1. Answer all 3 questions.
2. The total word count for all 3 questions must not exceed 2 500 words.
3. Submit answers to all 3 questions as a single Word document by 10h30 on Monday 9 November.
4. Please check to ensure that you can access the 4 annexures linked to Question 3
Note: assume for the purposes of this question that all countries relevant to this problem have adopted the UNCITRAL Model Law 2006 (including Option 1 for Article 7, but without other relevant amendments or additions) and that the New York Convention of 1958 has been incorporated into domestic law.
You are in-house counsel for the world’s largest manufacturer of surfboards, based in Mauritius (“Wave Inc.”), which has just lost an ICC arbitration against a Dutch supplier of surf wax (“Dutch Wax”). The place of arbitration was Port Louis, Mauritius. Your managing director believes that the award was unfair and wishes to take immediate action against the award.
a) Advise your managing director what form(s) of recourse Wave Inc. might have against the arbitral award and where this might take place.
b) The managing director wishes you to raise the following issues in proceedings against the award:
(i) There was no valid agreement to arbitrate, as the “agreement” was concluded by e-mail and not signed;
(ii) The arbitral tribunal denied Wave Inc.’s application to submit new evidence after the close of arbitral proceedings;
(iii) During the first procedural meeting, the tribunal advised the parties “not to submit boxes of invoices” during the proceedings, yet denied Wave Inc.’s claim because of failure to provide sufficient documentary proof of payments made;
(iv) The arbitral tribunal misinterpreted the law applicable to the contract, and has therefore reached a wrong decision;
(v) The award will cause great financial hardship to Wave Inc.; and
(vi) One of the members of the arbitral tribunal is from the same small village in the Netherlands as the CEO of Dutch Wax.
Advise your managing director whether these arguments are likely to be successful in preventing enforcement of the award, explaining your advice.
c) If Wave Inc. files annulment proceedings, what effect may or will this have on enforcement proceedings?
d) If Wave Inc. is able to have the award annulled, will Dutch Wax still be able to enforce the award? Explain.
Note: for the purposes of this question, assume that South Africa and Zambia are parties to the ICSID Convention and the New York Convention, and that there is a bilateral investment treaty (“BIT”) in place between South Africa and Zambia, containing all the usual investor protections and options to arbitrate at the choice of the investor through ICSID, the ICSID Additional Facility and the UNCITRAL Rules.
You are legal adviser to Southern Waste (“SW”), a South African company specialising in sewerage treatment, which won a tender by the Zambian State-owned company Zam-Sewerage (“ZS”) in 2012 to construct and operate a sewerage treatment plant in Northern Zambia. Under the tender agreement, Southern Waste will operate the plant for a period of ten years after construction has been completed, and will also transport 50% of all sewerage from the Zambian capital Lusaka to the plant. The tender agreement between Southern Waste and Zam-Waste includes a dispute resolution clause referring disputes arising out of the tender agreement to the commercial courts of Lusaka, Zambia.
During construction of the plant in 2012-2013, Zam-Waste changes the design specifications, causing nine months’ delay to the project and additional knock-on construction costs for Southern Waste. Also during construction, the Zambian government withdraws a licence necessary for the transport of waste material through a nature reserve, forcing Southern Waste to divert its transport routes around the reserve, with a structural increase in time and cost. Surprisingly, the government does not withdraw a licence granted to a local Zambian operator transporting the remaining 50% of waste material to the plant.
Construction is completed in December 2013 and the plant commences operation. However, in early 2015, the Zambian government adopts a range of measures to consolidate its economic recovery after the global financial crisis. These measures include restrictions on foreign investors transferring any income generated by their investments out of Zambia. At around the same time, the local community where the sewerage treatment plant is located stages a series of protests against the smell of the plant and some leakage from the plant into a local river. One of these protests becomes violent, causing damage to the plant; the local police do nothing to prevent protestors from destroying equipment.
Southern Waste consults you for advice on the following issues:
a) What possible claims might Southern Waste have for the changes to design specifications? Against which party and in which forum should they be brought? What are the advantages or disadvantages of this form of dispute resolution in the circumstances?
b) What possible claims might Southern Waste have arising out of the withdrawal of the transport licence? Against which party and in which forum should any such claims be brought? Which arbitration rules will be applicable?
c) What possible claims might Southern Waste have arising out of the economic measures taken by the Zambian government in 2015 and the demonstrations in 2015? Against which party and in which forum should any such claims be brought?
d) Would your answers to sub-questions b) and c) be any different if the Zambian government had withdrawn from the ICSID Convention and terminated all its existing BITS with immediate effect on 1 January 2015? Explain.
e) Assume that Southern Waste chooses to initiate arbitration under the UNCITRAL Rules in August 2015. What role, if any, might the UNCITRAL Transparency Rules and the United Nations Convention on Transparency in Treaty-based Investor-State Arbitration (the “Transparency Convention”) play in these proceedings? What role, if any, might the Zambian-based NGO “Save our Rivers” (an NGO dedicated to ensuring that Zambian rivers are not polluted by industrial waste) play in the arbitral proceedings? How would this role differ, if at all, from the role that Save our Rivers might play if the arbitration were held under the ICSID Convention Arbitration Rules?
[Total: 15 marks]
1. PT Eastern Vesselindo Holdings, (the owners) chartered its vessel “MV Elder” to Coal Products (Pty) Ltd (the Charterer) by a fixture note (See attached, Annexure A).
2. A fixture note is a contract which incorporates a pro-forma charterparty.
3. Clause 24 of the fixture note provided that “Any disputes under this fixture note to be referred to arbitration in Hong Kong according to English law”.
4. Clause 27 of the fixture note provides that “other terms and conditions as per Gencon c/p 1994”. It is not disputed that this refers to the Gencon 1994 charter party”. (See attached, Annexure B).
5. No boxes of Part I of the Gencon 1994 form were completed, including Box 25.
6. The Bill of Lading referred to in Clause 20 of the fixture note was on the CONGEN 1994 form (See attached, Annexure C). Clause 1 provides that “All terms and conditions, liberties and exceptions of the Charter Party, dated as overleaf, including the Law and Arbitration Clause/Dispute Resolution Clause, are herewith incorporated”. A similar provision was typed on the front of the bill of lading.
7. To avoid pirates off the coast of Indonesia the vessel deviated from the scheduled route. During the deviation the propeller shaft broke. The vessel had to be towed and repaired. The owner declared General Average in terms of Clause 12 of the charterparty. The charterer refused to contribute as required by the Charterparty.
8. When the cargo is off-loaded at Richards Bay, surveyors note that a substantial amount of the cargo has been water-damaged. When the owners deny liability, Eskom, the South African consignees and holders of the bill of lading, institute action in the South African High Court to recover its losses. Eskom has never had sight of the charterparty and denies that it is bound by the arbitration clause in the charterparty. Eskom is aware of the case of Caresse Navigation Ltd. v Office National de l’Electricité & Ors  EWHC 3081 (The Channel Ranger) (See attached, Annexure D).
9. There was also a claim between the owners and charterers for shortlanded cargo.
10. The owners purported to appoint their arbitrator as sole arbitrator pursuant to Gencon clause 19(a).
11. Charterers queried the appointment and jurisdiction of the arbitrator, arguing that the seat of the arbitration was Hong Kong and the curial law was the law of China. The sole arbitrator ruled on his jurisdiction, concluding that the arbitration was subject to the UK Arbitration Act 1996 and that Gencon clause 19(a) was applicable. He ruled that in the circumstances, he had been properly appointed.
You are required to comment on the following questions:
1. Is the arbitration under the charterparty subject to English or Hong Kong curial law? Why? [5 marks]
2. Assume (even if you differ in your opinion) that it is English curial law. Comment on whether the appointment of the sole arbitrator was valid. [5 marks]
3. Are Clause 24 of the fixture note and clause 19 of Gencon inconsistent? Which prevails if there is an inconsistency? [3 marks]
4. Where will the general average claim be resolved and according to what law? [2 marks]
5. In the light of the Caresse judgment, where and in what forum should Eskom’s claim be heard? [15 marks]
[Total: 30 marks]