Convened Online by the Arbitration Committee of the ICC in Spring 2021

On the evening of 13 April, 2021, the International Chamber of Commerce Arbitration Committee (hereinafter referred to as the ICC Arbitration) held its spring 2021 working session online. At the meeting, Chairman Alexis Mourre of ICC Arbitration reflected on the development of the Court during his tenure, which has seen the Court adapt to the latest trends and take steps to meet the challenges, to increase transparency, diversity and efficiency in its operations over the past six years. In particular, since the outbreak of Newcastle pneumonia, the Court of Arbitration has issued guidance documents and has ensured the regular progress of cases through the mail and online hearings.

Alexander Faisal, Secretary-General of the Court of Arbitration, presented the Court's case statistics for 2020, in which 946 new cases were registered, involving 2,507 parties, 145 jurisdictions and 113 places of arbitration, mainly in the economic sectors of construction work, energy and power projects. The top ten countries and territories of origin of the parties were: USA, Brazil, Spain, France, Italy,  Germany, Hong Kong, China, India and Mexico. In 2020, 1,520 arbitrators were appointed or confirmed, of whom 355 were women, accounting for 23.4% of the total number of arbitrators, a higher number and proportion than in previous years.

Stephanie Cohen, head of the Commission's Working Group on the Use of Information Technology in International Arbitration, presented the updated report of the Working Group to the conference. She introduced the update, which will include the use of artificial intelligence and blockchain technology in arbitration, online case management and online hearings, as well as guidance on the use of information technology for clients through case studies and operational guidelines. The meeting also included presentations on the work and research plans of the Committee's Working Groups on Corruption in International Arbitration and Alternative Dispute Resolution and Arbitration.

China (Shenzhen) Intellectual Property Arbitration Centre established, exploring the establishment of an anti-infringement patent alliance in the Greater Bay Area

On 20 April, 2021, the inauguration ceremony of China (Shenzhen) Intellectual Property Arbitration Centre and the release ceremony of "12 Articles" on the transformation and application of intellectual property rights in Nanshan District were held at Shenzhen Bay Innovation Square. IPR arbitration is an important way to resolve IPR disputes, with the unique advantages of a short timeframe, low cost, strong confidentiality, full reflection of the will of the parties, and wide domestic and international recognition.

The inauguration event chose the core area with the highest density of high-tech enterprises and research institutions in Shenzhen and the strongest demand for IP services, and took the lead in establishing an international arbitration branch in Shenzhen Bay Science and Technology Ecological Park, helping Nanshan District to build a "Shenzhen name card" for IP protection. The initiative received a positive response from high-tech enterprises in the district, with DJI making an "arbitration pledge" on behalf of the Nanshan Intellectual Property Alliance, calling on Nanshan technology enterprises to give priority to arbitration as a means of resolving intellectual property disputes.

Nanshan District also released the "Nanshan District Action Plan for Building an Advanced Zone for the Transformation and Application of Intellectual Property Rights (2021-2023)" at the event, proposing to introduce a number of international top service providers and high-level talents and to explore the establishment of an anti-infringement patent alliance in the Greater Bay Area.

New allies for the "Guangzhou Standard" in arbitration

On 21 April, 2021, the Guangzhou Arbitration Commission, the Swiss Chinese Law Association (SCLA) and the Geneva International Dispute Institute (GIDI) held a signing ceremony for a memorandum of cooperation on the "Guangzhou Standard" and a presentation of the APEC-ODR platform via video teleconference.

In recent years, Guangzhou Arbitration Commission has launched a number of innovative initiatives, such as organizing the development of the world's first recommended standard for Internet arbitration, the Guangzhou Standard, pioneering the development of Internet arbitration, creating the first "Guangzhou Model" for international commercial arbitration, and launching the world's first APEC-ODR platform. ODR platform, etc. In addition, Guangzhou Arbitration Commission has accelerated cooperation with key countries along the "Belt and Road" and co-organized the China International Arbitration Forum with world-renowned arbitration institutions. The new Arbitration Committee has added renowned experts from Hong Kong and Macao to its membership, recruited more than 160 foreign arbitrators to join the arbitration team, and comprehensively revised the arbitration rules to incorporate the latest theoretical and practical achievements at home and abroad to further adapt to the development of Internet arbitration.

At the ceremony, staff from Guangzhong introduced and demonstrated the ODR platform to participants from the Swiss-Chinese Law Association and the Geneva International Mediation Centre. The participants highly appreciated the platform and expressed that they would continue to strengthen cooperation with Guangzhong in exploring multi-dispute resolution mechanisms.

Zhoukou City Intermediate People's Court, Henan Province:

The court revoked arbitration award after failing to conduct a reasonable review of the postal address and telephone number

Relevant Provisions:

Arbitration Law of the People’s Republic of China (Revision 2017)：

Article 58.

Where the parties concerned can provide evidence disproving the arbitration award in any of the following circumstances, they may request a cancellation of the arbitration award by an intermediate People's Court at the place where the arbitration commission is located:

(1) there was no arbitration agreement;

(2) items for arbitration were not within the scope of the arbitration agreement or were those upon which the arbitration commission had no right to arbitrate;

(3) the establishment of the arbitration tribunal or arbitration procedures are in contravention of legal proceedings;

(4) the evidence upon which the arbitration award is made was counterfeit;

(5) the other party has concealed evidence to the degree that fairness has been affected;

(6) arbitrators have accepted bribes, resorted to deception for personal gain or perverted the course of justice by the award.

Where the People's Court has formed a collegiate bench and has examined and verified that the award was made under one of the aforesaid situations, it shall order the cancellation of the award.

Where the People's Court decides that it should make a ruling to the effect that there has been a violation of the public interest, it shall order the cancellation of the award.

Article 59.

An application by a party for the cancellation of an arbitration award shall be made within six (6) months of its receipt of the application award document.

Article 60.

The People's Court shall make a ruling upon whether to allow or dismiss an application for the cancellation of an arbitration award within two (2) months of its acceptance of the case.

Case Description:

On 4 September 2020, the Zhoukou Arbitration Commission made an award [(2020) Zhou Zhong Cai Zi No. 217]: 1. Liang Feng and Liang Yalin repaid Zhoukou Rural Commercial Bank Co., Ltd. the principal amount of the loan of RMB 1,000,000 and interest of RMB 86,166.67 (as at 30 April 2020). The interest shall be calculated at the monthly rate of 13.593750 ‰ from May 1, 2020 to the date of repayment; 2. The attorney’s fee of RMB 15,862 and property preservation fee of CNY 5,000, amounting to CNY 20,862, shall be jointly borne by the respondents; 3. Mai Jianfeng, Yang Caimin and Fang Yibo were jointly and severally liable for the principal and interest of the first loan; 4. Other arbitration claims of Zhoukou Rural Commercial Bank Co., Ltd. were rejected. The arbitration fee of RMB 14,718 was jointly borne by Liang Feng, Liang Yalin, Mai Jianfeng, Yang Caimin and Fang Yibo.

The recipient's contact number 155 ××××8932 in the acknowledgment of service by post is that of the respondent Liang Feng, not the applicant himself. The address of the addressee is not the same as the address of the respondent Liang Feng, which has been specified in Article 12 of the Personal Loan Contract and other special agreements, "Group 4, Zhang Bukou Village, Chuanhui District". The arbitral tribunal did not conduct a reasonable examination of the postal address and telephone number. After the rejection by post, the arbitral tribunal did not take other means of service to serve again. The Arbitral Tribunal did not take other measures to serve the award again after the rejection of the mail. The Henan Zhongwang Law Firm commissioned the Henan Yicheng Judicial Appraisal Centre to check the signature of "Liang Yalin" on page 64 of the "Letter of Commitment from Borrower's Relatives" provided by the Zhoukou Arbitration Commission (2020) Zhou Zhong Case No. 217, dated 29 September 2018. Liang Yalin's signature is not that of the applicant himself.

Court’s View:

Although the arbitral tribunal served the respondent by post at the address and telephone number provided by the respondent, it failed to conduct a reasonable examination and did not notify the parties of the hearing in an appropriate manner during the arbitration proceedings, in violation of the statutory procedures. The arbitral tribunal’s procedural violations de facto deprived the claimant of the opportunity to participate in the arbitration proceedings and to adequately present the case and defend itself, in serious breach of the minimum due process requirements for arbitration. The judicial appraisal opinion of Henan Yicheng Judicial Appraisal Centre has confirmed that the signature in the Letter of Undertaking from Relatives of the Borrower was not signed by Liang Yalin himself. Although the appraisal was commissioned unilaterally, the evidence can prove that the evidence relied on in the award and made the claimant jointly liable for repayment of the loan was suspected to be forged.

In accordance with the provisions of Articles 58, 59 and 60 of the Arbitration Law of the People's Republic of China, it was ruled as follows: The award (2020) Zhou Zhong Cai Zi No. 217 made by the Zhoukou Arbitration Commission was revoked.

British High Court confirms tribunal’s award of third party funding costs to the respondent

Relevant Provisions:

British Arbitration Act：

59. Costs of the arbitration.

(1)References in this Part to the costs of the arbitration are to—

(a)the arbitrators’ fees and expenses,

(b)the fees and expenses of any arbitral institution concerned, and

(c)the legal or other costs of the parties.

68. Challenging the award: serious irregularity.

(2)Serious irregularity means an irregularity of one or more of the following kinds which the court considers has caused or will cause substantial injustice to the applicant—

(b)the tribunal exceeding its powers (otherwise than by exceeding its substantive jurisdiction: see section 67);

(3)If there is shown to be serious irregularity affecting the tribunal, the proceedings or the award, the court may—

(a)remit the award to the tribunal, in whole or in part, for reconsideration,

(b)set the award aside in whole or in part, or

(c)declare the award to be of no effect, in whole or in part. 

The court shall not exercise its power to set aside or to declare an award to be of no effect, in whole or in part, unless it is satisfied that it would be inappropriate to remit the matters in question to the tribunal for reconsideration.

Case Description:

The case concerned an ICC award rendered in London in which the sole arbitrator rendered a fifth partial award requiring Essar to compensate Norscot for US$4 million, of which US$1.94 million represented third-party funding received by Norscot, which was three times the amount of funding received by Norscot (US$650,000) which was three times the amount received by Norscot (US$650,000) and represented 35% of the total amount upheld by the tribunal. Essar subsequently brought an action to set aside the arbitral award in the English courts on the grounds that the award was contrary to section 68(2) of the Arbitration Act.

At issue in this case was whether the arbitral tribunal’s award of third-party funded costs to the respondent constituted grounds for setting aside the arbitral award. Under section 68(2)(b) of the English Arbitration Act, the arbitral tribunal's excess of its powers constitutes a serious irregularity and constitutes grounds for setting aside an arbitral award by the court under section 68(3) of the Act. In turn, sections 59(1) and 61(1) of the British Arbitration Act provide that the arbitral tribunal may make an award as to the allocation of the costs of the arbitration, which include: (1) the fees and expenses of the arbitrators; (2) the costs of the arbitral institution; and (3) other costs. Therefore, the key to whether an arbitral tribunal's award requiring the respondent to bear the costs of third party funding is ultra vires is whether the costs of third party funding constitute "other costs".

Court’s View:

The British court ultimately held that the arbitral tribunal was entitled to award the respondent reimbursement of third-party funding costs and thus dismissed Essar's application to set aside the arbitral award. The court reasoned in two ways.

On the issue of the arbitrator’s ultra vires powers. The court held that, according to precedent, only a deliberate exercise by an arbitral tribunal of conduct outside its own competence constitutes a "serious irregularity" under section 68(2) of the Arbitration Act, and that, in this case, the arbitrator's interpretation of the third-party contribution as arbitration costs and its treatment on the basis of the facts he had found was not justified under either arbitration act or the ICC Rules. There is a basis for this under both the arbitration act and the ICC Rules. Therefore, even if the arbitrator misunderstood the costs of the arbitration, the arbitrator in this case did not commit a serious irregularity as he did not act intentionally ultra vires.

On the question of whether third party funding costs constitute other costs. The court first declined to refer to a similar provision in English civil procedure law on this issue, and then confirmed the availability of third-party funded costs by reference to the ICC Rules and an ICC report entitled Decisions on Costs in International Arbitration made in early 2015, and finally, on the basis of Finally, on the facts identified, the court found that Essar’s conduct had forced Norscot to resort to costly arbitration rather than other methods and that Norscot had no other remedy in this case than to obtain third party funding. In conclusion, the court accepted that third party funding constituted "other costs" for the purposes of section 59(1)(c) of the Arbitration Act.

This Newsletter is produced by ZLWD International Business Committee and for your reference only.

Editorial Board: Wei LIN  Philip DUAN  Ellen WANG  Lingling GUO

Yuming Li  Ning Ning  Yu Zhuan

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