there was a serious question to be tried and that there was a risk that the assets would be dissipated.

In terms of the balance of convenience, the principle that the court should adopt is the course which is likely to cause the lower risk of injustice, if it should turn out that the interim order (whether to grant or refuse the relief) is wrong.  Given that there were competing claims as to the ownership of the Shares, and each side claimed irreversible and irreparable harm should they not be permitted to exercise rights in the Shares, the appointment of a receiver to “hold the ring” in the interim of the making of an award in the arbitration, should cause the lower risk of injustice to either side.


Section 45 of the Arbitration Ordinance makes it clear that Hong Kong courts have the power to grant interim relief in aid of foreign arbitral proceedings.

This is another arbitration friendly decision by the Hong Kong courts which granted interim measures in order to facilitate the process of the CIETAC arbitral tribunal or the Mainland court which has primary jurisdiction over the arbitration.

For parties who have commenced arbitral proceedings in jurisdictions without a comprehensive legal regime for granting interim relief, the provision can be a helpful tool for parties to seek the appointment of receivers, injunctive relief or to restore the status quo of parties pending the decision of the foreign arbitral proceedings. This would be of particular relevance for parties who wish to preserve assets held in Hong Kong, but with pending arbitration in the Mainland China or foreign jurisdictions.

Updates to Hong Kong Arbitration Ordinance: third party funding and arbitration over IP rights

On Wednesday, 14 June 2017, two sets of amendments to Hong Kong’s arbitration law were passed to clarify that:

  • third party funding of arbitration, mediation and related proceedings is permitted under Hong Kong law, and
  • disputes over intellectual property rights (“IPRs“) can be resolved through confidential arbitration and that it is not contrary to the public policy of Hong Kong to enforce arbitral awards involving IPRs.

The relevant bills were the Arbitration and Mediation Legislation (Third Party Funding) (Amendment) Bill 2016 (“Third Party Funding Bill“) and the Arbitration (Amendment) Bill 2016 (“IPR Arbitration Bill“).

Third party funding

The Third Party Funding Bill amends the Arbitration Ordinance and the Mediation Ordinance to make clear that third party funding of arbitration, mediation and related proceedings is permitted under Hong Kong law.

It is now clear that the centuries-old doctrines of maintenance and champerty, which still prohibit third party funding for litigation, do not apply to funding of arbitration and mediation.

The Third Party Funding Bill also provides measures and safeguards aimed at preserving integrity if third party funding is used, including providing for a code of practice for funders (which is still to be developed after completion of a consultation process, which is already underway).

The amendments are expected come into effect later this year, to allow time for the code of practice to be drawn up.

The Third Party Funding Bill closely follows the recommendations made by the Law Reform Commission in the Report on Third Party Funding for Arbitration dated 12 October 2016, save for an amendment that allows third party funding by lawyers and law firms so long as they do not act for any party in the relevant proceedings. (See our earlier note setting out the key points of the Bill here.)

The availability of third party funding is a welcome development for arbitrations seated in Hong Kong, bringing it in line with international developments.  It will allow greater access to justice and provide another option for companies to manage financial risk.

Arbitration of disputes involving IPRs

The IPR Arbitration Bill amends the Arbitration Ordinance to clarify that disputes involving IPRs can be resolved through arbitration under Hong Kong law and that it is not contrary to the public policy of Hong Kong to enforce arbitral awards involving IPRs.

The changes are expected to come into effect on 1 January 2018, following a period of around six months to allow practitioners and others concerned to prepare for commencement of the relevant amendments after yesterday’s passage of the Bill.

The current arbitration law is silent as to the subject matters of disputes that are capable of resolution by arbitration and a clear statement concerning the arbitrability of disputes involving IPRs has been lacking.

Under the IPR Arbitration Bill, arbitration proceedings over IPRs will remain confidential and any awards will only have inter partes effect.  Legal rights of third parties not a party to the arbitration proceedings will not be affected and there will be no requirement for disclosure to or recordal of arbitral awards involving IPRs with the respective Registries of the Hong Kong Intellectual Property Department. In fact, none of the IP related legislation has been amended to make such awards a recordable instrument or event affecting rights in or under a registered IPR / an application for registration.

While expressly providing for arbitration of disputes involving IPRs is a positive step for Hong Kong as an international centre for arbitration, arbitration of disputes involving IPRs is a complex area.  Parties considering arbitration of disputes involving IPRs should seek legal advice about the implications of agreeing to arbitrate, particularly in a cross-border context.

Somewhere beyond the seen: Paris Court of Appeal sets aside an award on the basis of serious indications of money laundering after considering new evidence and reevaluating the record.


On 21 February 2017, the Paris Court of Appeal set aside an UNCITRAL award on international public policy grounds due to serious indications of money laundering. Allegations of corruption and criminal activity have been used increasingly in recent years in French courts to argue for the setting aside of arbitral awards on the grounds of a breach of international public policy. This is the first time, however, that the Paris Court of Appeal has set aside an award on the basis of alleged money laundering. Further, this decision appears to specify the extent of review that French courts may perform when dealing with allegations of a breach of international public policy in cases where issues of money laundering are at stake, as it follows a detailed review of facts that were put before the arbitral tribunal and the consideration of new evidence.

Relevant facts:

Mr Belokon, a Latvian citizen, acquired Insan Bank in Kyrgyzstan in 2007 and renamed it Manas Bank. In spring 2010, political tensions in Kyrgyzstan led to the fall of President Bakiev and the Kyrgyz authorities placed Manas Bank into temporary administration. The initial temporary administration period was extended several times. On 2 August 2011, Mr Belokon commenced UNCITRAL arbitration proceedings under article 9.2(d) of the Kyrgyzstan-Latvia BIT, alleging that the continuing extension of the temporary administration period amounted to indirect expropriation.

In an award rendered on 24 October 2014, the three-member tribunal found in favour of Mr. Belokon and ordered Kyrgyzstan to pay $15.2 million. An action to set aside the award was brought by the Kyrgyz Republic before the Paris Court of Appeal in January 2015, notably on the grounds that the recognition or enforcement of an award in contradiction with the fight against money laundering would constitute a breach of international public policy.

In its application to have the award set aside, the Kyrgyz Republic argued (as it had during the arbitration proceedings) that most of Manas Bank’s activities had the purpose of furthering money laundering. As evidence, it relied on the fact that the bank’s 17 main clients were offshore companies whose operations were devoid of any economic purpose and that Mr Belokon was very closely connected to the former president’s son. It also adduced new evidence that Baltic International Bank, also owned by Mr Belokon, was fined 1.1 million euros in March 2016, more than a year after the award was rendered, for breaching anti money-laundering rules in Latvia between 2003 and 2015.

In seeking dismissal of the application, Mr Belokon claimed that Kyrgyzstan’s application to set the award aside amounted to a review of the merits of the case, which he argued was not permitted under French law.


The Paris Court of Appeal set aside the award on the basis that its recognition or enforcement would be contrary to international public policy. Interestingly, it disagreed with the tribunal’s finding that there was insufficient clear evidence to support serious indications of money laundering. Explaining its decision, the Court said that its task was to determine whether recognition or enforcement of the award would undermine the fight against money laundering by allowing a party to benefit from criminal activities. In carrying out this assessment, the Court said that it was not limited to the evidence available to the tribunal or bound by its assessment of the record, although it added that due process must always be respected.


This decision constitutes the first example of an award being set aside by the French courts on international public policy grounds on the basis of alleged money laundering. In coming to this decision, the Paris Court of Appeal appears to have conducted a relatively thorough review by examining in detail evidence that was put before the tribunal and considering new evidence, such as the 1.1 million euro fine given to Baltic International Bank for breaching anti money-laundering rules in Latvia. This extent of review appears to share similarities with the reasoning in three 2014 Paris Court of Appeal decisions in the area of corruption (Gulf Leaders, République du Congo v. Commisimpex and SAS Man Diesel), the first two of which have been upheld by the Cour de cassation (French Supreme Court). It also appears to be in contrast with the 2004 Paris Court of Appeal decision in Thalès, an important case in this area, according to which national courts should not carry out a thorough review of matters dealt with by the arbitral tribunal and that only a flagrant, effective and concrete breach of international public policy could lead to an award being set aside.

Case: CA Paris, Belokon v Kyrgyzstan, 21 February 2017, No. 15/01650

More pro-arbitration measures in China for foreign investors

The PRC Supreme People’s Court recently announced changes promoting arbitration between companies incorporated in pilot free trade zones:

  • wholly foreign owned enterprises incorporated in pilot free trade zones can now submit commercial disputes to foreign arbitration; and
  • there is a possibility that China is opening the door to ad hoc arbitration.

These changes, issued on 30 December 2016 in the Opinions on Provision of Judicial Safeguards to the Development of Pilot Free Trade Zones (Fa Fa [2016] No. 34) (“Opinions“), are major pro-arbitration changes to promote business in China’s free trade zones.

Development of the “foreign element” rule

Under the PRC law, a contract is foreign-related only if the contract contains a “foreign element” in at least one of the following aspects: nationality of the parties, habitual residence of the parties, subject matter of the contract, legal facts leading to establishment, change or termination of the contract, as well as other circumstances which a people’s court may deem as a “foreign element”.

The importance of the “foreign element” rule under the PRC law is indicated in the choice of the seat of arbitration, given that a dispute in connection with a contract without a “foreign element” may not be submitted to arbitration seated in a foreign jurisdiction. (See the SPC’s Reply in Zhaolai Xinsheng [2013] Min Si Ta Zi No. 64.)

Change happened in the case of Siemens v. Golden Landmark ([2013] Hu Yi Zhong Min Ren [Wai Zhong] Zi No.2), whereby the No. 1 Intermediate People’s Court of Shanghai Municipality innovatively upheld the “foreign element” in a contract based on, inter alia, the fact that the parties of the contract are two wholly foreign owned enterprises (“WFOE“) incorporated in the Shanghai Pilot Free Trade Zone, even though the conventional thinking is that a WFOE in itself does not constitute a “foreign element”. Nonetheless, given that PRC court judgments do not have binding effect on other PRC courts, it was not clear at the time whether other PRC courts would adopt a similar approach.

With the promulgation of the Opinions in December 2016, Article 9 of the Opinions clarified that an “arbitration agreement concluded between WFOEs incorporated in a pilot free trade zone submitting a commercial dispute to foreign arbitration should not be held as invalid solely based on lack of foreign element of the dispute“, thereby confirming the interpretation in Siemens v. Golden Landmark in the form of a judicial document.

Ad hoc arbitration in China possible

Under the PRC Arbitration Law, a designated arbitration commission is one of the mandatory requirements for a valid arbitration agreement. As a result, ad hoc arbitration is not permitted in China.

The Opinions in Article 9 provide that an “arbitration agreement between companies incorporated in a pilot free trade zone submitting a relevant dispute to arbitration conducted at a specific place in the mainland, through specific arbitration rules, and by specific personnel may be held as valid.” Given that the designated arbitration commission is not required under this article, there are certain voices in the Chinese arbitration community suggesting that such article may be interpreted as China’s attempt to open the door to ad hoc arbitration.

Nonetheless, given that Article 9 does not go into details for some issues such as the scope of the “specific arbitration rules” as well as the potential conflict between Article 9 and the mandatory requirement regarding designated arbitration commission under the PRC Arbitration Law, clarification may be needed for future application of Article 9, and its impact on ad hoc arbitration in China still remains to be seen.

For the full text of the Opinions (in Chinese), please click here.

The New VIAC Rules – Effective from 1 March 2017

On 1 March 2017, the new arbitration rules of the Vietnam International Arbitration Centre (VIAC) came into force, replacing the 2012 rules.

The 2017 VIAC Rules include the following changes:

  • Multiple Contracts (Article 6) – under the 2017 VIAC Rules parties will now have the opportunity to bring claims relating to more than one contract in a single Request for Arbitration, irrespective of whether the claims are made under one or more arbitration agreement.
  • Consolidation (Article 15) – parties may now agree to consolidate two or more pending VIAC arbitrations into a single arbitration.  However, VIAC will retain discretion to confirm the consolidation “upon its consideration on relevant matters”.  At this stage, it is unclear what matters VIAC considers relevant and the rule is comparatively short on detail when compared to the provisions of other institutions, such as HKIAC and SIAC.  The rule is clear that unless otherwise agreed by the parties, the arbitrations will be consolidated into the arbitration that commenced first.  According to VIAC, this provision is estimated to save between 15% and 37% of the total costs of arbitration for multiple VIAC proceedings, had those proceedings not been consolidated.
  • Expedited Procedure (Article 37) – where the parties agree to it, arbitration proceedings can be conducted under a new expedited procedure. Unless the parties have agreed otherwise, the 2017 VIAC Rules provide that expedited proceedings will be heard by a sole arbitrator with time limits in the rules shortened. Unlike other institutional rules – such as SIAC or ICC’s 2017 rules with their 6 month time limits – the VIAC rules do not prescribe any particular process or specify any time limits for an award in an expedited arbitration.  This may be because the claimed statistics for VIAC arbitrations show that on average, matters are already resolved very quickly by international standards (claimed figure is 154 days).  Usefully, the rules specify that unless the parties agree otherwise, the tribunal now also has discretion to decide a case on documents only, which means no oral hearing, no requests to produce documents and no examination of witnesses. With the parties’ agreement, a hearing may also be conducted by teleconference or videoconference, instead of in person.

The 2017 VIAC Rules are part of an effort to keep VIAC’s institutional arbitration offering up to date with international best practice and contain some undoubtedly helpful features to help parties control time and cost in their arbitrations.  They are intended to address some of the key complaints from the users of arbitration generally. It is not alone in updating its rules to allow for the consolidation of multiple claims and for expedited proceedings, though the recently updated rules of the major international institutions are arguably drafted in a more comprehensive way.  It remains to be seen how VIAC will apply them in practice.  Certainly the amendments will help gather support for institutional arbitration in Vietnam and cement VIAC’s growing reputation as a leading centre for parties who have agreed to arbitrate there.  Its latest available statistics show rapid growth, with over 50 foreign element cases pending before VIAC in 2015.

More broadly, the 2017 VIAC Rules are a further positive indication that Vietnam is increasingly adopting a more pro-arbitration approach. We now look forward to seeing how the rules are applied in practice and further clarification from the Supreme People’s Court as to, for example, the status of awards made under VIAC’s new expedited procedures. We expect these will add to the positive direction the Vietnamese courts are taking in regards to the enforcement of arbitral awards.

Effective Today: Revised ICC Rules of Arbitration

The revised ICC Rules of Arbitration are in effect as of today, 1 March 2017.  The Rules were revised to increase efficiency and accountability in ICC arbitrations and, most significantly, the revised Rules provide for a new expedited procedure that brings the ICC into line with fast-track procedures already available in a number of other arbitral institutions around the world.

Unless parties opt out, the ICC’s new Expedited Procedure Rules will automatically apply to all arbitrations with arbitration agreements concluded after 1 March 2017 and with amounts in dispute up to US$2 million.  And while the ICC Court has discretion to determine that the expedited procedure is inadequate for any matter on a case-by-case basis, parties may elect to opt into the Expedited Procedure Rules for arbitrations amounts in dispute higher than US$2 million as well.

Arbitrations proceeding under the new Expedited Procedure Rules will be significantly simplified, allowing matters to move forward more efficiently.  First, regardless of what the arbitration agreement provides, the dispute will be referred to a sole arbitrator (to be appointed by the ICC Court or the parties) whose fees are on a reduced scale.  Then, expedited matters will bypass the Terms of Reference altogether – a process that could take up to 2 months under the prior Rules – and instead will go straight to a case management conference within 15 days of sending the file to the tribunal.  An award then must be rendered within six months of that conference.  In total, expedited proceedings should not take longer than 6.5 months from start-to-finish, unless limited and justified circumstances warrant an extension.

To allow matters to proceed on such a fast track, arbitrators may choose to limit the scope of disclosures, witness statements, expert reports and/or written submissions in the expedited proceedings.  Indeed, arbitrators have discretion to decide expedited cases without any document disclosures and even without hearings.  Or, if hearings are needed, the Expedited Procedure Rules allow flexibility to hold them by video or teleconference.

Parties to arbitrations with amounts in dispute greater than US$2 million or with arbitration agreements concluded before today need not feel left out:  as noted above, the ICC Rules provide a mechanism to opt into the expedited procedures.  And moreover, the amended Rules have new features that provide for greater efficiency and accountability in all ICC arbitrations.  The timeline for the Terms of Reference was cut in half from two months to 30 days in the revised Rules, for example.   And a clause in the prior version of the Rules that prohibited the ICC Court from communicating its reasons for deciding to appoint, confirm, challenge or replace an arbitrator has been deleted, providing more transparency into the Court’s decision-making process.

Overall, the 2017 ICC Rules updates are not as comprehensive as the last round of revisions in 2012, and most ICC arbitrations will continue to proceed much as they have been – with a few tweaks.   But as described above, even though potential arbitration could be far off for parties who are entering into arbitration agreements now, those are the parties for whom the revisions are most relevant.   For all commercial agreements with ICC arbitration clauses that conclude after today, parties should be aware that the Expedited Procedure Rules automatically will apply to disputes for amounts less than US$2 million unless the parties explicitly opt out in the arbitration agreement.  And similarly, parties including ICC arbitration clauses in agreements after today should consider whether they may want to opt in to the Expedited Procedure Rules for disputes with claims over US$2 million.  The parties may set their own threshold amount for opting into the expedited procedures (for example, all arbitrations with amounts in dispute below US$20 million), or they may opt into the expedited procedures for all arbitrations irrespective of the amount in dispute.  The revised ICC Rules provide model language that is recommended to effect the parties’ intentions regarding opting in or out of the Expedited Procedure Rules.

For the complete set of the updated ICC Rules, please click here.