International Arbitration Newsletter October - 2018 | Regional Overview: Asia Pacific

CHINA

Chinese Tech Group faces CIETAC award enforcement in California

Chinese investment firm Shanghai Qichengyueming has recently applied to the US District Court for the Central District of California to enforce a CIETAC award worth more than US$100 million against Chinese tech entrepreneur Jia Yueting and its China’s LeEco technology group.

The underlying dispute concerns a US$75 million loan that Jia’s companies took out in 2015 under a convertible note purchase agreement. Prompted by the media coverage of LeEco’s liquidity crisis, SQ launched an arbitration to recover the debt and obtained an award at the International Economic and Trade Arbitration Commission (CIETAC), determining that Jia was liable as guarantor for certain loans that had not been repaid and ordered him to pay more than 648 million renminbi (US$95 million) as well as interest, legal fees and costs.

INDIA

India defeats Louis Dreyfus Armateurs treaty claim

French ship-owners Louis Dreyfus Armateurs has lost its claim filed before an UNCITRAL tribunal under the 1997 France-India bilateral investment treaty against India in a failed joint venture at a port in West Bengal.

The dispute relates to India’s alleged frustration of a joint venture, the French ship-owners being an indirect minority partner in the venture known as Haldia Bulk Terminals and accusing the government of conspiring to undermine the venture.

In the latest award, the UNCITRAL tribunal held that Louis Dreyfus failed to meet the jurisdictional threshold based on having a minimum 51% stake in the venture requirement in the treaty for some claims, whereas other claims were dismissed on the merits. Louis Dreyfus Armateurs has also been ordered to pay US$7 million towards the state's costs.

India´s Supreme Court allows UNCITRAL award challenge

In a judgment dated 25 September, India’s Supreme Court has ruled that the Indian government can pursue an application in Delhi to set aside an UNCITRAL award in favour of Scottish-owned oil and gas company Hardy Oil and Gas, after finding there had been no agreement on the arbitral seat despite the selection of Kuala Lumpur as the “venue” of the arbitration.

The underlying dispute concerns Hardy’s rights in the CY-OS/2 offshore petroleum block near Pondicherry in southern India. The government revoked Hardy’s exploration licence for the block in 2009. In 2013, an UNCITRAL tribunal issued an award in Hardy’s favour and tribunal ordered India to reinstate the licence and pay interest on sums spent by Hardy on the project until its rights are restored.

India has refused to comply with the award, and now the Supreme Court has overturned a Delhi court ruling that had declined jurisdiction over India’s challenge to the award in favour of an Indian subsidiary of London-listed Hardy Oil and Gas.

Kazakhstan

Kazakhstan hit with ICSID Treaty claim by Estonian architecture investor

Estonian construction company AS Windoor has registered an ICSID claim under the 2014 Estonia-Kazakhstan bilateral investment treaty of over US$30 million against Kazakhstan after the state failed to pay for work on a new international business and conference centre in the capital Astana and to recognise the ruling of an SCC tribunal on the dispute.

The dispute relates to a contract entered by AS Windoor with Kazakh company Baltiiski Dom in 2012 to design and supply €25 million worth of glass-aluminium structures for the new centre and the state-owned company default of a payment deadline, leading Windoor to terminate the contract and launch its SCC claim which awarded Windoor €23 million in 2015. However, Kazakh courts refused to recognise the ruling.

Singapore

Singapore High Court denies English Queen’s Counsel leave to appear

The Singapore High Court has recently denied an English Queen’s Counsel leave to appear in court in Singapore to seek the set aside of an ICC award on natural justice grounds after acting as lead counsel in the original arbitration.

The underlying ICC arbitration concerned a contract for the construction of a gas pipeline management and communications system in Singapore´s suburbs.Despite the court understanding that the QC did have sufficient experience to decide the dispute on natural justice grounds, it did not accept that he should be admitted based on his involvement as lead counsel in the arbitration proceedings.

South Korea

South Korea revises US Free Trade Agreement

Korea’s ministry of trade, industry and energy recently unveiled that Korea is revisiting its investor-state dispute settlement clause of its free trade deal with the US following a strong increase in treaty claims against it.

The revised Korea-US Free trade agreement – known as KORUS FTA – will be sent to parliament for ratification before it can take effect. The two states agreed amendments seeking to prevent abuse of the arbitration system by multinational companies and amendments doing away with the concept of legitimate expectation and prohibiting parallel cases relating to the same alleged measures or arising from the same events.

South Korea hit by UNCITRAL Treaty claim on Samsung merger

South Korea has been hit with a claim under the 2012 Korea-US Free Trade Agreement and the 1976 UNCITRAL rules filed on 13 September 2018 by US private equity fund Mason Capital Management over its interference in a US$8 billion Samsung merger.

As with similar earlier cases, the arbitration concerns the merger in 2015 of Samsung C&T Corporation with another Samsung affiliate, Cheil Industries. Claimants allege that having taken at least US$7.8 million in bribes from the Lee family, President Park and other senior government officials subverted the internal procedures of Korea’s National Pension service.