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InternationalArbitrationMarch2013INTERNATIONALARBITRATION QUARTERLYInternational arbitration in Australia inlimboThe Australian arbitration community eagerlyanticipates a judgment of the High Court in acase which has sought to strike at the heart ofinternational arbitration in Australia. If the HighCourt application is successful, it will havethe effect of preventing Federal Court judgesfrom enforcing international arbitration awardsmade in Australia under the UNCITRAL Modellaw on International Commercial Arbitration(the Model Law) as presently enacted.Legislative amendment would be required.That amendment would necessitate the courtsengaging in a merits review of each awardbefore enforcement. This runs contrary tothe intention of the New York Convention onthe Recognition and Enforcement of ForeignAwards 1958 (the Convention).The case, TCL Air Conditioner (Zongshan)Co Ltd v The Judges of the Federal Court ofAustralia & Anor, concerns a PRC company(TCL) which entered into a distributorshipagreement with an Australian company (Castel).A dispute arose between the parties andarbitration proceedings were commenced. TCLparticipated in the arbitration and pursued acounter-claim. The tribunal made two awards(the Awards) in favour of Castel: damagesof AUD$2.4 million and over AUD$700,000in costs. Castel commenced enforcementproceedings in the Federal Court under theInternational Arbitration Act 1974 (Cth) (the Act).In January 2012, Mr Justice Murphy held thatthe Federal Court had jurisdiction to determinethe application for enforcement pursuantto Articles 35 and 36 of the Model Law andSection 16 of the Act when read alongside theJudiciary Act 1903 and the Federal Court ofAustralia Act 1976 (Cth).In July 2012, TCL filed an application foran Order to Show Cause, seeking ordersrestraining Castel from enforcing the Awardsand/or quashing the judgment of Mr JusticeMurphy. At the same time a notice was filedby TCL under S78B of the Judiciary Act. The

final hearing took place in November2012. Judgment was reserved.TCL argued that any judgmentenforcing the Awards should bequashed because:1. Articles 35 and 36 of theModel Law, when read withSection 7 of the Act, purportto confer the judicial powerof the Commonwealth uponarbitral tribunals, contrary tothe Australian Constitution (theConstitution).2. It is impermissible to interferewith the judicial power of theCommonwealth contrary to therequirements of the Constitution.3. Articles 35 and 36,when readwith Section 7 of the Act,undermine the integrity of theCourts and are invalid.Why is the case important?It has been said that “Australia’ssystem of arbitration under the [Act]is part of an interconnected globalsystem of dispute resolution” andthat framework is “of paramountimportance to the internationaleconomic system” 1 . Further, theModel Law and the Act do notcomprise judicial power but give thecourts the recognised function ofupholding the parties’ contractualbargain to arbitrate and to be boundby the subsequent award, subjectto a well recognised number ofexceptions ensuring proceduralfairness, provided that the tribunalacts within its mandate and thatthe courts do not allow an awardto compromise their own integrity,processes or the public policy of theState.1. Joint Submissions as Amici Curiae by the AustralianCentre for International Commercial Arbitration Limited(ACICA) to the High Court. See also Comandate MarineCorp v Pan Australia Shipping Pty Ltd (2006) 157 FCR 45.02 International Arbitration QuarterlyIn 1988, Australia led the way bygiving the force of law to the ModelLaw under the Act. It has since beenadopted by over 60 countries. TheModel Law’s fundamental objectiveis to facilitate the enforcement ofcontractual agreements to arbitrateand to therefore establish a statutoryframework around the contractualagreement. An important part ofthis is to give courts supervisoryjurisdiction of the process that allowsfor the challenge of an award onlimited grounds 2 .TCL has sought to attack thestructure of the Model Law, arguingnot only that the arbitration regime inAustralia purports to confer “judicialpower” on arbitral tribunals, butalso that the Act interferes with thejudicial power of the Commonwealthbecause it limits the courts’ powerto exercise it. In effect, the courtsare left simply “rubber stamping”arbitral awards for the purposesof enforcement, with very limitedgrounds for review. TCL argued thiswas against the Constitution and thepower vested in the court to reviewa decision where an error of lawwas present. Further, they arguedthat the current regime impairs theinstitutional integrity, independenceand impartiality of the courts.If these arguments are upheld, it issuggested that the outcome will bea “disaster”, putting Australian lawat odds with every other major legalsystem around the world 3 . Somecommentators have suggested thatit could seriously undermine theefforts made to promote Australia asa venue for international arbitration.It has also been said that, in seekingto impugn the validity of the Act,TCL’s attack on the essentialstructure of the Model Law invites a2. See Soh Beng Tee & Co Pte Lte v FairmountDevelopment Pte Ltd [2007] 3 SLR 86 and the UNCITRALcommentary on the Model Law.3. Professor Luke Nottage: International CommercialArbitration - Australia in the Asian Century (16 November2012).constitutional conclusion that wouldhave the consequence of disruptingan international dispute resolutioninfrastructure of wider importance 4 .Is Australian arbitration unfriendly?By contrast, in August 2011 theSupreme Court of Victoria handeddown a decision in relation to aMongolian arbitral award, refusingto enforce it 5 . The claim arose outof a mining operations agreementbetween Altain Khuder (Altain) andIMC Mining Inc (IMC) under whichdisputes were to be referred toarbitration in Mongolia. A sistercompany of IMC, IMC MiningSolutions (IMCS), was not named inthe mining operations agreement ordispute resolution clause.An award in favour of Altain wasmade by a Tribunal sitting inMongolia. IMCS was ordered topay money to Altain “on behalf ofIMC”. Altain sought to enforce theaward against IMC and IMCS in theSupreme Court of Victoria. IMCSapplied to have the enforcementorder set aside as it was not a partyto the arbitration agreement. Theirapplication was dismissed at firstinstance and they appealed.The appeal raised an importantquestion under the Act, as to whichparty bears the burden of proof ofestablishing that a debtor under anaward is not bound by the arbitrationagreement. The Court of Appealagreed with Altain that the burdenis upon the debtor, rejecting IMCS’ssubmission that the burden wason Altain. The Court of Appeal didhowever accept that Altain had firstto satisfy a threshold test: it had toprove to a prima facie standard thatthe debtor (IMCS) was a party to the4. Joint Submissions as Amici Curiae by ACICA, IAMA andCIArb (see 1 above).5. IMC Aviation Solutions Pty Ltd v Altain Khuder (2011) 282ALR 717 [2011] VSCA 248.

“The threshold testset off alarm bellsin some quartersbecause in mostother jurisdictionsthis is not treatedas a threshold issuebut as a defence.”arbitration agreement. Altain had notsatisfied that test.The threshold test set off alarmbells in some quarters because inmost other jurisdictions this is nottreated as a threshold issue but as adefence.The majority in the Court of Appealcommented that in enforcementproceedings, the Court will notact simply as a “rubber stamp”.They said: “at all stages of theenforcement process, courts performa judicial function and accordinglymust act judicially. To act roboticallyis not to act judicially.”The general principle thereforeremains that in all but the mostunusual cases (it is suggested Altainis such a case) an application toenforce a foreign award will involvea summary procedure and thata creditor will have little difficultyin satisfying the threshold test. Itis suggested that an Australiancourt will always start with a strongpresumption of regularity in respectof a tribunal’s decision and themeans by which it was reached 6 .In particular, the pro-enforcementbias of the Convention and the Act6. “Australia as a safe and neutral arbitration seat” The HonMarilyn Warren AC ACICA 6 June 2012.requires the Australian court to weighcarefully all relevant factors whenconsidering whether to depart fromthe enforcement procedure in theConvention and the Act 7 .In the TCL case, ACICA, asintervenor, submitted thatenforcement is not automatic andnot a form of registration mechanism.Rather the process involves anapplication by a party and the useof rules of procedure, evidenceand onus of proof. It was thereforesubmitted that the court is notan automaton bound to enforcethe award, nor is it performing anadministrative act. It is exercisingindependent judicial power.In Australia, reform of the lawgoverning arbitral procedure andamendments to the Act passed in2010 have been directed towardsfacilitating the conduct of internationalarbitration, including enforcementand recognition. Before the TCLcase, the combination of the Act,the Model Law and the Convention,arbitral awards were thought to beenforceable in Australia subject tosupervision by the Courts, in keepingwith the pro-enforcement preferenceunder the Convention and the Act.Indeed, Chief Justice Keane statedrecently: “the crucial question for theprospects of international arbitrationin Australia remains as to where thebalance is to be struck between themaintenance of necessary standardsof fairness and competence on theone hand and the respect for themanifest desire of commercial partiesfor speed, expertise and economy onthe other” 8 .Hopefully the High Court in theTCL case will find that the Federal7. See ESCO v Bradken [2011] FCA 905.8. “The Prospects for international arbitration in Australia” -25 September 2012.Court’s discretion in enforcing aninternational award is not limitedunder the Model Law and that itcan enforce international arbitrationawards made in Australia withoutlegislative amendment to require amerits review.The arbitration community iscertainly looking for the High Courtto give much anticipated guidanceon its approach and attitude tointernational arbitration and is willingit to hand down a decision which willnot be a retrograde step, which somebelieve will prompt parties to choosealternative venues for arbitrationwhere the enforceability of awards ismore certain.For more information, please contactChris Lockwood, Partner, on+61 (0)8 9422 4711,, or yourusual contact at HFW.“In Australia,reform of the lawgoverning arbitralprocedure andamendments to theAct passed in 2010have been directedtowards facilitatingthe conduct ofinternationalarbitration, includingenforcement andrecognition.”International Arbitration Quarterly 03

Incorporating arbitrationagreements and followingmulti-tiered dispute resolutionclausesThe Singapore High Court’s decisionin International Research Corp PLCv Lufthansa Systems Asia PacificPte Ltd and another (27 November2012) is a timely reminder of therules on incorporation of arbitrationagreements and the applicationof multi-tiered dispute resolutionclauses.There are two main points to takefrom the case:1. If parties intend to incorporatean arbitration clause from onecontract into another, clearwording must be used. Failureto do so can result in potentiallylengthy and costly arguments,as it did in this case, or in atribunal with no jurisdiction toresolve the dispute.2. If a dispute resolution clauseprovides for a multi-tieredprocedure, it must be clear andcertain. The procedure shouldthen be followed as closely aspossible. Failure to do somay affect the tribunal’sjurisdiction.BackgroundLufthansa Systems Asia Pacific PteLtd (Lufthansa) and Datamat PublicCompany Ltd (Datamat) entered into aCooperation Agreement under whichLufthansa agreed to supply certaintechnology services to Datamat.International Research Corp PLC(IRCP) and Datamat entered into aSale and Purchase Agreement relatingto certain aspects of the technologycovered by the CooperationAgreement.When Datamat encountered financialdifficulties, all three parties enteredinto two Supplemental Agreements.Under these, IRCP undertookcertain obligations in respect ofpayments due to Lufthansa under theCooperation Agreement.A dispute arose between Lufthansaand IRCP over payments which IRCPcontested. Lufthansa terminatedthe Cooperation Agreement andthe Supplemental Agreements andcommenced arbitration under Clause37 of the Cooperation Agreement.IRCP was not an original party to theCooperation Agreement and wasonly a party to the SupplementalAgreements. However, theSupplemental Agreements did notcontain any dispute resolution clauses.IRCP disputed the tribunal’sjurisdiction on two grounds:1. IRCP was not a party to thearbitration agreement as it wasnot a party to the CooperationAgreement.2. Lufthansa had in any event failedto comply with the escalationprocedure set out in Clause 37of the Cooperation Agreement.Was IRCP a party to the arbitrationagreement?Both Supplemental Agreementscontained clauses stating that allother provisions of the CooperationAgreement “shall remain effectiveand enforceable”. The SingaporeCourt was quick to hold thatthese words were insufficient toincorporate the arbitration clauseinto the Supplemental Agreements.Following previous authorities,the Court held that an arbitrationclause in a contract between A andB cannot be incorporated into acontract between B and C unlessclear words of incorporation areused. The Court observed that ageneral reference to “all rights”is insufficient to incorporate anarbitration agreement found in aseparate contract.“If parties intend to incorporate anarbitration clause from one contract intoanother, clear wording must be used.Failure to do so can result in potentiallylengthy and costly arguments, as itdid in this case, or in a tribunal with nojurisdiction to resolve the dispute.”The Court then considered whetherthe Cooperation Agreement and theSupplemental Agreements could beconsidered a composite agreement,as the Tribunal had found. Itconcluded that this approach was oflittle assistance. Instead, the correctapproach was to ascertain theparties’ objective intentions.To do so, the Court considered 2main issues:04 International Arbitration Quarterly

1. The object and purpose of theSupplemental Agreements.2. The plain language used in theSupplemental Agreements.In transferring Datamat’s paymentobligations under the CooperationAgreement to IRCP, the objectand purpose of the SupplementalAgreements was to enforceLufthansa’s right to payment underthe Cooperation Agreement. TheCourt concluded that “IRCP’spayment obligations to Lufthansaare inextricably tied to Datamat’sobligations under the CooperationAgreement” and “there is no doubtthat the Supplemental Agreementscan only be understood in connectionwith the Cooperation Agreement”.Both Supplemental Agreements statedthat “This Supplemental Agreement…is hereby annexed to and made apart of the [Cooperation Agreement]”.Clause 5 of Supplemental AgreementNo. 1 provided that “Lufthansa andDatamat agree that IRCP shall have noother obligations than those providedin this Supplemental Agreement”. TheCourt held that this was inserted toerase any doubts as to IRCP’s limitedrole in the arrangement. It was nota reflection of the parties’ objectiveintention that the dispute resolutionmechanism would only bind Lufthansaand Datamat, not IRCP.The proper contextual interpretationwas that the parties had intended thesame dispute resolution mechanismin the Cooperation Agreement to bindall three parties to the SupplementalAgreements. The Court gave fourprincipal reasons for this:1. The Supplemental Agreementswere entered into as aconsequence of Datamat’s nonperformanceof its obligationsand to support the paymentobligations. All three parties wereaware of this context.2. The obligations in theSupplemental Agreements andin the Cooperation Agreementare inter-dependent. The threeagreements were intended by theparties to function as one andshould be read as a whole.3. IRCP did not dispute that itwas aware of the terms of theCooperation Agreement whenentering the SupplementalAgreements.4. If a similar dispute as to paymenthad arisen between Lufthansaand Datamat, there would be noargument that the dispute wasnot subject to the procedureset out in the CooperationAgreement. It would make littlecommercial sense for Lufthansa,“If a dispute resolution clause providesfor a multi-tiered procedure, it must beclear and certain. The procedure shouldthen be followed as closely as possible.Failure to do so may affect the tribunal’sjurisdiction.”Datamat and IRCP to havepayment disputes determined indifferent fora, depending on theparties involved.The only commercially sensible andrational conclusion for includinglanguage in the SupplementalAgreements which stressed that theywere annexed to and made part ofthe Cooperation Agreement was thatthe parties’ objective intention wasfor the Cooperation Agreement to bebinding on them all.Had Lufthansa failed to complywith the escalation procedure?Clause 37.2 of the CooperationAgreement provided that any dispute“shall be referred” to a series ofspecified committees for resolutionbefore going to arbitration.The Court held that the provision wassufficiently certain to be enforceableas there was an unqualified referenceto mediation and the process wasclear and defined. Clause 37.2operated as a condition precedentto the commencement of arbitrationgiven its mandatory wording and thefact that both parties had proceededon that basis. Accordingly, if Clause37.2 had not been complied with, theTribunal did not have jurisdiction toresolve the dispute.The Court took a fairly broadapproach and, based on the evidenceprovided, concluded that there hadbeen several rounds of high levelmeetings between the parties toresolve the dispute. The Court wastherefore satisfied that they hadattempted to negotiate and thatthe object of Clause 37.2 had beenmet. Accordingly, the Tribunal hadjurisdiction to resolve the dispute.International Arbitration Quarterly 05

ConclusionsThe main issue in this claimcould have been avoided had theSupplemental Agreements specificallyidentified and incorporated thearbitration agreement from theCooperation Agreement. Whereparties intend that an arbitrationagreement will apply to a separatecontract, clear words should beused. Conversely, if they intend thatsome terms of a contract will beincorporated into another but thearbitration agreement will not apply,clear words to this effect should beincluded, too.There are a number of risks implicitin failing to specify whether aparticular arbitration agreement isor is not intended to apply. At best,it can lead to potentially costly andtime consuming arguments aboutjurisdiction before an arbitral tribunaland/or court. At worst, it could lead toan award being overturned becausethe tribunal lacked jurisdiction.Parties should bear in mind that anarbitration agreement is a separateand severable agreement andtherefore should be referred to“The Court observedthat a generalreference to “allrights” is insufficientto incorporatean arbitrationagreement foundin a separatecontract.”expressly, particularly in cases whereone of the parties is not a party to theoriginal arbitration agreement.The Court considered the potentialramifications of not following thestrict rule that express words arerequired to incorporate an arbitrationagreement into another agreement.It concluded that the rule did notcircumscribe its power to give effectto the parties’ intentions. However, it isgenerally difficult to show that partiesintended to incorporate an arbitrationagreement contained in a separateagreement in the absence of clearwords and the rule should continue toapply in the majority of cases.It is worth bearing in mind thathaving succeeded on the issue ofincorporation, Lufthansa still hada significant hurdle to overcomein establishing first that the multitieredprocedure in Clause 37.2was sufficiently certain to beenforceable and second, that it hadbeen properly followed. In a recentdecision of the English Court, Wah(Aka Alan Tang) & Another v GrantThornton International Ltd & Others(14 November 2012), a multi-tieredclause was rejected as being tooequivocal and not sufficiently clear onthe parties’ respective obligations tobe enforceable.The broader and more relaxedapproach of the Singapore Court,which ultimately held that the partieshad complied with the object of therelevant clause without looking inany great detail as to whether theindividuals identified in Clause 37.2attended the relevant meetings, orat the order in which those meetingswere held, was a conscious reflectionof cultural and commercial practicein the region, promoting consensusand negotiated solutions whereverpossible. In adopting this approach,the Court referred to a recentdecision by the Singapore Court ofAppeal in which it specifically heldthat it was in the wider public interestin Singapore to promote consensusin this way.For more information, please contactAdam Richardson (pictured below),Associate, on +65 6305 9527,, or yourusual contact at HFW.“In adopting thisapproach, the Courtreferred to a recentdecision by theSingapore Courtof Appeal in whichit specifically heldthat it was in thewider public interestin Singapore topromote consensusin this way.”06 International Arbitration Quarterly

Enforcement of arbitrationawards in China and HongKongCurrently, a total of 148 countrieshave ratified the New YorkConvention on the Recognition andEnforcement of Foreign ArbitralAwards of 1958 (the New YorkConvention, or the Convention),which provides for mutualrecognition and enforcement ofarbitral awards in contracting states.China’s accession to the New YorkConvention took effect in 1987 and,following the return of Hong Kongto Chinese sovereignty, China’smembership was extended to HongKong in 1997. This article providesan overview of the enforcementof arbitral awards in these twojurisdictions.ChinaFor the purposes of enforcement inChina, arbitral awards can be dividedinto four main categories:1. A domestic award (one made inChina with no trace of a foreignelement).2. A foreign-related award (onemade in China but with foreignelement(s), for example one partyto the dispute is foreign).3. A foreign award, made outsideChina, which can be furtherdivided into:- Convention.- Non-Convention awards.- Awards made in Hong Kong,Macau or Taiwan.“It is unclear whether the term “arbitrationcommission” refers only to thoseestablished pursuant to the ArbitrationLaw (e.g. CIETAC or CMAC), or whether italso covers foreign arbitration institutionswith a seat in China (e.g. ICC).”Domestic awardsArbitration in China is governedby the PRC Arbitration Law, whichcame into effect on 1 September1995. Whilst this does not expresslyprohibit ad hoc arbitration, it providesthat an arbitration agreementshall clearly specify the arbitrationcommission chosen by the parties.If the arbitration agreement failsto specify clearly the choice ofarbitration commission, the partiesmay conclude a supplementaryagreement. Failing this, the arbitrationagreement will be void.It is unclear whether the term“arbitration commission” refers onlyto those established pursuant tothe Arbitration Law (e.g. CIETAC orCMAC), or whether it also coversforeign arbitration institutions with aseat in China (e.g. ICC). Recent courtcases in China involving applicationsfor the enforcement of ICC awardsmade in China suggest that suchawards may be regarded as “nondomestic”awards, enforceable underthe New York Convention. However,since China is not a common lawcountry, these decisions are notlegally binding and the positionremains unclear.It will therefore be prudent to ensurethat an arbitration agreement whichprovides for domestic arbitration inChina clearly specifies the choiceof an arbitration commissionestablished pursuant to theArbitration Law.The pre-reporting system (seebelow) does not apply to domesticawards and, since no foreignelement is involved, there is usuallyless concern about issues suchas local protectionism. However,pursuant to the Arbitration Law and“It will therefore beprudent to ensurethat an arbitrationagreement whichprovides fordomestic arbitrationin China clearlyspecifies the choiceof an arbitrationcommissionestablished pursuantto the ArbitrationLaw.”International Arbitration Quarterly 07

“The groundsfor refusing toenforce Conventionand foreignrelatedawardsare substantiallyprocedural in natureand are in linewith internationalpractice.”the relevant Article in the PRC CivilProcedure Law, the Court mayexamine the merits of the award (andnot just its procedural nature).Foreign awards and foreign-relatedawardsConvention awards, whether ad hocor instutional, should be recognisedand enforced in China pursuant tothe New York Convention. In 1987,the Supreme People’s Court in Chinaissued a Circular on ImplementingConvention on the Recognition andEnforcement of Foreign ArbitralAwards Entered by China (the 1987Circular) which states that China willrecognise and enforce awards madein other contracting states.Arbitral awards rendered in non-Convention states may be enforcedif there are appropriate agreementsin place between China and suchnon-Convention states.The grounds for refusing to enforceConvention and foreign-relatedawards are substantially procedural innature and are in line with internationalpractice. For Convention awards, theyare set out in Article 5(1) and (2) ofthe New York Convention; for foreignrelatedawards, they are set out inArticle 274 of the Civil Procedure Law(2012 Amendments). They include thelack of a valid arbitration agreement;lack of proper notice of arbitration; anexceeding of authority by the arbitraltribunal; irregularity in the compositionof the tribunal or arbitral procedure;and contravention of public policy.Unlike domestic awards, the Courtmay not review the merits of theunderlying award.In order to ensure strictimplementation of the enforcementprocedure for foreign and foreignrelatedawards, the SupremePeople’s Court issued a Circularon Issues in the People’s Courts’Handling of Foreign-relatedArbitrations and Foreign Arbitrationsin 1995 (the 1995 Circular). Thisestablishes a pre-reporting systemfor non-enforcement of foreign andforeign-related awards.Under this pre-reporting system,if any Intermediate People’s Courtintends to refuse enforcement ofa foreign award, or to set aside orrefuse enforcement of a foreignrelatedaward, it is required to reportto the Higher People’s Court withinits jurisdiction for review. If theHigher People’s Court agrees, it isrequired to report this to the SupremePeople’s Court. The ultimate decisionwill be made by the SupremePeople’s Court.This pre-reporting system is generallywelcomed as helpful in avoiding localprotectionism (whether actual and/orperceived). Unofficial figures suggestthat about 80% of awards referredto the Supreme People’s Court areremitted to the lower courts forenforcement.In practice, the process of multiplelayers of review can mean significantdelays in the enforcement process.Steps have been taken to try toprevent or limit delays – in 1998, theSupreme People’s Court issued aruling that for Convention awards, theIntermediate People’s Court must ruleon recognition and enforcement andreport any refusal to do so within twomonths of acceptance of the case.Save in exceptional circumstances,the enforcement of an award mustbe completed within 6 months. Thisruling does not, however, apply toforeign-related awards. In practice,enforcement can nevertheless be a“Under this pre-reporting system, if anyIntermediate People’s Court intends torefuse enforcement of a foreign award,or to set aside or refuse enforcement ofa foreign-related award, it is required toreport to the Higher People’s Court withinits jurisdiction for review.”08 International Arbitration Quarterly

long and somewhat drawn outprocess.Hong Kong, Macau and TaiwanawardsAwards made in Hong Kong, Macauand Taiwan are governed by therespective arbitration arrangementsbetween these regions andChina. Hong Kong awards areenforceable in China pursuant tothe Memorandum of UnderstandingConcerning the Mutual Enforcementof Arbitral Awards between theMainland and Hong Kong issuedby the Supreme People’s Court inJanuary 2000 (the Memorandum).Grounds for refusing enforcement, inArticle 7 of the Memorandum, mirrorthose for refusing enforcement ofConvention awards.In 2009, the Supreme People’sCourt issued a Notice of RelevantIssues on the Enforcement ofHong Kong Arbitral Awards in theMainland, clarifying that wherean application has been made forenforcement of an ad hoc awardmade in Hong Kong, or an awardmade in Hong Kong by the ICC orother foreign arbitration institution,the People’s Court should examine itin accordance with the provisions inthe Memorandum.China appears to be more receptiveto the enforcement of Hong Kongawards, compared with awards fromother foreign jurisdictions, perhaps asa consequence of the “one country,two systems” relationship betweenthe two.In China, an enforcement applicationmust be made within two yearsfrom the last permissible date ofperformance under the award; or ifno date for performance is stipulated,within two years from the date whenthe award becomes effective.Hong KongEnforcement in Hong Kong differsfrom enforcement in China because,although Hong Kong became partof China on the handover in 1997,the Basic Law (the constitutionaldocument of Hong Kong) providedthat the judicial system previouslypractised in Hong Kong would bemaintained.A new Arbitration Ordinance(Cap.609) (the Ordinance) came intoeffect in Hong Kong on 1 June 2011.The key feature of this new Ordinanceis the unification of the previouslyseparate regimes for domestic andinternational arbitrations into a singleregime, substantially based on the“China appears to be more receptive tothe enforcement of Hong Kong awards,compared with awards from other foreignjurisdictions, perhaps as a consequenceof the “one country, two systems”relationship between the two.”“This reserves aresidual power tothe Court to refuseenforcement fornon-Conventionawards.”UNCITRAL Model Law. This hasmade arbitration law in Hong Kongmore efficient and user friendly.Part 10 of the Ordinance dividesenforcement of arbitral awards intothree categories:1. Awards made in or outside HongKong (including non-Conventionawards) (s82-86).2. Convention awards (s87-91).3. Mainland awards (s92-98).For the first two categories, awardshave the same effect and areenforceable in the same manner asa judgment of the Court, but onlywith the leave of the Court. Thegrounds for refusing enforcement areessentially the same as those underthe New York Convention and areprocedural in nature. An additionalground under the first category isprovided for under section 86(2)(c),which states that enforcement maybe refused “for any other reasonthe court considers it just to do so”.This reserves a residual power to theCourt to refuse enforcement for non-Convention awards.Mainland awards are also enforceablein the same manner as a judgment ofthe Court, with the leave of the Court.International Arbitration Quarterly 09

“Mainland awards are also enforceablein the same manner as a judgment of theCourt, with the leave of the Court. Thereis no reservation of a residual power torefuse enforcement, and the grounds forrefusal are essentially the same as thoseunder the New York Convention.”There is no reservation of a residualpower to refuse enforcement, and thegrounds for refusal are essentially thesame as those under the New YorkConvention.The definition of a “Mainland award”is “an arbitral award made in theMainland by a recognised Mainlandarbitral authority in accordance withthe Arbitration Law of the People’sRepublic of China”. This can besignificant because it means that anarbitral award made in China but bya foreign arbitration institution (e.g.ICC) is not a “Mainland award”. It willinstead fall within the first categoryfor the purposes of enforcementunder the Ordinance, allowing theCourt a residual power to refuseenforcement.For more information, please contactPeter Murphy (pictured below),Partner, on +852 3983 7700, orAmanda Cheung, Associate, on+852 3983 7702, or yourusual contact at HFW.The time limit for enforcing an awardin Hong Kong is 12 years from thetime when the award becomesenforceable.It is worth noting that in practice, theHong Kong Courts are unwilling toset aside or refuse to enforce awardsunless there are serious irregularities.Since Hong Kong has a common lawsystem, the Court’s judgments arebinding, so Hong Kong will continueto adopt a pro-enforcement attitude.“This can be significant because it meansthat an arbitral award made in China butby a foreign arbitration institution (e.g.ICC) is not a “Mainland award”.”10 International Arbitration Quarterly

Global Arbitration Review (GAR)Global Arbitration Review has justlaunched the 6th edition of its GAR100 listing and HFW is delighted thatits International Arbitration practice hasbeen included for the first time. GAR100 is a global guide to the internationalarbitration capabilities of law firms.Head of International Arbitration at thefirm, Partner Damian Honey (picturedbelow), commented “I am extremelypleased that Global Arbitration Reviewhas recognised the capabilities ofHFW’s international arbitration practice.We have enhanced our capabilities inthis field extensively over the last fewyears and our listing in the GAR 100 istestament to that.”HFW International ArbitrationSeminarsHFW will be hosting a series ofseminars in the coming months forin-house lawyers and others with aninterest in International Arbitration.Sydney (Tuesday 19 March 2013)Melbourne (Wednesday 20 March 2013)Perth (Friday 22 March 2013)Hong Kong (Tuesday 16 April 2013)Singapore (Friday 19 April 2013)London (Thursday 23 May 2013)If you would like further details, pleasecontact & EventsHFW Dispute Resolution SeminarsHFW London(30 April and 14 May 2013)“I am extremely pleased that Global Arbitration Review hasrecognised the capabilities of HFW’s international arbitrationpractice. We have enhanced our capabilities in this fieldextensively over the last few years and our listing in the GAR100 is testament to that.”International Arbitration Quarterly 11

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