Publications

China

Chinese group offshore subsidiary initiate enforcement against aircraft JV partner

In January 2021, a federal judge in the Western District of Missouri confirmed a HKIAC award valued at around US $ 87 million in favour of Top Jet, a British Virgin Islands subsidiary of China’s Zhongzhi Enterprise Group, and against Kansas City-based Jet Midwest Group (“JMG”) and others. At present, Top Jet is considering to enforce the award in California.

Top Jet and JMG incorporated a joint venture named Sino Jet, agreeing that both partners own 50% of the JV and each contributing US $ 50 million to the JV. However, JMG contributed US $ 10 million only. Sino Jet suffered a net loss of US $ 31 million for not receiving the full amount of sales revenue promised by JMG.

In 2017, Top Jet initiated a HKIAC arbitration against JMG and its BVI subsidiary named Sky, as well as Sino Jet, pursuing the exercise of a redemption right to compel them to purchase its shares in Sino Jet. Sky subsequently filed a counterclaim alleging that Top Jet had breached its obligation to recruit affiliates to assist Sino Jet to acquire low-interest loans. The tribunal rejected Sky’s counterclaim, and held in the award that JMG and Sky had substantially violated their obligation of capital contribution to Sino Jet, and that the three defendants shall bear joint and several liability.

Sky then objected to the confirmation of the HKIAC award in Missouri by Top Jet, which was overruled as well. On January 26, 2021, Top Jet obtained a final attachment order in the Cayman Islands against Sky’s shareholdings in Sino Jet. In March, the Missouri court also granted Top Jet a writ of garnishment against Bank of America and other related entities.

India

India faces enforcement of investment treaty award

On April 19, 2021, an award made in May of 2020 valued US $ 135 million against India for cancelling a satellite agreement was applied to be enforced by Deutsche Telekom before the US District Court for the District of Columbia.

In order to carry out a project to provide wireless audiovisual, cell phone and broadband services in India, an Indian company named Devas Multimedia, in which Deutsche Telekom holds 20% of the stock, entered into an agreement with an Indian state-owned company called Antrix to lease 2 S-band satellites in 2005.

However, Antrix then cancelled the agreement when the Indian government decided to reserve certain s-band capacity for non-commercial strategic objectives. In 2013, Deutsche Telekom initiated an arbitration under the Germany-India BIT and in 2017, an arbitral tribunal at the Permanent Court of Arbitration issued a partial award ruling that India was liable for the cancellation of the Agreement and had to compensate Devas.

In 2018, this award was upheld by the Swiss court and confirmed again by a court in the Western District of Washington in 2020, but was suspended for enforcement in March 2021 after liquidators in India took control of Devas and fired its U.S. attorneys.

A subsidiary of Devas applied to be substituted as an enforcing party of the award, declaring that India had “hijacked” Devas in order to avoid paying damages. This application was denied by the court in Washington.

The Indian Supreme confirms that Indian parties can select a foreign arbitration seat

The Indian Supreme Court has held that Indian parties can validly choose a seat of arbitration outside of India in a recent appeal by PASL Wind Solutions against a decision that found a Zurich-seated ICC award won by GE Power Conversion India was enforceable as a foreign award under the “nationality neutral” New York Convention.

After a dispute broke out over a breach of the R&Ws contained in a sale and purchase agreement of converters, PASL commenced arbitration proceedings under an arbitration clause that provided for a Zurich seated ICC arbitration. The final award rejected PASL’s claim and awarded the costs of the arbitration to GE.

When PASL decided not to comply with the award on costs, GE sought to enforce it before Indian courts, including a request for interim relief force PASL to deposit the costs. PASL opposed the application arguing that the arbitration proceedings were Indian seated because the parties were Indians and this meant that the award on costs could not be enforced as a foreign award under the New York Convention.

The Gujarat High Court concluded that, although the award on costs was enforceable in India as a foreign award, the parties were not allowed to request interim relief because they had not chosen an Indian seat. PASL appealed this ruling before the country’s Supreme Court.

The Supreme Court concluded that “nothing should stand in the way of party autonomy in designating a seat of arbitration outside India even when both parties happen to be Indian nationals”. Indeed, in deciding whether an award is foreign or not what matters is the seat and not the nationality of the parties.

Singapore

Details of Indonesia mining contract dispute released

More details regarding the SIAC arbitration launched by Pani Bersama Tambang (PBT), a subsidiary of Indonesia’s Merdeka Copper Gold in February of 2021 against J Resources Nusantara (JRN), which is headed by Indonesian mining magnate named Jimmy Budiarto, has recently been released.

In November 2019, PBT and JRN entered into a contract to combine a Pani IUP gold project whose license was held by a joint venture with its majority partner being Merdeka, and an adjoining block owned by JRN into one ownership group. However, the transaction fell through due to the failure to obtain the approvals and permits from Indonesia’s government departments as well as financial institution lenders.

PBT contends in the arbitration that JRN has not fulfilled its obligations to satisfy the conditions precedent to the transaction and therefore requested JRN to bring the transaction to fruition or to compensate PBT between US $ 500 million and US $ 600 million. JRN contends that it has taken all efforts to obtain the relevant approvals and permits, but for reasons beyond its control, in particular, the six-month moratorium on mining licenses under the new mining law promulgated in Indonesia in June 2020, making it impossible to fulfill the preconditions within the term of the contract.