12 September, 2019
Welcome to this issue of the Global DR Legal Update, our quarterly newsletter which aims to bring together the most important global developments in litigation and arbitration.
In this issue:
Asia Pacific
Australia
High Court to have final say on common fund orders in class actions
Australia's highest court has agreed to hear an appeal relating to the constitutionality of common fund orders. CFOs allow a litigation funder to recover compensation from every class member out of recoveries, not just from those who have signed funding agreements. The appeal is against the decisions of the Federal Court and New South Wales Court of Appeal, sitting together, which found that the making of common fund orders was constitutional and within the power of the courts. Australian courts have been increasingly willing to make CFOs since they were first approved in 2016, leading to a greater number of competing, open class actions. The High Court's decision will be closely watched by litigation funders, to see whether this trend is likely to continue. Read more.
China
New guidelines seek to improve litigation services
The Supreme People's Court has issued new guidelines aimed at improving litigation services in China by making it easier to file cases and resolve disputes. The proposals include increasing online services to facilitate the online filing of legal proceedings, encouraging the use of mediation and administrative agencies to settle disputes before resorting to litigation, establishing special mediation offices for domestic and road traffic disputes and creating litigation service centers for local courts, which offer reception halls, websites and mobile apps. Read more.
China
Foreign arbitral institutions in Shanghai Free Trade Zone to be permitted to administer cases
The State Council of China has published plans to permit foreign arbitral institutions to set up in the Shanghai Free Trade Zone and to administer arbitrations seated in China. At present, foreign arbitral institutions are only permitted to administer cases involving a "foreign element," and so their activities in the SFTZ have been limited to marketing their services rather than administering disputes. The changes are part of China's plans for the New Lingang Area, an expansive new area of the SFTZ, which aims to compete with other free trade zones around the world. Read more.
Hong Kong
Court clarifies limitation period for enforcing arbitral awards in Hong Kong
The Hong Kong Court of First Instance has issued guidance as to when an action to enforce an arbitral award becomes time-barred. Under Hong Kong law, enforcement must commence within six years from the date the cause of action accrued. The court found that an arbitration agreement is premised upon an implied undertaking by the parties to perform an award, so the cause of action will accrue once the award debtor fails to pay within a reasonable time of the award being published and a demand for payment being made. On these facts, "reasonable time" was 21 days from the publication of the award, and so the limitation period expired six years after this date. The enforcement action was, therefore, time-barred. Read more.
Papua New Guinea
Papua New Guinea accedes to New York Convention
Papua New Guinea has deposited an instrument of accession to the Convention on Recognition and Enforcement of Foreign Arbitral Awards 1958, known as the New York Convention, becoming the 160th country to do so. The Convention requires contracting states to recognize and enforce arbitral awards made in other contracting states in the same way they would for a domestic award, subject to certain limited exceptions. The Convention will come into force in Papua New Guinea on 15 October 2019. Read more.
Singapore
Singapore proposes changes to its international arbitration legislation
Singapore’s Ministry of Law has proposed a number of amendments to the city-state's International Arbitration Act. These include allowing a party to arbitral proceedings to appeal to the Singapore High Court on a question of law arising out of an award, provided they have opted-in to this mechanism. Other proposals include provision for the default appointment of arbitrators in multiparty situations, a mechanism to allow parties mutually to request the tribunal to decide on jurisdiction at the preliminary award stage, and more powers for tribunals to support enforcement of confidentiality. Read more.
Global
Hague Judgments Convention a “true game-changer in international dispute resolution”
The Convention on Enforcement of Foreign Judgments has been formally adopted by the Hague Conference on Private International Law. The Convention establishes an international agreement on the recognition and enforcement of court judgments across borders and seeks to do for the enforcement of court judgments what the New York Convention does for arbitral awards. It should greatly increase the ease of enforceability whilst lessening the time and cost, making this a highly significant event for international dispute resolution. Uruguay became the first state to sign the convention, with more states expected to follow soon. It will enter into force once it has been ratified by at least two states. Read more.
Burford Capital sees share price plummet
Burford Capital, the world's largest litigation funder, endured a turbulent start to August. Its shares fell 65% in 24 hours, losing value well in excess of USD 1 billion, before starting to recover. The loss occurred after Muddy Waters, a US-based hedge fund, shorted Burford's stock before publishing a damning report regarding the company's financial position and reporting methods. In response, Burford issued a number of strong rebuttals and claimed to have evidence of illegal market manipulation of its shares. Burford also announced the replacement of its CFO and two board members, as well as changes to its governance practices. IMF Bentham, one of Burford's biggest rivals and the only other publicly listed litigation funder, sought to reassure its investors by publicly differentiating its business practices from that of Burford. Read more.
Singapore Mediation Convention signed by 46 countries
UNCITRAL's new Convention on the Enforcement of Mediation Settlements, known as the "Singapore Convention," has been signed at an official ceremony in Singapore. To date, 46 countries, including China, India, Singapore and the United States, have signed, with more expected to follow. The Convention seeks to encourage confidence in mediation by creating an international mechanism for the enforcement of settlement agreements that result from mediation, similar to how the New York Convention acts as a framework for the enforcement of arbitral awards. The treaty was approved by UNCITRAL in June last year and was formally adopted by the UN General Assembly in December. It will come into force six months after ratification by at least three United Nations states. Read more.
International commercial courts publish memorandum on the enforcement of money judgments
The Standing International Forum of Commercial Courts has published its Multilateral Memorandum on Enforcement of Commercial Judgments for Money. The memorandum is the product of contributions from 32 jurisdictions across six continents, outlining the procedures necessary for the enforcement of monetary judgments of one jurisdiction in the courts of another. The SIFoCC was formed in London in 2017 at a meeting of representatives from commercial courts from around the world, with the aim of facilitating collaboration and the sharing of best practice. The SIFoCC will meet again in early 2020 to discuss future priorities. Read more.
Further amendments proposed to ICSID rules
The International Centre for Settlement of Investment Disputes has published the third draft of its suggested changes to its rules governing disputes between states and foreign investors, which have not been updated for 13 years. The proposals include mandatory electronic filing, new rules for expedited proceedings, shortened timelines for the rendering of awards and new rules on mediation. ICSID published its first working paper on the proposals in August last year and the second paper in March. This latest draft includes additional provisions relating to transparency, security for costs and third-party funders. ICSID member states will consider the proposals at a meeting in November. Read more.
Please click here for the full report.
For further information, please contact:
Benjamin Roe, Baker & McKenzie
benjamin.roe@bakermckenzie.com
