Commercial Arbitration in Asia (Ammar Younas)

Commercial
Arbitration in
Asia
Ammar Younas

How the Arbitration Process Works?
https://www.thebalancesmb.com/what-is-the-arbitration-process-how-does-arbitration-
work-397420

According to the
American
Arbitration
Association
(AAA), here is the
general process for
arbitration.
Filing and
Initiation
Arbitrator
Selection
Preliminary
Hearing
Info Exchange
and
Preparation
Hearing
Post Hearing
Submissions
The Award

Biggest Arbitration Stories Of 2018
• https://www.arbitrationnation.com/biggest-arbitration-stories-2018/

The largest Arbitration Awards in History
https://hsfnotes.com/arbitration/2014/08/14/the-largest-arbitration-
awards-in-history-three-majority-shareholders-in-yukos-awarded-total-
damages-of-over-50bn-from-the-russian-federation-2/
Three Majority shareholders in Yukos awarded total damages of over
$50bn from the Russian Federation
The Tribunals also ordered Russia to reimburse the Claimants for
arbitration costs of € 4.2 million and costs of representation of more
than US$ 60 million.

Online Dispute Resolution and electronic
hearings
https://www.nortonrosefulbright.com/en/knowledge/publications/71e
0aa1e/online-dispute-resolution-and-electronic-hearings
https://www.researchgate.net/publication/329710340_The_enforceabi
lity_of_electronic_arbitration_agreements_before_the_DIFC_Courts_a
nd_Dubai_Courts
https://unctad.org/en/Docs/edmmisc232add20_en.pdf

Resolving disputes on the Belt and Road

The Belt and Road Initiative
• China’s strategic and economic policy
to create a 21st century Silk Road
• 6 overland corridors
- China-Mongolia-Russia Economic
Corridor
- China-Central Asia- West Asia
Economic Corridor
- New Eurasia Land Bridge
Economic Corridor
- China-Pakistan Economic Corridor
- Bangladesh-China-India-Myanmar
Economic Corridor
- China-Indochina Peninsula
Economic Corridor
• 1 maritime route

Belt and Road
1/3 of
world GDP
70+
countries
65% of
global
population
75% of all
goods and
services
the world
moves

What is a Belt and Road project?
No official list or definition
Source of finance
BRI countries involved
Construction and infrastructure: roads, railways, ports, bridges;
maritime…
Chinese companies completed 30 cross-border M&A projects in 18
countries and regions in January 2019

BRI Project: an example
Lender Host Government / Host
state SOE
Project Co.
EPC Contractor
Sub-contractor A Sub-contractor B Sub-contractor C
O&M Contractor
Financing Agreement(s)
EPC Contract
Sub-contracts
Concession Agreement
Bw investors: Shareholders Agreement / JV Agreement
Bw contractor JV members: Consortium Agreement /
Shareholders Agreement / JV Agreement
O&M Contract

What is a Belt and Road dispute?
No official list or definition
Look at deal financing, sector, parties
Construction and projects; maritime, etc
Cross-border (inbound & outbound)
Complex - usually

Is there anything special about a BRI dispute?
Party identity?
Sector?
Complexity?
Commercial or
treaty claims?
Immunity issues?

How can we resolve a BRI dispute?
Litigation
MediationArbitration

Litigation
• Litigation in China
• Rare in practice
• Non-Chinese party unfamiliar with procedure, language
• Concerns re impartiality
• Difficult to enforce outside China
• But China taking steps to improve and internationalise court process
• Judicial interpretation on enforcing foreign judgments
• Signed Hague Convention on Choice of Courts
• Establishment of the International Commercial Courts for commercial disputes, particularly B&R disputes

Litigation• Litigation in the host state
• If host state has strong bargaining position, or local legislation requires.
• Investors generally prefer to avoid local court proceedings. Concerns
may include:
• lack of impartiality
• procedural inefficiency
• unfamiliarity with local court system, procedure and counsel
• reluctance of courts to enforce against the host state?

Litigation
• Litigation in a third state
• Perceived neutrality compared to litigation in the host state, but rare because:
• may be difficult to enforce in host state
• questions over court’s jurisdiction over the investments in the host state
• may not be acceptable to investor or host state

Mediation
Non contentious, non-binding
• Tradition of Chinese parties preferring mediation/conciliation
• Flexibility
• Informality
• Helps preserve commercial relationship
• Confidentiality
• Time and cost saving potential
• Enforcement?
• Mediated settlement agreement enforceable as a contract
• Otherwise non-binding

Arbitration (commercial)
• Binding and enforceable cross-border
• Impartiality, efficiency and fairness
• Ease of enforcement
• Most BRI countries are signatories to New York Convention
• Limited exceptions
• Commercial or investment treaty
• Flexibility
• Efficiency (compared to litigation)?
• Limited rights of appeal
• Private and confidential

Arbitration (investor/state)
• Relies on bilateral / multilateral investment treaty between relevant states
• Investor can sue host state for breach of treaty protections
• Investment treaty arbitration:
• ICSID
• UNCITRAL
• SIAC Investment Arbitration Rules 2017
• CIETAC Investment Arbitration Rules 2017

“Mixed mode” DR
Negotiation
Mediation
/Conciliation
Arbitration Litigation

DR “with Chinese characteristics”
• China encourages “mixed mode” DR for BRI disputes
• “Blue Book”: negotiation + mediation + arbitration
• Mediation is a traditional feature of Chinese DR
• International Commercial Court: mediation is included by default and arbitration is encouraged, with
enforcement benefits
• Reflects trends/party preferences in and outside China
• Aims to protect rights and interests of all parties
• Work with existing DR service providers

Existing solutions
International institutions offer
arbitration and mediation services
•ICC
•HKIAC
•SIAC
•CIETAC
•etc

Bespoke Belt and Road solutions
CIETAC Investment Arbitration Rules / Investment Disputes Resolution Centre
Silk Road Arbitration Centre, Xi’an (丝绸之路仲裁中心，西安)
Wuhan Arbitration Centre Belt & Road Arbitration Court (“一带一路”（中国）仲裁院)
International Commercial Courts (国际商事法庭) in Beijing, Xi’an (Belt) and Shenzhen (Road)
e-BRAM.hk (电子“一带一路”仲裁与调解平台)
SIMC/CCOIC (新加坡国际仲裁中心/中国国际商会) mediation service

Contractual complexity requires DR
consistency
Lender Host Government / Host
state SOE
Project Co.
EPC Contractor
Sub-contractor A Sub-contractor B Sub-contractor C
O&M Contractor
Financing Agreement(s)
EPC Contract
Sub-contracts
Concession Agreement
Bw investors: Shareholders Agreement / JV Agreement
Bw contractor JV members: Consortium Agreement /
Shareholders Agreement / JV Agreement
O&M Contract

BRI DR clauses: key considerations
• Three key considerations in selecting the most suitable arbitration:
• Enforceability
• New York Convention
• Regional conventions
• Other arrangements – e.g. local legislation, precedents
• Local law requirements
• Is the dispute arbitrable under local law?
• Can the arbitration be seated outside the host state?
• Jurisdiction of local courts
• Application of local procedural law
• Local law requirements regarding recognition and enforcement of foreign arbitral award
• Commercial considerations
• Relationship of the contracting parties

What is happening in practice?
• DR clauses in BRI contracts
English law + SCC
English law + ICC
London
HK law + HKIAC
English law + SIAC
English law + LCIA

What is happening in practice?
• China International Commercial Courts (国际商事法庭,
CICC) in Beijing, Xi’an (Belt) and Shenzhen (Road)
• CIETAC Investment Arbitration Rules/ Investment Disputes
Center
• Wuhan Arbitration Centre Belt & Road Arbitration Court
(“一带一路”（中国）仲裁院)
• HKIAC Belt and Road Advisory Committee, online
resource platform
• ICC Belt and Road Commission
• SIMC/CCOIC mediation service(新加坡国际仲裁中心/中
国国际商会)
• etc
Institutions’
BRI
initiatives

Conclusions
No “one size fits all” DR mechanism
Room for several methods and institutions
“Key players” likely to emerge over time
Consistency within project docs desirable
Expert drafting required
Unlikely a single forum will dominate

PRC and Hong Kong investment treaties
More than 3300 investment treaties signed worldwide
Typically follow a very similar format, but do not all offer the same scope of
protection
In total, China has signed 109 bilateral investment treaties and 19 other treaties
with investment protection provisions (eg the China-ASEAN FTA) are in force
Chinese investment treaties cover at least 56 BRI target jurisdictions
However, Chinese treaties pre-1998 accession to ICSID do not offer very good
protection – only disputes re compensation for expropriation can be arbitrated

China’s investment treaties
First generation
Sources: UNCTAD (2016; MOFCOM (2016); OUP (2009)
Second generation
Third generation (post-1998)
Fourth generation

Consolidation, joinder & intervention in
international arbitration

• What?
• Consolidation involves the fusion of two or more separate and independently
existing arbitrations into one
•
• Joinder and intervention concern the introduction of one or more parties into a
single, existing arbitration
• Joinder – an existing party seeks to add a new party
• Intervention – an entity that is not a party to the arbitration wishes to become a party
Consolidation, Joinder & intervention

• Why?
• International business transactions frequently involve multiple parties and/or
multiple contracts
• The increasing complexity and volume of international transactions translates into
an increase in multi-party international arbitration
• Many national court systems have broad powers to order non-consensual
consolidation of multiple proceedings, or joinder of additional parties
─ Promotes judicial efficiency, consistency, fairness
• However: the legitimacy of arbitration derives from party consent

• Advantages?
• Time and cost savings
• legal fees
• expert fees
• witness time and costs
• arbitrator fees
• Procedural economy
• Removes risk of inconsistent awards

• Drawbacks?
• Complications regarding appointment of arbitrators
• Confidentiality concerns
• Unequal distribution of time/cost savings among parties
• Increased complexity within a single proceeding may increase overall
time

Threats to International Arbitration

Guerilla Tactics
• Definition
• a label for a range of tactics that are intended to delay or sabotage the arbitral process to
undermine the finality of an arbitral award
• generally employed by the party who has the weaker case on the merits
• Typically rely on procedural rules that ensure due process
• equal treatment of parties
• full and reasonable opportunity to present the case
• parties’ entitlement to a hearing if requested

Categories and Examples
“Rough Riding” “Guerilla Tactics”
“Extreme Guerilla
Tactics”

What are Guerilla Tactics?
Challenging tribunal’s jurisdiction
Challenging arbitrators
Challenging award
Failure to comply with procedural orders
Failure to pay
deposits
Unmeritorious
applications
Last-minute
cancellations
Spurious /
excessive
document requests

Pre-Award Phase
The aim of an arbitration 'guerrilla' in
the pre-award phase is to:
• delay and frustrate the arbitration in order to
increase the claimant's appetite to settle or to
take steps to put its assets out of the claimant's
reach; or
• lay the ground for a future challenge to the
award in the courts.

Pre-Award Phase
• Examples
Alleging arbitrator lacks
independence
Alleging arbitrator lacks
independence
Fabricating conflicts between
tribunal and counsel
EDF v. Argentina
Tribunal member on board of
UBS, which invests in and with
Claimant EDF
Rompetrol v. Slovenia
Tribunal member previously
worked in same firm as party
representative, though different
office.
Hrvatska v. Romania
Respondents use barrister who
was a door tenant at the
chambers of one of the
arbitrators.

Unmeritorious challenge and post-award
Guerrilla Tactics
• Attempts by the losing party to challenge the award by the
back door.What?
• The losing party invokes procedural issues or due process
violation as a ground to obtain a revision of the merits of the
case. These unmeritorious challenge delay or frustrate the
performance and enforcement of the award.
How?
• The growing number of challenges undermine a
fundamental feature of international arbitration – the finality
of awards.
Effect?

Countering Guerilla Tactics
BEFORE DURING AFTER
• Drafting arbitration clauses • Implementation of sanctions • Move for summary judgment
• Code of conduct as procedural order • Engaging State law authorities • Submissions on costs
• adherence to timetable
• treatment of witnesses
• discovery and admissibility
of evidence
• challenge of arbitrator
• interim relief through
national courts
• notifying institution
• notifying bar associations
• Challenge of award

Who are the arbitrators?
BAISES

Causes of lack of diversity
Female partners on international arbitration
teams:
~ 11%
Female arbitrators on international arbitration
tribunals:
~ 6%
Females around the world:
~ 50%
Female law students:
~ 60%
Female partners in international law firms
~ 20%
Sources:
Lucy Greenwood, Getting a
Better Balance on
International Arbitration
Tribunals (2013)
Lucy Greenwood, ‘Unblocking
the Pipeline: Achieving
Greater Gender Diversity on
International Arbitration
Tribunals, International Law
News (2013, Vol 42)
Roughly, for
every 10
individuals
around you …

Survey Statistics
56% of survey respondents say to consider diversity when drawing up a short list of potential appointment of arbitrators
6% of responding arbitrators believed that they had lost appointments due to ethnicity
23% believes they have lost appointments because of their gender
28% believe that they have lost appointments because they were considered too young
84% of survey respondents thought that there were too many men
64% felt that there were too many arbitrators from Western Europe or North America
80% thought that tribunals contained too many white arbitrators
70% would like institutions to publish statistics on gender and ethnic or national identity

“UNCONSCIOUS BIAS” :
A survey of arbitral institutions (2015)
0.00%
5.00%
10.00%
15.00%
20.00%
25.00%
30.00%
Percentage of female arbitrators
Percentage of female
arbitrators

Greenwood research(statistics for 2016)
• (source: https://globalarbitrationreview.com/article/1141813/a-year-of-the-pledge-new-data-on-women-arbitrators)

Greenwood research (statistics for 2017)
• (Source: https://globalarbitrationreview.com/article/1171218/the-pledge-turns-two-how-are-the-numbers-looking)

Greenwood research (statistics from 2015 to
2017)
• (source:https://globalarbitrationreview.com/article/1171218/the-pledge-turns-two-how-are-the-numbers-looking)

Icc court statistics FOR 2017
Total number of ICC arbitrators confirmed or appointed: 1488
45%
41%
14%
Out of 249
Arbitrators
appointed by
ICC
Arbitrators
appointed by
parties
Arbitrators
apponited by
co-arbitrators
1239
249
Number by gender
Men Women

How to develop your
career in arbitration?

• Be patient
• You have to start from the bottom
• Do not take shortcuts
• Learning good advocacy skills takes time
• So does developing good judgment
• Gradually gain experience
• Observe and learn from more experienced lawyers
SUCCESS STRATEGIES

• Develop strong legal skills
• Be a good litigation tactician first and know your own legal
system well before turning to the pure international field
• But then treat international arbitration as a speciality in itself
• “If they can’t write, if they haven’t mastered contracts or civil
procedure, we can’t use them, even if they’ve done all the
dissertations in the world.” Lucy Reed
SUCCESS STRATEGIES

• Good Command of English
• Excellent English, both written and oral, is crucial since English
is the language most often used in international arbitration
SUCCESS STRATEGIES

• You don’t have to start at an international law firm to get your foot
into the door
• You can gain experience working/interning
• at a smaller law firm
• at an arbitral institution
• for an arbitrator
• for a judge
• as a researcher or teaching assistant
• as in-house counsel
SUCCESS STRATEGIES

• Make a Name for Yourself
• Publish
• Attend conferences
• Join and volunteer at arbitral organisations/institutions (e.g.
IBA, ICCA, OGEMID) or young groups (e.g. ICC-YAF, HK45, LCIA
YIAG)
SUCCESS STRATEGIES

• Don’t Forget Soft Skills
• Be a team player
• Work hard
• Learn to accept setbacks
• Be commercial
• Be responsive and client friendly
SUCCESS STRATEGIES

PART 2
Appointment of Arbitrators and
Recognition and Enforcement of an
Award

• In practice, arbitrators are usually individuals. However, certain
national laws do not exclude that a legal entity be designated as an
arbitrator
• French, Dutch, English, and Italian law limit the capacity to be an
arbitrator to individuals
• In Switzerland, arbitrator must be an individual, but when a legal
entity is nominated this can be interpreted as meaning one of its
officers
Composition of the Arbitral Tribunal

• None of the laws governing arbitration prescribes a particular number
of arbitrators, but Belgian, Dutch, and Italian law require an odd
number
• However, sometimes it is possible for a dispute to be resolved by an
even number of arbitrators (Switzerland)
• If the AT has two members, it must render an unanimous award

• If the arbitrators fail to reach an agreement, the arbitration
agreement becomes inoperative and the dispute must be submitted
to the competent national court
• When the parties have not determined the number of arbitrators, the
majority of national laws provide that the AT shall be composed of 3
members

• English law presumes that the parties envisaged a sole arbitrator
• In the Netherlands, the court determines the number of arbitrators if
the parties have not dealt with this question
• When the AT is composed of 3 members, one of them is usually the
chairman, having specific powers

• The laws governing the arbitration do not usually lay down any
requirements as to the nationality of an arbitrator
• The parties can agree contractually on particular requirements
concerning the qualifications, age, function or nationality of the
arbitrators
• Arbitration laws do not prevent a professional judge from being
appointed as an arbitrator

• All arbitration laws recognize the freedom of the parties to appoint
arbitrators or to agree on the appointing procedure
• The parties may name the arbitrators in their arbitration agreement.
This method of appointment is not recommended because it can lead
to difficulties in the case of predecease, unavailability or refusal of the
designated person to act
Appointment of the Arbitrators by Parties

• The parties may also designate the arbitrator by reference to his
function
• In practice, the most frequent solution is to avoid naming the
arbitrator in the arbitration agreement
• Where the parties have chosen to submit their dispute to a single
arbitrator and fail to reach agreement thereon, they can apply to the
competent court to make the appointment

• If the AT consists of three members, the classic
method is to allow each of the parties to choose its
own arbitrator
• It is then for the appointed arbitrators to nominate a
chairman. If they are unable to agree on a chairman,
the competent court can again be requested to do so

• The parties in their AA may entrust a third party with
the task of appointing the arbitrators in the event of a
deadlock in the constitution of the AT
• It is common practice to choose the chairman of a
court as appointing authority
Appointment of the Arbitrators by a Third
Party

• The autonomy of the parties with regard to the
constitution of the AT is not without limits. It is
subject to the respect of fundamental guarantees,
particularly to the principle of equality
• The principle of equality means that the parties have
the same rights in the nomination of the AT
Limits to the Autonomy of the Parties in the
Appointment

• Principle of equality does not mean that each party has a right to
appoint ‘his’ or ‘her’ arbitrator
• Nor is equality violated when one of the parties fails to exercise its
rights during the constitution of the AT with the consequence of
placing the other party in a privileged position
Limits to the Autonomy of the Parties in the
Appointment

• When the parties have not chosen institutional arbitration and have
not entrusted a third party with the nomination of their arbitrators,
difficulties in the constitution of the AT can only be overcome by a
court
• All arbitration laws allow the parties to request a court to appoint the
arbitrators
Appointment by a Court

• The arbitrator must not be linked to either of the parties and must
not have any interest in the outcome of the dispute. He must be
independent
• This requirement not only exists at the stage of the constitution of the
AT, but continues until the end of the arbitration
The Independence of Arbitrators

• The independence and impartiality of an arbitrator are compromised
by the existence of close links with one of the parties to the arbitral
proceedings
• It would therefore be inadmissible that an arbitrator be the employee
of or depend economically on one of the parties

• The existence of close personal ties of family or friendship with a
party should similarly lead to the removal of the arbitrator
• However, a common nationality or a domicile in the same country are
not sufficient
• The arbitrator must not be the advisor of one of the parties, but can
be in past

• The existence of an ordinary business relationship between the
arbitrator and one of the parties is normally not sufficient for his
removal
• The existence of close links between two arbitrators may also cast
doubt on the independence and impartiality of the arbitral tribunal

• Choose arbitration as dispute settlement method
• Agreement to arbitrate
• Dispute
• Submission agreement: choice of arbitrators, seat of
arbitration, applicable law, and etc
• Arbitration proceedings
• Award
• What is next?

Recognition and Enforcement of Arbitral
Awards
• New York Convention on the Recognition and Enforcement of Foreign
Arbitral Awards was adopted in 1958
• According to the Convention, the term "arbitral awards“ includes not
only awards made by arbitrators appointed for each case but also
those made by permanent arbitral bodies to which the parties have
submitted

Awards
• This Convention applies to the recognition and enforcement of
arbitral awards made in the territory of a State other than the State
where the recognition and enforcement of such awards are sought,
and arising out of differences between persons, whether physical or
legal

Awards
• Each Contracting State shall recognise arbitral awards as binding and
enforce them in accordance with the rules of procedure of the
territory where the award is relied upon
• There shall not be imposed substantially more onerous conditions or
higher fees or charges on the recognition or enforcement of arbitral
awards to which this Convention applies than are imposed on the
recognition or enforcement of domestic arbitral awards

Awards
• To obtain the recognition and enforcement, the party applying for
recognition and enforcement shall supply:
• The duly authenticated original award or a duly certified copy thereof.
• The original agreement referred to in article 11 or a duly certified copy
thereof.

Awards
• Recognition and enforcement of the award may be refused, at the
request of the party against whom it is invoked, if that party furnishes
to the competent authority where the recognition and enforcement is
sought, proof that:
1) The parties to the agreement were under some incapacity, or the
said agreement is not valid under the law to which the parties have
subjected it or, or

Awards
2) The party against whom the award is invoked was not given proper
notice of the appointment of the arbitrator or of the arbitration
proceedings or was otherwise unable to present his case; or
3) The award deals with a difference not contemplated by or not falling
within the terms of the submission to arbitration, or it contains
decisions on matters beyond the scope of the submission to
arbitration

Awards
4) The composition of the arbitral authority or the
arbitral procedure was not in accordance with the
agreement of the parties, or, failing such agreement,
was not in accordance with the law of the country
where the arbitration took place; or
5) The award has not yet become binding on the
parties, or has been set aside or suspended by a
competent authority of the country in which, or
under the law of which, that award was made.

Awards
• Recognition and enforcement of an arbitral award may also be
refused if the competent authority in the country where recognition
and enforcement is sought finds that:
a) The subject-matter of the difference is not capable of settlement by
arbitration under the law of that country; or
b) The recognition or enforcement of the award would be contrary to
the public policy of that country.

Awards
• Any State may, at the time of signature, ratification or accession,
declare that this Convention shall extend to all or any of the
territories for the international relations of which it is responsible
• Such a declaration shall take effect when the Convention enters into
force for the State concerned

// 93
Consolidation
Case study
Contracts for the production
and distribution of luxury
“Executive” model vehicles in
China …
Distributor of CM’s vehicles
in China, existing under
the laws of the People's
Republic of China
China
Leading German
vehicle manufacturer,
incorporated under
the laws of Germany
German
y
Manufacturer of
vehicles in China,
incorporated under the
laws of Hong Kong
Hong Kong
24 Feb 2018
VEHICLE
CONTRACT
KIT
CONTRACT
1 March 2018

// 94
Consolidation
Case study
Distributor of CM’s vehicles
in China, existing under
the laws of the People's
Republic of China
China
Leading German
vehicle manufacturer,
incorporated under the
laws of Germany
German
y
Manufacturer of vehicles
in China, incorporated
under the laws of Hong
Kong
Hong Kong
24 Feb 2018
VEHICLE
CONTRACT
KIT
CONTRACT
1 March 2018
ADC orders units
of the “Executive”
model from Chief
Inspection and delivery
of Vehicles
ADC pays
Chief the purchase
price for the Vehicles
Chief orders Kits
from CM for
Vehicle
assembly
CM provides the Kits
& invoice to Chief
Chief pays
CM for the Kits
Mechanics of
the Contracts

// 95
Consolidation
Case study
VEHICLE CONTRACT
• “Any dispute that relates to this
Contract shall be finally resolved by
arbitration at the Hong Kong
International Arbitration Centre
(“HKIAC”) under the HKIAC
Administered Arbitration Rules
(the “HKIAC Rules”) before three
arbitrators. The nationality
requirement under Article 11.2 of the
HKIAC Rules shall not apply to the
appointment of the presiding
arbitrator. The seat of the arbitration
shall be Hong Kong. The arbitral
proceedings shall be conducted in
Chinese and English. The Contract
shall be governed by Hong Kong
law.”
• + Clause 19 : Force Majeure
KIT CONTRACT
• “Any dispute arising from or in
connection with this Contract shall
be settled through amicable
negotiations by the parties. If no
settlement can be reached
through negotiations within 30
days of the dispute being notified
to all parties, the dispute shall be
finally resolved by arbitration at
the HKIAC under the HKIAC
Administered Arbitration Rules
before three arbitrators. The
arbitral proceedings shall be
conducted in English. The
Contract shall be governed by
Hong Kong law.”
Terms of the Arbitration Agreements

// 96
Consolidation
Case study
Vehicle
Contract
24 Feb
2018
Kit
Contract
1 Mar
2018
ADC
orders
Vehicles
from Chief
Chief
orders Kits
from CM
CM
delivers
Kits to
Chief
Arbitration 1
Kit Contract
Chief v CM
9 Jan 2019
Arbitration 2
Vehicle
Contract ADC v
Chief
11 Jan 2019
 May 2018  ADC submits orders for “Executive” model vehicles to Chief.
 Chief orders two batches of the Kits from CM.
 CM accepts the orders and delivers the Kits to Chief.
 Chief is dissatisfied with the quality of the Kits  certain parts are allegedly defective.
 Chief is unable to assemble the vehicles with the Kits supplied  requests CM to send replacement
parts several times.
 Chief withholds payment for the Kits.
 CM fails to deliver the replacement parts.
 Chief fails to deliver the “Executive” model vehicles to ADC.
Timeline

// 97
Consolidation
Case study
Vehicle
Contract
24 Feb
2018
Kit
Contract
1 Mar
2018
ADC
orders
Vehicles
from Chief
Chief
orders Kits
from CM
CM
delivers
Kits to
Chief
Arbitration 1
Kit Contract
Chief v CM
9 Jan 2019
Arbitration 2
Vehicle
Contract ADC v
Chief
11 Jan 2019
 9 January 2019  Chief commences Arbitration 1 under the 2018 HKIAC Rules against CM seeking
specific performance of the Kit Contract.
 Chief designates Arbitrator X to serve in Arbitration 1.
 CM requests an extension of time for designating an arbitrator. HKIAC grants CM’s request.
 11 January 2019  ADC commences arbitration 2 under the 2018 HKIAC Rules against Chief seeking
damages for Chief’s failure to deliver under the Vehicle Contract.
 ADC designates Arbitrator Y as the first arbitrator.
 Chief designates Arbitrator X as the second arbitrator.
 Arbitrators X and Y jointly designate Arbitrator Z (Australian) as the third and presiding arbitrator.
 15 February 2019  HKIAC confirms the designation of each arbitrator in Arbitration 2.
Timeline

// 98
South Korea
 20 February 2019 Chief applies to consolidate arbitration 1 and arbitration 2 pursuant to Article 28
of the 2013 HKIAC Rules.
 ADC objects.
 Subsequently, ADC brings a challenge against Arbitrator X, on the basis that a partner associated
with his firm is currently acting on behalf of Chief in an unrelated proceeding.
 HKIAC rejects the challenge.
 ADC requests the Hong Kong Court of First Instance to decide the challenge.
 The Court rejects the challenge.
Arbitration 1
Chief v CM
Undesignate
d CM’s
Party-
Appointed
Arbitrator
Undesignate
d Presiding
arbitrator
Arbitrator X
Chief’s
Party-
Appointed
Arbitrator
Arbitration 2
ADC v Chief
Arbitrator X
Chief’s Party-
Appointed
Arbitrator
Arbitrator Z
Presiding
Arbitrator,
Australian
Arbitrator Y
ADC’s Party-
Appointed
Arbitrator
THE KIT CONTRACT THE VEHICLE CONTRACT
Consolidation
Case study

// 99
Consolidation
Case study
The issues
 Should arbitrations 1 and 2 be consolidated?
 Assuming arbitrations 1 and 2 are
consolidated: CM requests HKIAC to
disqualify Arbitrator X on the same grounds
alleged by ADC or to appoint a new arbitral
tribunal in the consolidated arbitration. Chief
opposes and contends that X should remain
in the arbitral tribunal. What should happen?

Commercial Arbitration in Asia (Ammar Younas)

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