Arbitration News

The Committee on Hong Kong Arbitration Law recently produced its draft Report on proposed reform of the Hong Kong Arbitration Ordinance. It has long been recognised that the Arbitration Ordinance, which is based on the now-repealed English Arbitration Acts 1950 – 1979, required updating and presenting in a user-friendly format. The central proposal is to replace the current legislation with a new Arbitration Ordinance, which will be more closely based upon the UNCITRAL Model Law, and which will abolish the present distinction between domestic and international arbitrations.

The Draft Report also recommends that:

• a term should be implied into all arbitration agreements that any arbitration proceedings should be confidential
• there should be a general duty on parties to the arbitration to progress the arbitration and comply with orders and directions of the tribunal
• tribunals should have the power to impose sanctions in the event of non-compliance
• parties should be given a "full" as opposed to a "reasonable" opportunity to present their cases
• payments into Court by parties to arbitration should be abolished • the right of parties to challenge an arbitrator on grounds of serious irregularity or misconduct should be abolished
• provisions permitting parties to consolidate related arbitrations, to appeal to the Court on a point of law, or to refer a preliminary question of law to the Court for determination should be available on an "opt-in" basis only.

The draft Report is currently at the consultation stage, following which the Committee’s final recommendations for the new Arbitration Ordinance will be referred to the Secretary of Justice with a view to their becoming law.

In a recent decision WSG Nimbus Pte Ltd v Board of Control for Cricket in Sri Lanka the Singapore High Court confirmed that an arbitration agreement which provided that the parties had a right to elect to submit a dispute to arbitration was a valid arbitration agreement in accordance with the provisions of Section 2(1) Singapore International Arbitration Act. Essentially this is an agreement in writing in accordance with Article 7 of the UNCITRAL Model Law. The Court noted that although the arbitration agreement did not provide for compulsory arbitration, once the option was exercised arbitration became the mandatory dispute resolution mechanism. The Court also dismissed the argument that the plaintiffs in the Colombo High Court proceedings had accepted its jurisdiction and were therefore stopped from relying on the arbitration agreement. The Court accepted the plaintiffs’ argument that the only action they had taken in respect of the court proceedings was to file a motion to object to its jurisdiction.

The tribunal rendered their award on jurisdiction in the UPS v Canada case. Canada argued that the issues raised by UPS, anti-competitive behaviour and its regulation and control, were not covered by the terms of NAFTA. The Tribunal reviewed the matter and struck out some of the heads of claim submitted by UPS. However, this will not adversely affect the case being argued by UPS. The main point of interest in the award on jurisdiction is the review of Article 1105 NAFTA, Minimum Standard of Treatment. This is the third decision on the scope of this provision since the Free Trade Commission issued its Statement on the interpretation of Article 1105. All of the tribunals (Pope & Talbot and Mondev) have endorsed the government’s interpretation that the article only prescribes the customary international law minimum standard of treatment of aliens. This is in contrast to the wider concept of treatment in accordance with international law referred to in the provision itself. The Tribunal found that there was no customary international law with regard to anticompetitive behaviour and declined jurisdiction for any claim based on Article 1105 accordingly.

Iran is reviewing the possibility of involvement in the work of the Energy Charter. The Energy Charter is an inter-government organisation whose primary aim is to promote energy cooperation between the 51 signatories of the Energy Charter Treaty. The Secretary General of the Energy Charter secretariat discussed this possibility at the invitation of the Iranian Government during a recent visit to Tehran. Although the Energy Charter Treaty has members from all across Europe, Eastern Europe, and former CIS countries, with China having observer status at the secretariat, there are no Middle Eastern oil producing states that have yet participated in the process. Iran's interest could be an important and interesting development in this regard.

Article by Norah Gallagher

The content of this article does not constitute legal advice and should not be relied on as such. Specific advice should be sought about your specific circumstances.

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