By Jason P.H. Wong

In A v B and Others [2024] 4 HKC 36, [2024] HKCFI 751, (available here), Mimmie Chan J has set aside an enforcement order for enforcing an award on the basis that the tribunal has failed to give reasons for its decisions on key issues and instead simply recited the relevant contractual provisions (the interpretation and effect of which was disputed) and stated the orders made, without addressing the parties’ arguments or explaining the tribunal’s reasoning.

In AAB v BBA and Another [2024] 3 HKC 656, [2024] HKCFI 699,(available here), DHCJ Reyes SC refused to set aside an award for lack of reasoning and lack of due process, but remitted it back to the tribunal for failing to deal with an issue for determination as identified in the award itself.

In SYL and Another v GIF [2024] 2 HKLRD 1389, [2024] HKCFI 1324,(available here), DHCJ Norman Nip SC has set aside the jurisdictional award in an HKIAC arbitration under multiple contracts.  The relevant arbitration agreements provided for different appointment procedures for the tribunal and the learned Deputy Judge held that the rights of the parties challenging jurisdiction to designate an arbitrator had been infringed.

By Aman A. Mir and Anjali Shah

In the case of SBI General Insurance Co. Ltd. v. Krish Spinning, (2024 INSC 532),(available here), a three-judge bench of the Indian Supreme Court held that discharge of a contract by ‘accord and satisfaction’ does not by itself preclude reference to arbitration where a valid arbitration agreement exists in the substantive contract. By virtue of the doctrine of separability, the arbitration agreement in the substantive contract survives and any dispute in relation to the settlement arrived at between the parties can be referred to arbitration as being a dispute arising out of or in relation to the substantive contract. The Court further clarified that while deciding an application for appointment of arbitrator, Section 11 (6A) of the Indian Arbitration and Conciliation Act, 1996 limits the scope of enquiry by the referral court to a prima facie examination as to the existence of a valid arbitration agreement and the question of ‘accord and satisfaction’ being a mixed question of law and fact, is within the exclusive jurisdiction of the arbitral tribunal.

In DLF Ltd. v. KONCAR Generators and Motors Ltd.,(2024 INSC 593),(available here), concerning the enforcement of foreign arbitral awards denominated in foreign currency, the Supreme Court of India ruled that the relevant date for converting the award into Indian Rupees is when the award becomes enforceable, which is the date when objections against the award are dismissed. The Court further held that if the award debtor deposits an amount during the pendency of objections, the conversion rate applicable on the deposit date should apply to the deposited sum. This ruling clarifies handling foreign currency awards in India, especially concerning fluctuating exchange rates, and serves as a critical precedent for future cases.

In Cox & Kings Ltd. v. Sap India Pvt. Ltd. & Anr., Arbitration Petition, (2023 INSC 1051),(available here), a Constitution Bench of the Supreme Court of India extensively clarified the Group of Companies doctrine, affirming that non-signatories can be bound by an arbitration agreement if mutual intent is evident. The Court outlined that this intent can be discerned through factors such as the relationship between the parties, the commonality of the subject matter, and the composite nature of the transaction. It was ruled that the doctrine, rooted in commercial realities, has an independent existence in Indian law beyond any specific provisions of the Arbitration Act. The Court cautioned that the doctrine should not be applied merely due to a non-signatory’s affiliation with a corporate group and should be cautiously invoked at the referral stage. However, it emphasized that the doctrine should not be used at the enforcement stage without giving non-signatories a fair chance to contest their involvement in the arbitration process. This judgment provides crucial clarity on the contours and limitations of the Group of Companies doctrine in Indian arbitration law.

In Sharp Corp. Ltd. v. Viterra BV, [2024] UKSC 14,(available here) the UK Supreme Court addressed the proper method for calculating damages under a GAFTA contract for the sale of Canadian peas and lentils. The case arose after Sharp defaulted on payment terms, leading Viterra to declare a default and resell the goods. The GAFTA Appeal Board awarded damages based on the theoretical cost of importing equivalent replacement goods, but Sharp argued for damages based on the actual value of the goods left with Viterra, which had increased due to Indian customs changes. The Supreme Court upheld the Court of Appeal’s decision that damages should reflect the actual value, not a hypothetical replacement cost, and remitted the matter back to the GAFTA Appeal Board for reassessment.

By Saptak Sanyal

In Delhi Metro Rail Corporation Limited v. Delhi Airport Metro Express Private Limited,(2024 INSC 292 ) , (available here),  a three Judge Bench of the Indian Supreme Court  allowed the petitioner’s curative petition by overturning the Supreme Court’s previous decision in the case and affirmed the High Court’s Division Bench’s decision to set aside the Award. It is a rare instance where the Indian Supreme Court has allowed curative petition in an arbitration related dispute. The Court has explained what construes patent illegality which can be used as a ground for setting aside of a domestic award in terms of Section 34 (2A) of the Arbitration and Conciliation Act, 1996. The Court also ruled that the arbitral tribunal ignored vital evidences on record, resulting in perversity and warranting interference from the Court. The Supreme Court ruled that it has exercised its jurisdiction under Article 142 of the Indian Constitution in a curative petition since the previous decision of the Court in this case has upheld a patently illegal award which has caused a grave miscarriage of justice. 

In Avitel Post Studioz Limited  v. HSBC Pi Holdings (Mauritius) Limited , (2024 INSC 242 ),  (available here),  a two Judge Bench of the Indian Supreme Court in context of an objection to the enforcement of a foreign award on the ground of bias. The Award Debtors alleged that the Presiding Arbitrator Christopher Lau SC had failed to make full disclosure of material facts and circumstances concerning conflict of interest and therefore the award rendered by the Tribunal cannot be enforced as it is against the public policy in terms of Section 48 (2) (b) of the Indian Arbitration and Conciliation Act 1996. The Court ruled that there exists no identity or conflict of interest between the Presiding Arbitrator Mr Christopher Lau SC and the award holder , or any of its affiliates including its holding company i.e HSBC PLC (U.K). The Court also ruled that since the circumstances in the case falls under the Green list of the 2004 IBA Guidelines on Conflicts of Interest in International Arbitration, no duty of disclosure is owed by the Presiding Arbitrator. The Court ruled that the determination of bias should be done by applying international standards and the refusal of enforcement of foreign awards should only be in a rare case where non-adherence to international standards is clearly demonstrable. 

The Government of India on 3rd June 2024 introduced new "Guidelines for Arbitration and Mediation in Contracts of Domestic Public Procurement",(available here). It appears from these guidelines that the Government is no longer in favour of arbitration as a method of dispute resolution in respect of contracts where the Government (or a Government entity or agency) is a party except in low value disputes (not exceeding Rs. 10 crore or approximately USD 1.2 million) and is leaning in favour of other methods of dispute resolution (such as litigation in the courts in India and mediation). 

By Shrijana Mainali

In Adv. Devendra Pradhan (on behalf of Hanil Engineering & Construction Co. Ltd v. Appellate Court, Patan, 2075, (Decision no. 10138),(available here), the Supreme Court ruled that a dispute resolution clause in a contract is considered an independent agreement under the doctrine of severability, meaning it remains unaffected by the status of the main contract. The ruling emphasized that parties have the autonomy to select specific substantive and procedural laws for the arbitration clause, and choosing a particular country's law for the substantive aspects of the contract does not automatically extend to procedural or appointment-related issues. This highlights the autonomy of parties in tailoring the legal framework governing the arbitration process. The Supreme Court also addressed situations where a contract stipulates resolution through amicable settlement. In such cases, the parties are obligated to make a genuine effort to resolve the dispute amicably, as outlined in the contract. The court cautioned against initiating arbitration proceedings or rendering an award without adhering to the contractual provision requiring attempts at amicable settlement. 

In Krishna Chandra Jha v. Dinesh Bhakta Shrestha on behalf of Sumit Prakash Asia Private Limited, 2066 (Decision No. 8128),(available here), the Supreme Court held that arbitrators are bound by the terms and conditions agreed upon by the disputing parties and cannot issue an award that extend beyond the contractual terms. The arbitrator’s authority is confined to the agreement, with no discretionary powers. Any award that goes beyond the agreed terms would be considered an "Excess of Jurisdiction." This decision emphasizes that the arbitrator's role is confined to interpreting and applying the terms set forth in the contract.

In Department of Road et al. v. Waiba Construction Co. Pvt. Ltd., Samakhusi, Kathmandu et al. 2067 (Decision No. 8479), (available here), the Supreme Court held that when a dispute is referred to arbitration, the court is prohibited from engaging in factual inquiries, evaluating evidence, or issuing decisions akin to those in standard litigation. The Court further asserted that it lacks the authority to annul an arbitral award unless there is a significant legal error. This highlights the specialized nature of arbitration, emphasizing that courts should avoid delving into factual matters and evidence typically addressed in standard judicial proceedings. By limiting the court's role in reviewing evidence and factual determinations, the decision upholds the finality of arbitral awards and reinforces the principle of minimal judicial intervention.

In Bhanu Prasad Acharya on behalf of Nepal Government, Ministry of Finance v. Damodar Ropeways and Construction Company et al. 2067 (Decision no. 8368), (available here),the Supreme Court clarified that arbitration is an informal and alternative method of dispute resolution within the judicial framework. It should not be perceived as a process where decisions are made based on assumptions, suspicions, or speculative matters merely because it occurs outside the court system. Similar to formal judicial processes, arbitration requires that facts be established, supported by relevant evidence, and consistent with the terms of the contract. When contract terms are ambiguous or silent, interpretation must adhere to prevailing laws, concepts, and accepted norms. Decisions based on assumptions rather than established principles and legal standards undermine the fairness of justice, rendering outcomes susceptible to the arbitrator's subjective reasoning.

By Angela Abala and Mateo Tomas L. Escueta

In Maynilad Water Services, Inc. v. National Water and Resources Board, (G.R. No. 181764), (available here),the Philippine Supreme Court addressed a dispute involving Maynilad Water Services, Inc. and Manila Water Company, Inc., two private companies operating under concession agreements with the Metropolitan Waterworks and Sewerage System (MWSS) in Metro Manila. The companies sought to increase consumer water rates by including corporate income taxes as recoverable business expenses. The MWSS denied these petitions, leading to separate arbitrations. In the Manila Water arbitration, the inclusion of taxes in rate calculations was disallowed, while in the Maynilad arbitration, it was permitted, allowing for higher consumer rates. The Supreme Court ruled that such disputes are arbitrable under Section 6 of the Alternative Dispute Resolution Act of 2004 but refused to enforce the arbitral award in Maynilad's favor, holding that it violated public policy. The Court emphasized a narrow interpretation of the public policy exception, stating that awards contrary to fundamental principles of justice and morality, or harmful to the public, cannot be enforced. The Court found that allowing Maynilad to pass on its corporate income taxes to consumers would lead to unequal treatment between consumers under Manila Water and those under Maynilad, which violated the right to equal protection and adversely affected the public by creating disproportionate water rates between service areas, despite no substantial distinction between consumers. As water is a basic human right, the Court concluded that the Maynilad award was injurious to the public and could not be enforced.

By Mateo Tomas L. Escueta (Olivas Law Office)

In Lone Congressional District of Benguet Province v. Lepanto Consolidated Mining Company (G.R. No. 244063, 244216, 21 June 2022), (available here), the Supreme Court vacated a domestic arbitral award that violated public policy safeguarding the rights of indigenous persons to their ancestral domains. The case addressed whether certification requirements of the Indigenous People’s Rights Act of 1997 (IPRA) applied to the renewal of a mining agreement originally executed in 1990 between the government and two mining corporations, which allowed for renewal “upon mutual agreement or as may be provided by law.” The mining operations located in Mankayan municipality, Benguet province, covered a  portion of the ancestral domains of the Mankayan, an indigenous group.  The Arbitral Tribunal ruled that the renewal of the mining agreement cannot be preconditioned on the complying with the IPRA certification requirements because doing so prejudices the mining companies’ vested rights. The Supreme Court disagreed Court ruled that Arbitral Tribunal disregarded public policy and acted in manifest disregard of the law It concluded that the Final Award effectively deprived the Mankayans of their rights to their ancestral domains guaranteed by Section 59 of the IPRA and the Constitution itself as a state policy. The Supreme Court vacated the arbitral award without prejudice to the mining companies’ full compliance with the requirements under IPRA for the renewal of the mining agreement. 

The narrow and restrictive approach to public policy emerged in the landmark case of Mabuhay Holdings Corporation v. Sembcorp Logistics Limited (G.R. No. 212734, 5 December 2018),(available here) the Supreme Court ruled that an arbitral award will not be enforced, “if doing so contravenes the State’s fundamental tenets of justice or morality, or [is] blatantly injurious to the public, or the interests of the society.” The Court recognized that most arbitral jurisdictions adopt a narrow and restrictive approach in defining public policy in light of the pro-enforcement policy of the New York Convention. It also took note of Singapore and Hong Kong, fellow Model Law countries with restrictive approaches to public policy in finally considering that Philippine law favors arbitration and enforcement of arbitral awards. Prior to this case, no definition of public policy existed in cases involving the enforcement of arbitral awards. 

By August Adamowicz, LALIVE

In its decision II CSKP 897/22 of 19 January 2024 (available here), the Polish Supreme Court decided that the objective inability of a party to an arbitration agreement to pay for arbitration can render the arbitration agreement incapable of being performed. This constitutes an exception from the national court’s obligation to refer parties to arbitration, and is explicitly codified in Article 1165 § 2 of the Polish Code of Civil Procedure, which mirrors Article II(3) of the New York Convention and Article 8(1) of the UNCITRAL Model Law. In this case, the claimant argued that due to its inability to pay the costs of arbitration and the existence of an institution of “relief from litigation costs” available in court proceedings, the court should not refer the dispute to arbitration but rather decide the case itself. The Supreme Court agreed, stating that the alternative could lead to a situation in which the claimant cannot realistically defend their rights before an arbitral tribunal (due to lack of financial resources to commence arbitration), while at the same time being prevented from submitting the dispute to any other court (due to binding arbitration agreement), thereby effectively depriving the party of its constitutional right to judicial legal protection. 

By Evgeniia Saveleva, Independent Practitioner

In the decision on the case А45-19015/2023 (available here), the Russian Supreme Court overturned the lower courts' decision to enforce the foreign arbitral award due to violations of public policy, remanding the case for a new trial.

In this case, a German company sought to enforce the arbitral award rendered by FOSFA arbitration (seated in London) against a Russian company. The award stated that the Russian company had failed to deliver flax seeds on time under the relevant contract and awarded 600,000 USD in damages to the German company. The panel consisted of arbitrators from Ukraine, the UK, and Denmark.

The Russian lower courts enforced the award, but the Russian Supreme Court overturned their decisions, stating that enforcement would contradict public policy.

First, the Supreme Court referred to principles of public policy such as “proportionality of civil liability” and “legality,” which allowed the Court to review the award on the merits and disagree with the tribunal's approach to damages. The Supreme Court also noted that lower courts should have considered the social significance of the Russian company and the effects of the enforcement of the award on job security and social stability.

Second, the Supreme Court referred to “impartiality” as the principle of public policy. The Court’s rationale was that the award was rendered by arbitrators who are citizens of “unfriendly” states. Thus, the lack of impartiality in the consideration of the case should be presumed until proven otherwise. The list of “unfriendly” states is provided under the Order of the Government of the Russian Federation dated 5 March 2022 No. 430-r and includes countries that imposed or supported sanctions towards Russia. 

Lastly, the Supreme Court noted that the lower courts had failed to consider the possible due process violations that could occur as a result of sanctions. The Russian company argued, among other things, that it was unable to receive legal representation in the UK and therefore effectively participate in arbitration.

Therefore, in light of the new implication that the participation of arbitrators from “unfriendly” states is presumed to violate the principle of “impartiality” and public policy in Russia, this case could have significant consequences for the enforceability of foreign arbitral awards in Russia.

In the decision on the case А40-301955/2022 (available here), the Commercial Court of the city of Moscow denied the request to serve foreign court documents on a Russian party due to violations of public policy.

In this case, the Court considered the letter of request of the Higher Regional Court of Berlin to serve documents on the relevant Russian party. The Court determined that the Russian party had previously obtained an anti-suit injunction under Russian law (Articles 248.1., 248.2. of the Commercial Procedure Code), prohibiting proceedings against it in foreign courts. The Court also noted that the Russian company is under sanctions, which limit its ability to represent itself in foreign court or arbitration proceedings. Therefore, the Court ruled that fulfilling the German court's request to serve documents would violate public policy. The Supreme Court later affirmed this conclusion.

By August Adamowicz, LALIVE

In its judgment 4A_244/2023 of 3 April 2024 (available here), the Swiss Federal Supreme Court dismissed a challenge against an intra-EU investment arbitration award, issued by a Geneva-seated tribunal against Spain, in an arbitration brought under the Energy Charter Treaty (“ECT”). Most notably, the Supreme Court expressed its opinion on the anti-intra-EU investment arbitration stance presented by the European Commission and the Court of Justice of the European Union (“CJEU”), going as far as calling it “a crusade against such international arbitrations”. The Supreme Court rejected entirely the arguments presented by Spain, which were in line with the position of the EU organs. The Supreme Court underlined that the ECT as a multilateral treaty has to be interpreted taking into account international law and the rules on the interpretation of international treaties, which the CJEU failed to do in the Achmea and Komstroy judgments. The Supreme Court interpreted the relevant provisions of the ECT, underlining that (i) the consent to investment arbitration expressed in Art. 26 para. 3 point a) of ECT is unconditional and cannot be withdrawn after the arbitration has been commenced, (ii) the fact that the EU member states transferred certain areas of power to the EU does not mean that they would no longer be bound by provisions of an international treaty they have ratified, and (iii) those could have included an adequate disconnection clause in the text of the ECT, which they did not do. The Supreme Court also pointed out that depriving investors of the right to initiate arbitration proceedings against other EU member states under the ECT would go against the purpose of the ECT, namely the encouragement of the flow of international investments. Finally, the Supreme Court did not find a conflict between provisions of the ECT and the Treaty on the Functioning of the European Union (contrary to the finding of the CJEU in the Komstroy judgment), but it noted that even if there was a conflict there is nothing that would suggest the primacy of EU law over the ECT under principles of international law.

In its two judgments 4A_572/2023 and 4A_288/2023 of 11 June 2024 (available here and here), the Swiss Federal Supreme Court rejected two challenges brought against the same interim arbitration award. The interim award was this time challenged on the basis of the successful disqualifications, after the interim award was issued, of two of the members of the arbitral tribunal. In both judgments, the Supreme Court took a position on two important practical issues. First, the Supreme Court underlined that although it is not competent to decide on a direct appeal against decisions of relevant bodies on the disqualification of arbitrators, such decisions can be reviewed in the context of challenges to the arbitral awards brought under the grounds of irregular composition of arbitral tribunal. Second, the Supreme Court clarified that under Art. 190a para. 1 let. c of the Swiss Federal Act on Private International Law, the challenge against the arbitral award (including interim award) can only be upheld if the ground for the challenge of the arbitrator (including prejudice) already existed at the time of the delivery of the award. In the case at hand the Supreme Court did not find enough proof that such grounds existed when the interim award was rendered.

By Fortunate Kirabo (Chairperson-Uganda Vis Society and Legal Trainee at K & K Advocates)

On 7th June 2024, the High Court of Uganda (Commercial Division) in Democratic Governance Facility v Foundation for Human Rights Initiative (Civil Application 7 of 2023) [2024] UGCommC 229 held, among other issues, that the time within which a party to an arbitration proceeding can apply for setting aside of the arbitral award starts running from the date the award is delivered and received by the parties. This is a departure from earlier cases that had set such time at the date on which the award is signed and delivered, comparing it to a judgment of court. In its reasoning, the Court noted that the earlier decisions were decided without reference to the relevant provisions of the Arbitration and Conciliation Act (Chapter 5, Vol. II, Laws of Uganda 2023) and without any citation to authority. As such, they were per incuriam. 

The Court noted that delivery of an award to the parties is an essential step in arbitral proceedings since it “has the effect of conferring certain rights on the party such as triggering the time period for applying for correction or interpretation of the award or for filing an application to annul the award, as also ending the right to exercise those rights on expiry of the prescribed period of limitation which would be calculated from that date.” This reasoning, as noted by Justice Stephen Mubiru, “reflects the legislative intent of the Act that delivery must be made to a person with direct knowledge of the arbitral proceedings and who would be the best person to understand and appreciate the arbitral award being connected with the dispute at hand.”

This holding is the correct interpretation of section 34(3) of the Act which provides that an application to set aside an arbitral award may not be made after one month has lapsed from the date on which the party making the application received the award. 

See also ICCA Handbook, Uganda, Chapter V (Arbitral Award), Section 10 (Enforcement of Domestic and International Awards Rendered in Uganda), Subsection a (General).