In June 2021, Amanda Lees in our Singapore office kicked off our brand new webinar series titled Arbitration Award Enforcement Issues in Asia and Beyond (a series which could also have been titled “Show Me The Money!”). In this series, Amanda interviews experts and colleagues from across our network on their experience in enforcing arbitration awards across the globe. A link to the Webinar recording is here.
In the first session, Amanda spoke with, Marjolein van den Bosch, Head of Enforcement Asia at litigation funder Omni Bridgeway. Given that Omni Bridgeway’s key revenue stream comes from successful enforcement, Marjolein is a font of knowledge when it comes to effective enforcement strategies. During the session, Amanda and Marjolein highlighted what clients and their legal teams need to do during every stage of a transaction to maximise their chances of recovery. Here’s a summary of those stages and their tips.
At the contractual drafting stage:
- Draft your clauses with the New York Convention in mind. For example, an incredibly complicated or vague clause leaves an unscrupulous counterparty with lots of room to avoid proceedings and enforcement. Marjolein’s insight as to why so many clauses are badly drafted – “Simple – they are always drafted last minute!”
- Avoid some of the more common problems in drafting clauses: (a) providing for foreign court proceedings when foreign judgments are not enforceable in the target enforcement state; (b) having court jurisdiction and arbitration clause in the same document; (c) drafting multi-tiered clauses without clear triggers; and d) not ensuring that the arbitration clause is valid in the enforcement state. Our pro tip: use a model clause and get local law advice.
- For enforcement – to the extent possible – get parent company guarantees. One of the easiest ways to avoid enforcement is to “dump the company”.
When a dispute arises:
- Always remember that getting an arbitration award is different from getting paid. When a dispute arises always ask: Where is the counterparty and its assets located? Who is the counterparty? Is it a is sovereign or state-owned entity or large influential corporation? Is the counterparty likely to try to evade proceedings and enforcement? These questions will help determine the strategy you should take throughout the dispute.
- If resistance is expected, then first work carefully to find assets. Look for both “hard” assets like real estate and bank accounts, but also “soft assets” like trade flows and monetary flows.
- Make the distinction between high-value low-impact assets, such as a passive non-strategic shareholding, and low-value high-impact assets, such as a strategic trade flow (or in one case discussed at the webinar – a small apartment belonging to a mistress of a public figure!).
During the arbitration
- If you locate assets, monitor them and then don’t sit on the fence about conservatory measures. Act swiftly if there is any chance of dissipation.
- Don’t forget the basics such as using delivery methods that are appropriate for enforcement. These may be time consuming, but ultimately they are worth it. Make sure that parties who are not participating in the arbitration are served with all arbitration documents and detailed affidavits of service are produced at every stage of the proceedings. This is similar to our tip when launching applications under the Hong Kong – Mainland Interim Measures Arrangement (see our post on that Arrangement here). In jurisdictions where the service requirements are defined and stringent (e.g. China Mainland), work with local lawyers, in addition to the international legal team.
- Make sure the Tribunal is following any procedures set out in the arbitration agreement and in the rules.
- Consider if you need separate awards for different issues given the jurisdiction of enforcement. Make sure any relief is easy to enforce such as a cash payment.
After you have the arbitration award
- Move quickly to enforce.
- Take advantage of the New York Convention by enforcing in multiple jurisdictions simultaneously. Similarly the arrangements between Hong Kong and Mainland China have changed such that you can now enforce in both jurisdictions at once.
- Be creative – look for the high impact low value assets and target them.
- Be patient – don’t underestimate the time it can take to serve documents and to take proceedings. Even in jurisdictions where enforcement is straightforward it can still take years if the counterparty raises challenges at every step.
The recording of our second episode featuring Paul Starr, Xu Xianhong, Suraj Sajnani and Liu Yang discussing China Mainland and Hong Kong specific enforcement issues is also now available here.
Our third episode in which Amanda Lees and guest Swee Im Tan from 39 Essex Chambers look at enforcing awards in Singapore and Malaysia is on 14 July 2021 – sign up here. They will be comparing the availability of interim measures and how awards are challenged.
Stay tuned as we cover different jurisdictions in the following episodes of this webinar series:
- India & the Subcontinent
- Indochina (Vietnam, Cambodia & Laos) and the Philippines
- Indonesia, Thailand & Myanmar
- Japan & Korea
- Middle East
- United Kingdom
- United States of America
As a side note – and we have mentioned this in an earlier post – we are huge fans of Webinars. A Zoom chat box seems to be much more encouraging for audience members to raise questions in comparison to raising one’s hand in a crowded room. Having said that, we can’t wait to meet our friends and clients in person again!