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The Asia-Pacific
Arbitration Review 2021
Published by Global Arbitration Review in association with
Clayton Utz King & Wood Mallesons
Debevoise & Plimpton LLP KL Partners
DLA Piper Nagashima Ohno & Tsunematsu
Dzungsrt & Associates LLC Rajah & Tann Singapore LLP
Economic Laws Practice Shanghai International Economic and Trade
Fangda Partners Arbitration Commission (Shanghai International
Arbitration Centre)
FTI Consulting
Singapore Chamber of Maritime Arbitration
Herbert Smith Freehills
WongPartnership LLP
KCAB INTERNATIONAL
www.globalarbitrationreview.com
© Law Business Research 2020
garThe Asia-Pacific
Arbitration Review 2021
A Global Arbitration Review Special Report
Reproduced with permission from Law Business Research Ltd
This article was first published in June 2020
For further information please contact Natalie.Clarke@lbresearch.com
© Law Business Research 2020The Asia-Pacific Arbitration Review 2021
Account manager Bevan Woodhouse
Production editor Kieran Redgewell
Chief subeditor Jonathan Allen
Subeditor Sarah Meaney
Head of production Adam Myers
Editorial coordinator Hannah Higgins
Publisher David Samuels
Cover image credit Mirexon/iStock
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ISBN: 978-1-83862-249-7
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© Law Business Research 2020The Asia-Pacific
Arbitration Review 2021
A Global Arbitration Review Special Report
Published in association with:
Clayton Utz
Debevoise & Plimpton LLP
DLA Piper
Dzungsrt & Associates LLC
Economic Laws Practice
Fangda Partners
FTI Consulting
Herbert Smith Freehills
KCAB INTERNATIONAL
King & Wood Mallesons
KL Partners
Nagashima Ohno & Tsunematsu
Rajah & Tann Singapore LLP
Shanghai International Economic and Trade Arbitration Commission
(Shanghai International Arbitration Centre)
Singapore Chamber of Maritime Arbitration
WongPartnership LLP
© Law Business Research 2020Preface���������������������������������������������������������������������vi
Overviews Country chapters
Arbitration in mainland China’s free trade zones Australia������������������������������������������������������������������ 55
aiming to match international standards������������ 7 Frank Bannon, Dale Brackin, Steve O’Reilly and
Shanghai International Economic and Trade Clive Luck
Arbitration Commission (Shanghai International Clayton Utz
Arbitration Centre)
China����������������������������������������������������������������������� 63
Disputes in construction andinfrastructure Zhang Shouzhi, Huang Tao and Xiong Yan
projects������������������������������������������������������������������� 11 King & Wood Mallesons
Craig Shepherd, Daniel Waldek and Mitchell Dearness
Herbert Smith Freehills Hong Kong�������������������������������������������������������������� 70
Peter Yuen, Olga Boltenko and Matthew Townsend
Innovation in progress – developments in Korea Fangda Partners
after the launch of KCAB INTERNATIONAL��������� 18
Sue Hyun Lim India������������������������������������������������������������������������� 73
KCAB INTERNATIONAL Naresh Thacker and Mihika Jalan
Economic Laws Practice
Investment Treaty Arbitration in the
Asia-Pacific������������������������������������������������������������� 24 Japan���������������������������������������������������������������������� 81
Tony Dymond, Z J Jennifer Lim and Cameron Sim Yoshimi Ohara
Debevoise & Plimpton LLP Nagashima Ohno & Tsunematsu
Serving the Maritime Ecosystem�������������������������� 35 Korea����������������������������������������������������������������������� 84
Punit Oza Beomsu Kim, Young Suk Park and Jae Hyuk Chang
Singapore Chamber of Maritime Arbitration KL Partners
Covid-19 – the economic fallouty and the effect Malaysia������������������������������������������������������������������ 89
on damages claims���������������������������������������������� 38 Andre Yeap SC and Avinash Pradhan
Oliver Watts Rajah & Tann Singapore LLP
FTI Consulting
Singapore��������������������������������������������������������������� 96
The rise of arbitration in the Asia-Pacific������������ 43 Alvin Yeo SC, Chou Sean Yu and Lim Wei Lee
Andre Yeap SC and Kelvin Poon WongPartnership LLP
Rajah & Tann Singapore LLP
Vietnam���������������������������������������������������������������� 103
Third-party funding in the Asia-Pacific region��� 49 Nguyen Ngoc Minh, Nguyen Thi Thu Trang and
Gitanjali Bajaj, Ernest Yang and Queenie Chan Nguyen Thi Mai Anh
DLA Piper Dzungsrt & Associates LLC
www.globalarbitrationreview.com v
© Law Business Research 2020Welcome to The Asia-Pacific Arbitration Review 2021, a Global Arbitration Review special
report. Global Arbitration Review is the online home for international arbitration specialists,
telling them all they need to know about everything that matters.
Throughout the year, GAR delivers pitch-perfect daily news, surveys and features, organises
the liveliest events (under our GAR Live banner) and provides our readers with innovative tools
and know-how products.
In addition, assisted by external contributors, we curate a range of comprehensive regional
reviews – online and in print – that go deeper into developments in each region than the
exigencies of journalism allow. The Asia-Pacific Arbitration Review, which you are reading, is
part of that series. It contains insight and thought leadership inspired by recent events, from 37
pre-eminent regional practitioners.
Across 17 chapters and 112 pages, it offers an invaluable retrospective. All contributors are
vetted for their standing and knowledge before being invited to take part.
Together, our contributors capture and interpret the most substantial recent international
arbitration events of the year just gone, with footnotes and relevant statistics. Other articles
provide valuable background so that you can get up to speed quickly on the essentials of a
particular country as a seat.
This edition covers Australia, China, Hong Kong, India, Japan, Korea, Malaysia, Singapore
and Vietnam. It also has overviews of construction and infrastructure disputes in the region (and
how to avoid them), investment treaty arbitration (particularly its relevance to the Belt and Road
Initiative), the impact of covid-19 on the art of damages calculation, and third-party funding.
Among the nuggets it contains:
• the common mistakes that contractors make when allocating risk in contracts and how to
avoid them;
• a groundbreaking year for international arbitrations in Korea;
• the vogue among Asian states for including appeal mechanisms in their ISDS;
• how China’s government has managed to open up the mainland market to institutions such
as the ICC, without having to amend the national arbitration law;
• the end of natural-justice based challenges to awards in Singapore; and
• a handy table showing the position of third-party funding in eight Asian states.
And much, much more.
We hope you enjoy the volume. If you have any suggestions for future editions, or want to
take part in this annual project, my colleagues and I would love to hear from you. Please write to
insight@globalarbitrationreview.com.
David Samuels
Publisher
May 2020
vi The Asia-Pacific Arbitration Review 2021
© Law Business Research 2020Arbitration in mainland China’s free trade zones aiming
to match international standards
Shanghai International Economic and Trade Arbitration Commission
(Shanghai International Arbitration Center)
Aspiring to international standards
In summary
The FTZ Arbitration Rules
At its core, the Shanghai Pilot Free Trade Zone (SHFTZ), is
The Pilot Free Trade Zone (FTZ) strategy is a bridgehead
intended to enact innovative rules and systems. From its imple-
of the Belt and Road initiative, and a testing ground
mentation in 1995 up to 2013, China’s Arbitration Law restricted
of international industrial cooperation. It also marks
development of domestic arbitration rules and practice, which led
the highest standard of China’s investment and trade
reform. Since the establishment of the China (Shanghai)
to the country lagging behind modern practice. At the same time,
Pilot Free Trade Zone (SHFTZ) in 2013, 18 provinces have
under the influence of the amendments of the 2006 UNCITRAL
followed suit, and the Lingang Special Area (the Lingang
Model Law on International Commercial Arbitration and the
Area) promises to take things one step further. Under the
2010 United Nations Commission on International Trade Law
framework of the 1995 Arbitration Law of the People’s Arbitration Rules (the UNCITRAL Arbitration Rules), interna-
Republic of China (the Arbitration Law), arbitration tional arbitration went through a great transition leading a num-
institutions in mainland China, judicial review bodies ber of well-known international arbitration institutions to modify
and administrative organisations have issued measures their rules.
in favour of the development of arbitration in the FTZs. The Shanghai International Arbitration Center (SHIAC)
This article covers, the experience of the Shanghai established the China (Shanghai) Pilot Free Trade Zone Court
International Arbitration Center and judicial support in of Arbitration in the SHFTZ in October 2013, to provide con-
the SHFTZ, and the challenges under the new arbitration sultation, case filing and arbitral hearings and other services for
policies in the Lingang Area. parties in the SHFTZ. In May 2014, SHIAC released the China
(Shanghai) Pilot Free Trade Zone Arbitration Rules (the FTZ
Discussion points Arbitration Rules) incorporating the most advanced arbitra-
tion theory and practice at the time. The FTZ Arbitration Rules
The interplay between the China (Shanghai) Pilot Free adopted emergency tribunals, arbitrator appointment outside
Trade Zone Court of Arbitration, the FTZ Arbitration Rules, the panel list, mediation by mediator, joinder of third parties in
and the courts. arbitration, the small claims procedure, award ex aequo et bono in
mainland China and revised interim measures, and consolidation
Arbitration in the Lingang Area: of arbitrations and evidence.
• Overseas arbitration institutions. These innovative rules not only became the reference point for
• Shanghai International Dispute Resolution Center amendment of the arbitration rules of other domestic arbitration
(SIDRC). institutions from 2014 to 2016, but also received great attention
• Diversified dispute resolution mechanisms. from further afield. In 2015, the State Council issued a Circular on
• Quasi ad hoc arbitration China-style and exploration Issuing the Plan for Comprehensive Deepening the Reform and
of interim measures in the Lingang Area. Opening-up of China (Shanghai) Pilot Free Trade Zone, which
mentions the improvement of arbitration rules in FTZs and sets
Referenced in this article
the goal of making Shanghai a ‘globally oriented’ arbitration centre
in the Asia-Pacific region. The FTZ Arbitration Rules were also
• The FTZ Arbitration Rules.
highly praised by the head of the UNCITRAL Regional Centre
• 2014 Opinions on Judicial Review and Enforcement.
for Asia and the Pacific at the time, for innovation and inspiring
• 2015 Circular of the State Council on Issuing the Plan
regional arbitration reforma.
for Comprehensively Deepening the Reform and
Opening-up of China (Shanghai) Pilot Free Trade
FTZ Arbitration Rules optimising dispute resolution modes
Zone.
• 2016 Opinions on Judicial Guarantee.
The innovations of the FTZ Arbitration Rules, including arti-
• 2019 Overall Plan of the Lingang Special Area of the
cles of consolidation of arbitration, mediation by mediators, open
China (Shanghai) Pilot Free Trade Zone. panel and small claims procedure have already been used in prac-
• 2019 Opinions to Provide Judicial Services and tice.The following examples were two cases of medical equipment
Guarantees. and consumables distribution agreements that were accepted by
• 2019 Arrangement Concerning Mutual Assistance SHIAC. Company F, the claimant, was a foreign-invested enter-
in Court-ordered Interim Measures in Aid of Arbitral prise registered in the SHFTZ. Company H and Company P
Proceedings by the Courts of the Mainland and of were two distributors that had concluded distribution agree-
the Hong Kong Special Administrative Region. ments with Company F to sell the equipment in certain areas.
As Company H and Company P refused to pay the price of the
www.globalarbitrationreview.com 7
© Law Business Research 2020Arbitration in mainland China’s free trade zones aiming to match international standards
products, Company F filed two arbitration suits. After proceed- Arbitration regime reform in the Lingang Area
ings commenced, Company H and Company P separately applied Arbitration institutions and the SIDRC
for mediation. With the consent of Company F, the Chairman In August 2019, the Overall Plan for Lingang Special Area of
of SHIAC appointed Mr G as the mediator in the two cases China (Shanghai) Pilot Free Trade Zone clearly stipulated that
according to article 50 of the FTZ Arbitration Rules. Through well-known overseas arbitral and dispute resolution institutions
five rounds of mediation, the three parties reached a package of could establish business divisions in the Lingang Area. Later on,
settlement agreements. To enforce the settlement agreements, the the Shanghai Bureau of Justice published the Administrative
parties all agreed to continue the arbitration. Once the mediation Measures for Business Offices Established by Overseas Arbitration
procedure ended, the arbitration procedure started with two arbi- Institutions in Lingang Special Area of China (Shanghai) Pilot
tral tribunals constituted according to the arbitration agreement. Free Trade Zone (the Administrative Measures), in which specific
The parties then requested the examination of the two cases on rules are enacted for the establishment of business divisions of
the basis of documents and consolidated the cases. In the end, overseas institutions. This was an important internationally facing
the tribunals rendered a single award according to the settlement step forward for China’s arbitration legal service market.
agreements and the result of the dispute resolution was recognised As one of the earliest arbitration institutions to deal with
by all parties. In the above two cases, the articles of mediation by foreign-related arbitration in China, SHIAC maintains close
mediators, mediation in arbitration and consolidation of arbitra- connections with overseas arbitration institutions and practi-
tion were used to resolve the disputes effectively and efficiently. tioners. In 2019, the Shanghai International Dispute Resolution
The FTZ Arbitration Rules have been in place for over six Centre, which is jointly initiated by SHIAC, the Shanghai World
years now. As of November 2019, SHIAC had accepted more Trade Centre Association and other institutions, was officially
than 650 cases in connection with the SHFTZ, with a total of announced at the Shanghai International Arbitration Summit dur-
more than 12 billion yuan in dispute. To date, parties in five cases ing the Second China International Import Expo. The Shanghai
have recommended arbitrators that are not listed in the panel, and International Dispute Resolution Centre invites well-known
mediators have been appointed for mediation in 10 arbitrations. international dispute resolution institutions and commercial
mediation institutions to base their offices there. This effec-
Judicial support for arbitration in the SHFTZ tively corresponds to article 15 of the Administrative Measures,
The FTZ Arbitration Rules have also obtained the support from which stipulates that ‘Shanghai Municipal Bureau of Justice will
courts. Within one week of the release of the FTZ Arbitration encourage and guide the Business Offices to operate and conduct
Rules, Shanghai No. 2 Intermediate People’s Court enacted its foreign-related arbitration activities in a centralised way in the
Opinions on Judicial Review and Enforcement,1 in which the administrative region of the Shanghai municipality.’ At the time
articles were stipulated to correspond to the innovative rules of of writing, the Singapore International Arbitration Centre (SIAC),
the FTZ Arbitration Rules.The Opinions on Judicial Review and Shanghai Arbitration Association (SHAA) and China (Shanghai)
Enforcement set up a green channel for cases applying the FTZ Pilot Free Trade Zone Court of Arbitration had opened offices
Arbitration Rules whereby case filing and review are more efficient, in the Shanghai International Dispute Resolution Centre. Other
the amount of security deposit required for preservative measures institutions including the ICC, HKIAC and KCAB have also
is lowered and the enforcement of awards is actively guaranteed. shown some interest in the site.
The China (Shanghai) Pilot Free Trade Zone Court of Arbitration, The establishment of business divisions of overseas arbitration
the FTZ Arbitration Rules and the Opinions on Judicial Review institutions and the settlement of well-known international dis-
and Enforcement jointly make up an arbitral troika in the SHFTZ. pute resolution institutions in the Shanghai International Dispute
Later on, Shanghai No. 1 Intermediate People’s Court released Resolution Centre will provide Chinese parties with the one-
its Guidelines on the Trial of Cases involving the China (Shanghai) step dispute resolution service. Along with the opening of business
Pilot Free Trade Zone, which also facilitate preservative measures divisions of overseas arbitration institutions, the actual practice of
in arbitrations related to the SHFTZ. arbitration rules and case administration will also be introduced
Another improvement is reflected in identification of for- into China. Meanwhile, Chinese elements including laws, lan-
eign-related elements where the arbitration clause is concluded guage and lawyers will frequently appear in overseas arbitration
between wholly foreign-funded enterprises registered in the institutions. However, new problems may arise by overseas arbi-
SHFTZ. In the past, companies registered under Chinese law tration institutions doing business in mainland China, such as the
would be regarded as Chinese companies regardless of their capital identification of foreign-related elements, nationality of the awards,
source and composition, and the validity of the arbitration clause and the judicial review standard of applicable laws, which will be
arising out of non-foreign related cases but requesting foreign a great challenge for the arbitration system and the professional
arbitrations would be denied. In the SHFTZ, however, arbitration arbitration community in China.
agreements in these cases are not necessarily invalid. In Siemens
International Trade Co Ltd v Shanghai Golden Landmark Co Ltd (a China International Commercial Courts
case concerning application for recognition and enforcement of a In line with various other initiatives such as the Singapore
foreign arbitral award),2 it was stipulated that: International Commercial Court, the Netherlands Commercial
Court and the Dubai International Financial Centre Courts, on 29
where the wholly foreign-owned investment enterprises registered in the June 2018, the Chinese Supreme People’s Court (SPC) announced
FTZ mutually agree to submit the commercial dispute to foreign arbitra- the establishment of the China International Commercial Courts
tion, the relevant arbitration agreement shall not be treated as invalid (CICC) and designated several qualified Chinese international
merely on the ground that there is no foreign factor involved in such dispute. commercial mediation institutions and international commercial
arbitration institutions to jointly build an integrated platform of
The decision was also adopted in the Opinions on Judicial mediation, arbitration and litigation with CICC, to form a ‘one-
Guarantee.3 stop’ international dispute resolution mechanism. In December
8 The Asia-Pacific Arbitration Review 2021
© Law Business Research 2020Arbitration in mainland China’s free trade zones aiming to match international standards
2018, SHIAC became one of the first five international commer- of arbitration specifying the location, rules and adjudicators of
cial arbitration institutions to be included in the SPC’s one-stop the arbitration is seen as limited recognition of ad hoc arbitration
mechanism. CICC is a permanent adjudicative body dealing with by Chinese courts under the current Arbitration Law. SHIAC is
international commercial disputes. To date, CICC institutions experienced in dealing with cases that apply the UNCITRAL
have ruled on challenges to the validity of arbitration agreements Arbitration Rules. Recently, there have also been cases that
in three international commercial arbitration cases. Apart from applied the Bylaws and Arbitration Rules of International Cotton
the trial of international commercial disputes, CICC also accepts Association Limited and the Arbitration Rules of the Grain and
applications for preservative measures, enforcement or set-aside Feed Trade Association.The validity of arbitration agreements and
of arbitral awards in international commercial arbitration cases, awards of cases where SHIAC acted as the appointing authority
which are accepted by certain arbitration institutions. or the procedure administration institution have been recognised
According to the Opinions to Provide Judicial Services and various times by the courts in Shanghai. To provide standardised
Guarantees4 and the opinions relating to the Lingang Area issued services for ad hoc arbitration, SHIAC is planning to issue a ser-
by Shanghai High People’s Court, it is stipulated that an inter- vice guide for ad hoc arbitration, especially in respect of arbitrator
national commercial dispute trial organisation would be built in appointment, administrative assistance, financial management and
the Lingang Area and a diversified dispute resolution mechanism other services.
that integrates mediation, arbitration and commercial litigation Apart from the services and arrangements for ad hoc arbitra-
would be established. Therefore, following Shenzhen and Xi’an, tion, SHIAC has tried to explore the mechanism of interim meas-
the Lingang Area would probably become the third place to build ures. As early as in 2014, a chapter called ‘Interim Measures’ was
an international commercial trial organisation. The establishment added to the FTZ Arbitration Rules, which was the first time that
of an international commercial dispute trial organisation in the interim measures had been used as a legal term and normatively
Lingang Area would further improve the judicial support for arbi- mentioned in the arbitration rules of a mainland China arbitration
tration in the Lingang Area. institution. On 1 October 2019, an Arrangement5 officially took
effect, which was the first time that formulated rules of the SPC
Quasi ad hoc arbitration and interim measures assisted with interim measures in arbitrations seated and admin-
In 2016, the SPC issued the Opinions on Judicial Protection, istered outside mainland China. With regard to the Arrangement,
which for the first time specified that: parties of arbitral proceedings in Hong Kong may apply for
interim measures (including ‘conduct preservation’ orders) to
where enterprises registered in the FTZ agree to conduct arbitration of a competent intermediate courts in mainland China. Also in the
relevant dispute at a specific location in China, in accordance with spe- 2019 Opinions to Provide Judicial Services and Guarantees and
cific arbitration rules and by a specific person or persons, such arbitration the opinions issued by Shanghai High People’s Court with regard
agreement may be found to be valid. to the Lingang Area, judicial support is stipulated for interim
measures application in foreign-related arbitration cases, while
In 2019, the SPC issued the Opinions to Provide Judicial Services conduct preservation orders, especially injunctions, are included
and Guarantees, which indicated support for this form of arbitra- in the categories of interim measures of foreign-related arbitra-
tion again. tion cases in the SHFTZ. Therefore, it can be anticipated that in
According to article 16 of the Chinese Arbitration Law, ad foreign-related FTZ arbitration cases accepted by SHIAC, parties
hoc arbitration is deemed not to be permitted in China, as a valid may submit applications for conduct preservation in cases apart
arbitration clause shall include an arbitration institution.This form from property preservation and evidence preservation.
7-8/F, Jinling Mansion Established in 1988, the Shanghai International Economic and Trade Arbitration Commission (SHIAC)
28 Jin Ling Road (also Shanghai International Arbitration Center, previously the China International Economic and
Huangpu District Trade Arbitration Commission Shanghai Commission) has been providing independent, impartial,
Shanghai 200021 effective and professional arbitration services for commercial disputes from its inception.
China
In October 2013, SHIAC founded the China (Shanghai) Pilot Free Trade Zone Court of Arbitration
Tel: +86 21 6387 5588
and enacted the China (Shanghai) Pilot Free Trade Zone Arbitration Rules in line with international
Fax: +86 21 6387 7070
info@shiac.org practice. In August 2014, SHIAC established the first aviation arbitration platform in the world: the
Shanghai International Aviation Court of Arbitration, providing a significant approach for settling
www.shiac.org international aviation disputes. In October 2015, SHIAC established the first dispute resolution platform
for Brazil, Russia, India, China and South Africa (BRICS): the BRICS Dispute Resolution Center Shanghai,
offering dispute resolution mechanisms for settling cross-border disputes among the BRICS countries.
In November 2015, SHIAC set up the first dispute resolution platform for disputes arising between
Chinese and African countries: the China-Africa Joint Arbitration Center Shanghai, providing the
business entities of China and Africa with convenient dispute resolution services.
SHIAC is dedicated to actively giving full play to the important role of arbitration among diversi-
fied dispute resolution methods and continues to devote itself to building Shanghai to be an arbitra-
tion hub in the Asia-Pacific region and the world as a whole.
www.globalarbitrationreview.com 9
© Law Business Research 2020Arbitration in mainland China’s free trade zones aiming to match international standards
Notes
1 2014 Opinions on Judicial Review and Enforcement of Arbitration Cases
Applying China (Shanghai) Pilot Free Trade Zone Arbitration Rules.
2 (2013) Shanghai No. 1 People’s Court (Waizhong) Zi No. 2.
3 2016 Opinions of the Supreme People’s Court on Providing Judicial
Guarantee for the Construction of Pilot Free Trade Zones.
4 2019 Opinions of the Supreme People’s Court for All People’s Courts to
Provide Judicial Services and Guarantees for the Construction of the
Lingang Special Area of the China (Shanghai) Pilot Free Trade Zone.
5 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 Administrative Region.
10 The Asia-Pacific Arbitration Review 2021
© Law Business Research 2020ww
THE ASIA-PACIFIC ARBITRATION REVIEW 2021 ISBN 978-1-83862-249-7
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