Header graphic for print


International Arbitration News, Trends and Cases

Appeals and challenges under the Arbitration Act 1996: Not so appealing anymore?

It is well-recognised that an advantage of London-seated arbitration is the limited grounds on which an arbitration award may be challenged or appealed in the English courts. The three grounds of challenge / appeal under the English Arbitration Act 1996 (the “Act”) are:

  • lack of substantive jurisdiction of the arbitral tribunal (s.67);
  • serious irregularity affecting the tribunal, the proceedings or the award that has caused or will cause substantial injustice to the applicant (s.68); and
  • appeal on a point of law (s.69).
  • The Commercial Court statistics for the court year 2018-2019 show that there has been a significant decrease in the number of applications under s.68 and s.69 (there are no statistics available for s.67 applications). Specifically, there were:
  • 19 s.68 applications, compared with 71 in 2017-2018
  • 39 s.69 applications, compared with 87 in 2017-2018.
  • The statistics also highlight the very low success rate of these applications. The minutes of the Commercial Court Users’ Group Meeting (at which the statistics were reported) record that there were “very few” successful s.68 challenges in 2018-2019, and “Teare J expressed hope that parties were hearing the message that the hurdle for these applications is high.” None of the s.69 applications were successful in 2018-2019 (there were only two successful s.69 appeals the previous year).

Why has there been such a dramatic decline in applications under s.68 and s.69 in the space of a year?

Were fewer arbitration awards issued in 2018-2019 meaning that there were less arbitral awards for parties to challenge/appeal? The caseload statistics issued by some of the major arbitral institutions that administer London-seated arbitrations (LCIA, ICC and LMAA) for the calendar year 2018 (which partly overlaps with the 2018–2019 court year to which the Commercial Court statistics relate) suggest not – there appears to have been a modest increase in arbitrations commenced and arbitral awards rendered in 2018 compared with 2017. (As regards s.69 appeals – we note that the ICC and LCIA Rules exclude the ability of parties to appeal under this section, but the LMAA Rules do not.)

Does the decline reflect party satisfaction? Perhaps the decline in s.68 and s.69 applications should be viewed as a sign that parties are happy with the arbitration process and the quality of awards being rendered by tribunals in arbitrations seated in London and are, therefore, less inclined to challenge/appeal those awards in the English courts.

And/or, are parties deciding not to bring applications because of the low chances of success? As Teare J suggested, perhaps parties are deciding against bringing applications in circumstances where the “hurdle for these applications is high.”

Are the 2018-2019 statistics evidence of a trend towards fewer appeals/challenges?

Some caution should be exercised before attempting to extrapolate a trend of sharply decreasing s.68 and s.69 applications by comparing the 2017-2018 and 2018-2019 statistics alone. The statistics for 2015-2016 (34 s.68 applications, one successful challenge and 60 s.69 applications, four successful appeals) and 2016-2017 (31 s.68 applications, no successful challenges and 46 s.69 applications, no successful appeals) indicate that 2017-2018 was an anomaly because it saw a significant spike in s.68 and s.69 applications.

The spike in 2017-2018 makes the decrease in 2018-2019 appear sudden and dramatic, whereas if the 2018-2019 figures are compared with the 2015-2016 and 2016-2017 figures they suggest a gentler trend of gradually decreasing applications over the last few years.

We shall have to wait for the statistics for subsequent years to see the true picture, however, in the meantime, perhaps the 2018-2019 statistics should should be viewed as: (i) demonstrating the satisfaction of parties arbitrating in London with the arbitral process and awards rendered; (ii) a sign that parties are becoming increasingly pragmatic regarding the chances of success of s.68 and s.69 applications; and, (iii) a reflection of the robust and pro-arbitration stance of the English courts.

Annabel Maltby and Georgia Davies

How Far Do Tribunals Have a Duty to Investigate Corruption? The Kenyan High Court Has Its Word

It is twelve years since an ICSID tribunal dismissed World Duty Free’s claim against the Republic of Kenya for breach of a lease agreement signed in 1989. As is well known, the claimant obtained the contract with a $2 million bribe to former President Moi, and the tribunal held, inter alia, that it could not uphold a claim based on a contract obtained through corruption, deeming it contrary to international public policy (World Duty Free Company Limited v Republic of Kenya (ICSID Case No. ARB/00/7), para. 188).

Despite this 2006 award, World Duty Free commenced arbitration again in 2008 (against the Kenya Airports Authority (”KAA”)) for alleged breaches of contracts entered into pursuant to the same 1989 lease agreement. This time, World Duty Free’s prospects looked good: an ad hoctribunal awarded it around $50 million in damages in December 2012. But the Kenyan High Court has now put an end to its short-lived success. Following an application from the KAA, it set aside the award on 5 October 2018, finding it “inimical to public policy” on the basis that damages had been awarded in relation to contracts founded in the 1989 agreement – which in turn had been obtained through corruption (Kenya Airports Authority v World Duty Free Company Limited t/a Kenya Duty Free Complex (High Court of Kenya, Nairobi, misc. application no. 67 of 2013)).

Interestingly, the bribe to former President Moi was not raised by either party in the arbitration. The High Court’s judgment, therefore, provides a useful reminder that addressing corruption often requires arbitrators to undertake a delicate balancing act, with significant consequences if the right balance is not struck. While a tribunal must not exceed the contractual limits of its power by considering matters falling outside the terms of reference, it must also ensure that its award is enforceable and therefore consistent with relevant public policy demands.

A Tribunal’s Duty to Investigate Corruption at Its Own Motion

There is no universally accepted approach to addressing corruption when it surfaces in international arbitration. While there does seem to be a general and gradual shift toward taking a more active stance than previously, arbitrators continue to grapple with issues such as finding suitable methods of applying international conventions on corruption and the possibility of establishing the existence of corruption with the concept of red flags.

However, as allegations of corruption were not raised by the KAA in its defence in the present case, Justice Torgbor (acting as sole arbitrator) considered the matter outside his jurisdiction:

There is therefore no basis… in pleading, evidence or agreement for this Arbitral Tribunal to take cognizance of an ‘ICSID judgement’ or an unlisted ICSID issue. Subject to the cautionary caveat occasioned by the Respondent’s withdrawal from the arbitral proceedings an Arbitral Tribunal does not normally roam around to find and determine issues the parties have not for themselves raised for determination“.

As Torgbor noted, a tribunal must take great care to restrict itself to considering the issues put before it. A failure to decide a case as pleaded may lead to annulment or problems with enforcement. In this case, the sole arbitrator’s reluctance to consider the bribe at his own motion is perhaps understandable given the conspicuousness of its absence from the parties’ submissions.

Nonetheless, the High Court, when considering the KAA’s application to set aside the award, judged that Justice Torgbor had erred in his decision and noted that:

Whilst arguing that the ICSID Award was not placed as formal evidence before the Torgbor Tribunal, Counsel for Kenya Duty Free nevertheless concedes that it was to be found in at least three bundles of Documents placed before the Tribunal. The language used by the Arbitral Tribunal does not suggest that it did not see and read the Award or at any rate was unaware of it“.

It went on to observe that once an allegation of corruption is brought to the attention of a tribunal, even if not pleaded, “the Tribunal ought to pause and interrogate [it]”. This direction is interesting for its breadth and clarity. It suggests that when confronted with corruption, tribunals should have the confidence to undertake at least a cursory exploration of the relevant allegations (whether raised by the parties or not).

Such logic may find traction elsewhere given the current debate on corruption in international arbitration. Indeed, the High Court’s decision fits within a wider trend of national courts indicating that arbitrators should adopt a more active stance in this regard. In a recent case before the Singapore High Court, for example, Kannan Ramesh J reiterated that, “in appropriate cases, an arbitral tribunal would be required to investigate allegations of corruption“, provided the allegations affect the issues under consideration in the arbitration (China Machine New Energy Corp v Jaguar Energy Guatemala LLC and another [2018] SGHC 101, paras. 224 and 226). This followed a similar ruling by the Paris Court of Appeal, which suggested early last year that Tribunals seated in France have a duty to “meticulously examine” evidence of corruption when it arises (Cour d’appel de Paris, arrêt du 21 février 2017, Belokon c. Kirghizistan (15/01650)).

Meanwhile, investment tribunals have also shown a greater willingness to adopt a proactive stance since the landmark 2006 decision in Word Duty Free v Kenya. In the 2016 case of Spentex v Uzbekistan, for example, the tribunal went as far as using the cost allocation as a means of addressing corruption. It strongly urged Uzbekistan to make a donation to the UNDP anti-corruption initiative, failing which it would have been subject to an adverse costs order.

Importance of Rendering an Enforceable Award

This gradual shift toward a more active stance on corruption requires arbitrators to pay particular attention to need to render an enforceable award, which may be jeopardised if they stray outside the contractual limits of their power by deciding on unpleaded issues. Indeed, section 35(2)(a)(iv) of the Kenyan Arbitration Act provides that an award may be set aside in Kenya if it “deals with a dispute contemplated by or not falling within the terms of reference to arbitration or contains decisions on matters beyond the scope of the reference to arbitration“.

Yet arbitrators must also be alive to the risk of their awards falling foul of public policy requirements. This was underlined by the Kenyan High Court in its judgment, which noted that, “however much [Arbitral Tribunals’] awards should enjoy autonomy, they should not be tolerated as long as they are inimical to public policy” (para. 38). This principle is of course also reflected in the New York Convention.

The present case illustrates that it can be difficult for tribunals to strike the right balance between these at times competing demands. However, as the ICSID tribunal in the first round of the World Duty Free saga observed, corruption is almost universally considered to be contrary to public policy:

“in light of domestic laws and international conventions relating to corruption, and in light of the decisions taken in this matter by courts and arbitral tribunals, this Tribunal is convinced that bribery is contrary to the international public policy of most, if not all, States or, to use another formula, to transnational public policy“.

With this in mind, the precedence afforded by the Kenyan High Court to the need for arbitrators to consider the issue of corruption is understandable.


It remains uncommon for a court to condemn a tribunal’s failure to investigate corruption at its own volition; however, the tribunal, in this case, was in the unusual position of possessing damming evidence of corruption in the well-publicised ICSID award. The wider impact of this decision may, therefore, be limited due to the factual circumstances.

Nonetheless, the High Court’s decision highlights the on-going tension between arbitrators’ nervousness at exceeding the contractual limits of their power, the arbitrator’s duty to investigate corruption at its own motion, and the need to render an enforceable award consistent with public policy. While in this case, the arbitrator was likely fully aware of Word Duty Free’s corruption, and therefore may have been overly cautious in the eyes of the Kenyan High Court, it illustrates the difficulties faced by arbitrators dealing with unpleaded allegations of corruption in the absence of explicit guidance.


This article first appeared on the Kluwer Arbitration Blog in December 2018.

The Paris Court upholds the supranational nature of OHADA law in dismissing annulment application (CA Paris 16/25484, 20 December 2018)

The Paris Court of Appeals recently upheld an arbitral award applying OHADA law. The application to set aside the award had been brought by the State of Cameroon based on arguments made under Cameroonian law. However, the Court applied OHADA law over Cameroonian law, in the process confirming the supranational nature of OHADA law. This is therefore an interesting decision which shows the courts of a state external to OHADA confirming that law’s pre-eminent stature.

After a brief review of the facts and procedure of the Garoubé saga leading to this decision, taking us from Yaoundé to Belgium to Paris (1), we summarize the decision below (2) and review briefly its significance in upholding OHADA law (3).

1.            Facts and procedure

Projet Pilote Garoubé (“Garoubé“) was a company established in Yaoundé, Cameroon, one of the founding OHADA States. The company was therefore governed by the OHADA law on companies – the Uniform Act relating to Commercial Companies and Interest Groups.

Garoubé entered into concession agreements with Cameroon in 2001 to conduct game ranching and related farming activities. After five years, Cameroon unilaterally suspended the concession agreements. Garoubé then transferred its registered offices to Belgium, thus becoming a company governed by Belgian law.

The ensuing dispute has been ongoing for several years. Garoubé initiated arbitration proceedings on the basis of an ICC arbitration clause in the agreements. A first arbitration award was rendered but then annulled due to a conflict of interest on the part of one of the arbitrators. A second tribunal was constituted and issued two partial awards, first on jurisdiction and later on liability. These awards formed the basis of Cameroon’s request for annulment in the present case.

Amongst the various arguments made in support of its request for annulment, Cameroon argued that Garoubé’s transfer of registered office from Cameroon to Belgium – although permitted by OHADA law – was in breach of Cameroonian regulations relating to wildlife exploitation. Therefore Garoubé, in its status as a Belgian company, did not have standing to bring arbitration against Cameroon and therefore the tribunal did not have jurisdiction.

2.            The Court upholds the supranational nature of OHADA law

The Paris Court dismissed all of Cameroon’s arguments, applying a particularly strong reasoning on the superseding nature of OHADA law.

The Court endorsed the arbitral tribunal’s decision on jurisdiction holding that: “The OHADA treaty sets a supranational rule by providing for the mandatory and direct application in member States of Uniform Acts and it establishes, in addition, their supremacy over former or subsequent internal legal dispositions“. Further, it set out: “the Uniform Act relating to Commercial Companies and Interest Groups establishes that its provisions are public policy and are also immediately and directly applicable“. In other words, OHADA law provisions protecting the transfer of a company’s registered office were interpreted as overriding any contrary OHADA State regulation.

As a result, Cameroon’s regulation relating to wildlife could not prevent the transfer of Garoubé’s registered office and therefore had no effect on the arbitration agreement’s enforceability and the jurisdiction of the arbitral tribunal.

In addition, Cameroon claimed that its regulations on wildlife were overriding mandatory rules and that in by failing to take these rules into account the award had breached international public policy. The Paris Court also dismissed this argument, reminding Cameroon of the high threshold required to show a breach of international public policy under French law.

3.            Conclusion

Courts beyond the boundaries of the 17 OHADA States will rarely get the opportunity to consider the status of OHADA law. When faced with allegedly competing provisions of OHADA and local law, the Paris Court, perhaps unsurprisingly, upheld the supremacy of the international OHADA law, and in doing so used strong terms to ensure the matter remained beyond doubt.

Indeed, the strong wording used by the Court – assimilating OHADA law to public policy – suggests that it will be difficult for parties to get around OHADA law. This reference to public policy raises some of its own questions, such as whether a breach of OHADA law could form the basis for an annulment application under OHADA or New York Convention principles. Such issues remain open for clarification at a later date.

By endorsing the superseding nature of OHADA law, the Paris Court of Appeals gives effect to the OHADA Treaty’s initial promise: a “harmonized business law in order to improve companies’ business“, including by giving visibility and predictability to companies instituted under that international legal system. This decision should therefore help to ensure that other companies like Garoubé can avail themselves of OHADA law for their own benefit.

Hong Kong Arbitration Week Recap: Making Arbitration Fit for the Future

Hogan Lovells hosted an event yesterday, 30 October 2018, at its Hong Kong office, as part of the Hong Kong Arbitration Week, titled “Making Arbitration Fit for the Future”.  The event was graced by the presence of Bernard Hanotiau as the keynote speaker, followed by speeches from HKIAC’s Sarah Grimmer and Hogan Lovells’ James Kwan, Julianne Hughes-Jennett and Dan González.

Keynote Speaker: Bernard Hanotiau

Bernard Hanotiau kicked off the seminar by noting its fascinating theme of making arbitration fit for the future, which in his view is to make arbitration as efficient as possible by adapting it to match the evolution of society.  Hanotiau believes that there is still room for institutional rules to be improved from an efficiency standpoint, such as expanding grounds for complex arbitrations, introducing summary or early determination procedures and providing secured online repository where documents can be uploaded.

To make arbitration fit for the future, Hanotiau said that practitioners and arbitrators need to step up to the plate by adapting and improving their practice of the arbitral process.  This can be done by making use of modern and appropriate technology, and take the initiatives to shorten the procedure where possible.  On technology, Hanotiau highlighted its importance to shrink a large number of files, and suggested that site visits may possibly be replaced by 3D models or augmented reality very soon.

When met with an audience question on how to balance party autonomy against a party’s demand for a 40-page post-hearing briefs, Hanotiau said that the Tribunal should first discuss with the parties on the way forward.  If the parties are in total disagreement and the Tribunal considers them to be unreasonable, it will need to make a final decision.  Hanotiau thought that parties should approve of Tribunals that put their foot down to make decisions.

Innovation: Improving Institutional Rules as the Answer

HKIAC’s Sarah Grimmer then took the floor and introduced the audience to the brand new HKIAC Administered Arbitration Rules, which will come into effect on 1 November 2018.  Grimmer explained that there were three key objectives behind the amendments in essence: time and cost saving measures, efficiency in complex arbitrations and relevance to developments in international arbitration.

Some of the noteworthy amendments that Grimmer highlighted include: a cap on the total fees charged by an emergency arbitrator; introduction of an early determination procedure; imposition of a three-month time limit to render an award after close of proceedings; amended deadlines to appoint an emergency arbitrator and to render an emergency decision; possibility to file an emergency arbitrator application before commencing an arbitration; express reference to concurrent proceedings; encouraging the effective use of technology and delivery of documents through an online repository system.

Artificial Intelligence in International Arbitration

James Kwan, an international arbitration partner at Hogan Lovells’ Hong Kong office, spoke about the tongue-twisting concept of “AI in IA”.  Drawing on the 2018 Queen Mary University of London International Arbitration Survey, Kwan pointed out that there is a sentiment towards the greater use in the future of artificial intelligence (“AI“) technology, with 61% of the survey respondents noting that “increased efficiency, including through technology” is the factor that is most likely to have a significant impact on the future evolution of international arbitration. Kwan then highlighted for the audience how AI is used in international arbitration, ranging from enhancing case management to predictive justice and even having AI arbitrators.

While enhancing case management is quite innocuous, predictive justice and AI arbitrators are certainly the more heated topics.  Some of the concerns highlighted by Kwan include the failure for predictive justice to take into account the “human factor”, due process and the right to be heard.  On AI arbitrators, while the idea is tempting, Kwan said that such concept is unlikely to happen in the immediate future given the various hurdles such as: whether machines can be qualified as arbitrators; nationality and security of AI arbitrators; and whether AI arbitrators are capable to render reasoned awards or suitable to decide disputes at all, given their lack of understanding of emotions.  As such, Kwan foresees that although AI is here to stay, in its current form AI can only assist and facilitate, but is nonetheless useful and will play an increasingly significant role in arbitration.  Referring to the Terminator series, Kwan concluded that lawyers and arbitrators can be assured that their services are still needed until the judgment day comes.

Human Rights and Arbitration

Julianne Hughes-Jennett, a partner at Hogan Lovells’ London office, then took the stage to talk about the relationship between businesses and human rights (“BHR“) as well as international arbitration. Drawing from both soft laws (such as the OECD Guidelines) and hard laws (such as national legislations), Hughes-Jennett said that states have the duty to respect, fulfil and protect human rights while corporations have the responsibility to respect the same.  In the context of investment treaty claims, human rights can be used both as a sword (e.g., breach of access to justice and due process obligations) and a shield (e.g., claimant’s breach used to either mitigate the compensation owed).

Hughes-Jennett pointed out that the types of BHR disputes referred to arbitration will either involve a victim against a business, or a business against another business.  However, there are certain challenges to overcome for this type of dispute such as consent to arbitrate, applicable law, public policy, inequality of arms and spurious claims.  Notwithstanding these challenges, BHR disputes have already been filed previously, such as the arbitrations brought before the Permanent Court of Arbitration based on the Accord on Fire and Building Safety in Bangladesh.  Hughes-Jennett concluded that BHR arbitration is undoubtedly a welcome initiative, but it would be important to carefully consider the legal, practical and policy challenges as well as to continue to consult stakeholders on this matter.

Increasing Efficient Access to International Arbitration

Last, but certainly not least, Dan González (Global Head of Hogan Lovells’ International Arbitration practice) spoke about increasing efficient access to international arbitration. González  pointed out the consistency from different surveys that arbitration is the preferred tool for dispute resolution, but that the top complaints about international arbitration from these surveys include costs, delay and time taken to resolve the dispute.

On technology, he noted that electronically stored information (“ESI“) is overwhelming practitioners, as an average employee now generates around 800 megabytes of electronic information per year.  González then shared some tips for promoting better efficiency in arbitral proceedings, which include:

  • Working with the opposing counsel at an early stage. To improve efficiency, parties should try to agree on the procedural order, reduction in the number of pleadings and the discovery procedure. Parties could consider putting mediation on the schedule, as this may lead to early resolution of the dispute, or narrowing down of the issues.
  • Avoid raising every dispute with the arbitral tribunal. Parties should attempt to reach an agreement with the opposing counsel on some issues, and avoid the temptation of raising every disagreement to the Tribunal. However, González reminded the audience that it may be appropriate in some cases to raise significant disputes, which may provide an opportunity to advance one’s own case.
  • Conduct the discovery process in a more efficient manner. Counsel should only ask for the documents we need, rather than engaging in a fishing expedition. González also pointed out the need to identify key custodians, develop intelligent search terms, understand ESI and use technology assisted review (predictive coding) wherever possible.

Questions and Answers

As a parting gift to the audience, Hogan Lovells’ Kent Phillips asked each of the speakers to look into their crystal balls and predict on the future of international arbitration.

Kwan was of the view that there will be a greater influence by Chinese parties in international arbitration, which is evident from the increase in caseload across arbitral institutions such as HKIAC, SIAC and ICC.  He also said that this influence can be felt by the recent amendments to institutional rules like the “med-arb” procedure.

Both Hanotiau and Hughes-Jennett agreed with Kwan, with Hughes-Jennett noting that the bulk of her caseload now involves Chinese parties in commercial arbitrations.  Her prediction, however, is that there will be a rise in BHR disputes.  This is because there are already clauses in place for these disputes, and that it all takes is for them to spring.

González thought that more ADR processes will surface alongside international arbitration, which was traditionally thought to be a form of ADR in the United States but now became the method of dispute resolution.  While it is possible that there will be more and more mediations being conducted by necessity and to save costs, it may be challenging to conduct mediation in other parts of the world due to cultural diversity.

Finally, Grimmer shared González’s view that arbitration will continue to be utilized by more and more parties, which is clear from the arbitral institutions’ recent case load performance and improvement in case management quality.  Grimmer agreed with Kwan that Chinese parties will be engaging more frequently in the arbitral process, and that arbitration – from across the spectrum of dispute resolution – will remain absolutely strong.

New effort to control time and cost in arbitration – the Prague Rules

The draft ‘Rules on the Efficient Conduct of Proceedings of International Arbitration’ (the “Prague Rules“), which were released on 1 September 2018, makes for sombre reading for users of arbitration. It comments that “it has become almost commonplace these days that users of arbitration are dissatisfied with the time and costs involved in the proceedings”. Indeed, interviewees of the 2018 Queen Mary survey on International Arbitration said that “the default mindset that an arbitration would last for up to 18 months should be challenged”.

Set to launch in December 2018, the Prague Rules will work as guidelines, in much the same way as the IBA Rules on the Taking of Evidence in International Arbitration (“IBA Rules“), and will apply only when adopted by the parties. In general the Prague Rules appear to provide a more inquisitorial approach to the taking of evidence compared to the more adversarial style IBA Rules.

In particular, the Prague Rules Working Group identified three features of evidence-taking in arbitration – which it considers to be the main culprits causing extended time and costs – with which arbitration users are dissatisfied:

  1. Document production – which often entails broad categories of document requests leading to lengthy and tedious document disclosure processes;
  2. Too many fact and expert witnesses – which often includes witnesses who testify on irrelevant facts that do not assist the tribunal in resolving the issues in dispute; and
  3. Extended cross examination at lengthy oral hearings – which includes cross on issues the tribunal considers irrelevant.

IBA vs The Prague Rules – What are the differences?

The Prague Rules are not intended to compete with or replace the IBA Rules, but rather promote different options to suit differing parties’ needs.

The overarching difference between the two sets of rules is that the Prague Rules encourage a more active role for the tribunal in a bid to increase the efficiency and cost-effectiveness of international arbitration proceedings.

The more active role is most obviously seen in the Prague Rules’ approach to the disclosure of documentary evidence, fact and expert witnesses, hearings and settlement assistance.

Documentary Evidence

In the Prague Rules, the tribunal “shall avoid extensive production of documents, including any form of e-discovery” (Article 4.2). This is contrasted with the outcome increasingly encountered with the IBA Rules which – despite the drafters’ original intentions to reduce the scope of disclosure – often ends up with parties making broad ranging requests for documents falling into numerous categories and a lengthy and burdensome disclosure process. This can be problematic when busy arbitrators adopt a cautious approach to relevance out of lack of understanding of the case or – in order to appear even-handed – split the issues and award the requesting party something. The Prague Rules simplify this process and a party may only request specific documents (rather than categories of documents).

Fact Witnesses

Rather than the parties identifying the witnesses on whose testimony it intends to rely (IBA Rules Article 4.1), the Prague Rules dictate that after providing the parties with an opportunity to comment, the tribunal shall decide which witnesses are to be called for examination (Article 5.2). The tribunal may also decide not to call a witness for examination during the hearing, if it considers the testimony of that witness to be irrelevant for the resolution of the issues in dispute (Article 5.3).

Expert Witnesses

Under the Prague Rules, the tribunal also has greater control over expert witnesses. Contrasted with Article 5 of the IBA Rules (concerning party-appointed experts), the Prague Rules contain more streamlined guidance on experts, with Article 6 noting that at either the request of a party or on its own initiative, the tribunal may appoint one or more experts to present a report to the tribunal on disputed matters which require specialised knowledge. However, the tribunal’s appointment of experts does not preclude a party from submitting its own expert reports (Article 6.4).


Article 8 of the Prague Rules provides that, to the extent possible, the dispute should be resolved on a documents-only basis. If one of the parties requests a hearing or the tribunal itself finds it appropriate, the hearing should be conducted in the most cost-efficient manner and in the shortest duration possible (including by using video, electronic or telephone communication to avoid unnecessary travel costs for arbitrators, parties and other participants). This is contrasted with the IBA Rules which assume that an oral hearing will take place.

Settlement Assistance

Perhaps the most controversial feature of the Prague Rules is that it contemplates some tribunal assistance in settlement negotiations. Article 9 notes that unless one of the parties objects, the tribunal shall assist the parties in reaching an amicable settlement of the dispute at any stage of the proceedings. The tribunal may also, to the extent permissible under the lex arbitri, express its preliminary views with regard to the parties’ respective positions in order to assist in an amiable settlement of the dispute. The tribunal (or one of its members) may also act as mediator, and may continue to act as arbitrator in the event that the matter does not settle at mediation.


The Prague Rules are the latest in a long line of initiatives aimed at addressing some of the perceived causes for two of the major reported concerns with arbitration – the time and cost involved. The Rules consider that encouraging the tribunal to be more proactive in its case management function will lead to more efficient arbitrations. This is to be encouraged.

In an age of due process paranoia we query whether the risk is that an increase in tribunal intervention may lead to an increase in arbitral awards being challenged. One of the major attractions of arbitration is party autonomy and the Prague Rules arguably strip some of that away. There is undoubtedly a fine line between tribunals driving arbitrations to be as efficient and as inexpensive as possible, and the parties having the flexibility to decide the format of dispute resolution that best suits them.

Only time will tell whether there will be user uptake of the Prague Rules, particularly in common law jurisdictions, and their December 2018 release will be watched with interest by the international arbitration community.

Hong Kong court refuses to enforce an arbitral award on the basis of violation of public policy

In Z and Y [2018] HKCFI 2342, the Hong Kong Court of First Instance (“CFI”) refused to recognize and enforce an arbitral award (“Award”) of the China Guangzhou Arbitration Commission (“Commission”) on the basis that enforcement under section 95(3)(b) of the Hong Kong Arbitration Ordinance would be contrary to the public policy of Hong Kong.  This is a rare example of the Hong Kong courts invoking such ground.  The judgment also dealt with commonplace arguments to challenge jurisdiction and enforcement, which will be of interest to arbitration users.


The arbitration was commenced by the Applicant against the Respondent under a guarantee purportedly signed by the Respondent in 2014.  Under this instrument, the Respondent was to guarantee a debt of RMB 10,239,325.09 allegedly due to the Applicant by a Chinese company known as HD, accrued under 8 supply contracts whereby the Applicant sold plastic raw materials to HD.  Around the same time, HD’s affiliate company (known as MD) purportedly entered into 8 supply contracts with the Applicant, under which MD would supply to the Applicant the exact amount and types of goods supplied by the Applicant to HD.  This was essentially a back-to-back arrangement where goods passed from MD to the Applicant and then to HD.

Leave to enforce the Award was originally granted by the CFI on 28 August 2017 as part of the standard procedure in an ex parte application for leave.  The Respondent then applied to the CFI to set aside the enforcement order on the following grounds.

Illegality ground

The Respondent argued that the various supply contracts were sham arrangements to hide what was in reality loans between the Applicant and HD, the act of which contravened PRC law and constituted the criminal offence of “fraudulent contracts”.

In this regard, the Respondent adduced evidence to show that it was abnormal for the Applicant, HD and MD to have entered into their transactions for the following reasons: (a) HD and MD only purchased raw materials for their own use in their ordinary course of business; (b) the types of raw materials required and used by them were different; and (c) HD and MD were both scaling and closing down their businesses and it did not make sense for there to be purchases of such large amounts. Accordingly it was inconceivable for there to be back-to-back transactions.

In response, the Applicant merely pointed out that this illegality ground had been argued by the Respondent in the arbitration which was dismissed by the tribunal.

In examining this ground, the CFI clarified that it should neither review the merits of the Award, nor is any mistake of fact or law made by the tribunal a ground to set aside or refuse enforcement.  However, the CFI held that the tribunal had failed to give any adequate reasons as to why it had concluded that the Illegality Ground had not been established by the Respondent and should be dismissed.  The CFI found the Respondent’s case as to the sham transactions of the supply of materials to be credible, and were supported by evidence. The allegations of such unlawful loans therefore raised serious issues of illegality and possible offences under PRC law, which the CFI thought the tribunal had not thoroughly considered.

Accordingly, the CFI said that it would offend notions of fairness and justice to enforce the Award when it might be tainted by illegality, and when a significant issue brought before the tribunal for determination had not been seen to be properly considered and determined, contrary to the parties’ legitimate and reasonable expectations.

Other grounds raised by the Respondent to resist enforcement – capacity, invalid guarantee, and lack of proper notice – were rejected. However, the CFI was sympathetic to the illegality argument raised under the invalid guarantee ground, which it had addressed above.

Invalid arbitration agreement ground

The Respondent argued that there was no valid arbitration agreement as it only provided that the parties to the guarantee “may” apply to the Commission for arbitration.  Further, the guarantee was not signed by the Applicant, and there was no evidence that it had agreed to the document or become a party to the guarantee and the arbitration agreement.

The CFI held that although the arbitration clause in the guarantee stipulated that any party “may” apply for arbitration for any dispute, case law ruled that once a party applies to exercise this option, the other party would be bound to accept the reference (Hermes One Ltd v Everbread Holdings Ltd [2016] 1 WLR 4098).  As such, the CFI rejected the Respondent’s submission that there was no binding arbitration agreement because the arbitration clause was uncertain and not mandatory.

However, onto the Respondent’s argument that the guarantee was not signed by the Applicant, the CFI noted that the question of the validity of the guarantee under PRC law was not addressed in the Award.  There was no reason given to support the tribunal’s finding that there was a valid guarantee under PRC law, apart from the fact that it was signed by the Respondent as a person with legal capacity, and did not contravene any law and should be enforced.  In the CFI’s view, the tribunal’s failure to adequately explain why it upheld the validity of the guarantee casted doubt on its acceptance of the existence of a valid and binding arbitration agreement between the Applicant and the Respondent.


The CFI ruled that it would be contrary to the public policy of Hong Kong to enforce the award since the tribunal had failed to give adequate reasons as to why it accepted the guarantee to be valid and legally enforceable, in light of the Respondent’s illegality claims.

This case constitutes one of the rare instances where an arbitral award was refused recognition on the basis of a violation of Hong Kong’s public policy.  Based on our analysis of the case, the CFI cannot be said to have invoked the public policy ground loosely.  The CFI displayed genuine concerns in recognizing and enforcing an award that, on the evidence before the court, may have been tainted by illegality which had not been thoroughly considered by the tribunal.

Without a doubt, national courts should adopt a pro-enforcement stance to uphold the sanctity of arbitration.  Courts should also treat the enforcement of awards “almost [as] a matter of administrative procedure” and be “as mechanistic as possible” (KB v S (HCCT 13/2015)).  However, safeguards exist to prevent the enforcement of awards tainted by illegality arising out of the underlying contract.  This case serves as a confident reminder that the Hong Kong courts continue to uphold the notions of fairness and justice that underpin the judicial system.

The long reach of US discovery: Commercial Court allows enforcement of 28 USC §1782 discovery order

In recent years, US federal procedural law has emerged as a powerful weapon in cross-border disputes. In particular, section 1782 of Title 28 of the United States Code (28 USC §1782) allows district courts in the US to order the discovery of evidence for use in foreign and international proceedings – including, according to several courts, foreign-seated arbitrations.

The recent Commercial Court decision in Dreymoor Fertilisers Overseas Pte Ltd v EuroChem Trading GmbH [2018] EWHC 2267 (Comm) is a useful example of how the English courts will exercise their supervisory authority where proceedings under section 1782 may threaten to interfere with a London-seated arbitration. In particular, it reaffirms that the courts will only restrain a foreign discovery procedure where it would lead to “unconscionable” interference with the local proceedings.

Section 1782 and its use in international arbitration

Section 1782(a) provides, in relevant part, that a US district court may order any person within its jurisdiction “to give his testimony or statement or to produce a document or other thing for use in a proceeding in a foreign or international tribunal…” Case law has historically been divided on whether arbitral tribunals fall within the meaning of a “foreign or international tribunal” or whether the section is limited in its scope to public law courts and tribunals. However, since the US Supreme Court held in Intel Corp v Advanced Micro Devices Inc., 542 US 241 (2004) that section 1782 encompassed “quasi-judicial bodies“, there has been a growing trend towards including arbitral panels within an expansive interpretation of “tribunal”.

In multiple decisions, therefore, US courts have granted requests for pre-hearing discovery in respect of investment and commercial arbitrations seated abroad. Section 1782 has particularly proven its value in relation to third parties over whom the tribunal has no jurisdiction, but who are nevertheless susceptible to orders from a national court. Thus directors, (ex-)employees and advisers of the parties may all be the subject of a section 1782 order to produce documentary evidence or to present themselves for depositions or testimony. Compared to other legal systems – for example, sections 43 and 44 of the English Arbitration Act 1996, under which the tribunal’s consent is normally necessary before seeking judicial assistance – US law thus offers a more liberal procedure for obtaining discovery, which parties are increasingly using in arbitration.

The decision in Dreymoor v EuroChem

The interaction between US court proceedings under section 1782 and parallel arbitration proceedings in London was at the centre of the recent judgment in Dreymoor Fertilisers Overseas Pte Ltd v EuroChem Trading GmbH.

EuroChem, one of the largest fertiliser producers in the world, had entered into a series of distribution contracts with Dreymoor, a trading company headquartered in Singapore. EuroChem subsequently alleged that Dreymoor had procured these contracts by paying bribes to two of EuroChem’s former executives and filed two arbitrations in London seeking to set the contracts aside. In relation with another group of distribution contracts, EuroChem also sued Dreymoor before the courts of the British Virgin Islands (BVI). Finally, EuroChem commenced court proceedings in Cyprus (to which Dreymoor was not a party) seeking to recover the bribes which had allegedly been paid to one of its former senior employees.

EuroChem applied to the District Court for the Middle District of Tennessee seeking disclosure under section 1782 in support of these various proceedings. Its target was Mr Sandeep Chauhan, the former director of Dreymoor, whom it sought to depose and compel to produce various documents relevant to the alleged bribery. While the district court left open the question of whether section 1782 could be applied in support of the London-seated arbitrations, there was no doubt that the BVI and Cypriot court proceedings fell within its scope. The order was granted and later upheld on review.

Dreymoor subsequently applied before the English courts for an injunction restraining EuroChem from enforcing the section 1782 order. It argued that enforcement of the order would interfere with its preparation of the upcoming arbitrations in London and that it would be unfair for EuroChem to have two occasions to cross-examine Mr Chauhan, first on deposition and then at the arbitral hearing. Bryan J granted an interim injunction pending a full hearing.

In a judgment of 24 August 2018, however, Males J sitting in the Commercial Court discharged the injunction. Reviewing the case law, it was clear that the courts had a power to restrain “unconscionable” conduct and that, in principle, pursuing a section 1782 order could amount to an unconscionable interference with the fair disposal of proceedings in England. However, on the facts of the case, the threshold of unconscionability was not met, based on several factors:

  • Significantly, the district court had granted the order to obtain evidence for use in the BVI and Cypriot proceedings. While the English courts had an interest in protecting the integrity of their own proceedings and English-seated arbitrations, it was not their role to police the conduct of foreign litigations. Moreover, it could not be said that the London arbitrations were the “lead proceedings”.
  • Given that the US courts had repeatedly dismissed Dreymoor’s objections and held that non-disclosure had already prejudiced EuroChem, it would be a “serious breach of comity” to overrule their conclusions.
  • While the section 1782 order may have an effect on Dreymoor’s preparation for the arbitral hearings, this was “entirely a problem of Dreymoor’s own making” given its successful efforts to delay the enforcement of the order by over a year.
  • Although in previous cases the court had been concerned that pre-trial depositions would allow one party two bites at the cherry to cross-examine a witness, this was less of a concern in the instant case. Due to the existence of multiple proceedings in different jurisdictions, it was likely that all parties’ witnesses would be examined more than once.

As such, EuroChem should be permitted to enforce the section 1782 order against Mr Chauhan. It was, however, left to the tribunals to decide whether the evidence so obtained from Mr Chauhan should be admissible in the London arbitrations.


The Commercial Court’s decision confirms that the “unconscionability” test outlined by the House of Lords in South Carolina Insurance Co v Assurantie Maatschappij ‘De Zeven Provincien’ NV [1987] 1 AC 24 is a relatively high threshold. The judgment can be contrasted with previous decisions in which courts issued anti-suit injunctions against section 1782 applications – notably, Omega Group Holding Ltd v Kozeny [2002] CLC 132 and Benfield Holdings Ltd v Richardson [2007] EWHC 171 (QB) – on the grounds that US discovery would interfere with the due process of court proceedings in England. One of the key differences in Dreymoor was that Mr Chauhan’s evidence was primarily sought for use in the BVI and Cyprus, suggesting that the courts are unlikely to restrain discovery where the requested evidence is intended for use outside England.

Moreover, on the facts of the case, the court was evidently unimpressed that Dreymoor had fought tooth and nail to avoid its former director giving evidence, and took comfort from the fact that the US courts had considered and rejected its objections on multiple occasions. It is notable that although Dreymoor alleged that US discovery would disrupt the arbitrations, it had also failed to inform the London tribunals of its move to restrain the section 1782 order. While the tribunal’s consent is not strictly necessary for the English courts to grant such an anti-suit or anti-enforcement injunction, the arbitrators’ opinions are likely to carry significant weight in light of their role as procedural gatekeepers. A party in Dreymoor’s position would therefore be well advised to normally consult the arbitral tribunal before making any application to the courts.

Although the court declined to exercise its power in this case, the judgment nevertheless confirms the possibility that, in appropriate cases, the English courts may restrain the use of US discovery procedures in support of London-seated arbitrations. Indeed, it appears that the scope of application of section 1782 continues to grow, with it being increasingly used to obtain e-documents hosted in or accessible from the US. Given the growing popularity of section 1782, therefore, this is unlikely to be the last time that the courts face this issue.

The establishment of three new organisations points to further growth in African arbitration

Africa’s economic growth is picking up pace and is expected to reach 6.3% in East Africa and 3.4% in Sub-Saharan Africa by the end of this year.  Foreign direct investment into Africa is also expected to increase from $41.8bn to $50bn, due in part to the signing of the historic African Continental Free Trade Area (AfCFTA) agreement in March.

As international investment and trade in Africa increases, so does the number and frequency of commercial disputes, with arbitration increasingly becoming a preferred means of resolution.  The rise in arbitration in Africa can be seen by looking at the ICC’s recent caseload figures; in 2017, the institution saw the largest number of cases (87) and parties (153) from Sub-Saharan Africa in its history.

Against this background, we will look at three brand new organisations that aim to facilitate the further expansion of arbitration in Africa: the African Arbitration Association (1); the ICC’s African Commission (2); and AfricArb, a Paris-based association of lawyers (3).

1. The African Arbitration Association – an intra-African organisation to promote and strengthen arbitration in Africa

One of the most significant developments of the summer was the launch of the African Arbitration Association (AfAA), held at the headquarters of the African Development Bank (AfDB) in Côte d’Ivoire in June.  The AfAA aims to “promote, encourage, facilitate and advance” the use of international arbitration within Africa.  Although numerous initiatives have been developed to meet these aims in the past, AfAA has been launched to ensure pan-African coordination and cooperation.  The association has brought together an impressive number of African arbitral institutions, 71 in total, and will be headquartered in Rwanda at the Kigali International Arbitration Centre (KIAC).

The AfAA is a long-awaited response to calls for the establishment of a single organisation to promote the existing capacity for arbitration in Africa.  Commenting on the launch of the AfAA, Fidèle Masengo, secretary general of the KIAC, highlighted that arbitration clauses in many international contracts, particularly those financed by the African Development Bank or the World Bank, often provide for an arbitral seat in Paris, London or another Western location.  As a response to this, the AfAA intends to encourage the regionalisation of arbitration, by promoting the appointment of African practitioners, arbitrators and institutions.

The creation of the AfAA may be seen as an important step in what many have termed as the “Africanisation” of arbitration.  The organisation has been described as the “coming of age of the arbitration profession in Africa” by Judge Abdulqawi Ahmed Yusuf, President of the ICJ, a Somalian and prominent African arbitrator.  The AfAA and its awareness-raising activities also have the potential to tackle the perception that arbitration on the continent is extensively under-developed.  A report by SOAS this year identified that one of the reasons for an underrepresentation of Africa in international arbitrations is a poor perception of practitioners.  SOAS’ research showed, however, that a vast majority of respondent practitioners had specialist training (including by the CIArb) and just under half had sat as an arbitrator in at least one domestic arbitration case.

The AfAA also intends to assist African governments in strengthening the existing legislative and judicial frameworks to further facilitate arbitration. This will build on a number of recent institutional and legal developments.  In 2017, for example, South Africa modernised its legal framework via the adoption of the UNCITRAL model law in the new International Arbitration Act No.15.  Earlier this year, the Organisation for Harmonisation of Corporate Law in Africa (OHADA), revised its Arbitration Act and arbitral rules of the Joint Court of Justice and Arbitration (one of many arbitral institutions on the continent), which included measures to support investment treaty arbitration.

The AfAA aims to address some of the biggest challenges in African arbitration and the international community is eager to see exactly how it will do this.  In any event, the creation of the AfAA is a significant development in itself; it evidences the African arbitration community’s focus on raising awareness of its expertise and establishing its place in the international arbitration space.

2. The ICC’s African Commission – an effort to expand the ICC’s activities and growth on the continent

In July, the ICC announced that it will establish an African Commission to coordinate its activities and continued growth on the continent.  The Commission will be led by Ndanga Kamau (who was recently appointed Vice-President of the ICC Court) as president and Sami Houerbi (Director of ICC Dispute Resolution Services for Eastern Mediterranean, Middle-East and Africa) as secretary.  The Commission’s board will be compromised of members from 15 African jurisdictions.

Alexis Mourre, President of the ICC, explained that the “relevance of Africa for the Court’s future cannot be overstated” and that it is the region where “the development of robust and high-quality dispute resolution services is most relevant.” In addition to a rise in both cases and parties from Sub-Saharan Africa in 2017, the ICC also saw an increase in the number of arbitrators from North and Sub-Saharan Africa.  The Commission intends to further this trend through capacity-building, awareness-raising and other outreach activities.

The Commission will also work closely with the ICC Belt and Road Commission, which was launched in March to promote and develop the ICC’s offering for disputes arising out of China’s global infrastructure project.  This is in anticipation of large-scale Chinese investment in Africa in the coming years, as the number of African partners under China’s Belt and Road Initiative (BRI) continues to grow; in July, for example, Senegal became the first West African nation to enter into a cooperation agreement with China under the BRI.  The size and complexities of the BRI’s projects create the potential for a large number of high-value arbitrations on the continent.

3. AfricArb – an association of international lawyers with an enthusiasm for African arbitration

It’s not just arbitral institutions that are focusing on Africa.  Lawyers have also recognised that Africa is a distinct market, requiring specific expertise and a tailored approach.  AfricArb, a non-profit organisation launched in July, is an example of the continuing international enthusiasm for the development of African arbitration.  AfricArb was founded by a group of international practitioners, including Thomas Kendra, partner in the Hogan Lovells international arbitration team in Paris.  The organisation aims to promote the use of arbitration through the involvement of actors both inside and outside of Africa.  It will provide training and organise other events to encourage the sharing of ideas, knowledge and views.

During the launch event of AfricArb, Emilia Onyema, author of the SOAS report, pointed to its results as evidence of the extensive expertise of international arbitration in Africa.  Onyema, who is a member of the AfAA’s board of directors, explained that a concerted effort must be made to increase the representation of African practitioners in international arbitration.  While questions on how this will be achieved remain, the creation of organisations such as the AfAA and the ICC’s Africa Commission, which can draw on their institutional experience, is a significant step in the right direction.

These recent developments demonstrate the determination, of both African and international institutions and practitioners, to further strengthen African arbitration.  These, and similar organisations, will be vital in ensuring that arbitration is used as a dispute resolution mechanism across the whole of Africa, in a way that promotes and strengthens the continent’s ever growing capacity and expertise.

Latest developments in the Sanum saga: application to refuse enforcement rejected

In what has been a long-standing dispute comprising several applications before the courts of Singapore and Hong Kong, the Singapore High Court has rejected an application to refuse enforcement of an arbitral award for US$200 million in damages. The application to refuse enforcement was made pursuant to Article 36(1) of the UNCITRAL Model Law on International Commercial Arbitration (Model Law), which forms part of Singapore’s International Arbitration Act.

The applicant argued that:

  • The award was made pursuant to an arbitration agreement (or agreements) to which not all the award debtors were a party.
  • The award dealt with a dispute not contemplated by or falling within the scope of the submission to arbitration.
  • The composition of the tribunal and the seat of the arbitration were not in accordance with the agreement of the parties.

Ultimately, the court found that the applicants had done little to demonstrate the manner in which the alleged procedural irregularities had affected the arbitral procedure that was adopted, and had not produced any evidence of prejudice arising out of any procedural irregularities of the award. Accordingly, the applicants had not discharged their burden of demonstrating the seriousness of the breach. This is yet another pro-arbitration judgment delivered by the Singapore courts, again demonstrating the high threshold that must be met to refuse enforcement of an arbitral award and one which will hopefully bring the long running Sanum saga to an end. (Sanum Investments Limited v ST Group Co Ltd [2018] SGHC 141, dated 18 June 2018.)


The UNCITRAL Model Law provides:

“36. Grounds for refusing recognition or enforcement

Recognition or enforcement of an arbitral award, irrespective of the country in which it was made, may be refused only:

At the request of the party against whom it is invoked, if that party furnishes to the competent
court where recognition or enforcement is sought proof that:

A party to the arbitration agreement referred to in Article 7 was under some incapacity; or the
said agreement is not valid under the law to which the parties have subjected it or, failing any
indication thereon, under the law of the country where the award was made; or

The award deals with a dispute not contemplated by or not falling within the terms of the
submission to arbitration, or it contains decisions on matters beyond the scope of the submission
to arbitration, provided that, if the decisions on matters submitted to arbitration can be separated
from those not so submitted, that part of the award which contains decisions on matters submitted
to arbitration may be recognised and enforced; or

(iv) The composition of the arbitral tribunal or the arbitral procedure was not in accordance with
the agreement of the parties or, failing such agreement, was not in accordance with the law of the
country where the arbitration took place.”

Sanum Investments Limited (Sanum), a Macanese investor was interested in pursuing business opportunities in Laos in 2007. Sanum formed a joint venture with a Laotian entity for investment in the gaming and hospitality industry in Laos. It entered into a master agreement with ST Group Co, Ltd, Mr Sithat Xaysoulivong, ST Vegas Co, Ltd and ST Vegas Enterprise Ltd (collectively the Lao respondents), which provided for three joint ventures to be created to hold and develop certain properties; two concerned the running of casinos, and the third concerned the operation of slot clubs. The underlying dispute concerned the turnover of a slot club in Thanaleng (Thanaleng slot club). Central to the determination of the jurisdictional objections was the interpretation and relevance of two dispute resolution clauses found in the master agreement and a second agreement, the participation agreement, between Sanum and ST Vegas Enterprise. The participation agreement provided for any disputes to be resolved by the arbitration rules of the Singapore International Arbitration Centre (SIAC). The master agreement contained a dispute resolution clause as follows:

“…Parties shall mediate and, if necessary, arbitrate such dispute using an internationally recognized mediation/arbitration company in Macau, SAR PRC.”

While the tribunal used the two agreements to find jurisdiction, the Lao respondents disagreed, contending that those two agreements had nothing to do with the Thanaleng slot club and that disputes concerning the Thanaleng slot club were not covered by an arbitration agreement. An award was issued by a SIAC tribunal in August 2016 in favour of Sanum. The Lao respondents were required to pay Sanum US$200 million in damages. Sanum applied to the Singapore High Court to enforce the award, and the Lao respondents made an application for the court to refuse enforcement of the award. According to the Lao respondents, the award was made pursuant to an arbitration agreement to which they all were not a party, and the award dealt with a dispute not contemplated by or falling within the scope of the submission to arbitrate.


The Singapore High Court rejected the application to refuse enforcement of the award.

The court held that the tribunal had erred in relying on the master agreement together with the participation agreement, and was satisfied that the underlying dispute in fact arose out of the master agreement alone, which contained an agreement to arbitrate.

The court also found that Sanum was only entitled to arbitrate against Mr Sithat, ST Group Ltd and ST Vegas Co Ltd and the award was binding against them alone. ST Vegas Enterprise was not a party to the arbitration agreement and the award did not bind it.

The court also considered the effect of the mediation/ arbitration clause in the master agreement, and whether these words were capable of accommodating the commencement of the arbitration under the auspices of SIAC, adopting the SIAC Rules.

The court found that the choice of selecting the institution should be given to the dissatisfied party and Sanum’s choice of SIAC as the arbitration institution was an acceptable one. However, the court also found that while the commencement of the arbitration at the SIAC was proper, the tribunal had been wrong to hold that the seat was Singapore and that the proper seat of arbitration should have been Macau.

The court considered that where the parties have evinced a clear intention to settle any dispute by arbitration, the court should give effect to such intention, even if such aspects of the agreement are ambiguous, inconsistent, incomplete or lacking in certain particulars, so long as the arbitration can be carried out without prejudice to the rights of either party and so long as this does not result in an arbitration that is not within the contemplation of either party.

Ultimately, the court said that whilst the Lao respondents relied on Article 36(1)(a)(iv) of the Model Law to seek a refusal of enforcement of the award, they had done little to demonstrate the manner in which any procedural irregularities had affected the arbitral procedure that was adopted, and had not produced any evidence of prejudice arising out of any such procedural irregularities of the award. Accordingly, the Lao respondents had not discharged their burden of demonstrating the seriousness of the breach.


In yet another pro-arbitration judgment delivered by the Singapore courts, this case again demonstrates the high threshold that must be met to refuse enforcement of an arbitral award and one which will hopefully bring the long running Sanum saga to an end.

“Attorney eyes only” order does not breach settled arbitral norms or natural justice

The Singapore High Court has refused an application to set aside an award on the basis that there had been a breach of natural justice. The central issue in the application was whether the imposition of an “attorney eyes only” order by the arbitral tribunal, restricting inspection of certain documents produced to counsel, amounted to a breach of natural justice that justified setting aside the award. The Singapore High Court rejected this argument on the basis that the tribunal had an inherent right to issue such an order, which is ingrained in both the ICC Rules and the Model Law, that it was entirely appropriate to do so, and that it caused no prejudice to the applicant. The court also rejected an argument that the first respondent had breached its implied duty to arbitrate in good faith. While the court accepted that a duty of good faith will be implied into most or all arbitration agreements, given the inherently cooperative nature of the arbitral process, it rejected an argument that the first respondent had breached this duty by employing what the applicant described as “guerrilla tactics”. The court found that there was no evidence of such tactics being employed to undermine the arbitration. The judge’s in-depth discussion and analysis of “attorney eyes only” orders raises points of wider significance for the arbitration community. The decision recognises that such orders are appropriate in circumstances where a tribunal is satisfied that such measures are necessary to protect a party’s confidential documents. The “attorney eyes only” orders in this case appear to have contained some safeguards which may reflect good practice for parties or tribunals considering such orders. (China Machine New Energy Corp v Jaguar Energy Guatemala LLC and another [2018] SGHC 101, 26 April 2018.)

Article 34 of the UNCITRAL Model Law on International Commercial Arbitration provides, in relevant part: “2. An arbitral award may be set aside by the court specified in article 6 only if: (a) the party making the application furnishes proof that:


(ii) the party making the application was not given proper notice of the appointment of an arbitrator or of the arbitral proceedings or was otherwise unable to present his case; or


(iv) the composition of the arbitral tribunal or the arbitral procedure was not in accordance with the agreement of the parties, unless such agreement was in conflict with a provision of this Law from which the parties cannot derogate, or, failing such agreement, was not in accordance with this Law; or (b) the court finds that:


(ii) the award is in conflict with the public policy of this State.”

Section 24(a) of the International Arbitration Act (IAA) (Cap 143A, 2002 Rev Ed) provides:

“Notwithstanding Article 34(1) of the Model Law, the High Court may, in addition to the grounds set out in Article 34(2) of the Model Law, set aside the award of the arbitral tribunal if –

(a) the making of the award was induced or affected by fraud or corruption; or

(b) a breach of the rules of natural justice occurred in connection with the making of the award by which the rights of any party have been prejudiced.”

To set aside an award, an applicant must establish:

  • Which rule of natural justice was breached.
  • How it was breached.
  • In what way the breach was connected to the making of the award.
  • How the breach prejudiced its rights.

(Soh Beng Tee & Co Pte Ltd v Fairmount Development Pte Ltd [2007] 3 SLR(R) 86 at [29]).


The dispute between the parties arose from a contract for the construction of a coal-fired power generation plant located in Guatemala (Project) signed in 2008, between the contractor, China Machine New Energy Corporation (CMNC) and the owner, Jaguar Energy Guatemala LLC (Jaguar). The contract provided for disputes arising out of the contract to be resolved by ICC arbitration in Singapore. Significantly, the contract also provided for an expedited arbitration, with a requirement for the award to be issued 90 days after the selection of the third arbitrator; or, if the majority of the arbitrators agreed, within a further 90 days. In 2013, a dispute arose between the parties and Jaguar started the arbitration in January 2014.

The arbitration

Jaguar’s case in the arbitration was that CMNC had breached the contract, entitling Jaguar to validly terminated the contract, and that Jaguar was entitled to, amongst other relief, liquidated damages for delay and the costs of completing the Project. CMNC’s case was, among other things, that Jaguar was not entitled to liquidated damages for delay because CMNC was entitled to extensions of time. Although the contract provided for the dispute to be resolved within 90 days after the final member of the tribunal was appointed, the parties agreed to amend this requirement to provide for a hearing which would commence after the expiry of the deadline for the award being delivered. In May 2014, the parties agreed to a timetable for the arbitration. Despite this, CMNC applied for a variation to the timetable, namely that the main hearing should be brought forward by approximately eight months. CMNC relied on the fact that the parties had agreed to an expedited arbitration. Jaguar opposed CMNC’s request on the basis that it was not realistic. The tribunal rejected CMNC’s request. In the event, the arbitration took much longer to complete, with the merits hearing in July 2015 and the award being rendered in November 2015.

The attorney’s eyes only regime

Procedural Order No 2 provided for the parties’ statements of case to be accompanied by “copies of all documents which the Party concerned relies on and considers essential… and which have not previously been submitted by any Party.” On 13 August 2014, CMNC and Jaguar filed their respective statements of case. Jaguar noted in its pleading, that apart from redacting certain documents and not including witnesses’ full addresses, it was withholding production of 13 documentary exhibits. Jaguar claimed that CMNC had engaged in a series of threatening actions against Jaguar and its contractors, and Jaguar had serious concerns, that if CMNC was to discover the identity of Jaguar’s contractors and certain other sensitive material, the information could be misused to interfere with the Project or the arbitration. However, Jaguar also offered to provide un-redacted copies of witness statements and withheld documents on an “attorney eyes only” (AEO) basis to CMNC’s counsel and any experts retained by them. CMNC indicated that it was unlikely to agree to an AEO disclosure order.

The parties began the document production stage of the proceedings and CMNC demanded immediate production of the withheld documents. Jaguar invited the tribunal to issue an order allowing the parties to produce documents containing sensitive information on an AEO basis, subject to the receiving party’s right to challenge such disclosure. CMNC requested the tribunal to reject Jaguar’s request to produce documents on an AEO basis for four reasons:

  • An AEO order would be procedurally unfair.
  • CMNC would not misuse information.
  • Jaguar was inviting the tribunal to pre-judge fiercely disputed matters about CMNC’s conduct.
  • The concept of AEO disclosure, a feature of US dispute resolution, should not be imported into international arbitration.

The tribunal directed that a two-stage process would apply to the disclosure of the disputed documents. First, the documents would be disclosed to external counsel only. Second, CMNC could apply to the tribunal for certain employees to be given access to the documents that Jaguar had disclosed on an AEO basis, thereby providing a safeguard, which CMNC could resort to if its counsel needed instructions from employees on specific documents for the purpose of conducting its case in the arbitration. It appears that CMNC never applied under the second stage for its employees to be shown the AEO material. The tribunal did not regard the AEO process as one limited to domestic dispute resolution in the USA, concluding: “….it is in the experience of each of the tribunal members a process adopted in international arbitration for the purpose of preserving confidential documents disclosed in international arbitration proceedings.”

The redaction ruling

After an application by CMNC and a tribunal-convened teleconference with the parties, on 19 October 2014, the tribunal ruled that the AEO regime be lifted with respect to the 12 exhibits and other documents (the “Redaction Ruling”). Jaguar was to provide CMNC with the 12 exhibits in redacted form, and CMNC’s personnel were entitled to view those redacted documents. This ruling occurred more than eight months before the main hearing. Eventually, Jaguar produced un-redacted versions of all documents to CMNC. In its award dated 25 November 2015, the tribunal unanimously found that Jaguar had validly terminated the contract for default by CMNC and allowed Jaguar’s claim for damages of more than US$129 million (the award).

Application to set aside the award
In 2016, CMNC applied to the Singapore courts to set aside the award. The crux of CMCN’s case was that the arbitration was tainted by “procedural dysfunction”. It argued that the award should be set aside as:

  • The award was made in breach of the rules of natural justice, in breach of section 24(a) of the IAA, as the AEO regime deprived CMNC of a reasonable opportunity to present its case.
  • The tribunal had breached Article 18 of the Model Law by failing to treat the parties equally and to ensure that
    CMNC was given a full opportunity of presenting its case.
  • Jaguar breached its obligation to arbitrate in good faith, and the tribunal failed to restrain Jaguar from doing so in breach of Art 34(2)(a)(iv) of the Model Law.

CMNC submitted that the imposition of the AEO regime amounted to a breach of its right to natural justice which prejudiced its rights. It argued that the “inappropriate and indiscriminate use of an [AEO order] has the effect of denying a party adequate notice and opportunity to know the evidence against it and to meet that evidence.” Jaguar argued that, under the AEO regime, CMNC was entitled to apply for designated materials to be disclosed to its employees – a point repeatedly reiterated by the tribunal – yet failed to do so. Jaguar submitted that any disadvantage that CMNC suffered due to the AEO regime was due to its own strategic choices and failures, rather than a breach of natural justice. It also argued that even if there was a breach of natural justice, CMNC did not suffer any prejudice due to the breach.

The good faith argument
CMNC contended that parties to an arbitration both bear an implied duty to arbitrate in good faith. It also contended that Jaguar employed “guerrilla tactics” in the arbitration that amounted to a breach of its duty to arbitrate in good faith and accordingly, a breach of the agreed arbitral procedure. Those alleged guerrilla tactics included:

  • Seizing the construction area and terminating CMNC’s access to an online document platform which the parties shared.
  • Seizing documents by securing the eviction of CMNC’s employees from the site and detaining them elsewhere by bribing government officials.
  • Harassing and interfering with CMNC’s potential witnesses before the arbitration.
  • Disclosing documents in a disordered and delayed way.


Kannan Ramesh J rejected all of CMNC’s arguments and dismissed its application to set aside the award. The court considered the general principles regarding the setting aside of an arbitral award for breach of natural justice pursuant to Article 34(2)(ii) of the Model Law and section 24 of the IAA, which are settled law. The court also noted that “it is also trite that natural justice requires that parties be afforded a reasonable opportunity of presenting their case”, which it said also means that it should have an opportunity to respond to the case against it, referring to the Soh Beng Tee decision. In addition, the court explained that Singapore courts adopt a policy of minimal curial intervention which entails that a court “will not intervene merely because it might have resolved the various controversies in play differently” (see Soh Beng Tee at paragraph 65). It said that in light of the wide power accorded to a tribunal to conduct an arbitration, a court will exercise its supervisory role over the tribunal’s exercise of this power with a “light hand” (see Triulzi Cesare SRL v Xinyi Group (Glass) Co Ltd [2015] 3 SLR 154 at paragraph 51). There must be a “radical breach of [the right to be heard] which is ‘serious or egregious’ (see ADG and another v ADI and another matter [2014], 3 SLR 481 at paragraph 116, affirmed in Triulzi at paragraph 134).

The AEO regime

The court held that the imposition of the AEO regime did not amount to a breach of natural justice. In setting out its reasons, the court, having considered expert evidence on the issue, made some general observations about AEO orders in international arbitration. It concluded that while AEO orders are not entrenched in Singapore jurisprudence, that is not the same as saying it is not an appropriate order in international arbitration. In addressing the tribunal’s power to impose an AEO order, the court referred to Article 20(7) of the 1998 version of the ICC Rules which states that “[the] Arbitral Tribunal may take measures for protecting trade secrets and confidential information”. This language is also mirrored in the second limb of Art 22(3) of the 2012 ICC Rules, which states: “Upon the request of any party, the arbitral tribunal may make orders concerning the confidentiality of the arbitration proceedings or of any other matters in connection with the arbitration and may take measures for protecting trade secrets and confidential information.” Accordingly, the court found that the tribunal was empowered to impose an AEO order. It observed, in passing, that there is no equivalent provision under the 2015 SIAC Rules, the 2014 LCIA Rules or the 2013 HKIAC Rules.

The court rejected CMNC’s contention that the AEO regime significantly undermined its opportunity to present its case. The court referred to the fact that CMNC never applied under the second stage of the regime for its employees to access the AEO designated material, despite the tribunal’s repeated reminders, and without good reason. The court also rejected CMCN’s argument that the Redaction Ruling was only a “slight reprieve”. The court explained that the Redaction Ruling in fact “cured any prejudice caused by the application of the AEO regime to the 12 exhibits and the Further Documents that were disclosed by Jaguar in redacted form”. While the court accepted that Jaguar made unauthorised redactions, CMNC could have sought the appropriate order from the tribunal in respect of those redactions.

The court considered that CMNC did not suffer any prejudice that justified setting aside the award. The thrust of CMCN’s complaint was that it did not have sufficient time to review the documents purporting to support Jaguar’s claim for costs of completion. However, the court found that that was at least partly due to its own actions.

Good Faith

The court did not accept CMNC’s good faith arguments. Importantly, the court noted that the issue of whether an arbitration agreement includes an implied duty to arbitration in good faith does not appear to have been decided in Singapore before, but referred to a passage in Gary Born, International Commercial Arbitration (Wolters Kluwer, 2nd Ed, 2014), at pages 1257 – 1259, which states that an arbitration agreement necessarily includes an implied duty to arbitrate in good faith: “…the positive obligation to participate in the resolution of disputes by arbitration also necessarily includes more general duties to participate in good faith and cooperatively in the arbitral process. This follows both from the nature of the arbitral process and from the general rule of pacta sunt servanda.”

Therefore, the court concluded that an agreement to arbitrate is an agreement to participate in a process that requires the mutual cooperation of the parties. This is not necessarily implied as it is inherent in the very nature of an arbitration agreement. However, the judgment notes that it was unclear as to whether this duty to cooperate can be assimilated to, or falls under a more general duty of good faith. This matter is not settled under Singapore law.

The court concluded at that:

“the answer will turn on the interpretation of the arbitration agreement under the governing law of the same, which will differ between arbitration agreements.” (paragraph 196, Judgment) The court also noted that not all jurisdictions recognise a general duty to perform contractual obligations in good faith, and indeed there does not seem to be such a duty under English law, or under Singapore law. Despite this, the judge held that: “a duty of good faith will be implied into most or all arbitration agreements, even if there is no general duty to perform contractual obligations in good faith under that law, given the inherently cooperative nature of the arbitral process.” (paragraph 198, Judgment) The judge proceeded on the basis that Jaguar did have an implied duty to arbitrate in good faith, but that it did not breach that duty. The judgment notes that the academic commentaries that CMNC had brought to its attention on guerrilla tactics indicate that such tactics are employed with the aim of obstructing, delaying, derailing or sabotaging an arbitration. He found no evidence that Jaguar performed any of the alleged acts with the aim of undermining the arbitration. The court added that whilst the academic commentaries suggest that an arbitral award may be set aside on the basis of guerrilla tactics employed by the successful party, none of those commentaries suggested that guerrilla tactics may justify the setting aside of an arbitral award on the ground that they reflect bad faith.

Failure to investigate allegations of corruption

The court also rejected a challenge on public policy grounds arising from the tribunal’s failure to investigate allegations of corruption. The court accepted that in certain cases tribunals bear “a duty to raise and enquire, even sua sponte, into the issue of corruption”. The judge accepted this, but held that no duty arose in this case because the allegations had no bearing on the issues in the arbitration. Finally, the court did not accept that a breach would per se render the award liable to be set aside on public policy grounds.


In rejecting CMNC’s argument that there had been a breach of natural justice, the Singapore High court has reaffirmed the high threshold that is required to set aside an arbitral award. Kannan Ramesh J’s in-depth discussion and analysis of AEO orders raises points of wider significance for the arbitration community. The decision recognises that AEO orders are appropriate in circumstances where a tribunal is satisfied that such measures are necessary to protect a party’s confidential documents. The AEO orders in this case appear to have contained some safeguards, which may reflect good practice for parties or tribunals considering such orders. The discussion as to the tribunal’s duty to investigate corruption is also of wider significance, as is the practical requirement for a connection between the allegations and the matters in dispute in the arbitration.

Finally, the ruling is also significant for its consideration of the duty to arbitrate in good faith. Clearly challenges based on allegations of guerrilla tactics will be hard to make out. The court proceeded on the basis that the parties had implied obligations to arbitrate in good faith. Although it found no breach, this is significant given that the Singapore International Arbitration Act has no provision equivalent to Article 2A (1) of the Model Law which provides that in interpreting the Model Law, “regard is to be had to …the observance of good faith”. Given that a number of institutions have now adopted expedited procedures, it is of some note that it appears to have been common ground that a reasonable opportunity of presenting a party’s case in an expedited arbitration was not going to be the same reasonable opportunity as in a full-length arbitration. The court was evidently sceptical of a submission that a tribunal in an expedited process bore a heightened duty to police the process or that additional vigilance was required regarding due process.

A version of this Legal update was first published on Practical Law and is reproduced with the kind permission of the publishers.