First Successful Case of Property Preservation Since the Arrangement of Mutual Assistance between the Mainland Courts and the Hong Kong Special Administrative Region Takes Effect

On 8 October 2019, the Shanghai Maritime Court granted an application for preservatory interim measures for an arbitration seated in Hong Kong. This marked the first successful application under the Arrangement Concerning Mutual Assistance in Court-ordered Interim Measures in Aid of Arbitral Proceedings by the Courts of the Mainland and of the Hong Kong Special Administrative Region (the “Arrangement”) since it came into force on 1 October 2019.

In May 2018, the Applicant, a Hong Kong shipping company reached a settlement agreement with the Respondent, a company in Shanghai for a dispute between the two parties. The settlement agreement stipulated that the dispute would be settled by a payment of USD 180,000 to the Applicant. However, the Respondent defaulted and the Applicant commenced the arbitral proceeding with the Hong Kong International Arbitration Centre(the “HKIAC”) as per the arbitration clause contained in the settlement agreement on 16 July 2019. On 2 October 2019, HKIAC promptly issued to the Applicant a letter of transmission which the Applicant would forward to the Shanghai Maritime Court for seizure, sequestration and freezing of the Respondent’s account and other property. 

On 8 October upon receiving the application materials and the letter of transmission, the Shanghai Maritime Court docketed the case according to the Arrangement and the Civil Procedure Law of the People’s Republic of China and other relevant laws, and quickly formed a collegiate panel which reviewed and granted the application for preservatory measures on the same day. This case was the first application of the Arrangement, which proves the significance of the Arrangement in boosting the judicial cooperation between Mainland China and Hong Kong SAR.

Memorandum of Co-operation Executed between the Singapore International Arbitration Center and the Beijing Arbitration Commission/Beijing International Arbitration Center

On 15 October 2019, the Singapore International Arbitration Center (the “SIAC”) was pleased to announce that it had reached and signed a memorandum of co-operation (the “Memorandum”) with the Beijing Arbitration Commission/Beijing International Arbitration Center (the “BIAC”) to promote international arbitration as a preferable solution for cross-border disputes.

According to the Memorandum, the SIAC and BIAC will jointly promote international arbitration and provide better legal services for the commercial community. Also, they will jointly organize international arbitration conferences, seminars and workshops in China and Singapore, and invite key individuals from their respective arbitration circles to attend SIAC events held in Beijing or BIAC events held in Singapore. It was also agreed that the two arbitration organizations will recommend arbitrators to each other if appropriate and provide according training programs for one another upon request.

The Hearing in the CAS Arbitration Procedure between WADA, Sun Yang and FINA to be Held in Public on November 15, 2019

The Court of Arbitration for Sport (the “CAS”) will hear the appeal filed by the World Anti-Doping Agency (the “WADA”) against the Chinese swimmer Sun Yang and the Fédération Internationale de Natation (the “FINA”) on Friday, 15 November 2019. The appeal was brought to CAS after a decision issued by the FINA Doping Panel on 3 January 2019 where Sun Yang was found not to have violated any anti-doping rules. 

At the parties’ request, and with the agreement of all parties, the hearing will be open to the public. It is intended to be live streamed on the CAS website. Further information regarding registration will follow in due course. Only the persons correctly registered via the official procedure will be permitted at the hearing. This will only be the second time in the history of CAS that a hearing is held in public. The first public hearing, which took place in 1999, was also related to the sport of swimming, in the case of Michelle Smith De Bruin v. FINA.

The Supreme Court of the People’s Republic of China:

The Validity of an Arbitration Clause Shall Remain Unaffected Even if the Contract Is Not Formed

Relevant Provision:

Paragraph 1 of Article 16 of the Arbitration Law of the People’s Republic of China provides, “An arbitration agreement shall include arbitral clauses stipulated in the contract and other written agreements which request arbitration to be made prior to or following the occurrence of a dispute.”

Paragraph 1 of Article 19 of the Arbitration Law of the People’s Republic of China provides, “An arbitration agreement shall exist independently and its validity shall not be affected by changes, dissolution, termination or invalidity of the contract.”

Paragraph 1 of Article 20 of the Arbitration Law of the People’s Republic of China provides, “Where the parties concerned have a differing opinion upon the validity of an arbitration agreement, a request may be made for an award to be made by the arbitration commission or a judgment made by the People’s Court. Where one party requests an award to be made by the arbitration commission and the other party requests a judgment from the People’s Court, it shall be judged by the People’s Court.” 

Paragraph 2 of Article 10 of the Interpretation of the Supreme People’s Court on Certain Issues relating to Application of the Arbitration Law of the People’s Republic of China provides, “Where the parties reach an arbitration agreement at the time when they conclude the contract, the validity of the arbitration agreement shall not be affected by whether the contract has taken effect.” 

In the case of Yun Yu Co., Ltd. v Shenzhen Zhongyuancheng Commercial Investment Holding Co., Ltd. When determining the validity of an arbitration agreement, the core issue was whether the arbitration clause was valid if the contract was not formed.

Court’s View:

The court dismissed the claimant’s application for the following reasons:

a)If an interested party requests the confirmation of an arbitration agreement on the ground that the contract contained the arbitration clause was not formed, it shall be regarded as a case on the application for confirming the validity of the arbitration agreement, and the people’s court shall docket the case; 

b)The parties have reached agreement on the arbitration clause and have never raised any dispute over it, therefore the arbitration clause in this case had come into force. 

c)According to the paragraph 2 of Article 10 of the Interpretation of the Supreme People’s Court on Certain Issues relating to Application of the Arbitration Law of the People’s Republic of China, the validity of the arbitration clause should remain unaffected even if the contract was not formed.

Jin Hua Intermediate People’s Court:

The Claimant’s Application for Enforcement of The Arbitration Award Which Is Objectively Unenforceable Has Been Dismissed

Relevant Provision:

Paragraph 1 of Article 238 of the Civil Procedure Law of the People’s Republic of China provides, “Where one party concerned does not perform a debt instrument which has been vested with mandatory enforceability by a notary organisation pursuant to the law, the counterparty may apply to a competent People’s Court for enforcement, the People’s Court which accepts the application shall carry out enforcement.” 

Paragraph 1 of Article 4 of the Convention on the Recognition and Enforcement of Foreign Arbitral Awards provides, “To obtain the recognition and enforcement mentioned in the preceding article, the party applying for recognition and enforcement shall, at the time of the application, supply: (a) The duly authenticated original award or a duly certified copy thereof; (b) The original agreement referred to in article II or a duly certified copy thereof.” 

In the case of Russian Season Co., Ltd. (“Season Company”)v Tefan Import & Export Co., Ltd. (“Tefan Company”) for recognition and enforcement of the arbitral award No. 35/2014 made by the International Commercial Arbitration Court of the Russian Federation Industrial and Commercial Commission, the core issue was whether the claimant’s application to enforce the original arbitral award, which was objectively unenforceable due to the deregistration of the respondent, should be dismissed.

Court’s View:

The court dismissed the claimant’s application for the following reasons:

a)Tefan Company is the litigant of the contract involved in this case and the arbitration award, and the changes in business after the arbitration award was made shall not affect the judicial review of the arbitration award; 

b)The contract concluded between Tefan Company and Season Company contained an arbitration clause, respresenting the true intention of both parties and therefore binding on both parties. Tefan Company had been duly notified of appointment of the arbitrators and arbitration proceedings, it should bear adverse legal consequences for such rejection or failure to serve;

c)The arbitral award involved in the case did not fall under the circumstances for refusal of recognition as prescribed by the Convention on the Recognition and Enforcement of Foreign Arbitral Awards, therefore it should be recognized. However, in view of the fact that Tefan Company was diregistrated and the arbitraton award is objectively unenforceable, thus the enforcement application filed by Season Company should be dismissed.