Scholarship

Professors Franco Ferrari, Friedrich Rosenfeld, and Dietmar Czernich edit a book on “Due Process as a Limit to Discretion in International Commercial Arbitration”

Professor Franco Ferrari, the Center’s Director, has just edited a book entitled “Due Process as a Limit to Discretion in International Commercial Arbitration”, co-edited with Friedrich Rosenfeld, a Global Adjunct Professor of Law at NYU Law in Paris and a lecturer for investment arbitration at the Bucerius Law School in Hamburg, and Dietmar Czernich, an attorney and Adjunct Professor based in Vienna. The book offers a comprehensive study on dueprocess as a limit to arbitral discretion useful to anybody involved in international arbitration. Based on 19 country reports (authored by Julio Cesar Rivera (h), Rafael Alves, Andrea Bjorklund & Benjamin Jarvis, Zheng Sophia Tang, Soterios Loizou, Caroline Kleiner, Dr. Friedrich Rosenfeld, Jennifer Lim & Charlotte Lelong, Aditya Singh & Zehaan Trivedi, Francesca Ragno, Koji Takahashi, Nayla Comair-Obeid & Zeina Obeid, Jacob van de Velden & Abdel Zirar, Giuditta Cordero-Moss, Mikhail Batsura, Jonathan Lim, Simon Hohler, Hattie Middleditch, Ina Popova & Duncan Pickard) and a detailed general report authored by the three editors, the book explores how courts in major arbitration jurisdictions apply due process guarantees when performing their post-award review.

Professor Ferrari publishes a paper on the homeward and outward trends in CISG case law

Professor Franco Ferrari, the Center’s Director, is known for his work on the United Nations Convention on Contracts for the International Sale of Goods (CISG), one of the most successful uniform contract law instruments. In his most recent paper, published in a book edited by Professors Iacyr de Aguilar Vieira and Gustavo Cerqueira  to celebrate the CISG’s 40th anniversary and entitled “La Convention de Vienne en Amérique/The Vienna Convention in America”, Professor Ferrari identifies two trends in recent case law interpreting the CISG: the homeward trend and the outward trend, both of which are disruptive of the goal behind the CISG. The paper analyses the trends and suggests how to tackle them to promote a uniform application of the CISG.

Professor Pedro J. Martinez-Fraga publishes the second edition of “The American Influence on International Commercial Arbitration”

Professor Pedro J. Martinez-Fraga, a leading practitioner in the field of investor-State international arbitration, international commercial arbitration, and transnational litigation, the co-leader of Bryan Cave Leighton Paisner LLP’s International Arbitration Team, and Adjunct Professor at NYU School of Law, has just published the second edition of his acclaimed book entitled “The American Influence on International Commercial Arbitration” with Cambridge University Press. As Professor Jose Alvarez, NYU’s Herbert and Rose Rubin Professor of International Law, states, “Pedro J. Martinez-Fraga begins his masterful work on the United States’ influence on international commercial arbitration with the original vision of arbitration suggested by Goya’s painting ‘Duel with Clubs’ in the Museo del Prado. The idea that arbitration is as blunt an instrument for ‘dispute settlement’ as two men using deadly force against each other – admittedly efficient, expedient, and final – has, he says, been eclipsed by the recognition that arbitration has much in common with judicial proceedings. His book is an argument, driven by a careful examination of history, case law, and statute, that the actions and views of common law courts has had much to do with this change. His is a general (and rare) defense of what some would decry, namely the ‘Americanization’ of international arbitration. Readers should welcome this new up-to-date edition. It continues to be a valuable contribution to a healthy, ongoing debate.’’ According to Gary Born, the chair of WilmerHale’s International Arbitration Practice Group, the book contains a “thoughtful and provocative analysis of a very timely subject – replete with keen observations and original analysis.”

The book traces the contours of select US common law doctrinal developments concerning international commercial arbitration. The new edition supplements the foundational work contained in the first edition in order to produce a broader and deeper work. Professor Martinez-Fraga explores how the US common law may help bridge cross-cultural legal differences by focusing on the need to address these contrasting approaches through the nomenclature and goal of securing equality between party-autonomy and arbitrator discretion in international commercial arbitration. The book thus focuses on the common law development of arbitrator immunity, as well as the precepts of party-initiative and –autonomy forming part of the US common law discovery rubric that may contribute to promoting expediency, efficiency and transparency in international commercial arbitration proceedings. It does so by carefully analyzing, among other things, the International Bar Association (IBA) Rules on Evidence Gathering, the Prague Rules, and the role of 28 USC. §1782 in international arbitration.

TO WHAT EXTENT CAN COURTS REWRITE POORLY DRAFTED ARBITRATION AGREEMENTS TO VALIDATE THEM? – A SINGAPORE CASE STUDY

– Sonal Jain

Introduction

When parties expressly include self-invalidating provisions in their arbitration agreements, to what extent can courts extrapolate such provisions and find the agreement valid to give effect to the parties’ intention to arbitrate?

In BNA v. BNB and another, [2019] SGHC 142,[1] the Singapore High Court was tasked to determine the validity of an arbitration agreement. Despite the court’s lengthy elucidation rejecting the “validation principle”[2] as part of Singapore law, the Court effectively rewrote the parties’ arbitration agreement to find it valid. Instead of holding the agreement invalid under the correct applicable law, the court took a one step further– it interpreted an express provision in the arbitration agreement (“arbitration in Shanghai”) to mean an arbitration seated in Singapore with Shanghai merely the “venue” of the arbitration. Although the decision was successfully appealed before the Court of Appeal,[3] its paradoxical nature makes it noteworthy.

Background

In 2016, the Defendants commenced arbitration under a Takeout Agreement. Article 14 of this agreement stated that it would be governed by the law of the People’s Republic of China (“the PRC”). It also provided for the parties’ arbitration agreement. In the arbitration clause, the parties expressly stipulated that their disputes shall be “…finally submitted to Singapore International Arbitration Centre (SIAC) for arbitration in Shanghai…”[4] The Plaintiff challenged the Tribunal’s jurisdiction alleging the invalidity of the arbitration agreement under the applicable law– PRC law– stating that under PRC law, an arbitration between two domestic parties cannot be administered by a foreign arbitration institution.[5] The majority of the Tribunal held the Tribunal had jurisdiction. Thereafter, the Plaintiff applied to the Singapore High Court under §10(3) of the Singapore International Arbitration Act[6] to seek a de novo determination that the Tribunal does not have jurisdiction. The Court held that Singapore law applied to the arbitration agreement rendering it valid, therefore, the tribunal had jurisdiction.

The Court’s Findings

Law Applicable to the Arbitration Agreement

The Court reiterated that Singapore courts have adopted the three-step test formulated by the English Court of Appeal in Sulamérica.[7] This approach requires an inquiry into three questions.

  • Have the parties made an express choice of law to govern the arbitration agreement?
  • In the absence of an express choice, have they impliedly chosen a law? (The law expressly chosen by the parties for the underlying contract is presumptively their implied choice of law for the arbitration agreement. However, the presumption is rebutted if the arbitration agreement is invalid under this law.)
  • If the parties have not made an express or implied choice of law, with which system of law does the arbitration agreement have the closest and most real connection?

Rejection of the Validation Principle

According to the validation principle, while determining the law applicable to the arbitration agreement, courts must always apply the law that would validate the arbitration agreement, rather than potentially applicable choices of law that would invalidate the agreement.[8] Previously, Singapore courts had not expressly dealt with the issue of whether the validation principle is part of Singapore law. Another decision of the High Court[9] was interpreted to accommodate the validation principle in Singapore law.[10] Thus, the Court’s decision in BNA is significant. The Court’s rejection of the validation principle is sound as a matter of principle and practice.

Principally, the rules of contractual interpretation in Singapore directly conflict with the “nakedly instrumental” objective of the validation principle.[11] The Court of Appeal has previously held that arbitration agreements, like any other commercial contracts, should be interpreted in light of the words used by the parties, although to give effect to the parties’ intention to arbitrate.[12] In this vein, the Court in BNA rightly stated that analysis under the three-step test is driven by a desire to give effect to the parties’ intention to arbitrate insofar as the language chosen by them makes it possible.[13] The purpose of the analysis is not to achieve a predetermined objective of validating the agreement regardless.[14]

Practically, if arbitration agreements are construed without actually giving effect to the parties’ intentions by interpreting the words chosen (as may be the case when applying the validation principle) there is a serious possibility that the award may not be enforced if the enforcing court finds that the arbitration agreement was invalid under the law applicable to it.[15]

The Court’s Decision in BNA

Law Governing the Arbitration Agreement– The Three-step Test

The Court applied the three-step test to Article 14 of the Takeout Agreement and concluded the following:

  1. the parties had not made an express choice of law for the arbitration agreement; the choice of PRC law to the Takeout Agreement was insufficient to constitute an express choice of law to the arbitration agreement.
  2. PRC law presumptively applied to the arbitration agreement as parties’ implied choice. However, this presumption was rebutted because the arbitration agreement would be invalid under PRC law. Since the arbitration was seated in Singapore, the law of the seat– Singapore law– applied.
  3. there is no need to proceed to the third step having concluded Singapore law applies on the second step; assuming the inquiry under the third step ought to be conducted, Singapore law will still apply to the arbitration agreement.

Seat of Arbitration

The Court concluded that the seat of arbitration was Singapore notwithstanding the reference to Shanghai in the arbitration agreement. The parties expressly chose to conduct their arbitration according to the arbitration Rules of SIAC (“SIAC Rules 2013”). Rule 18.1 of the SIAC Rules 2013 (“Rule 18.1”) provides that the default seat of arbitration is Singapore, absent a contrary agreement of the parties or a contrary determination by the tribunal.[16] The Court found that the arbitration agreement referred to two geographical locations– Singapore and Shanghai. It held that reference to Shanghai did not constitute a contrary agreement as contemplated in Rule 18.1, because “there

[was]

nothing in the words chosen by the parties to refer to Shanghai which compels the construction that the PRC is to be the seat.”[17] Then, it justified itself by stating that out of the two geographical locations in the parties arbitration agreement, Singapore is a law district whereas Shanghai is merely a city.

Comment

As commendable the Court’s reasoning is for the rejection of the validation principle, its application of the three-step test to the facts of the case has failed to garner the same degree of fidelity. Particularly, the Court’s analysis on the seat of the arbitration is not only incongruent but also fraught with several difficulties.

To begin with, it is apparent from a plain reading of the arbitration agreement that there is a reference to only one geographical location in the agreement– Shanghai. Relying on the Court of Appeal’s decision in PT Garuda,[18] the Court itself reckoned that “if an arbitration agreement provides for any future arbitration to take place in a single geographic location, that location will be the seat of the arbitration unless the parties otherwise agree.”[19] There are other authorities that have interpreted such geographical references to mean a parties’ choice of “seat of arbitration”. In Naviera,[20] the English Court of Appeal opined that the phrase “arbitration in London” is the “colloquial way of referring to London as the seat of the arbitration.”[21] The Court should have concluded its inquiry in favor of Shanghai as the seat of the arbitration.

Likewise, the Court’s interpretation of Rule 18.1 is incoherent. As per Rule 18.1, first, the parties have a right to agree on a seat of arbitration. The default seat provision comes into effect only if at this first step there is no agreement between the parties.[22] Instead, the court interpreted Rule 18.1 inversely. To determine if the phrase “arbitration in Shanghai” constituted a contrary agreement, the Court assumed first that there is no such agreement, consequently, the arbitration agreement referred to two geographical locations– Singapore and Shanghai. This is logically inconsistent. Accordingly, the Court should have first determined if the words “arbitration in Shanghai” constituted an agreement between the parties on the seat of arbitration, independent of the default seat provision.

Additionally, it is ambiguous which law the Court applied to interpret the arbitration agreement. The Court’s decision is devoid of any conflict-of-laws analysis to determine the law applicable to the interpretation of the arbitration agreement. Either PRC law or Singapore law could have applied to is (as the law governing the underlying contract or the lex fori, respectively). Assuming the Court applied Singapore law, its application of the law was erroneous due to a clear departure from the existing precedent.[23] As regards PRC law, it may very well have been that PRC law would interpret “arbitration in Shanghai” to mean an arbitration seated in PRC. This would have been a question of foreign law, to be determined by way of expert evidence.[24]

This case may also be understood to have created a presumption that lack of the word “seat,” or merely referring to a city (as opposed to a country) in the arbitration agreement, will not constitute a choice of seat. Such a presumption would open the floodgates for jurisdictional arguments on the question of choice of seat, as it is not uncommon for parties to fail to designate the geographical location as “seat,” or simply refer to a city while choosing the seat.[25]

From the foregoing, the seat of the arbitration should have been decided as the PRC. Had the Court proceeded on that basis, it would have concluded on the second step of its three-step analysis that neither the law governing the underlying contract nor the law of the seat (both being PRC Law) would have applied to the arbitration agreement. The Court would have had to proceed to the third step and identified the law with which the arbitration agreement had the closest and most real connection. At this stage too, the Court should have concluded that PRC law governed the arbitration agreement because the proper law of the Takeout Agreement was PRC law and the seat of the arbitration was Shanghai. With this analysis, the court would have no alternative but to conclude that the arbitration agreement was invalid, and the tribunal lacked jurisdiction.

Accordingly, it is evident that the Court’s analysis in BNA was guided with the objective of finding the arbitration agreement valid. There is a clear dissonance between the Court’s jurisprudential discussion on the inapplicability of the validation principle in Singapore and its analysis in the present case. The Court effectively took the approach that would validate the arbitration agreement, despite the agreement’s apparent invalidity.

Closing Remarks

Although the Court’s decision is understandable due to Singapore’s pro-arbitration policy,[26] the Court of Appeal rightly reversed the Court’s decision finding that PRC law applied to the arbitration agreement. In one of its conclusory remarks, the Court noted that the three-step inquiry may operate arbitrarily due to the mere choice of arbitral rules. In this author’s opinion, it is not arbitrary, although it may have been an “unintended effect”.[27] Suppose the parties’ dispute arose just a year later and the SIAC Rules 2016[28] applied vis-à-vis SIAC Rules 2013, the parties’ arbitration agreement would have been invalid. Conversely, suppose PRC laws changed before the parties commenced their arbitration, the agreement would have been valid. These hypothetical outcomes do not reflect the arbitrariness of the judicial approach of determining the law applicable to the arbitration agreement. Instead, they remind the parties to survey their local laws before including self-invalidating provisions in their arbitration agreements and also to pay closer attention to drafting the clauses generally. After all, courts do not and should not be in the business of rewriting contractual bargains.[29] Though the Court in BNA erred in its findings, it correctly stated that “there is only so much which the law can do to save an inapt and inept arbitration agreement.”

[This article was written when the Singapore Court of Appeals had not issued the written grounds of decision. The grounds of decision were released on 27 December 2019. This article should not be construed as a summation of the Court of Appeals decision.]

Sonal Jain is an LL.M. Candidate in the International Business Regulation, Litigation and Arbitration Program at NYU School of Law.  Prior to enrolling at NYU, Sonal got her first degree in law from ILS Law College, Pune (India).


[1] BNA v. BNB and another, [2019] SGHC 142 (Singapore High Court) (Decision of July 1, 2019).

[2] See, Gary Born, International Commercial Arbitration(2nd ed., 2014) at p. 545.

[3] The grounds of appeal are awaited. See, Tom Jones, No Singapore seat for Chinese dispute, rules appeal court, Global Arbitration Review (22 October 2019), available at rb.gy/bqb1sn.

[4] BNA, supra n.1at [3] (emphasis added).

[5] However, this position is somewhat unclear. See, Arthur Ma et. al., GAR Know How: Commercial Arbitration: China: Infrastructure, ¶5 (last updated 2 May 2019), available at rb.gy/ndthzc; see also, Martin Rogers & Noble Mak, Foreign Administered Arbitration in China: The Emergence of a Framework Plan for the Shanghai Pilot Free Trade Zone, Kluwer Arbitration Blog (6 September 2019), available at rb.gy/gkrhwn.

[6] International Arbitration Act Cap. 134A (revised ed., 2002).

[7] Sulamérica Cia Nacional de Seguros SA v. Enesa Engelharia SA, [2013] 1 WLR 102 (English Court of Appeal); see, BCY v. BCZ, [2016] SGHC 249 (Singapore High Court).

[8] See, Born, supra n.2.

[9] BCY, supra n.7.

[10] See, Leong & Tan, The Law Governing Arbitration Agreement: BCY v. BCZ and Beyond, (2018) 30 SAcLJ 70.

[11] See, BNA, supra n.1 at [53].

[12] Insigma Technology Co. Ltd. v. Alstom Technology Ltd.,[2009] 3 SLR(R) 936, at [30], [31] (Singapore Court of Appeal).

[13] BNA, supra n.1 at [55].

[14] Id. at [53].

[15] Under the New York Convention, Article V(1)(a) courts may refuse enforcement of an award if the parties’ arbitration agreement was invalid under the law parties have subjected it to. This clause includes both parties’ express and implied choice of law. See, Albert Jan van den Berg, The New York Arbitration Convention of 1958: Towards a Uniform Judicial Interpretation (1981) at p. 282.

[16] SIAC Rules (5th ed., 2013), available at rb.gy/nevm8v.

[17] BNA, supra n.1 at [109].

[18] PT Garuda Indonesia v. Birgen Air, [2002] 1 SLR(R) 401 (Singapore Court of Appeal).

[19] BNA, supra n.1 at [103] (emphasis supplied).

[20] Naviera Amazomica Peruana SA v. Compania Internacional de Seguros del Peru, [1988] 1 Lloyd’s Rep 116 (English Court of Appeal).

[21] Id. at 119; a similar interpretation ensued in ABB Lummus Global Ltd. v. Keppel Fels Ltd, [1999] 2 Lloyd’s Rep 24 (English High Court) (finding that “arbitration in London” or “arbitration in New York” is the ordinary language used to describe the seat of the arbitration); see also, Shagang South-Asia (Hong Kong) Trading Co. Ltd. v. Daewoo Logistics, [2015] All ER (Comm) 545 (English Commercial Court) (finding that an arbitration clause with the phrase “arbitration in London” refers to a choice of seat of arbitration).

[22] Rule 18.1 reads, “the parties may agree on the seat of arbitration Failing such agreement, the seat of arbitration shall be Singapore…”, supra n.16.

[23] See, PT Garuda, supra n.18.

[24] See, BNA, supra n.1 at [116].

[25] See, Born, supra n.2 at pp. 2074, 2075 (citing cases wherein arbitration clauses making references merely cities, without any context, were held to be the seat of arbitration).

[26] Singapore Parl. Debates, Vol 63, Sitting No 7, Title: International Arbitration Bill, Cols. 625-627 [31 October 1994], available at rb.gy/tifhld; See also Harisankar K.S., International Commercial Arbitration in Asia and the Choice of Law Determination, (2013) 30 J. Int. Arb. 621 at p. 625.

[27] BNA, supra n.1 at [122].

[28] SIAC amended its rules in 2016 and eliminated the default seat rule in order to present a more global reach. See, Rule 21.1 SIAC Rules (6th ed., 2016), available at rb.gy/9z69x8; See also, Olga Boltenko and Priscilla Lua, The SIAC Rules 2016: a watershed in the history of arbitration in Singapore, Kluwer Arbitration Blog (July 12, 2016), available at rb.gy/ypfhtw.

[29] TMT Co. Ltd v The Royal Bank of Scotland plc, [2017] SGHC 21, at [68] (Singapore High Court).

Mainland China’s Courts May Order Interim Measures in Aid of Arbitral Proceedings in Hong Kong

Xin MA

The Supreme People’s Court of the People’s Republic of China (SPC) and the government of Hong Kong Special Administration Region (HKSAR) signedthe Arrangement Concerning Mutual Assistance in Court-ordered Interim Measures in Aid of Arbitral Proceedings by the Courts of the Mainland and of the Hong Kong Special Administration Region (hereinafter Arrangement) on April 2, 2019. This Arrangement came into force on October 1, 2019 both in Mainland China and in the HKSAR. The SPC promulgated it in the form of Judicial Interpretation,[1] according it national mandatory force.[2] This Arrangement for the first time allows the People’s court to order interim measures in aid of commercial arbitral proceedings[3] outside Mainland China,[4] though limited to those seated in Hong Kong.

Up to now, the SPC and the HKSAR have already signed six arrangements[5] in relation to mutual judicial assistance in civil and commercial matters. In addition to this Arrangement, the SPC intends to strengthen Hong Kong as a unique seat for Sino-related alternative dispute resolution in the Asia-Pacific area. This short article tries to clarify several implications of this Arrangement for foreign parties, in the context of negotiating and drafting arbitration clauses with a Sino party, and in the context of seeking court-ordered interim measures in a People’s court against a Sino party.

What Interim Measures Can Be Ordered by A People’s Court?

While the HKSAR is a common law jurisdiction and has adopted the Model Law, Mainland China is a civil law jurisdiction and its arbitration law does not resemble the Model Law. Thus, “Interim Measure” as defined in the Model Law, does not exactly correspond to its Mainland China counterpart.

Article 1 of this Arrangement defines Interim Measure in Mainland China as “property preservation, evidence preservation, and conduct preservation.”[6] If because of one party’s conduct, or for other reasons, enforcing an arbitral award becomes difficult, or any other damage may be caused to the applicant, the applicant may apply for the preservation of that party’s property, or for an order compelling that party to perform certain conduct or abstain from certain conduct.[7] If there is a likelihood that evidence may be destroyed, or lost, or difficult to obtain later, the applicant may apply for the preservation of evidence.[8] Parties can apply for such interim measures before or after the relevant arbitral institution or permanent office has accepted the arbitration case.[9] However, applications before the start of the arbitral proceedings face stricter judicial review in regard to the urgency of the circumstances.[10]

Ad hoc vs. Institutional Arbitration & Which Arbitral Institution to Choose?

Two issues should be considered when negotiating an arbitration clause in light of this Arrangement. First, Mainland China has not yet allowed ad hoc arbitration in its own jurisdiction.[11] Its attitude towards ad hoc arbitration is also reflected in this Arrangement: only institutional arbitral proceedings seated in Hong Kong are qualified to seek court-ordered interim measures in a People’s court. Though the award of ad hoc arbitration seated in Hong Kong could be enforced by a People’s court,[12] if a foreign party intends to fully benefit from Hong Kong’s preferential arrangements with Mainland China, institutional arbitration in Hong Kong would be a more valuable choice than ad hoc arbitration.

Shanghai Marine Court granted the first application pursuant to this Arrangement on October 8, 2019 for a settlement agreement enforcement arbitration submitted to HKIAC.[13] Notice, however, that the parties initially conducted an ad hoc arbitration to solve the original contract dispute and reached that settlement agreement agreeing upon HKIAC arbitration thereof. If such an institutional arbitration clause had not been negotiated and included in that settlement agreement, this application could not have been granted.  

Second, the choice of arbitration institution should be deliberately considered because not all of the institutional arbitration seated in Hong Kong is entitled to such court-ordered interim measure aid. The arbitral institutions or permanent offices which administer “arbitral proceeding in Hong Kong” for the purpose of this Arrangement have to satisfy certain requirements,[14] then apply to the HKSAR government and obtain mutual confirmation from both the SPC and the HKSAR government to be qualified.[15] The first confirmed arbitral institutions have been promulgated[16] and other arbitral institutions can be confirmed upon application in the future. Of those first six arbitral institutions or permanent offices, CIETAC Hong Kong office and SCIAC (Hong Kong) are permanent offices of arbitral institutions which are organized and registered in Mainland China. They excel in Chinese arbitration practice. Compared to ICC Asia Office and HKIAC, however, they may be less attractive because they are from the same jurisdiction as Sino parties. 

Practical Concerns When Seeking Interim Measures in A People’s Court

Some specific and practical concerns should also be addressed when seeking interim measures in a People’s court. Procedural as they may be, they can affect the success of the application. The first concern is to decide to which court to apply. The applicant may apply to the Intermediate People’s Court of the place of residence of the party against whom the application is made, or to the Intermediate People’s Court of the place where the property or evidence is situated.[17] However, this Arrangement requires that the People’s court which accepts the interim measure application be the same as the one to accept the enforcement application.[18] This requirement comes out of consideration for judicial efficiency; the ultimate purpose of interim measures is to guarantee the enforcement of the arbitral award.[19] Thus, there may be a trade-off between one court that is more advantageous for ordering interim measures and another that is more convenient for enforcing the arbitral award. Considering the urgency required for the interim measure, it might be practical to apply to the court where the interim measure can be directly implemented, since it has no need to ask for further assistance from another court, which may prolong the implementation process.      

The second concern is with regard to the notarization and authentication requirement. A foreign applicant’s documents of identity, as part of the materials for the interim measure application,[20] must be notarized and authenticated before their submission. The People’s Court bears a fairly rigid judicial attitude towards evidence formed outside Mainland China, requesting that all such evidence, including documents of identity, be notarized and authenticated.[21] Note that although notarization and authentication are a matter of formality, failing to complete those steps in a timely manner would jeopardize an application.

Another concern is with regard to security provision. The People’s courts may at their discretion require the foreign applicant to provide security for ordering property preservation or conduct preservation. Further, if such application is made before the relevant institution or permanent office has accepted the arbitration case, security must be provided.[22] Though there are legitimate policy justifications for requiring security provision, and Sino applicants face the same requirement,[23] it may in reality constitute an obstacle to the application’s success. Once required by the People’s court, failure to provide security may lead to the refusal to grant an interim measure.[24] Nevertheless, the foreign applicant may own no property in Mainland China, or the value of such property located in Mainland China may be not sufficient to satisfy the security requirement. Thus, a practical solution may be to ask a local or national guarantee company to provide security at some consideration; however, to do so entails hasty and expeditious negotiations at costs. It still remains to be seen how the People’s courts will exercise their discretion pursuant to this Agreement in regard to security provision. However, it is wiser for foreign applicants to prepare themselves in advance for such a security provision request.

On the other hand, certain conveniences related to the “pass-on” requirement in light of this Arrangement are noteworthy. Article 3 paragraph 2 of this Arrangement requires interim measure application materials produced by the applicant to be passed on to the relevant arbitral institution or permanent office, together with a pass-on letter addressed by such relevant arbitral institution or permanent office to the People’s court.[25] However, in practice, the SPC allows applicants submitting the interim measure application materials with the pass-on letter to proceed directly to the relevant People’s court, considering that the rigidity of the pass-on requirement may, given the urgency of the circumstances, jeopardize the application since Hong Kong is located outside Mainland China.[26] In the first application under this Arrangement, this is how HKIAC and the applicant proceeded.[27]

Conclusion

In light of this Arrangement, institutional arbitration is recommended. Parties should deliberately consider the suitable arbitration institution during arbitration clause negotiation, and choose the suitable court among the competent People’s courts for granting an interim measure. Besides other procedural concerns this article has mentioned, an applicant should prepare well in advance for how to satisfy the possible security provision requirement to ensure a successful application. Nevertheless, this Arrangement’s importancefor Sino-related arbitration “cannot be overstated”,[28] as Sarah Grimmer, Secretary-General of HKIAC has commented. Hong Kong will surely become a more attractive arbitration seat henceforth. 


[1] Judicial Interpretation2019No.14

[2] As the highest court in the People’s Republic of China, the SPC also functions as a de-facto rule-making power holder. Its judicial interpretation has played an important role directing judicial practice in Mainland China. Regarding the legal status, functions and limits of the SPC’s Judicial Interpretation, please see Li Wei, Judicial Interpretation in China, 5 Willamette J. Int’l L. & Dis. Res. 87 (1997).

[3] Investment arbitrations between a state party and a private party are not covered by this Arrangement.

[4] Please see Part One of<最高人民法院关于内地与香港特别行政区法院就仲裁程序相互助保全的安排>的理解与适用》(The Interpretation and Application of the Arrangement Concerning Mutual Assistance in Court-ordered Interim Measures in Aid of Arbitral Proceedings by the Courts of the Mainland and of the Hong Kong Special Administration Region), (Sep. 26, 2019),

http://rmfyb.chinacourt.org/paper/html/2019-09/26/content_160433.htm?div=-1.

[5] The Arrangement on Mutual Entrustment in Service of Judicial Documents in Civil and Commercial Matters 1998; the Arrangement Concerning Mutual Enforcement of Arbitral Awards 1999; the Arrangement on Reciprocal Recognition and Enforcement of Judgments in Civil and Commercial Matters Pursuant to Choice of Court Agreements between Parties Concerned 2006; the Arrangement on Mutual Taking of Evidence in Civil and Commercial Matters 2016; the Arrangement on Reciprocal Recognition and Enforcement of Judgments in Civil and Commercial Matters (signed in January 2019, but has not come into force yet. The Choice of Court Arrangement will be superseded upon its commencement). Another arrangement is the Reciprocal Recognition and Enforcement of Civil Judgments in Matrimonial and Family Cases 2017.

[6] See Interim Measure Arrangement, Article 1, “Interim measure” referred to in this Arrangement includes, in the case of the Mainland, property preservation, evidence preservation and conduct preservation.

[7] See Article 100 of the Civil Procedure Law of PRC.

[8] See Article 81 ofthe Civil Procedure Law of PRC.

[9] See Id. Article 81, Article 100.

[10] See Wang, Shizhou, Civil Procedure in China 159 (2014).

[11] Article 16 of the Arbitration Law of PRC requires that an arbitration agreement must contain a designated arbitration commission; otherwise the agreement will be invalid. Regarding the consensus that ad hoc arbitration is not admitted in Mainland China, please see Shahla F. Ali & Tom Ginsburg, International Commercial Arbitration in Aisa 88-90 (2013).

[12]最高人民法院关于香港仲裁裁决在内地行的有关问题的通知法[2009415 (Notice of the Supreme People’s Court on Issues concerning the Execution of Hong Kong Arbitral Awards in the MainlandNo. 415 [2009]).

[13] See 全国首例!上海海事法院裁定准香港仲裁程序中的保全申, (the First Instance! Shanghai Marine Court Granted an Interim Measure Application in Aid of A Hong Kong Arbitral Proceeding), (Oct. 9, 2019),

https://shhsfy.gov.cn/hsfyytwx/hsfyytwx/spgk1356/spdt1420/2019/10/09/09b080ba6dac0657016dae2f47970000.html?tm=1574068535096.

[14] See Interim Measure Arrangement, Article 2 paragraph 1.

[15] See Interim Measure Arrangement, Article 2 paragraph 2.

[16] These arbitral institutions are: Hong Kong International Arbitration Centre, China International Economic and Trade Arbitration Commission Hong Kong Arbitration Center, The Asia Office (Hong Kong) of the International Chamber of Commerce (ICC) International Court of Arbitration, Hong Kong Maritime Arbitration Group, South China International Arbitration Center (Hong Kong) and eBRAM International Online Dispute Resolution Centre.

[17] See Interim Measure Arrangement, Article 3 paragraph 1.

[18] See Supra note 4, (4) of Part Two.

[19] Id.

[20] See Interim Measure Arrangement, Article 4 paragraph 1, paragraph2.

[21] Wang, Shizhou, Supra note 10, at 23-24.

[22] Id. at 159-160.

[23] Id. at 160.

[24] Id.

[25] See Article 272 of the Civil Procedure Law of PRC.

[26] See Supra note 4, (2) of Part Five.

[27] “HKIAC Receives Five Applications under Hong Kong-Mainland Arrangement on Interim Measures”, (Oct.11, 2019), https://www.hkiac.org/news/five-interim-relief-applications-under-new-arrangement.

[28] Id.

Professor Franco Ferrari publishes commentary on the Rome Regulation on the Law Applicable to Contractual Obligations (Rome I)  

Professor Ferrari, who joined NYU full-time in 2010, after serving as full professor of law at Tilburg University (the Netherlands), Bologna University (Italy) and Verona University (Italy), has just edited an article-by-article commentary on the Regulation (EC) No 593/2008 of the European Parliament and of the Council of 17 June 2008 on the law applicable to contractual obligations, of which he is also the co-author.

As Professor Ferrari writes in the Preface to the book, parties to any transaction require predictability and legal certainty, as it is the predictability and legal certainty that allow the parties to assess the legal and economic risks involved in the transaction and, thus, allows them to decide whether to enter into the transaction at all. This need is felt even more strongly where the transaction is not a purely domestic one but is linked to more than one country. To reach the desired predictability and legal certainty in an international context, various approaches have been resorted to. The drafting of uniform rules of private international law is one such approach. It aims at guaranteeing that courts in the States where such uniform rules are in force will apply the same substantive rules no matter what court a dispute is brought before, thus reducing transactions costs by requiring a party to make provision for one law only. The Regulation (EC) No 593/2008 of the European Parliament and of the Council of 17 June 2008 on the law applicable to contractual obligations (Rome I) sets forth such a set of uniform private international law rules for (most of) the member states of the EU. The book provides students and practitioners with a concise and instructive article-by-article commentary which explains the underlying concepts and suggests solutions for problems that have arisen or may arise in the application of the Regulation.

Professor Franco Ferrari on International Sales

Professor Franco Ferrari, Director of the Center for Transnational Litigation and Commercial Law, has just published the second edition of his book entitled “Contracts for the International Sales of Goods”. This book provides an examination of the United Nations Convention on Contracts for the International Sale of Goods (CISG). Extensively referenced, the volume focuses on three issues, which, due to particular attention from courts and arbitral tribunals, are considered “typical” of CISG related disputes. These include the exact determination of the CISG’s sphere of application; both the non-conformity of delivered goods and the notice of non-conformity; and the determination of the rate of interest on sums in arrears. The  analysis helps readers understand the broader context in which these issues are embedded, and ultimately illustrates how the CISG is interpreted and applied in different jurisdictions.

Atlas of Comparative Private Law

Professor Franco Ferrari co-edited (with Professor Fracnesco Galgano et al.) and co-authored the fifth edition of a book in Italian entitled “Atlas of Comparative Private Law”. The book collects articles on twenty topics in the area of private law, ranging from transfer of property to tort law, from contract formation to bankruptcy.

The Relationship between International Uniform Law Conventions

Professor Franco Ferrari published a paper (in Portuguese) entitled “The Relationship between international uniform law conventions and the need for an interconventional interpreation”, in Estudio de direito comparado e de direito internacional privado (I. de Aguilar Vieira ed., Curitiba, 2011).

Getting to the law applicable to the merits in international arbitration

Professors Linda Silberman and Franco Ferrari publish a paper entitled “Getting to the law applicable to the merits in international arbitration and the consequences for getting it wrong”, in Conflict of Laws in International Arbitration (F. Ferrari and S. Kröll eds., 2010)

Consumer Protection in International Private Relationships

Professor Ferrari publishes a paper (with Dr. Francesca Ragno) entitled “Consumer Protection in International Private Relationships. European Union”, in Consumer Protection in International Private Relationships/La protection des consommateurs dans les relations privées internationales (D.P. Fernandez Arroyo ed., 2010)

Unification of the Law of Receivables Financing

Professor Ferrari publishes a paper on the unification of the law of receivables financing, entitled “Die Vereinheitlichung des Abtretungsrechts als Spiegel der Vereinheitlichung des internationalen Handelsrechts im Allgemeinen”, in Europäisches Kreditsicherungsvertragsrecht. Ulrich Drobnig zum 80. Geburtstag (J. Basedow et als. eds., 2010).

Professors Gillette and Ferrari publish a paper entitled “Warranties and ‘Lemons'” under the Article 35(2)(a) CISG” in German law review (Internationales Handelsrecht 2010, 2). For the full text of the paper click here.

Professor Silberman publishes a paper entitled “The New York Convention After Fity Years: Some Reflections on the Role of National Law” in the Georgia Journal of International and Comparative Law (38 Ga. J. Int’l & Comp. L. 25 (2009)).

The Sources of the Law of Contracts

Professor Ferrari publishes a book entitled “The Sources of the Law of Contracts for the International Sale of Goods” (2009) in Spanish. For more information click here.

Professors Silberman and Choi publish a paper entitled “Transnational Litigation and Global Securities Class-Action Law-Suits” in the Wisconsin Law Review (2009 Wis. L. Rev. 465 (2009)). For the abstract click here.

Professor Ferrari publishes a paper entitled “From Rome to Rome via Brussels: Remarks on the Law Applicable to Contractual Obligations Absent a Choice by the Parties (Art. 4 of the Rome I Regulation)” in German law review (RabelsZ 73 (2009) 750).

Professor Silberman publishes a book entitled “Civil Procedure: Theory and Practice” (with A. Stein and T. Wolff) (3rd ed., 2009).

Professor Ferrari edits a book entitled “The Rome I Regulation. The Law Applicable to Contractual Obligations in Europe” (2009) published in Germany. For more information click here.