SIAC Arbitration Training Video - 3 Commencing the Arbitration

since all attempts to negotiate with electro ace have failed and arbitration seems the best move aja Nix has decided to seek legal advice on how to proceed its general counsel has set up a meeting with a prominent offshore practitioner who is familiar with Singapore arbitration practice to discuss what should be done well first order of business Merry Christmas thank you very much and a very Happy New Year thank you and again thanks again for meeting me so urgently despite the festive season not at all I think the issue in Zurita seems like it's pressing and that we may have to act quite quickly yeah absolutely I mean how would you suggest we handle that we've tried everything electrics just refuses to sit down and see our position well then maybe we need to go for something a little stronger I think yes indeed because I mean I needn't remind you but there's a lot of money and reputation at stake there I've just reminded you anyway not for the first time maybe what we should do is initiate an arbitration the contract provides for arbitration in Singapore yes under the rules of the Singapore international arbitration center but but how will you go about that actually it's quite simple putting together a notice of arbitration is a simple exercise it's a straightforward process and it's often done actually to apply a pressure point to the other side it may be that once they receive a notice of arbitration they might think it's appropriate to begin settlement discussions and in your experience that usually works often it does ok well then it works for us let's try that according to si si rule 3.1 a notice of arbitration can take the form of a physical letter or even an email it must contain the following 1 the contact details of the parties to the arbitration and their legal representatives if known to a reference to the arbitration clause or the separate arbitration agreement that is invoked it should also provide a copy of the clause or agreement three a reference to the contract or treaty out of which the dispute arises again a separate copy of such agreement should be appended to the notice for a brief statement describing the circumstances of the dispute and the relief claimed further where possible an initial quantification of the claimed amount may be mentioned five any comets by the claimant regarding the applicable law the language of the arbitration and proposals in relation to the number of arbitrators on nominations of persons to act as arbitrator if the agreement does not provide it six a demand that the dispute be referred to arbitration seven and finally of course it must be accompanied by a filing fee as provided for by the SIAC schedule of fees they will of course be a filing fee but your outside legal team can take care of that okay I mean all that all of that is fine but you know I just realized there's actually something even more urgent the performance bank guarantee precisely it's in the contract and electrodes might decide to encash it at any time so we will need an injunction to stop that happening so what do we have to go to the courts of Amazonia or the REA sure I mean we don't know anything about the courts day actually there's no need we can go to the arbitration we can ask an arbitrator to make an interim order go to the arbitration but but I mean one arbitration we don't even have an arbitrator that is true and of course your contract stipulates three arbitrators so that would ordinarily take a long time to put together but there is a process available to ask for an emergency arbitrator and the SIAC can do that actually the SIAC was one of the first institutions in the world to introduce this kind of scheme so it's a mechanism whereby you have an arbitrator put in place very quickly who is able to give interim measures of protection and in this case one can hope that the order might be to prevent in catchment or the guarantee it's certainly as far as I'm concerned there is no contractual basis to encash that guarantee well I hope you're right because if it's gonna take weeks or even months to get this emergency arbitrator appointed then we're simply gonna be too late to stop them just calm yourself a little bit christmas is a time of miracles and as you well know when my fees are paid on time I can work the occasional miracle actually as it happens in the SIAC you can get an emergency arbitrator in place in one business day one business day are you sure about that I am sure and in fact I've heard directly from the CEO of the SIAC that in almost all of the cases so far they have managed to meet that target that is to date 36 cases that sounds almost too good to be true are you sure there's no sort of dark lining along the silver clouds I mean what if you don't get the relief you want it's possible we don't get the relief but worst come to worst we will actually just apply to the main arbitral tribunal when that's constituted in due time and if the guarantee has been encashed in the meantime well then we'll seek monetary relief okay so so what our chances for that bit of preventing in catchment well my definitive view on that is it depends when I look at the guarantee it says that it is provided in favor of the electro asus subsidiary electro oceania through an indian bank maybe you could just explain to me why that structure is in place well why electron Sharna will as far as I understand that probably because they handle electro Asian's contracts and mr.wai in Indian Bank again that's probably because electro Siana has got assets in India and probably some certain office there well it gets a little bit worse the bank guarantee is drawn through the lbs bank in New Delhi and what complicates things is that the bank guarantee expressly provides that it's not open to the guarantor which is you to know or investigate the merits of the demand invoking the parent guarantee or even to challenge the demand exactly I mean that's what I don't understand you can't even require proof of our liability before we pay we just have to shut up and pay the amount demanded and the bank guarantee also provides that the invocation shall be binding on the guarantor and that the invocation shall not be affected in any manner by any dispute that the guarantor may raise what we should do is check whether or not we can apply to the courts in Oceania or in India to prevent this engagement okay let's hold on now even if there may have been some defects the components we supplied and let's say electro a suffered some sort of damage you know from that how does that entitle electro Shantanu in cash the bank guarantees unfortunately the wording in your contract clearly identifies Asia annex as a guarantor and electro Oceania as the beneficiary fortunately the contract does provide that the guarantee can only be invoked in the event of a material breach of the agreement by Ag annex so what I suggest our strategy should be is to convince a court or an emergency arbitrator that unless and until that question of material breach is actually determined there cannot be a valid in catchment of the guarantee well I'm not so sure about that my fingers are gonna be very tightly crossed on this one well whilst your fingers are tightly crossed what I suggest is first thing tomorrow let's consult with counsel in Delhi and see whether or not we can bring this matter before the Indian courts I have in mind an extremely expensive but extremely good counsel in Delhi okay fine let's just see what she says and then we can decide well anyway I think we should get something to eat first now that will definitely clarify our thinking excuse me I agree raesha seems to be getting a very tricky position you've seen the papers I have seen both your papers and the papers they both look tricky how can I help if I can just cut to the chase we are extremely concerned about the bank guarantee under the supply contract we have every suspicion that Elektra Oceania is going to seek to encash that guarantee based upon supposed counterclaims albeit at least in my view those claims are extremely dubious at best the contract does seem to be in their favor are you seeking to apply for an interim measure of protection against engagement that is exactly what we're seeking but we need your assistance we need to know what the position will be in India and in particular whether we can or should apply to the Indian courts well the Indian position with respect to the in catchment of bank guarantees is courts should be slow in enforcing the bank guarantees with respect to beneficiaries right especially for an unconditional on-demand bank guarantee this position is based out of a proposition that an issuing bank need not unnecessarily get into the underlying dispute between the parties in fact in India when a bank issues a bank guarantee or a guarantee is given by a bank then it is strictly prohibited for the bank to go into the legitimacy of a beneficiary's claim so that sounds like that's gonna work against us in the Indian courts well I suppose then there's a question of whether we are allowed to even approach the Indian courts at all seeing as the supply contract contains a clear arbitration clause well isn't it the position that the Indian courts have to entertain any application for interim measures of protection and as far as I understood the position the Indian law is based on the on central model law yes section 9 of the Indian arbitration and conciliation Act is modeled on article 9 of the unsettled model law thereby granting the power to a party to approach a court for an interim measure of protection with respect to an arbitration in India okay good so this sounds like there's no problem however some of the Indian courts had to consider whether an Indian Court would have an jurisdiction to deal with the question of interim measure of protection with respect to arbitration seated outside of India I see so so there is a problem well you see the Indian arbitration and conciliation Act is divided into two parts part one which deals with domestic arbitrations and part two which deals with foreign arbitral awards and its enforcement in India fortunately a 2002 Indian Supreme Court decision had the opportunity to look into the question of a granting interim measure of protection with respect to arbitration seated outside of India and it did go ahead and granted that power to an Indian Court in fact there has been decisions of the court where they have permitted parties to apply and granted interim measures of protection even before an arbitration has started but presumably in that case one would have to show an intention to actually commence the arbitration oh precisely well then that's exactly what we need something tells me that it's not going to be as simple as that is there anything more unfortunately there is the same Supreme Court decision also said that the parties have the power to ask the jurisdiction of the Indian Court if they impliedly or expressly provided so in the contract which implies that while entering into a contract if by an express or an implied exclusion the powers of an Indian Court to grant an interim measure of protection could be taken away however our contract doesn't say so not expressly no but our arbitration agreement mentions SIAC and Singapore there have been court decisions where the courts have interpreted a foreign seat or a governing law other than the Indian governing law to imply an implied exclusion of part one of the Indian arbitration conciliation Act in fact I should mention that a recent 2012 judge decision of Indian Supreme Court have held that Indian Court would not have any jurisdiction to grant an interim measure of protection with respect to arbitrations seated outside of India oh yeah that doesn't sound very good for us it depends because this decision of the Indian Supreme Court only applies to arbitration agreements signed after the date of the decision which is 6 September 2012 ah good then fortunately I think ours was signed on December 2011 still knowing the bad faith scoundrels on the other side I have no doubt at all that electro ace will throw that singapore-based arbitration agreement right back at us if we make any attempt to move before the Indian courts well know that you're right anyway another question I have is how long is this application go to take before the Indian courts anyway I mean I know they're notoriously backlogged and really timing is of the essence here good question it should take about 3 to 4 months for the application to be finally heard by the Indian courts but matters after all the submissions have been filed by both parties however if we were to apply for an ad interim ex parte injunction that should be fairly quickly having said that you might want to consider before going to an Indian Court that is Asian X okay to have it publicly known about the dispute with the duration contract no no that's totally out of the question this is one of our biggest orders in the past five years I thought it might be of interest to know that si EC clauses in an arbitration agreement situation the Indian courts have actually refused granting an interim measure of protection because of the reason that the parties have an SI AC option available and also because of a mention of a foreign seed which implies an exclusion of part 1 of the Indian arbitration cancellation Act furthermore the Bombay High Court has recently validated SIAC emergency arbitration order passed by it well thank you very much that all sounds extremely problematic I think we are now focusing on the SIAC route and the emergency arbitrator option but we'll certainly keep you posted as we decide yes please let me know if you need to give a shot at the Indian courts we could hire a senior counsel and try and get an interim injunction having said that I know that SIAC has dealt with a lot of emergency arbitration applications involving Indian parties and the results have been quite impressive considering an emergency arbitration application before an SI ec is definitely a real and meaningful alternative perfect well that's all a one for Christmas then on that festive high note I shall say goodbye thank you very much good evening gentlemen Merry Christmas and a Happy New Year to you well I think the writing on the wall is clear enough I think the Indian option is extremely problematic I think we should now go the SHC route we should commence SIAC arbitration straight away we should request the appointment of an emergency arbitrator and apply for emergency interim relief yes I think that that all sounds very sensible am happy with that let's go ahead quickly in terms of the next steps if I just set them out we will draft notice of arbitration that will be filed with the SIAC and they will then check the notice to see that it complies with all the requirements of the rules they will then send a copy to the respondent and then they'll set out the next steps of the process all right well I've got another question well that's no surprise at all what is it if the arbitration is actually seated in Singapore but let's say electro is as assets are in China and South Korea how sure we that the decision of the arbitration tribunals even going to be enforced if I can give you a very clear answer we're not sure as any lawyer will tell you it all depends enforcement can be problematic it can be difficult in some jurisdictions sometimes defenses to enforcement are raised challenges but what one can say is that institutional arbitration can be much more secure than ad-hoc arbitration SIAC in particular has a very good reputation it's a well known body it has well-respected comprehensive rules it has a very good system internal system for scrutiny of awards so I think with an SI AC award we will stand better chances of enforcement than otherwise and hopefully we'll find a jurisdiction within your convention in implemented where there'll be no available defense to enforcement all right then well I suppose now we come to the the most important question which is really how much is this all gonna cost us I mean not just the emergency arbitrator but the entire case well in terms of the entire case si si will set a maximum for all the costs and they'll notify that to all the parties costs of the arbitration rule 31 s IAC rules 2013 one tribunals fees and expenses to si a C's administrative fees and expenses three costs of expert advice or other assistance required the total costs of the arbitration can be calculated using the fee calculator on si a C's website the three components are the tribunals fees and expenses si a C's administrative fees and expenses and the costs of expert advice or other assistance required as for the costs of expert advice and other assistance this is estimated initially by adding 20 to 25 percent of the total of the tribunals and si a C's maximum fees the ad valorem basis on which the first two components are calculated helps provide certainty to parties and increases the efficiency of the arbitral process whether tribunal spends 400 hours on a case or 4,000 hours it does not mean is paid more after all SIAC believes in objectively assessing a tribunals fees based on the work actually carried out in each case however in the spirit of party autonomy rule 30.1 offers the parties the option of alternative methods of calculating the tribunals fees when we add the three components we arrive at the maximum amount that the arbitration may cost giving both parties some certainty at the very outset in reality however the arbitration may cost significantly less based on the stage at which it concludes the time it takes and the complexity of the dispute to ease payment burdens SIAC divides this amount into three tranches equally shared by the parties 35% a further 35% and finally 30% which are spread across the different stages of the arbitration the first tranche is payable immediately when a case commences in order that the arbitration can proceed if a respondent fails to pay its share then the claimant may have to pay on the respondents behalf subject of course to being able to claim these monies subsequently once the tribunal has ruled on costs furthermore although deposits paid to SIAC are to be born equally by the parties the tribunal often decides that all costs are to be borne by the losing party okay and so what about the emergency arbitrators case well that has a number of different components firstly there is a flat fixed fee of five thousand Singapore dollars which is an administrative fee at the outset there is then the question of fees of the emergency arbitrator and that is subject to a cap which is 20 percent of the normal arbitrator cap there is also a minimum amount which is 20,000 Singapore dollars but that's subject to the discretion of the Registrar do bear in mind of course that the maximum that is set by the SLA see for the alteration costs is just a maximum at the end of the day the actual costs once quantified may well be less than that well that's music to my ears I suppose then we've got to deal with the other issue which is your rates and how much you're gonna charge us for all of this now those have no maximum but as you know well they are always extremely good value for money oh my years

Channel: SIAC

Views: 5,350

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Id: L2QQ1bEFxWA

Length: 22min 44sec (1364 seconds)

Published: Sun Mar 29 2020