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Bill to set up global arbitration centre introduced in LS - BW Businessworld

Google International ADR News - Fri, 2018-01-05 04:22

Bill to set up global arbitration centre introduced in LS
BW Businessworld
New Delhi, Jan 5 (PTI) A bill to set up a new international arbitration centre here to replace and take over the undertakings of its present 'avatar' - the International Centre for Alternative Dispute Resolution which works under the aegis of the ...

Litigation procedures and strategies: United States - Lexology

Google International ADR News - Fri, 2018-01-05 04:20

Litigation procedures and strategies: United States
Lexology
Alternative dispute resolution (ADR) measures including mediation, binding arbitration or a unique blend of the two approaches may provide an expedited and more cost-effective path to an amicable resolution. In addition to securing cost efficiencies ...

and more »

Bill to set up global arbitration centre introduced in LS - Times of India

Google International ADR News - Fri, 2018-01-05 04:19

Bill to set up global arbitration centre introduced in LS
Times of India
New Delhi, Jan 5 () A bill to set up a new international arbitration centre here to replace and take over the undertakings of its present 'avatar' - the International Centre for Alternative Dispute Resolution which works under the aegis of the Supreme ...

and more »

Inside LL.Ms in Corporate Law - LLM GUIDE

Google International ADR News - Fri, 2018-01-05 04:07

LLM GUIDE

Inside LL.Ms in Corporate Law
LLM GUIDE
M. curriculum has seen in increase in focus around alternative dispute resolution over the years, Allveri says, as well as a slight pivot toward Asia-Pacific-related issues as a result of the Obama administration's foreign policy shift and China's ...

Last day of Parliament winter session: Both houses adjourned sine die; no triple talaq bill in Rajya Sabha this time - Hindustan Times

Google International ADR News - Fri, 2018-01-05 02:37

Hindustan Times

Last day of Parliament winter session: Both houses adjourned sine die; no triple talaq bill in Rajya Sabha this time
Hindustan Times
Bill for international arbitration centre introduced. A bill for establishing an international arbitration centre in Delhi was introduced in the Lok Sabha on Friday. The New Delhi International Arbitration Centre Bill, 2018, was introduced by minister ...

and more »

Bill for international arbitration centre introduced in LS - Business Standard

Google International ADR News - Fri, 2018-01-05 01:38

Bill for international arbitration centre introduced in LS
Business Standard
"Further, the undertakings of the International Centre for Alternative Dispute Resolution (ICADR) needs to be taken over without interfering with the activities and without adversely affecting the character of ICADR as a Society, so that the existing ...

Confusing Dispute Resolution Jargon

ADR Prof Blog - Thu, 2018-01-04 20:43
In response to my question, “Do you use “BATNA” wrong?,” I plead guilty, with an explanation. With the patient tutelage of my friends, Hiro Aragaki and Sanda Kaufman, I have come to see the error of my ways. I was concerned because BATNA – the Best Alternative to a Negotiated Agreement – has become part of … Continue reading Confusing Dispute Resolution Jargon →

Hiro N. Aragaki: Things We Know and Think We Know About BATNA and WATNA

ADR Prof Blog - Thu, 2018-01-04 20:42
First off, thanks to John Lande for pursuing this issue and calling attention to the real imprecision that sometimes attends our use of the term “BATNA.”  If anything, I have learned through my off-line exchange with him and Sanda Kaufman that there is more confusion out there among scholars and practitioners than I had originally … Continue reading Hiro N. Aragaki: Things We Know and Think We Know About BATNA and WATNA →

Sanda Kaufman: Of ATNAs and BATNAs—Shedding Light on Negotiation Acronyms

ADR Prof Blog - Thu, 2018-01-04 20:42
Here’s Sanda Kaufman’s response to my conversation with her and Hiro Aragaki.   (Click the title of this post to see her piece.)

When the Bell Doesn’t Save You: Favianca and Jurisdiction After ICSID Denunciation.

Kluwer Arbitration Blog - Thu, 2018-01-04 16:26

Manuel Casas

This Post analyzes the recent award in Fábrica de Vidrios Los Andes, C.A. & Owens-Illinois de Venezuela, C.A. v. Bolivarian Republic of Venezuela (“Favianca”). This is the first award to rely on Article 72 of the ICSID Convention to decline jurisdiction over a claim filed after Venezuela had noticed it would denounce the ICSID Convention but before the 6-month period set out in Article 71 of the ICSID Convention had elapsed.

It is not uncommon for treaties to establish a delay between the time a State withdraws from the treaty and the time that withdrawal becomes effective. Indeed this is the default solution established by Article 56(2) of the Vienna Convention. That Article provides that when a treaty lacks withdrawal provisions, withdrawal is still possible in some cases, but always requires at least one year’s prior notice prior to the withdrawal becoming effective.

And if the treaty confers jurisdiction on an international court or tribunal, it is not uncommon for potential claimants to rush to file their claims before denunciation becomes effective. Every potential litigant is trying to get saved by the bell. The Claimants in Favianca were no exception: they filed their request for arbitration on 20 July 2012 – just five days before Venezuela’s denunciation of the ICSID Convention became effective.
Investor-State tribunals and international courts have previously dealt with these types of claims. In most cases those courts and tribunals have affirmed jurisdiction. Yet the Favianca Tribunal reached an opposite conclusion. It held that Venezuela’s prior denunciation of the ICSID Convention meant that consent to arbitration could not be perfected after denunciation and thus declined jurisdiction.

The Favianca Award: A Brief Overview

The Tribunal’s decision was based on its interpretation of Articles 71 and 72 of the ICSID Convention. Specifically, the Tribunal concluded that the Convention established a “division of labor” between the two articles. Article 71 provides that “denunciation shall take place six months after receipt of such notice.” While Article 72 states that notice of denunciation “shall not affect the rights or obligations … of that State … arising out of consent to the jurisdiction of the Centre given by one of them before such notice was received.”

In the Tribunal’s view, the two articles have separate purposes. On the one hand, Article 71, is directed to States as contracting parties to the ICSID Convention. On the other hand, Article 72 is directed to States as parties in ICSID arbitrations (para. 269). Based on this division of labor, the Tribunal held that the effect of Venezuela’s denunciation of the Convention on its consent to arbitrate was governed by Article 72, not Article 71.
Therefore, the Tribunal focused on Article 72’s reference to “consent to the jurisdiction.” It then drew a distinction between unilateral consent – that given exclusively by the State through a BIT – and perfected consent – crystallized when the potential claimant accepts the State’s offer to arbitrate (para. 274).

This distinction between the two types of consent led the Tribunal to conclude that a State’s consent to ICSID arbitration only extended throughout the 6 months period in cases of perfected consent (para. 282). In practice, this means when the claimants filed either a request for arbitration or at least a notice of dispute before denunciation.
The Favianca Tribunal’s interpretation of the Convention is detailed and thorough. The issues it tackled are complicated and have divided scholars. Yet the award departs from the interpretation of other tribunals. And the Tribunal’s distinction between the roles of Articles 71 and 72 is debatable. After all, the essential purpose of the Convention is dispute resolution. What other purposes would a State have to join the Convention other
than participating in ICSID Arbitrations?

More importantly, it seems to miss the overarching policy objectives pursued by Article 71 of the Convention: precluding States from opportunistically withdrawing from a treaty without previously granting potential claimants enough time to bring their claims. Instead, the Favianca Tribunal allowed Venezuela to, in practical terms, denounce the ICSID Convention with immediate effects.

Other Tribunals’ Position

Several tribunals had already addressed cases filed against Venezuela during the 6-month period before its denunciation of the ICSID Convention became effective. Several of these cases were not analogous to Favianca, as the claimants had filed notices of disputes before denunciation (and thus had perfected consent to arbitration before denunciation).
But not always. The Tribunals in Venoklim, Rusoro Mining, Blue Bank, and Transban held that claims filed within the 6-month window were valid. Note, however, that some dismissed the claims on other grounds and that Rusoro was under Additional Facility Rules.
For example, the Tribunal in Blue Bank concluded that it had jurisdiction over claims filed within the six months that follow the notice of denunciation. The Blue Bank Tribunal held that otherwise the sentence “the denunciation shall take effect six months after receipt of such notice” in Article 71 of the Convention would be deprived of effet utile (paras. 117-119).

The president of the Blue Bank Tribunal, Christer Söderlund, issued an insightful separate opinion analyzing Article 72 of the Convention. Söderlund views Article 72 in its historical context: a time before States entered into BITs. Thus, he concludes that Article 72 does not apply when States have consented to arbitration through a BIT, as in those cases States have “undertaken … the obligation to submit to international arbitration … for the duration of the treaty.” (para. 41).

For its part, the Venoklim Tribunal considered that Article 72 of the Convention could not be interpreted as establishing a specific rule that would give denunciation of the Convention immediate effect. The Venoklim Tribunal held that such a derogation from the general rule of Article 71 of the Convention would go against “the common sense” of that rule (para. 62, my translation).

Post-Denunciation Claims Before Other International Courts

International courts have also addressed claims filed between a State’s denunciation of a treaty and the date withdrawal becomes effective. They have tended to affirm jurisdiction over those claims. Of course, these courts have not faced treaty provisions akin to Articles 71 and 72 of the ICSID Convention; but their stance is still useful to understand the underlying principles at stake.

The ICJ has addressed analogous situations. After the ICJ decided Territorial and Maritime Dispute (Nicaragua v. Colombia) in 2012, Colombia purported to immediately withdraw from the Pact of Bogotá, the treaty that established the Court’s jurisdiction. The Pact, however, required a one-year notice period before denunciation became effective. Before the expiry of that one-year period, Nicaragua submitted two further disputes to the Court. Colombia challenged the Court’s jurisdiction, arguing that its denunciation of the Pact of Bogotá had been done with “immediate effects.” The objection was not successful.

Instead, the Court in Alleged Violations of Soverign Rights and Maritime Spaces in the Caribbean Sea (Nicaragua v. Colombia) held that, because the Pact “requires one year’s notice in order to terminate the treaty, any notification of denunciation begins to take effect immediately in the sense that the transmission of that notification causes the one-year period to begin.” (at para. 46).

The most expansive position to jurisdiction after denunciation is perhaps the Inter-American Court’s. The American Convention on Human Rights provides that denunciation only becomes effective one year after notice. The Inter-American Court, however, has considered that it retains jurisdiction over any dispute that took place during the time the American Convention was in force. The Inter-American Court has applied this in cases brought against Trinidad & Tobago and Venezuela, two States that have denounced the American Convention.
For instance, in Constantine et al. v. Trinidad & Tobago, a case brought almost two years after Trinidad had denounced the American Convention, the Court affirmed its jurisdiction and held that “The facts … occurred prior to the effective date of the State’s denunciation. Consequently, the Court has jurisdiction.” (at para. 28). The Court reached a similar conclusion in Granier v. Venezuela (at para. 14).

Jurisdiction Post-Denunciation: Policy Considerations

There are also important policy considerations for including the expiration of a notice period before denunciation of a treaty enters into force. Without that notice period, States may elect to strategically denounce a treaty conferring jurisdiction to an international court or tribunal when it plans to take an action that it suspects will lead to international claims.

Thus, by strategically withdrawing from a treaty, a State may insulate itself from international responsibility. Treaty provisions requiring some time before withdrawal becomes effective do not completely bar that possibility. But they make it more difficult.
Provisions like Article 71 of the ICSID Convention are meant to avoid that. The Favianca Tribunal, however, was not persuaded by those concerns. Moreover, as shown by Söderlund’s separate opinion in Blue Bank, the Favianca Tribunal’s interpretation is anchored in a potentially anachronistic reading of Article 72. That interpretation allowed Venezuela to effectively denounce the ICSID Convention with immediate effects.

More from our authors: International Arbitration and the Rule of Law
by Andrea Menaker
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The post When the Bell Doesn’t Save You: Favianca and Jurisdiction After ICSID Denunciation. appeared first on Kluwer Arbitration Blog.

AALS ADR Section Call for Nominations for Best ADR Article in 2017

ADR Prof Blog - Thu, 2018-01-04 13:49
As outgoing (or gone) Chair of the AALS Section on Alternative Dispute Resolution, I am pleased to announce on behalf of the Section’s Executive Committee the creation and launch of the Section’s annual award for best scholarly article published in print or online in 2017 in the field of ADR.  Details and a Call for … Continue reading AALS ADR Section Call for Nominations for Best ADR Article in 2017 →

New VIAC Rules of Arbitration and Mediation 2018 - Lexology

Google International ADR News - Thu, 2018-01-04 07:24

New VIAC Rules of Arbitration and Mediation 2018
Lexology
The new VIAC Rules confirm the ambitious course the VIAC has set for itself for the years to come: to consolidate its first-rate standing as one of the leading arbitration centres in Europe and to assist users of international dispute resolution ...

Arbitration law in the Philippines - Vantage Asia

Google International ADR News - Thu, 2018-01-04 00:06

Vantage Asia

Arbitration law in the Philippines
Vantage Asia
9285, also known as the Alternative Dispute Resolution Act of 2004 (ADR Act), which provided the much-needed legislation to institutionalize arbitration in the Philippines. The ADR Act addressed most of the inadequacies of its predecessor, Republic Act ...

The Three Hottest Energy Arbitrations of 2017

Kluwer Arbitration Blog - Wed, 2018-01-03 22:36

Marine de Bailleul

2017 has witnessed a boom in the number of international arbitrations in the energy sector. This is no surprise. Indeed, at the end of 2016, ICSID’s caseload-statistics reported that 42% of cases administered by ICSID arose from the energy sector, which was more than any other sector. As anticipated, this rise has continued throughout 2017. Today, energy is the industry where international arbitration is perceived as the preferred mechanism of dispute resolution, together with construction. The Energy Charter Treaty (“ECT”) is the most frequently invoked international investment agreement.

This popularity is explained by the crucial role played by sources of energy in today’s economies: the world is hungry for oil and for gas. These are the most important sources of energy and meet almost all global energy needs. Demand of, and investment in, sources of energy, are flourishing. Foreign investment became crucial to afford states the possibility of exploring and developing their energy resources, especially where states do not otherwise have the capital to do so.

In this piece, I examine three landmark energy arbitrations that shook up the international arbitration community in 2017. In my view, these are the hottest energy arbitrations of the year. Here’s why.

1. Hot because unattainable: June 2017, Yukos faces additional hurdles to enforce the award

That the shareholders in defunct Russian oil giant Yukos Oil Company (“Yukos”) won the largest arbitration award ever against Russia will be no news to you. On 18 July 2014, an arbitral tribunal sitting in The Hague held unanimously that Russia breached its international obligations under the ECT by destroying Yukos and unlawfully expropriating its assets for political reasons. The mammoth award was final, binding, and enforceable in 150 states under the New York Convention. However, Yukos faced several challenges in its efforts to collect on the USD 50 billion award. Below I set out some of these challenges, the latest of which occurred in June 2017.

First, in April 2016, the District Court of The Hague overturned the award on the basis of the tribunal’s decision on its jurisdiction, finding that Russia had not bindingly agreed to provisionally apply the ECT under article 45 of the ECT. Indeed Russia signed the ECT but never ratified it, because it found that the dispute resolution through arbitration at article 26 of the ECT was at odds with the Russian Constitution.

Second, when Yukos commenced its enforcement efforts by attempting to seize Russia’s assets abroad and freezing Russian bank accounts, including the accounts of Russian space agency Roscosmos, several national courts opposed the seizures in their respective jurisdictions. For instance, a Paris court invalidated the seizures related to Paris enforcement proceedings in June 2016, on the grounds that Roscosmos was a separate legal entity which could not be held accountable for debts owed by Russia.

Third, in June 2017, a Belgian court similarly unfroze Russian assets and lifted all attachments on Russian-owned real estate and bank accounts in Brussels, on the basis that Yukos lacked a valid enforceable title for the attachments. A 2015 amendment to the Belgian Judicial Code made it more difficult for creditors to attach the assets of sovereign states, including by imposing stricter conditions for the attachment; France passed a similar law in 2016.

Fourth, and this is the latest and ultimate obstacle in Yukos’ enforcement efforts, the Paris Court of Appeal confirmed in June 2017 the release of the seizures of Roscosmos’ assets and accounts. It rejected Yukos’ appeal and affirmed the lower court’s ruling that Roscosmos was not an emanation of the Russian state, but instead a separate legal entity not liable for Russia’s debt in the USD 50 billion award. All in all, the Paris Court of Appeal held that the seized funds did not belong to Russia and, as such, lifted attachments on funds held by French satellite launch company Arianespace. Andrea Pinna, counsel to Russia in the Paris enforcement proceedings, noted that “this is the ninth legal decision along these lines. Not once have the oligarchs succeeded with their arguments brought before French courts for the seizure of assets of Russian public corporations”.

The bottom line is that Yukos is facing continuous hurdles in attempting to collect on the award costs. Targeting Russian and French commercial interests in connection with the European space cooperation is proving a difficult task, and Yukos may have to look at other avenues for enforcement. It could also appeal the latest decisions before the Cour de Cassation and seek to renew the attachments.

2. Hot because feisty: June 2017, Total defeats a multi-billion arbitration claim

After an eight-year UNCITRAL dispute with Russian provinces Volgograd and Saratov and with Russian company OOO Interneft over a 1992 oil and gas exploration and production agreement, former Total subsidiary Elf Neftegaz has prevailed in the arbitration by having all claims thrown out on 19 June 2017.

In the arbitration, the parties disagreed on the applicability and effective date of their contract. The agreement, aimed at the development of oil fields in Volgograd and Saratov, was concluded weeks after the collapse of the Soviet Union. The parties were at odds over whether the contract had taken effect, though it was common ground that no oil and gas exploration or production ever occurred. Indeed, Elf Neftegaz argued that it was forced to abandon the project following the claimants’ resistance: Russia implemented federal regulations that were contrary to the contract and sought greater autonomy in the provinces. Other points in dispute concerned: (i) the legal regime applicable in the Soviet Union; (ii) the changing legal and political landscape when the Russian Federation came to light; (iii) whether the claims in the arbitration were time-barred; and (iv) whether the provinces had authority to enter into the 1992 agreement.

More importantly, the amount in dispute is what makes Total’s successful defense particularly noteworthy: the claimants sued Total for USD 22 billion in damages. Total managed to defeat this sizeable arbitration claim, thereby avoiding what would have been one of the largest UNCITRAL awards ever. What is more, the claimants failed to challenge the arbitral award in the Swedish court within the required deadline; therefore, the award is now final and binding. This constitutes another hot arbitration outcome in the energy sector.

3. Hot because harmonious: December 2017, ConocoPhillips and Ecuador settle their dispute

On 4 December 2017, ConocoPhillips and Ecuador agreed to the terms of a settlement under an ICSID arbitration award issued last February. In December 2012, an ICSID panel issued a decision on liability holding Ecuador liable under the USA-Ecuador BIT for unlawful expropriation of the company’s assets in the country – two significant oil blocks. The arbitral tribunal then issued an award on damages in February 2017, ordering Ecuador to pay USD 380 million to ConocoPhillips’ subsidiary Burlington Resources, by way of compensation for the 2009 confiscation. Ecuador then applied to annul the award, and in August 2017 an ICSID Annulment Committee lifted the stay of enforcement of the award, rejecting the state’s argument that payment of the award costs should be postponed due to financial pressures.

Under the settlement agreement, ConocoPhillips will receive USD 337 million from Ecuador. The energy giant has already received USD 75 million from the state in December 2017, and expects to collect the balance by April. The parties have also agreed to an offset for the decision awarding Ecuador USD 42 million on its counterclaims, of which Burlington Resources is entitled to an extra USD 24 million through a third-party contribution to the payment.

The settlement is a positive development, not only because it allowed the parties to resolve their nine-year controversy constructively, in terms which are mutually satisfactory, but also because it contributes to the effectiveness and legitimacy of the arbitral process. Indeed as stated by Ecuador’s attorney general’s office, the state will stick by its “commitment to fulfilling its international obligations”. Put simply, Ecuador will pay the agreed sum to ConocoPhillips. This is an encouraging outcome, especially in light of the recent trend of hostility towards the arbitral process as shown by several states in the Latin American region. By way of example, as discussed in a previous article, Venezuela adopted a stance of non-compliance and opposition to the multiple awards rendered against it in recent years. Venezuela multiplied its annulment requests against such awards, and its cumulative debt at ICSID grew sharply. It is therefore promising to witness countries such as Ecuador engaging in a mutually agreeable resolution of their dispute instead of repeatedly avoiding payment, even if Ecuador has noted that it disagrees with the award findings.

* * *

To put it in a nutshell, the energy sector has clearly emerged as a trendy sector in which to use international arbitration as a tool for resolving disputes. The importance and complexity of the issues at stake, the prominence of the parties involved, and the size of the claims, all partake of the popularity of energy arbitration. It remains to be seen whether 2018 will be taking a step in the same direction…

The views and opinions expressed in this article are those of the author, and do not necessarily reflect the official policy or position of its previous or current employer.

More from our authors: International Arbitration and the Rule of Law
by Andrea Menaker
€ 240


The post The Three Hottest Energy Arbitrations of 2017 appeared first on Kluwer Arbitration Blog.

Stone Soup, Reflective Practice, Action Research, and Social Justice

ADR Prof Blog - Wed, 2018-01-03 20:19
Some questions for law professors:  Why did you go to law school?  Why did you decide to go into academia?  What do you want to accomplish in your work?  What do you hope for your students? In this post, I give my answers to these questions, which I think will resonate for many readers of … Continue reading Stone Soup, Reflective Practice, Action Research, and Social Justice →

Passing of Roger Wolf

ADR Prof Blog - Wed, 2018-01-03 14:39
From TFOIs Deborah Eisenberg and Toby Guerin: Dear Colleagues: Many of you knew Roger Wolf, the visionary founder of our Center for Dispute Resolution and the Mediation Clinic at Maryland Carey Law, and a true trail-blazer in the ADR field in Maryland and nationally.  He passed away last weekend.  Below is a beautiful tribute written … Continue reading Passing of Roger Wolf →

Jones Walker Elects Six New Partners - Markets Insider

Google International ADR News - Wed, 2018-01-03 09:36

Jones Walker Elects Six New Partners
Markets Insider
He previously served as general counsel at the Florida Lottery and is a member of International Masters of Gaming Law, an invitation-only, non-profit association of gaming attorneys, regulators, educators, executives, and consultants. Tyler P ...

Jones Walker Elects Six New Partners - PR Newswire (press release)

Google International ADR News - Wed, 2018-01-03 09:06

Jones Walker Elects Six New Partners
PR Newswire (press release)
He previously served as general counsel at the Florida Lottery and is a member of International Masters of Gaming Law, an invitation-only, non-profit association of gaming attorneys, regulators, educators, executives, and consultants. Tyler P ...

Non-existence of Contract: An Often Raised Challenge at Recognition and Enforcement Stage in China

Kluwer Arbitration Blog - Tue, 2018-01-02 18:54

Wei Sun

When applicants seek recognition and enforcement (“R&E”) of foreign arbitral awards in PRC courts, a challenge often raised by respondents is the non-existence of the main contract between the parties, where the arbitration agreement is contained. Respondents contend that the contracts provided by the applicants as the basis for arbitration are not authentic or duly executed, thus non-existent. In particular, the lack of an original copy, of the signature by an officer authorized to sign the particular contract, and of an official stamp of the company being affixed may all call into question the authenticity and existence of the main contracts and, consequently, the arbitration agreement included therein. The note takes a closer look at the facts and the reasoning employed by PRC courts in relevant cotton arbitration cases, intending to show how PRC courts approached the issue of non-existence in R&E proceedings due to negligence occurring during execution of contracts.

Allenberg Cotton v. Jiangsu Nijiaxiang Group (2013) Wuxi, Jiangsu

Allenberg Cotton (“Allenberg”) applied to enforce an International Cotton Association (“ICA”) award (A01/2010/80) against Jiangsu Nijiaxiang Group (“Nijiaxiang”) before the Wuxi Intermediate People’s Court.

Background: The dispute arose out of a sales contract (No. 395080). The parties listed in this contract were Allenberg and Nijiaxiang, but the contract was only signed by a person named Zhang Yongzhong and not stamped by Nijiaxiang. Zhang was the general manager of Tiangong, a subsidiary of Nijiaxiang. In the past, Zhang signed one contract (No.381950) on behalf of Nijiaxiang and several contracts on behalf of Tiangong, with Allenberg. All these contracts had original paper copies and were respectively stamped by Tiangong and Nijiaxiang. However, Contract 395080 as submitted by Allenberg was a fax copy and Zhang denied that the signature was genuine.

Court decision: The court held that, first, Allenberg failed to provide further proof to establish authenticity of Zhang’s signature on Contract 385080. In particular, when the court asked if Allenberg wanted to apply for technical verification of the signature, Allenberg refused to do so. Second, all the previous undisputed contracts between Tiangong/Nijiaxiang with Allenberg were executed by placing Zhang’s signature as well as the company stamp on printed copies of contracts. In contrast, Contract 395080 was a fax copy with only Zhang’s signature, a notable deviation from the past practices. Thus, the court was unable to ascertain whether there was an arbitration agreement between the parties.

Further, the court proceeded to conclude that, under English law, even if Zhang’s signature on Contract 395080 was authentic, Allenberg failed to prove that Zhang was authorized to sign the contract on behalf of Nijiaxiang. The main reasons relied by the court were: (i) Allenberg failed to prove that Zhang was expressly authorized by Nijiaxiang; (ii) based on past practices, Allenberg should check if Zhang was authorized or should request Nijiaxiang to stamp the contract; (iii) except for Contract 381950 (which was also stamped), Zhang had never represented Nijiaxiang in dealing with Allenberg; and (iv) Nijiaxiang declined to ratify Zhang’s signature by applying for non-recognition.

On these grounds, the court concluded that there was no arbitral agreement and the condition for an arbitration agreement set forth in Article II of the New York Convention was not met. Thus, in accordance with Article V.1(a) of the Convention, the court refused to recognize and enforce the ICA award.

In another case Louis Dreyfus v. Jiangsu Nijiaxiang Group (2013) Wuxi, Jiangsu, the factual background and the court’s ground for non-recognition were almost the same.

ECOM Agroindustrial Asia v. Qingdao Golden Yangtze Group Penglai Textile (2014) Yantai, Shandong

ECOM Agroindustrial Asia (“ECOM”) applied to enforce an ICA award against Qingdao Golden Yangtze Group Penglai Textile (“Golden Yangtze”) before the Yantai Intermediate People’s Court.

Background: The dispute arose out of a sales contract and the corresponding confirmation letter between ECOM and Golden Yangtze, both signed and stamped. However, the contract was sent through faxing so there was no original copy. During the R&E proceeding, Golden Yangtze categorically denied the authenticity of the signature and stamp on the copy. ECOM did not provide supplementary evidence in response. Instead, ECOM argued that the authenticity of the contract was a matter of substantive law and should only be decided by the ICA tribunal and not the Chinese court.

Court Decision: The court reasoned that it had the power to determine whether there was an arbitration agreement and whether it was valid on the basis of evidence. In this case, the dispute was whether the signature on faxed copy was genuine or not. This could only be ascertained by analyzing the faxed copy and other evidence materials provided by the parties. As ECOM failed to provide any other evidence materials except for the faxed copy and an ICA statement, there was not sufficient evidence to establish that there was any arbitration agreement between the parties. Hence, the application by ECOM did not meet the requirement set forth in Article II of the New York Convention and should be denied.

In contrast, in ECOM USA v. Foshan Nanhai Zhaoli Cotton Spinning (2014) Foshan, Guangdong, the court upheld the authenticity of a contract only with a fax copy because ECOM used a witness to prove the signing of the contract, whose testimony was supported by the fax number and time of transmission on the fax copy.

Compass Cotton B.V. v. Shandong Yanggu Shunda Textile Co., Ltd (2014) Liaocheng, Shandong

Compass Cotton B.V. (“Compass Cotton”) applied to enforce an ICA award against Shandong Yanggu Shunda Textile Co., Ltd (“Shunda”) before the Liaocheng Intermediate People’s Court.

Background: The dispute arose out of a sales contract between Compass Cotton and Shunda, concluded with the help of an agent company in Shanghai. Compass Cotton only had a fax copy of the contract, signed by a person named Zhang Jie and stamped. Along with other challenges, Shunda also contested the existence of the contract. In particular, Shunda provided payroll and social security records to prove Zhang was not an employee of Shunda and sample contracts to show the stamp on the contract was not the official and registered stamp of the company. In response, Compass Cotton submitted a group of supplementary evidence. First, Compass Cotton provided two contracts between Shunda and two international companies, which were executed in the same pattern, i.e. signed by Zhang and affixed with the unofficial stamp, and records from the Qingdao Customs showing that one of the two contracts was actually carried out by Shunda and Shunda used to recognize such contracts. Second, Compass Cotton provided webpages where Zhang was listed as a representative of Shunda. Third, Compass Cotton provided Shandong precedents to establish that using an unofficial stamp did not affect the contract’s validity in international trade. In addition, the court, at the request of Compass Cotton, interviewed Zhu Xuesong, executive director of the agent company in Shanghai.

Court decision: The court affirmed the existence of contract between Compass Cotton and Shunda based on the testimony of Zhu Xuesong and the supplementary evidence submitted by Compass Cotton. As the court also found other issues in Compass Cotton’s favor, it recognized the ICA award in the end.

Suggestions for Executing Contracts

As analyzed above, arbitral awards may be denied recognition in China for omissions made during execution of the sales contracts. By observing some simple precautions, the possibility of non-recognition can be dramatically reduced.

(a) Legal Representative

Every company in China has a registered legal representative, either the general manager (CEO) or chairman of the board of the company. The legal representative, as the title indicates, does not need any further authorization to represent the company. On the other hand, other directors, officers or employees of a company can only represent the company within their respective authorizations. Thus, it is always a good idea to request the legal representative of a Chinese trade partner to sign the sales contract. If a person other than the legal representative is signing the contract on behalf of a Chinese company, it is prudent to request for a power of attorney.

(b) Official Stamp

Every company in China has an official stamp, which is registered at the local Administration of Industry and Commerce. Companies, however, may use other unofficial stamps, such as so-called accounting stamps, trade stamps, etc. Even if not signed or signed by a person other than the legal representative, a contract affixed with the official stamp is usually sufficient to bind the company. It’s prudent to request a Chinese trade partner to affix its official stamp on the contract.

(c) Keep records

Although, execution of contracts by faxing executed copies or emailing scanned copies can be more efficient, it could relatively hard to verify the authenticity of signatures and stamps on these copies. Records such as original fax transmission pages (showing fax number and transmission time) and email correspondences should be kept for future possible use as evidence. Similarly, it would be a good idea to keep records evidencing prior transactions with repeat trade partners.

More from our authors: International Arbitration and the Rule of Law
by Andrea Menaker
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The post Non-existence of Contract: An Often Raised Challenge at Recognition and Enforcement Stage in China appeared first on Kluwer Arbitration Blog.

Suggestions for Using Stone Soup this Semester

ADR Prof Blog - Tue, 2018-01-02 12:19
This post is for colleagues who will use a Stone Soup assignment this coming semester or are considering doing so. We now have posts with assessments of 19 course offerings, which include the Stone Soup assignments that faculty used.  Some posts include additional documents.  Note that this post collects assessments of five ADR courses and … Continue reading Suggestions for Using Stone Soup this Semester →
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