以下文章来源于中伦文德律师事务所 ，作者中伦文德

On June 22, 2022, the International Center for Settlement of Investment Disputes (ICSID) published the newly revised 2022 ICSID Regulations and Rules. The revisions, which took five years to complete, cover all major rules and regulations, including the ICSID Arbitration Rules and the ICSID Mediation Rules, and aim to improve the efficiency of ICSID case handling, expand the service scope of ICSID, and ensure more openness and transparency in the conduct and outcome of dispute resolution proceedings. The newly revised regulations and rules have come into force on July 1, 2022.

The main highlights of the revised ICSID Regulations and Rules include: (1) improved procedural efficiency. The revised ICSID Arbitration Rules clarify that all documents are to be served electronically absent exceptional circumstances and add mandatory case management conferences and specific timelines for each key procedural step. In particular, the ICSID Arbitration Rules also add new expedited arbitration procedures for parties’ discretion to apply; (2) expanded the jurisdiction scope of ICSID. The revision of the ICSID Additional Facility Rules significantly expands its jurisdiction over international investment disputes by allowing parties to agree to resort to the ICSID Additional Facility Rules for arbitration and mediation when none of the parties to the dispute is an ICSID member or a national of an ICSID member; (3) new mediation and fact-finding rules. In this amendment, ICSID has added independent ICSID Mediation Rules and Regulations and ICSID Fact-Finding Rules and Regulations, under which mediation and fact-finding procedures can be applied independently or together with arbitration procedures, providing more options for parties to seek the most favorable dispute resolution; and (4) further improved transparency of arbitration procedures. Under Article 14 of the ICSID Arbitration Rules, parties must disclose the name and address of any third party funder immediately upon receipt of funding or upon acceptance of the case to avoid potential unknown conflicts of interest.

This comprehensive revision of the ICSID Regulations and Rules both took into account massive previous cases and extensively listened to the opinions of people from all walks of life. The above-mentioned revision not only responded to the various problems of the previous ICSID dispute settlement mechanism but also took into account the current international environment and new issues arising from the global epidemic. The revised ICSID Regulations and Rules, with lower application threshold, more streamlined and convenient procedures, and higher transparency, will undoubtedly better serve international investors and host countries, and promote the flourishing of international investment and dispute settlement.

The Hong Kong International Arbitration Centre ("HKIAC") is pleased to announce that, pursuant to a decision of the Supreme People's Court ("SPC") on 22 June 2022, HKIAC is the first overseas arbitration institution to join the China International Commercial Court's ("CICC") "one-stop" platform for the diversified settlement of international commercial disputes ("One-Stop Platform")【In June 2018, the Supreme People's Court established the China International Commercial Court ("CICC") to deal exclusively with international commercial disputes. The judges of CICC are all from the Supreme People's Court.】

At present, parties to cases administered by HKIAC and with Hong Kong as the place of arbitration can already apply to the relevant intermediate people's court in the Mainland for preservation of evidence, property or conduct. With the addition of HKIAC to the One-Stop Platform, parties to HKIAC cases with a subject matter of RMB 300 million or more or other significant implications can apply directly to CICC for preservation measures and enforcement of the arbitral award. This provides a more efficient option for parties to appropriate cases, in addition to the existing arrangement for preservation of arbitration and enforcement of awards between the Mainland and Hong Kong.

On the other hand, the parties had to apply to the relevant intermediate court in the Mainland for the enforcement of awards made abroad (including awards with Hong Kong as the arbitration place) in previous years. Before refusing enforcement, the intermediate court needed to report to and obtain permission from the SPC. With the addition of HKIAC to the One-stop Platform, parties to eligible HKIAC cases can apply directly to CICC for preservation measures and enforcement of the award. This new route will certainly result in significant time and cost savings for the parties. For major cases, direct access to CICC will enhance the efficiency, transparency and predictability of the outcome of arbitration.

Following the outbreak of the Russo-Ukrainian war in February 2022, the Fédération Internationale de Football Association (FIFA) and the Union of European Football Associations (UEFA) issued an injunction against Russian soccer participation in any world or European zone tournaments. The Russian Football Association and other four professional league teams (Zenit St. Petersburg, Sochi, PFC CSKA Moscow, and FC Dynamo Moscow ) could not accept the injunction so that they appealed for reversal. After a four-month investigation, Court of Arbitration for Sport (CAS) held hearings on July 5th and 11th. On July 15th in Lausanne, Switzerland, CAS announced to reject the six Russian appeals. As a result, FIFA and UEFA can continue to maintain the injunction.

CAS responded that although the Russian soccer team was implicated in the Russo-Ukrainian war, considering the significant consequences of Russia’s military actions, the injunction would contribute to the safety of soccer matches around the world. Meanwhile, CAS stated that FIFA and UEFA had not exceeded their powers in dealing with "unforeseen and unprecedented circumstances" and therefore CAS respected the decisions made by the two organizations.

In response, the Russian Football Federation argued that it strongly rejects the decision of the CAS and will reserve the right to continue to defend its interests. It may seek compensation or file a new appeal to the Swiss Supreme Court. Under current law, however, the Swiss Federal Tribunal will only accept a limited number of grounds for overturning the decision made by CAS, such as abuse of legal process.

Legal Basis:

the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards

Article V

2 . Recognition and enforcement of an arbitral award may also be refused if the competent authority in the country where recognition and enforcement is sought finds that:

The subject matter of the dispute is not capable of settlement by arbitration under the law of that country; or(b) The recognition or enforcement of the award would be contrary to the public policy of that country.

Case Description:

A Korean company and a Beijing technology company(hereinafter collectively referred to as the "Parties") entered into a Purchase Contract(hereinafter referred to as the "Contract") on December 5, 2013, with Article 15 of the Contract agreeing that disputes arising out of the contract shall be submitted to the Singapore International Arbitration Centre (SIAC) for arbitration. They also agreed that the arbitration shall be governed by Singapore law and the arbitration proceedings shall be conducted in English. Thereafter, the Parties entered into four supplementary agreements, but they did not amend the arbitration clause. As a dispute arose between the Parties in the performance, the Korean company initiated arbitration with the SIAC on 21 November 2016 of Case No. 288 of 2016 (ARB288/16/QW). SIAC issued Final Award No. 129 of 2019 in the case on 23 October 2019. As the Beijing technology company failed to perform the effective award within the stipulated period, the Korean company applied to the Beijing Fourth Intermediate People’s Court (hereinafter referred to as the "Court") for the recognition and enforcement of the arbitral award in accordance with the law. In the course of the Court's review, SIAC made a Memorandum of Correction to the case, and the Korean company applied for recognition and enforcement of this Memorandum as well. The Beijing technology company proposed that the composition of the arbitral tribunal did not conform to the arbitration rules and some of the award did not fall within the scope of the arbitration agreement. Meanwhile, it argued that there were obvious errors in the award and the award was detrimental to the public interest of the society. In response to the reason that the award was detrimental to the public interest, the Beijing technology company argued that the equipment in dispute had serious quality problems, and itself had hired an expert to explain these problems in the arbitration. However, the arbitrators did not adopt the expert's opinion, resulting in an obvious unfairness in the final result of the award, which seriously undermined the enthusiasm of domestic enterprises to participate in foreign trade and undermined the public policy in foreign trade in China. Therefore, this arbitral award should not be recognized and enforced.

Court’s View:

After examination, the Court held that the composition of the arbitral tribunal in this case did not violate the arbitration rules, and that the arbitral tribunal did not exceed the scope of the arbitration agreement by rejecting the arbitration counterclaim of the Beijing technology company. The reasons are as followed: the arbitration was a dispute between commercial entities arising from the performance of a contract, and the outcome of the arbitration involved only the Parties to the Contract, not Chinese public policy; whether or not the arbitral tribunal adopted the expert's opinion was within the scope of exercising the arbitration right, and had no relationship with Chinese public policy; although the electric power system was an important sector related to public safety and services, matters related to the purchase of electric power equipment could not all be considered as public policy; and the arbitral tribunal heard the case based on the evidence and the law involved, and the award was within the scope of the application of arbitration right.

In summary, the Court found that the defence of the Beijing technology company could not be established. The Court ruled to recognize and enforce the final arbitral award and the Memorandum of Correction made by the SIAC.

Case Description:

In September 2015, WISDOM company (hereinafter referred to as "W"), ADWO company (hereinafter referred to as "AW") and other related parties entered into a Framework Agreement to acquire 80% of AW's shares by mainland investor for RMB1 billion. In December of 2015, W and AW entered into an Equity Repurchase Agreement, agreeing to repurchase the shares held by W from AW.

Disputes among W, AW and other parties arose from two agreements before the acquisition was completed. The dispute was submitted to the Hong Kong International Arbitration Centre (HKIAC) for arbitration as two separate cases at the same time which are: in January 2017, a case filed under the Framework Agreement, with W and another related party as claimants and AW and other related parties as defendents (hereinafter referred to as "Arbitration Award No. 1"); and in June 2017 a case brought by AW as claimant and W as respondent under the Equity Repurchase Agreement (hereinafter referred to as "Arbitration Award No. 2"). The two cases were heard separately, but AW appointed the same arbitrator "Mr Tao" in both cases(hereinafter referred to as the "Arbitrator").

In Arbitration Award No. 1, W claimed actual performance of the Framework Agreement or damages for breach of contract, while AW filed a counterclaim to claim damages against W for misrepresentation when W purchased AW's shares. In Arbitration Award No. 2, AW claimed rescission of the Equity Repurchase Agreement and corresponding damages on the basis of misrepresentation. Although the two cases were based on different agreements, the claims against W for misrepresentation were basically the same.

The two arbitral tribunals issued their awards in March and July 2020, respectively. In Arbitration Award No. 1, the arbitral tribunal upheld W's arbitration claim and rejected AW's counterclaim of misrepresentation. However, the arbitration tribunal in Arbitration Award No. 2 upheld AW's misrepresentation claim, allowed AW to rescind the Equity Repurchase Agreement and awarded W shall indemnify AW for approximately $38 million, which shall take into account the interest and other costs.

In October 2020, W applied to the HK court to set aside the Arbitration Award No. 2 based on the principle of ne bis in idem. W claimed that the arbitral tribunal in Arbitration Award No. 2 was bound by Arbitration Award No. 1 in respect of the same findings of fact. However, it disregarded them and made different findings of fact on the same subject on the same issue. Arbitration Award No. 2 thus violated the principles of fairness, due process and justice, and was therefore contrary to the public policy of Hong Kong. In December 2020, AW applied for the enforcement of Arbitration Award No. 2 and the preservation of W's property.

The court of first instance found that where AW appointed the same arbitrator for both cases, W was entitled to expect that Arbitrator to perform his duties fairly and impartially and that Arbitration Award No. 2 lacked the requisite impartiality and failed to observe due process. The court ultimately found that W had strong grounds to set aside the Arbitration Award No. 2 and dismissed AW's application for preservation of the enforcement of the Arbitration Award No. 2 on the basis that there was no clear evidence that W had transferred any assets out of Hong Kong to avoid the enforcement of the award, nor was there any real risk that W would take steps to prevent AW from enforcing the Arbitration Award No. 2 in Hong Kong. AW requested an appeal to the court but was denied. It then appealed to the appellate court.

Court’s View:

(i) About the doctrine of ne bis in idem

AW asserted that the court of first instance erroneously considered that the dispute involved the principle of ne bis in idem on the grounds that the claims of misrepresentation in two arbitrations arose at different time and in different agreements.

The appellate court found that it could not agree with the appellant's claim because the court of first instance had made it clear that the conclusions reached by Arbitration Award No. 2 were based on the same statements of fact as those examined by Arbitration Award No. 1. Moreover, the claim of misrepresentation in relation to the different agreements did not detract from the fact that what was stated in the two arbitration awards, which was same with AW's pleadings. Therefore, given that Arbitration Award No. 1 and No. 2 made inconsistent factual findings regarding the misrepresentations based on the same background, it was not clearly erroneous for the court to find that the principle of non bis in idem was involved.

(ii) About the different decisions of the two arbitral tribunals

AW asserts that it was not unforeseeable that Arbitration Award No. 2 made different decisions based on different evidence and claims, on the grounds that part of the new evidence was only presented in Arbitration Award No. 2. Therefore, Arbitration Award No. 2 was entitled to make different conclusions based on different facts.

The appellate court found that reasoning to be erroneous because the court of first instance was not concerned with whether Arbitration Award No. 2 could have reached a different conclusion than Arbitration Award No. 1. Rather, what the court of first instance made clear in its decision was that it was concerned with the structural integrity of the arbitral process and the arbitral award, namely that the fairness and integrity of the case required the Common Arbitrator to invite the parties to submit their views on the impact of Arbitration Award No. 1 on the issues decided by Arbitration Award No. 2. The failure to give the parties an opportunity to be heard on res judicata affected the structural integrity of the proceedings.

(iii) About the duties of the arbitrators

AW asserted that the Common Arbitrator did not have an affirmative duty to indicate to the parties the relevant findings of fact in Arbitration Award No. 1 on the grounds that the issue of estoppel should be raised by the opposing party and not by the arbitrators, and that arbitrators had a duty to keep matters relating to Arbitration Award No. 1 confidential.

The appellate court held that the Common Arbitrator’s duty of confidentiality in relation to Arbitration Award No. 1 was not absolute. There are recognized circumstances in which disclosure of confidential information or documents in an arbitration is permissible, including where it is reasonably necessary to protect the legitimate interests of a party to the arbitration and where the interests of justice require disclosure.

The issue at stake in this case was whether the arbitrators were obliged to invite the parties to submit comments on whether Arbitration Award No. 2 could make a finding that was inconsistent with Arbitration Award No. 1. The appellate court agreed with the court of first instance that even if the Common Arbitrator were under a duty of confidentiality, he should have invited the parties to submit their comments. This was necessary to protect the interests of both parties, and fairness and due process required arbitrators to give clear reasons for completely inconsistent findings of fact. When the Common Arbitrator considered Arbitration Award No. 2, he could not completely disregard the reasonable findings of misrepresentation in Arbitration No. 1, as if they had never been raised.

(iv) About waiver

AW asserts that W knew but did not inform the second arbitration tribunal of Arbitration Award No. 1, and therefore it waived any claim of irregularity.

The appellate court held that the court of first instance had noted that W had not informed the second arbitral tribunal of Arbitration Award No. 1, but that it had informed the second arbitral tribunal that there were parallel arbitration proceedings in progress and that there was a risk of inconsistent determinations. The court of first instance had taken into account that the Common Arbitrator must have been aware of the facts decided in Arbitration Award No. 1, but that they had not objected in either award and that the parties had reasonably expected their appointed arbitrators to perform their duties fairly and impartially. The appellate court ultimately found that it could not support AW's claim of abstention.

In summary, the appellate court held that the court of first instance's decision that the respondent W had strong grounds to set aside Arbitration Award No. 2 and that the application for preservation of the enforcement of Arbitration Award No. 2 filed by the applicant AW was correct and upheld the court of first instance's dismissal of AW's application for appeal.

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  jingya MAO

All Information published in this Newsletter is from open source.

If you have any suggestion or need more information, please contact us.