The Arbitralwomen Inaugural Panel Session Was Successfully Held at Zhonglun W&D Law Firm

On January 16, 2020, the Arbitralwomen Inaugural Panel Session with the theme of “ArbitralWomen Challenge: Becoming Future Leaders in International Arbitration” was successfully held in Shanghai. The session was sponsored by the ArbitralWomen, co-sponsored by Zhonglun W&D Law Firm, and supported by Shanghai International Economic and Trade Arbitration Commission (Shanghai International Arbitration Center), Chartered Institute of Arbitrators (CIArb) and Lee Hishammuddin Allen & Gledhill, a Malaysian law firm. Wang Haifeng, vice president of Shanghai Arbitration Association and arbitrator of Shanghai International Arbitration Center, Stella Hu, senior consultant of Herbert Smith Freehills and Chinese member of ArbitralWomen, Crystal Wong Wai Chin, attorney at Lee Hishammuddin Allen & Gledhill and Malaysian member of ArbitralWomen Member, Sun Tao, partner at Zhonglun W&D Law Firm, Ma Yixing, partner at AllBright Law Offices, and other female arbitrators and international arbitration practitioners attended the session to jointly explore the opportunities and challenges faced by female arbitrators in international arbitration, share their practical skills and experience, and encourage young female arbitrators to join arbitration organizations.

Overseas Arbitration Organisations Could Undertake Foreign-related Arbitration Business in Lin-gang Special Area from 2020

On July 30, 2019, Shanghai Municipal People's Government adopted the Measures for the Administration of Lin-gang Special Area of the China (Shanghai) Pilot Free Trade Zone. Article 13 provides that a well-known overseas arbitration and dispute resolution institution may, after having made registration with the municipal justice authority and a filing to the justice department of the State Council, establish a business institution in the Lin-gang Special Area to conduct arbitration business with respect to civil and commercial disputes arising in international commercial, maritime, investment, and other fields.

In order to thoroughly implement the provision, the Shanghai Municipal Bureau of Justice promulgated the Measures for the Administration of Overseas Arbitration Institutions' Establishment of Business Departments in the China (Shanghai) Pilot Free Trade Zone Lin-Gang Special Area (the "Measures") on October 21, 2019. These Measures apply to the establishment of business departments in the Special Area by overseas arbitration institutions and to the foreign-related arbitration business. The Measures entered into force on January 1, 2020.

Article 6 of the Measures provides that an overseas arbitration institution applying for the establishment of a business department in the Special Area shall meet the following requirements: 1. It has been lawfully incorporated overseas and in existence for more than five years; 2. It has conducted substantial arbitration activities overseas, and acclaimed high international reputation; and 3. The person in charge of a business institution has not been subject to criminal punishment for an intentional crime.

Seychelles Accedes to New York Convention

With its accession to the Convention on the Recognition and Enforcement of Foreign Arbitral Awards (also known as the “New York Convention”), effected on 3 February 2020, the Seychelles becomes the 162nd State party to the Convention. The Convention will enter into force for the Seychelles on 3 May 2020..

According to the United Nation Commission on International Trade Law (“UNCITRAL”),  upon accession to the New York Convention, Seychelles made the following declaration: that the state will apply the Convention to the recognition and enforcement of awards made in the territory of another contracting State, and only to differences arising out of legal relationships (whether contractual or not) that are considered commercial under the national law.

Draft Articles on Rapid Arbitration by the UNCITRAL

UNCITRAL held a meeting at New York from February 3rd to 7th, 2020. The meeting mainly discussed the consideration of draft provisions on rapid arbitration. The Working Group passed the report at the end of the meeting and submitted it to the fifty-third session commission meeting, tentatively scheduled for July 6th to 17th, 2020 in New York.

The Working Group considered that rapid arbitration is an accurate and simplified procedure, which shortened timeframe of processing a case. Also,  micro, small and medium sized enterprises would be greatly benefit from rapid arbitration. At the same time, the Working Group was of the view that it should focus on the establishment of an international framework on rapid arbitration and had provided two different templates of rapid arbitration provisions, which will be discussed and decided by the Commission at its fifty-third session. One is an individual template and the other template is amendment to the Arbitration Rules of the UNCITRAL.

HKIAC Published 2019 Annual Report

The Hong Kong International Arbitration Centre (“HKIAC”) released its 2019 annual report on February 13, 2020, which reviewed and summarized the arbitration work of the Centre in 2019.

In 2019, the number of arbitration cases registered at the HKIAC reached a record of 308, involving over 450 contracts, an increase of 16% compared to 2018. Meanwhile, according to the Arrangement of the Mainland and Hong Kong on Interim Measures in 2019 (the "Arrangement"), as of October 1, 2019, the Hong Kong International Arbitration Center ("HKIAC") has accepted 13 applications regarding to evidence or property preservation filed in mainland China, adding up to the total amount of approximately CNY5.5 billion (approximately USD798 billion). Around 40% of applications were filed by mainland China applicants and the rest 60% were filed by applicants from Hong Kong, Switzerland, Singapore, Samoa or the British Virgin Islands.

The HKIAC will celebrate its 35th anniversary in Hong Kong on May 5, 2020.

Legislative Affairs Commission of the National People’s Congress: Unable to Perform Contract Due to Epidemic Prevention Could be Considered as Force Majeure

On February 10, Zang Tiewei, spokesman of the Commission of Legislative Affairs of the Standing Committee of the National People’s Congress and director of the research office, said that the government has undertaken measures to prevent and control the COVID-19 epidemic to protect public health. The outbreak is an unforeseeable, unavoidable and insurmountable Force Majeure event for the party unable to perform the contract. In accordance with the relevant provisions of the PRC Contract Law, impossibility of performance caused by force majeur event could exempt the party’s partial or whole liabilities, except otherwise provided by law.

A number of legal disputes arises during the outbreak of COVID-19, judges or arbitrators may refer to the aforementioned point of view in terms of solving disputes through trials or arbitration.

CIETAC Released 2019 Annual Report

The China International Economic and Trade Arbitration Commission ("CIETAC") promulgated the 2019 Work Report (the "Report") in January, summarized the arbitration work of CIETAC in 2019.

In 2019, the CIETAC accepted a total of 3333 arbitration cases with various types (a year-on-year increase of 12.53%), including 2716 domestic cases (a year-on-year increase of 11.31%) and 617 foreign-related cases (a year-on-year increase of 18.20%. The amount involved in the disputes reached CNY122billion (a year-on-year increase of 20.13%), while the amount involved in the foreign-related cases reached CNY38billion (a year-on-year increase of 30.79%). There are 211 cases involving CNY100million (a year-on-year increase of 23.39%).

Guangdong High People’s Court:

An Arbitration Award Shall Still Remain Valid Even the Arbitration Commission Did Not Establish Branch, Agency or Business Site at the Place of Arbitration

Relevant Provisions:

Article 62 of The Arbitration Law of the People's Republic of China provides, “The parties shall perform the arbitration award. If a party fails to perform the arbitration award, the other party may apply to the people's court for enforcement in accordance with the relevant provisions of the Civil Procedure Law. The people's court to which the application has been made shall enforce the award.”

Article 10 (3) of The Arbitration Law of the People's Republic of China provides, “The establishment of an arbitration commission shall be registered with the administrative department of justice of the relevant province, autonomous region or municipality directly under the Central Government.”

On March 12, 2019, Zhanjiang Arbitration Commission trialed a loan contract dispute between Shenzhen Yinsheng Small Loan Co., Ltd. and Shenzhen Jingbai Construction Engineering Co., Ltd. [(2018) Zhan Zhong Zi No.3181] in Shenzhen, and held that the respondent, Shenzhen Jingbai Construction Engineering Co., Ltd. shall repay CNY3,058,407.50 and interest. However the Shenzhen Intermediate People's Court rejected the application for enforcement of the arbitration award on the ground that "Zhanjiang Arbitration Commission did not establish any branch, agency or business site in Shenzhen" [(2019) Yue 03 Zhi No.1869]. The applicant, Shenzhen Yinsheng Small Loan Co., Ltd. appealed to the High People's Court of Guangdong Province, requesting setting aside of the ruling rendered by the Shenzhen Intermediate People's Court. The main issue of this reconsideration [(2019)Yue Zhi Fu No. 948] is whether the ruling given by Shenzhen Intermediate People's Court to reject the enforcement application was illegal or improper, meaning that whether Zhanjiang Arbitration Commission is allowed to arbitrate in Shenzhen.

Court’s View:

Guangdong High People's Court acknowledged the validity of the original arbitration award issued by Zhanjiang Arbitration Commission and set aside the verdict [(2019) Yue 03 Zhi No.1869] given by Shenzhen Intermediate People's Court for the following reasons:

a) Arbitration is an alternative of litigation to resolve civil disputes, and the arbitral award given by the arbitration commission could be relied upon by the court to enforce the award;

b) The establishment of an arbitration commission shall be registered with the administrative department of justice of the relevant province, autonomous region or municipality directly under the Central Government;

c) Even though Zhanjiang Arbitration Commission arbitrated in Shenzhen, it could neither be deemed that Zhanjiang Arbitration Commission was established illegally, nor could it be decided that the commission has illegally set up a branch, agency or business site. Thus the rejection of enforcement ruled by the court lacks factual basis.

United States Court of Appeals for the Fifth Circuit :

In the Absence of Specific Contrary Agreement, Class Arbitration Is a Gateway Issue For Courts to Decide

Relevant Cases:

(1) Henry Schein, Inc. v. Archer and White Sales, Inc., 139 S. Ct. 524, 530 (2019) ；

(2) Rent-A-Center, West, Inc. v. Jackson, 561 U.S. 63, 68–69 (2010) ；

(3) Del Webb Cmtys., Inc. v. Carlson, 817 F.3d 867, 877 (4th Cir. 2016) ；

(4) Catamaran Corp. v. Towncrest Pharmacy, 864 F.3d 966, 972 (8th Cir. 2017)

20/20 Communications, Inc. is a national direct-sales and marketing company. The company employs field sales managers and requires as a condition of employment that they sign the company’s Mutual Arbitration Agreement. That agreement contains, among other provisions, a class arbitration bar, under which employees agree to bring only individual actions, and not class or collective actions, to arbitration. A number of field sales managers filed class claims. In response, 20/20 Communications sought a declaration in federal district court that the issue of class arbitrability is a gateway issue for the court rather than the arbitrator to decide, and that the class arbitration bar does indeed foreclose class arbitration. The district court held that the arbitration agreement authorized arbitrators, rather than the court, to decide the arbitrability of a collective arbitration, and rejected 20/20 Communications. 20/20 Communications appeals against the decision of the district court. The principal question presented in the appeal（No. 18-10260 c/w 19-10050）is whether the availability of class arbitration, is a gateway issue that a court must decide, in the absence of clear and unmistakable language subjecting such questions of arbitrability to an arbitrator rather than a court.

Court’s View:

The court vacated the judgment of the district court and remanded with instructions to dismiss the case for the following reasons:

a) When parties agree to arbitrate certain disputes, courts naturally expect those parties to resolve those disputes before an arbitrator, rather than a court. Questions of arbitrability, however, are typically reserved for courts to decide, absent “clear and unmistakable” language in the arbitration agreement to the contrary;

b) Until now, the Supreme Court still has not decided whether class arbitrability is such a gateway issue. However a number of our sister circuits have concluded that class arbitrability is a gateway issue;

c) Class actions bind not only named parties, but also countless unnamed parties as well, due process requires that absent parties “be afforded notice, an opportunity to be heard, and a right to opt out of the class.”;

d) The terms invoked by the employees did not support their claim and it was for the court, not the arbitrators, to determine whether the availability of class arbitration, is a gateway issue.

Singapore Court of Appeal:

If the Arbitration Agreement Only Stipulates Arbitration in A Certain Place, Such Place Shall Be Deemed to Be the Seat of Arbitration

Relevant Provision:

Article 18.1 of the Arbitration Rules of the Singapore International Arbitration Centre (2013) provides, “The parties may agree on the seat of arbitration. Failing such an agreement, the seat of arbitration shall be Singapore, unless the Tribunal determines, having regard to all the circumstances of the case, that another seat is more appropriate.” 

Relevant Case:

PT Garuda Indonesia v Birgen Air [2002] 1 SLR(R)401

Naviera Amazonica Peruana SA v Compania Internacional de Seguros del Peru [1988] 1 Lloyd’s Rep 116

Shagang South-Asia (Hong Kong) Trading Co Ltd v Daewoo Logistics [2015] 1Lloyd’s Rep 504

In BNA v BNB and another [2019] SGCA 84, pursuant to the Takeout Agreement and Addendum entered into between the parties, the agreement shall be governed by the laws of the People’s Republic of China (PRC law), and any dispute arising from the agreement shall be submitted to Singapore International Arbitration Centre (SIAC) for arbitration in Shanghai in accordance with the SIAC arbitration rules. Then, at the initial stage of the arbitration, BNA challenged the tribunal’ jurisdiction on the ground that the arbitration agreement would be invalid if it was governed by the PRC law, with the following main reasons: (1) since Shanghai was the seat of the arbitration, and PRC law did not permit a foreign arbitral institution such as SIAC to administer a PRC-seated arbitration; and (2) the dispute was a purely domestic dispute, and PRC law did not permit a foreign arbitral institution such as the SIAC to administer such a dispute. Therefore, the key issues were (1) whether the governing law of the Takeout Agreement is also the governing law of the arbitration agreement; (2) if the arbitration agreement only provides that the arbitration shall be conducted in Shanghai, then whether Shanghai shall be determined as the seat of arbitration or only the venue of arbitration while the seat of arbitration shall be otherwise determined as Singapore in accordance with the SIAC Arbitration Rules (2013).

Court’s View:

The court ruled that Shanghai was the seat of arbitration without expressing any concluded view as to whether the tribunal did or did not have jurisdiction for the following reasons:

a) The arbitration agreement is independent of the Takeout Agreement. Although the parties have agreed in the Takeout Agreement that the governing law of the agreement shall be PRC law, it is insufficient to determine that the governing law of the arbitration agreement shall also be PRC law;

b) The legal significance of the seat of arbitration differs from the venue of arbitration, in that the seat of arbitration determines the nationality of the arbitral award and the procedural rules of arbitration; while the the venue of arbitration is only the actual place of hearings and meetings, which may be determined based on the consideration of the convenience of transportation and costs; therefore, It is not common practice for the parties to agree upon the venue of arbitration in an arbitration agreement. Moreover, when only one place is agreed upon in an arbitration agreement, in the absence of evidence to the contrary, such place shall be determined as the seat of arbitration rather than the venue of arbitration;

c) Although the case was concerning the determination on whether the arbitral tribunal has jurisdiction, once the court had ruled that Shanghai instead of Singapore was the seat of arbitration, any decision of the Singapore courts on jurisdiction would not be binding upon the tribunal and the Singapore courts would simply have no supervisory jurisdiction over the arbitration.