International Arbitration Newsletter - March 2020 | Regional Overview: Asia Pacific

AUSTRALIA

ICC tribunal terminates flu drug licensing contract

North Carolina-based company, Biocryst Pharmaceuticals has announced that a licensing contract for the first intravenous flu treatment in the world named peramivir  that it concluded with Seqirus UK , a subsidiary of the Australian flu vaccines supplier and biotech group CSL, in 2015 was held by an ICC arbitration tribunal to have been terminated on account of Seqirus UK breach of contract.

According to Biocryst  the ICC tribunal also ordered  that Biocryst regain all its rights on , awarded Biocrest   its attorneys’ fees and costs related to the request for declaratory relief and ordered Seqirus UK to pay USD 5 million plus interest due to its failure to make a due periodical payment to Biocryst within 30 days upon the approval of peramivir for adult treatment in the European Union. Meanwhile, the ICC tribunal has also retained its jurisdiction for further proceedings in connection with the award of attorneys’ fees as well as any dispute related to the return of all the peramivir rights.

CHINA

Chinese investors threaten Ecuador with mining arbitration

Junefield Gold, a Chinese mining company, has filed a notice of dispute  against Ecuador under the China-Ecuador bilateral investment treaty (BIT) claiming USD 480 million. The claim relates to the suspension of its gold and silver mining project in Azuay province, southern Ecuador by order of the Court of Appeal of Azuay Province in 2018 that prohibited further operations due to the protests raised by community activists.

The protestors had petitioned the Ecuadorean courts claiming  that the mining operations riskedpolluting the vital waterways and lagoons of the nearby El Cajas national park and that the approval of the project had lacked  local resident consultation. As a result in 2018, after operating for two months, the mining operations were terminated. The provincial governor of Azuay Province has also filed a request for a referendum on the mining project.

Junefield contends that the mining concession it has been granted has been “effectively cancelled” by the court, which is “arbitrary” and that the proceedings that led to such result were “plagued with irregularities”.

SINGAPORE

SIAC fraud acquisition claim  settled

As announced by Malaysia-listed rubber-glove manufacturer Top Glove Corporation, it has reached a settlement with Singapore-registered Adventa Capital in the Singapore International Arbitration Center (SIAC) arbitration filed by Top Glove claiming that it was fraudulently induced into the purchase of surgical-glove maker Aspion in 2018 for USD 340 million. In a joint statement, Top Glove and Adventa confirm that, as full and final settlement of the dispute without any admission of liability by any party,  approximately USD 58.2 million would be paid to a subsidiary of Top Glove.

The dispute related to an acquisition completed in January 2018, for which Top Glove paid USD 340 million in cash and shares to acquire Aspion from Adventa. However, four months after the completion of the acquisition, Top Glove declared that Aspion’s assets had been overstated by USD 18 million while the purchase price had been overstated by nearly USD 160 million. In 2018, Top Glove launched a SIAC claim alleging that Adventa had induced it to sign the share purchase agreement through fraudulent misrepresentation.

SIAC tribunal finds Repsol liable to Chinese companies over fraud claim

As disclosed recently by Spanish oil giant Repsol , two of its subsidiaries are liable to the Chinese Sinopec entities SIPC and Addax Petroleum as ruled in the second partial award issued by the Singapore International Arbitration Center (SIAC) tribunal for the fraud claim launched by SIPC and Addax against Repsol relating to the USD 5.5 billion-valued purchase of a stake in a North Sea oil venture in 2012. In the liability phase of the case, the SIAC tribunal only ruled on one of five areas of the claim in due course, thus no damages would be awarded for at least another two years.

The dispute related to the purchase of a 49% stake in a joint venture  called Talisman Energy UK by SIPC and Addax with a price of USD 1.5 billion. In 2012, SIPC and Addax acquired the stake from Canada’s Talisman Energy, which was taken over and controlled by Repsol three years later.

In 2015, SIPC and Addax commenced arbitration against Talisman, claiming fraud and requesting USD 5.5 billion for compensation, which covers their initial investment in the JV and corresponding loss of opportunity. However, in 2017, all the warranty claims submitted by SIPC and Addax were dismissed by a first partial award issued by the SIAC tribunal. In 2020, the second partial award was issued by the SIAC tribunal confirming that further awards addressing liability in relation to the other four matters to be determined will be further provided, but the timeline for such award is pending to be decided.