International Arbitration Newsletter - February 2019 | Regional Overview: Asia Pacific

CHINA

Chinese nationals file enforcement petition in the US of CIETAC award against Chinese national

In a petition filed on 29 January 2019 in the US District Court for the Southern District of New York, three Chinese nationals (Shengkang Fei, Richard Yuqiang Lu and Ranran Xu) seek to enforce a US$13 million HKIAC award against Chinese national Weilli Su and his British Virgin Islands-registered company Flash Bright Power.

The award dated 2018 found these nationals were unfairly deprived of the benefits of an initial public offering (IPO), as Sky Solar, a Cayman-registered operator of solar power parks that was founded by Su and which his company, Flash Bright, held a controlling interest in.The claimants, who owned shares in Sky Solar, allege that Su “clandestinely” incorporated a new company, Sky Power Group, as a wholly owned subsidiary of Sky Solar. Two months later, the companies executed a one-for-one share swap, whereby other shareholders owning almost 95% of Sky Solar exchanged their shares for an equivalent interest in Sky Power. The petitioners did not participate in the share swap, which they alleged was “conducted in secret” and without their knowledge. 

ICC tribunal hears claim over Nigeria-China hydropower project

Sunrise Power and Transmission Company, a Nigerian energy company, has filed an ICC arbitration claim for a reported US$2.3 billion against the state of Nigeria and its Chinese partner, Sinohydro. Sunrise Power says it has been excluded from a project to build Mambilla Hydropower Project, Nigeria’s biggest power plant.The parties are currently exchanging memorials on the merits.

INDIA

Delhi High Court refuses stay over treaty claim against India on Mauritanian telecom case

In a decision dated 29 January 2019, the High Court of Delhi has refused to stay a US$1.4 billion UNCITRAL treaty claim brought by Mauritian telecoms investor Khaitan Holdings against India under the Mauritius-India bilateral investment treaty over the cancellation of mobile 2G spectrum licences.

The court has declined India’s request for an injunction to halt the UNCITRAL case under the doctrine of “kompetenz-kompetenz”, finding that it fell to the arbitral tribunal to determine whether it has jurisdiction to hear the dispute. India argues the BIT claim is barred because Khaitan Holdings is beneficially owned by Indian nationals.

The dispute relates to India’s 2G spectrum licences scandal, as in 2012, the country’s Supreme Court cancelled 122 mobile 2G spectrum licences after it emerged that the Indian government had allowed certain companies to buy licences at discounted rates on an “arbitrary” basis.

MALDIVES

Australian company seeks confirmation of award against Maldives

On 30 January 2019, Australian company Platinum Blackstone filed an application with the US District Court for the District of Columbia to confirm a US$20 million SIAC award against the Maldives relating to an immigration border control system that gave rise to allegations of corruption.Platinum Blackstone seeks to confirm an award rendered in November 2016 by sole arbitrator Chan Sek Keong SJ, a former chief justice and attorney general of Singapore, in proceedings at the Singapore International Arbitration Centre.

The underlying dispute relates to a tender dated 2010 won by Platinum Blackstone to install and operate an IT system that would track the crossings of travellers at the Indian Ocean nation’s entry and exit points. The 20-year contract entitled the company to a US$2 rate for every foreign passenger arriving or departing from the country. Despite efforts by Maldivian anticorruption authorities to halt the project because of concerns about the bidding process, the IT system was completed in 2012 and the government certified its acceptance of the system. However, the company says the Maldives refused to pay a series of invoices for the project.

PAKISTAN

Pakistan ordered to pay damages in partial award in favour of asset trace company

Pakistan has been ordered to pay around US$22 million to Isle of Man entity Broadsheet LLC that it hired nearly 20 years ago to trace the assets of the country’s controversial former prime minister Nawaz Sharif.

The dispute relates to a contract signed by Pakistan´s anti-corruption body, the National Accountability Bureau (NAB) and Broadsheet, a company established by Colorado businessman Jerry James, agreeing to help trace the overseas assets of “registered targets” consisting of Sharif and around 200 other Pakistanis including prominent public officials. The company agreed to work at its own expense in return for 20% of any sums recovered from the targets, regardless of whether Broadsheet itself was involved in the recoveries.

NAB terminated the agreement in 2003 but Broadsheet later learned that the bureau had entered into settlements with Sharif and other targets without notifying it or paying the commissions.

SINGAPORE

Dispute between Indian airport operator and private equity investors settles before SIAC

A SIAC tribunal recently issued a consent award recognising the settlement between two subsidiaries of India’s GMR Group and five private equity investors, including SBI Macquarie, Standard Chartered and JM Financial-Old Lane, finishing a US$1.3 billion SIAC dispute.  

The dispute related to payments made by the private equity funds paid US$200 million between 2010 and 2012 to acquire convertible securities in the Indian group’s subsidiary GMR Airports Limited (GAL), which at that time owned majority stakes in international airports in Delhi and Hyderabad. In 2015, GMR exercised a call option to buy back shares held by the private equity investors but a series of disputes arose that led to the commencement of three SIAC arbitrations, which were consolidated before one tribunal. 

GMR disclosed that under the settlement agreement, the investors and their affiliates would acquire a 5.86% stake in GMR Airports (valued at around US$170 million) and receive a payment of US$500 million in lieu of their convertible securities.