News and Notes
Ningbo Court Enforces China-seated Foreign Arbitral Award.
On October 14, 2009, China Law and Practice reported that a Ningbo Court enforced a China-seated foreign arbitral award for the first time. Reprinted with permission.
A Chinese court has for the first time enforced an award made in China by a foreign arbitral institution. The decision apparently follows a policy of limiting domestic awards to Chinese arbitral institutions, although lawyers have warned it is too early to draw any firm conclusions from the decision. There has long been uncertainty as to whether an award made in China by a foreign arbitral institution would be recognised and enforced by PRC courts. But in April 2009, the Ningbo Intermediate Court reportedly upheld an International Chamber of Commerce (ICC) award by labelling it as non-domestic – despite the fact that the award was made in Beijing. “The court got round this by allowing the successful party to rely on the New York Convention,” said Robert Pé, an Orrick Herrington & Sutcliffe dispute resolution partner. “This enabled the Chinese court to enforce the award,
but the reasoning is questionable.”
Sojitz Corporation v. Prithvi Information Solutions Ltd, 891 N.Y.S.2d 622 (Dec. 2, 2009)
New York Supreme Court rules that assets can be attached as security before commencement of international arbitration.
The New York Supreme Court ruled that assets can be attached as security even if underlying contract dispute is subject to international arbitration outside New York State. In this case, Sojitz, a Japanese company and Prithvi, an Indian company contracted for disputes to be arbitrated in Singapore. Sojitz moved for an ex parte order of attachment against Prithivi which was granted and Sojitz promptly attached a third party account debt owed to Prithvi in New York. The court ruled that Sojitz met the evidentiary standard by showing that Prithvi had diverted funds out of an escrow account held for Sojitz. The court determined that pre-award attachments against ascertainable property in New York State, like thirdparty debts owed to Prithvi, are acceptable in international arbitration cases.
DMA Int’l, Inc. v. Qwest Communications Int’l, Inc.
585 F.3d 1341 (10th Cir. 2009).
The Tenth Circuit Decides Post-Hall Street Manifest Disregard of the Law Case.
In a strong proclamation about arbitration’s legal significance, the Tenth Circuit held that an arbitrator did not act with manifest disregard of the law when he turned to extrinsic evidence to determine the parties’ intent and, further that, sanctions to compensate Qwest Communications Int’l, Inc, (Qwest) for “unnecessary legal fees” incurred was an appropriate measure to discourage similar attempts to usurp arbitral tribunal authority. DMA Int’l, Inc. (DMA) had challenged a tribunal’s factual findings but the court, in reliance on the highly deferential standard of review of arbitral awards of Hollern v. Wachovia Secs., Inc., found DMA’s appeal without merit. The court further reasoned that under the United Paperworkers Int’l Union v. Misco, Inc. standard, factual findings cannot be overturned by the courts simply because of the conflicting evidence. The court went further, under Federal Rule of Appellate Procedure 38, to award damages to Qwest. In doing so, the court scolded DMA, referring to the previous Tenth Circuit decision, Lewis v. Circuit City Stores, Inc., that made clear the burdens associated with challenging arbitral awards in Federal court.
La Comission Ejecutiva Hidroelectrica del Rio Lempa v. El Paso Corp., 341 Fed. Appx. 31; 2009 U.S. App. LEXIS 17596 (Aug. 6, 2009).
The Fifth Circuit Reaffirms No Judicial Discovery Assistance to Private Foreign Arbitrations under 28 U.S.C. Section 1782.
The Fifth Circuit reaffirmed its position that 28 U.S.C. § 1782, which provides for federal assistance in obtaining discovery for use in foreign and international tribunals, does not apply to private commercial arbitration tribunals. The court ruled that although the appeal by La Comission Ejecutiva Hidroelectrica del Rio Lempa (CEL) was not moot under UNCITRAL arbitration rules, as argued by El Paso Corp. (El Paso), Supreme Court precedent fails to provide for discovery requests in such circumstances. The court rejected CEL’s reliance on the Supreme Court decision in Intel Corp. v. Advanced Micro Devices, Inc ., and instead cited to the Fifth Circuit’s precedent in Republic of Kazakhstan v. Biedermann International. The court reasoned that the Intel case did not address whether private international arbitration tribunals qualify as a “tribunal” under § 1782. The court further noted that providing parties in international arbitrations the means to pursue supplemental discovery via the federal courts could detract from arbitration’s efficiency.