International Arbitration Newsletter - March 2021 | Regional Overview: Asia Pacific

CHINA

ICC award in favor of Chinese state entity is upheld

Bariven, a subsidiary of Venezuela’s national oil and gas company, challenged an ICC award in the amount of USD 70 million in favor of a subsidiary of state-owned China Poly Group Corporation named Surpass Commercial Corp (Surpass), alleging that there was no agreement between the contractual parties to consolidate claims under multiple contracts and therefore the tribunal contravened its mandate.

The challenge has been rejected by the Court of Appeal of The Hague, which recognized the validity of the arbitration agreement and ruled that the award was not in violation of public policy.

The dispute arose from the failure to fulfill due payment obligation by Bariven under 26 purchase order contracts it concluded with Surpass during the period from 2011 to 2015 for the purpose of purchasing commercial vehicles, spare parts and other industrial equipment. Surpass launched an ICC claim against Bariven in 2016. The claim was upheld in the award issued in May 2019, which ordered Bariven to pay Surpass USD 70 million including interest and bear the full legal expenses incurred by Surpass.

ICC arbitration for US-Chinese dispute settled

In February, 2021, American Puma Biotechnology (Puma) and Chinese CANbridge Pharmaceuticals (CANbridge) reached an agreement to terminate the license agreement (Agreement) for an anti-cancer drug named neratinib they concluded in 2018.  This way, the parties settle the ICC arbitration launched by Puma in July 2020, in which it claimed outstanding licensing revenue along with “double-digit royalties” valued at USD 20 million owed by CANbridge, alleging that CANbridge breached the Agreement and failed to commercialize neratinib with due diligence.

In order to settle the arbitration, Puma will pay CANbrdge USD 20 million in a lump sum as a termination fee to withdraw all the rights over the neratinib in Greater China. Meanwhile, Puma has reached an agreement with its current sub-licensee, a French pharma group named Pierre Fabre, to revise the existing license agreement in order to grant the exclusive rights for Greater China.

HONG KONG

HKIAC award against the incorrect respondent revoked

On February 18, 2021, Hong Kong Court of First Instance disclosed that the HKIAC award valued at USD 18 million against a Chinese pipeline company related to the Belt and Road initiative was revoked because the award debtor was wrongly named. The contractual party in the contract under which the dispute arose from was China Petroleum Pipeline Bureau (CPPB), while the debtor indicated in the award was China Petroleum Pipeline Engineering (CPPE), which neither was a party tof the arbitration agreement nor received any proper notification regarding the arbitration.

In 2013, tthe award creditor entered into a contract with CPPB. In 2019, the claimant commenced an arbitration against CPPB claiming outstanding services success fee valued USD 11 million. The claimant later changed the respondent to CPPE by citing the email it subsequently received from the latter stating that the CPPB had been changed to the CPPE. The change of respondent  was accepted by the tribunal and then the award was issued in March 2020, which ordered the CPPE to pay USD 18 million plus interest, despite it not having participated in the arbitration.

The Court held that the CPPB and CPPE are separate legal entities despite the similarities in their names and there was no proof on the official website of CPPE showing that CPPB had became part of CPPE.  

JAPAN

First treaty claim against Japan

Due to the subsidy cuts under the renewable energy subsidy regime (RES Regime) launched by Japan after the Fukushima nuclear disaster in 2011, Shift Energy, a Hong Kong-based renewables investor, has filed the first investment treaty claim against Japanese government based on the Hong Kong-Japan bilateral investment treaty, one of 29 existing bilateral investment treaties signed by Japan. It is reported that the said claim might lead to a wave of treaty claims against the Japanese government.

The RES Regime provided renewable energy investors with fairly favorable feed-in tariff. Meanwhile, given that the RES Regime was implemented at a time when the cost of solar equipment was declining rapidly, numerous investors were attracted to purchase PV plants in Japan. However,  just a year later, the Japanese government began cutting feed-in tariffs steadily and adopting regulation and supervision measures on licensed PV plants, e.g., setting retroactive deadlines. As disclosed in the data published by a credit research firm named Teikoku Databank, since 2018, more than 250 solar companies have been forced into bankruptcy due to the aforementioned subsidy cuts and regulatory framework.