The past few months have seen a number of pro-arbitration decisions around the world, which should provide further comfort to Japanese companies considering arbitration for their dispute resolution mechanism. This newsletter summarises some examples from the UK, Hong Kong and Singapore.
- Xstrata Coal Queensland Pty Ltd and others v Benxi Iron & Steel (Group) International Economic & Trading Co Ltd  EWHC 2022 (Comm)
- BBW v BBX and others  SGHC 190
- American International Group, Inc and AIG Capital Corporation v X Company  HCCT 60/2015 (30 August 2016)
Xstrata Coal Queensland Pty Ltd and others v Benxi Iron & Steel (Group) International Economic & Trading Co Ltd  EWHC 2022 (Comm)
The English High Court has granted an application under s79 of the Arbitration Act 1996 to extend the time limit to apply to the Tribunal under Article 27 of the LCIA Rules 1998 (Rules) to correct an ambiguity relating to the identity of one of the Claimants.
The Chinese Court refused recognition and enforcement of an LCIA award because one of the Claimants was not party to the contract (and arbitration agreement). The award was silent on the issue.
The Claimants sought to rely on Article 27.3 of the Rules, which provides for correction of awards. However, by the time the Chinese Court had made its decision, the 30 day time limit (from receipt of the award) to make such applications had long since expired.
The LCIA confirmed that the Tribunal had fulfilled its mandate and could not hear the application. The Claimants therefore applied to the Court for a retroactive extension of time under s79 to make the Article 27 application to the Tribunal.
The Court observed that, in practice, the time limit under Article 27 of the Rules would almost always expire before the outcome of any enforcement attempt was known.
The Court concluded that enabling the Tribunal to provide an explanation would therefore be a "just and reasonable approach". The Court also found that there was no undue delay in making the s79 application (as it was reasonable to await the outcome of the Chinese proceedings). The Court accordingly granted the application.
This is another pragmatic and pro-arbitration decision by the English Court. This case is also a reminder to clearly and correctly define parties in complex multi-party or multi-contract transactions and to ensure that the proper parties are bringing the claims.
BBW v BBX and others  SGHC 190
The Singapore High Court has recently confirmed that it has an inherent power to grant sealing orders barring public access to court files and documents.
The Claimant applied for an order sealing all court documents relating to an action (Action) against him. The Action concerned an application in connection with a SIAC arbitration. The Claimant argued that evidence relating to the arbitration would be referred to in the Action.
The Claimant's application relied on (i) ss 22 and 23 of Singapore's International Arbitration Act (IAA); and (ii) the inherent power of the Court to order sealing.
Confidentiality under the IAA
Sections 22 and 23 of the IAA provide for the confidentiality of arbitration. Although the arbitration fell within the scope of the IAA, the Court found that the Action did not qualify as a proceeding under the IAA (since it was a claim in contract concerning an indemnity agreement). Accordingly, the IAA did not apply.
Inherent power to grant sealing orders
The Courts' power to grant sealing orders is not provided for expressly. However, the Court considered that it must have an inherent power to grant a sealing order – otherwise the Court had been wrong in doing so for many years. The Court also found that such orders fell within the inherent powers of the Court to achieve a just outcome.
The public policy of keeping arbitrations confidential has been affirmed by both the Singaporean Courts and the Singapore Parliament. The decision to grant a sealing order is made by weighing the principle of open justice against the need to preserve confidentiality.
The Court held that, due to the considerable factual overlap, evidence adduced in the Action would compromise the confidentiality of the arbitration. The Court therefore granted the sealing order.
This case confirms that protecting the confidentiality of arbitrations is of utmost importance in Singapore. The Court may use its powers to preserve confidentiality even in cases which are not brought under the IAA, provided they relate to arbitration.
American International Group, Inc and AIG Capital Corporation v X Company  HCCT 60/2015 (30 August 2016)
The Hong Kong Court has dismissed an application to set aside an arbitral award because the Claimant could not establish that the Tribunal had "consciously disregarded" the applicable law.
A dispute arose in relation to a deposit (Deposit) paid by the Defendant as security under an SPA. The Defendant subsequently breached the SPA and the dispute was referred to arbitration in Hong Kong.
The Tribunal found that the Claimants were not entitled to keep the Deposit. The Claimants applied to the Hong Kong Court for the award to be set aside under s.64 Arbitration Ordinance (Cap 609), on grounds that the arbitrators had disregarded basic principles of New York law (the agreed governing law), in order to arrive at what the Tribunal considered a fair result.
The Tribunal had in fact considered a number of New York decisions in the award. The Claimants argued that, notwithstanding those references, the award could not have been made but for the Tribunal's deliberate decision to disregard New York law.
The Court confirmed that inferences of serious misconduct should be drawn only where there is compelling evidence in support. In this case, the Court found no evidence to support the Claimants' allegations and therefore dismissed the application with costs on an indemnity basis.
In Hong Kong, an error of law made by an arbitral tribunal is not a valid ground for setting aside an award. Instead, an applicant must prove that there was a "conscious disregard" of the applicable law. The Courts will not easily speculate on the reasons or motives behind a tribunal's decision, nor will they correct an error of law.
The above cases represent just a few of a recent wave of pro-arbitration decisions. The London and Singapore Court judgments demonstrate the willingness of some courts to assist and protect arbitration, whilst the Hong Kong judgment further reinforces the high burden on a party seeking to challenge an arbitral award (as have a number of other recent cases). For parties seeking confidentiality or finality in their dispute resolution mechanisms, arbitration remains an increasingly strong choice.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.