THE AUTHOR:
Esen Aydin, Legal Content Manager at Jus Mundi
Arbitration Aftermath with Zeyad Abouellail and Esen Aydın: Your trusted source for the latest post-award developments in the dynamic world of investor-State and commercial arbitration. Back with a fresh perspective, Zeyad focuses on cases involving States, ministries, and public entities, while Esen handles disputes between private parties. From settlements and compliance with awards to recognition, enforcement procedures, annulment, and beyond. Each week, we bring you global insights and updates to navigate this ever-evolving landscape.
Reficar v. CB&I
New York Court Denies Annulment Request and Grants Enforcement of Award in High-Stakes Dispute
ICC Case No. 21747/RD/MK/PDP
Institution: ICC (International Chamber of Commerce)
Tribunal: Juan Fernández-Armesto(President), Andrés Jana Linetzky (Appointed by the claimants), Vivian Arthur Ramsey (Appointed by the State)
Seat of arbitration: New York City, United States
On January 10, the US District Court for the Southern District of New York denied the CB&I parties’ motion to vacate and granted Reficar’s motion to confirm the ICC award, allowing enforcement of the award worth over USD 1 billion.
Background
In 2016, the Colombian company Reficar commenced an ICC arbitration against CB&I based in the Netherlands, and two of its subsidiaries based in the UK and Colombia. The dispute arose from an EPC contract between the parties for the modernization of the Cartagena Refinery in Colombia. In the arbitration, the owner of the refinery, Reficar, sought compensation for costs overruns incurred due to delays in the project’s performance and claimed that the contractor, CB&I, breached its contractual duties.
In its Final Award issued on 2 June 2023, the tribunal found that the CB&I companies had breached multiple duties under the EPC contract to the level of gross negligence, especially cost and schedule control commitments. The Award found that all three CB&I companies were jointly and severally liable for the full damages award.
Following the Final Award, the CB&I companies filed a petition to vacate the arbitration award in June 2023. Subsequently, in August 2023, Reficar filed a cross-petition to confirm the award before the US District Court for the Southern District of New York.
Grounds for Vacatur
In its Memorandum Opinion and Order, the court accepted that the petitioners had not met the burden of proof for the high threshold required for the vacatur of the award.
The first ground for vacatur asserted by CB&I was that the proceedings were fundamentally unfair. CB&I challenged three procedural decisions issued by the Tribunal, alleging errors in the evaluation of witness testimony, the management of the Respondent’s written submissions, and the duration of the oral hearing. The Tribunal’s admission of witness statements from two witnesses who did not appear for cross-examination was deemed an exercise of discretion under the party-agreed Hearing Protocol. Similarly, the court held that the Tribunal’s decisions to admit new evidence and arguments and to reduce the length of the hearings from six weeks to five weeks fell within its broad authority to regulate procedural matters. Accordingly, the court concluded that none of these issues rendered the proceedings fundamentally unfair.
CB&I’s second ground for vacatur alleged that the Tribunal exceeded its powers by applying Colombian law instead of the chosen New York law for offshore contracts. Emphasizing its limited scope of review, the court refused to evaluate the correctness of the Tribunal’s decision, instead examined whether the Tribunal disregarded the choice-of-law clause at all. The court found that the Tribunal had sufficiently justified the application of Colombian law. Additionally, the court held that the decision to conduct an online hearing fell within the Tribunal’s authority and could not serve as a basis for vacating the award on the ground of excess of powers.
The third ground for vacatur asserted by CB&I was the Tribunal’s alleged manifest disregard of the law. The Court rejected this argument, finding that the Tribunal’s methodology for assessing damages was reasonable given the impracticality of an invoice-by-invoice review and that it did not disregard the cost-reimbursable nature of the contract. Additionally, the Court rejected Petitioners’ claim that the Tribunal manifestly disregarded the law in removing the liability caps due to gross negligence, concluding that the Tribunal conducted a thorough and well-reasoned analysis under the applicable laws. Finally, the Court also dismissed claims alleging disregard of the principle against double recovery.
After reviewing all alleged grounds for vacatur and upholding the ICC award, the Court granted Reficar’s cross-petition for enforcement.
Crescent v. NIOC (I)
Crescent’s Enforcement Request Proceeds Before Dutch Courts
PCA Case No. 2009-20
Institution: PCA (Permanent Court of Arbitration)
Tribunal’s initial composition: Gavan Griffith (President), Kamal Hossain (Appointed by the claimant), Assadollah Noori (Appointed by the respondent)
Tribunal’s final composition: Anthony Murray Gleeson (President), Jeremy Lionel Cooke (Appointed by the claimant), Nicholas Addison Phillips (Appointed by the respondent)
Seat of arbitration: London, United Kingdom
In a recently published judgment, the Hague Court of Appeal has affirmed a previous first-degree court decision allowing the enforcement of a partial award.
Background
The dispute arose from a Gas Sales and Purchase Agreement between National Iranian Oil Company (“NIOC”) and Crescent. Under the Agreement NIOC agreed to supply natural gas for 25 years but failed to fulfill its contractual obligations. Consequently, in July 2009, Crescent companies initiated arbitration proceedings against NIOC, seeking compensation for the losses incurred due to NIOC’s non-performance.
The arbitral tribunal issued its Award on Jurisdiction and Liability in 2014, ruling that it had jurisdiction to hear the case and that NIOC had failed to fulfill its obligations under the Agreement, making it liable for Crescent’s damages. The arbitrator appointed by NIOC refused to sign the award and attached a dissenting opinion, stating that he could not sign due to alleged due process violations.
NIOC subsequently sought to annul the award before the English High Court of Justice. However, the court ruled in favor of Crescent and dismissed NIOC’s annulment request. Following this, the tribunal’s composition changed, and in September 2021, the reconstituted tribunal issued the Partial Award on Remedies, determining the amount of damages to be paid. NIOC again initiated annulment proceedings before the English Courts, challenging the Remedies Award, but the Court of Appeal again dismissed the appeal.
Crescent then sought enforcement of both the Award on Jurisdiction and Liability and Remedies before the Rotterdam District Court. In its 2022 decision, the Rotterdam District Court granted Crescent’s request and ordered the enforcement of the arbitral awards. The Court granted enforcement, rejecting NIOC’s objections regarding the tribunal’s composition, the validity of the arbitration agreement, allegations of corruption, claims of the tribunal exceeding its mandate, and violations of Dutch public policy, ultimately finding that the awards were reasoned and enforceable.
Decision on ‘Asymmetrical Ban on Appeal’
NIOC appealed the Rotterdam District Court’s decision granting enforcement of the arbitral awards, arguing that its appeal was admissible because the asymmetrical ban on appeal did not apply. Under Dutch law, this ban means that only a court decision refusing enforcement may be appealed, while a decision granting enforcement cannot be challenged.
The Hague Court of Appeal ruled in its judgment that the asymmetric ban on appeal applied to NIOC’s case, preventing the appeal against the decision granting enforcement of the arbitral awards. It rejected NIOC’s argument that the Dutch Supreme Court’s established interpretation of the United Nations Convention on the Recognition and Enforcement of Foreign Arbitral Awards (1958) (“New York Convention”) was incorrect, reaffirming that foreign arbitral awards should not face more onerous enforcement procedures than domestic awards. The court also dismissed NIOC’s claim that corruption-related treaties overrode the New York Convention.
NIOC further argued that the ban on appeal would violate the right to a fair trial under Article 6 of the European Convention on Human Rights, on the grounds that, under English law, corruption does not constitute a basis for setting aside an award. The court rejected this argument, holding that differences in substantive grounds for setting aside an award would not result in a violation of the European Convention for the Protection of Human Rights and Fundamental Freedoms (1950) (“ECHR”) Article 6.
Request to Override the Ban on Appeal
NIOC alternatively claimed that even if the asymmetrical ban applied, it could be bypassed on different grounds. It argued that the first-degree court had violated procedural rules by disregarding evidence and failing to properly consider its arguments. However, the court held that such procedural claims did not constitute valid grounds to override the ban. It also rejected NIOC’s assertion that it was denied the opportunity to submit crucial evidence, emphasizing that NIOC had multiple opportunities to present its case throughout the proceedings.
Lastly, NIOC argued that its appeal was admissible on the court’s refusal to stay proceedings under the Dutch Code of Civil Procedure and Article VI of the New York Convention. The court rejected this claim, ruling that the decision not to suspend the case was discretionary and could not be appealed. It also determined that the Iranian criminal case referenced by NIOC did not qualify as a parallel case under international lis pendens rules, as it involved different parties and subject matter.
Ultimately, the court upheld the enforcement of the arbitral awards, concluding that NIOC had no valid basis to appeal the decision.
Devas v. Antrix
Hague Court of Appeal Reverses the First-Degree Court Decision Denying Enforcement of the Award
ICC Case No. 18051/CYK
Institution: ICC (International Chamber of Commerce)
Tribunal: Michael C. Pryles (President), V.V. Veeder (Appointed by the claimants), Adarsh Sein Anand (Appointed by the Appointing Authority)
Seat of arbitration: Delhi, India
In its recently published judgment, the Hague Court of Appeal overturned a decision by the Hague District Court, which had declared Devas Multimedia America’s enforcement request inadmissible due to a lack of authority to seek enforcement. The Court of Appeal found that the Indian court decisions liquidating Devas Multimedia and setting aside the award lacked due process and could not be recognized.
Background
Devas initiated arbitration under ICC Arbitration Rules 1998 in July 2011, seeking damages for Antrix’s wrongful termination of an S-band spectrum capacity leasing agreement. The ICC tribunal ruled in Devas’ favor in September 2015.
In 2021, Antrix petitioned the National Company Law Tribunal (“NCLT”) to liquidate Devas, alleging fraud in the Agreement. The NCLT ordered Devas’ winding up and appointed a liquidator. Appeal by Devas against the liquidation order was dismissed by the Supreme Court. Based on the findings in the liquidation judgment, the Delhi High Court annulled the award, citing patent illegalities, fraud, and conflict with India’s public policy. This order was later confirmed by the Indian Supreme Court.
For more information on the background of the case and Devas’ BIT claim against India, please refer to our previous digests here and here.
Judgment of the Hague District Court
The question before the Hague District Court was whether Devas Multimedia America Inc. (“DMAI”), a subsidiary of Devas Multimedia Private Limited and a non-party to the arbitration agreement and award, could request enforcement of the ICC award.
The key issue was whether DMAI could pursue enforcement on behalf of Devas despite the liquidator’s order revoking its authority. The court found that this question depended on whether the Indian Supreme Court’s ruling on Devas’ liquidation should be recognized in the Netherlands.
DMAI opposed recognition, arguing that the liquidation proceedings in India lacked impartiality, violated fundamental due process rights, and were contrary to Dutch public policy. The court rejected DMAI’s allegations and found its enforcement request inadmissible, thereby denying the request.
Reversal by the Hague Court of Appeal
In its judgment of 17 December 2024, the Hague Court of Appeal overturned the lower court’s decision and granted DMAI leave to enforce the ICC award.
Given the serious consequences for Devas, the Hague Court of Appeal examined whether the liquidation proceedings complied with the requirements of a right to a fair trial under Article 6 of the ECHR. It found that :
- Devas was denied a fair trial, as the NCLT refused its request for document production, despite the potential relevance of the records in refuting the fraud allegations.
- Indian courts accepted Antrix’s allegations based on employee statements without allowing Devas to cross-examine the witnesses, depriving Devas of its right to a fair defense.
- Indian Supreme Court treated key fraud allegations as undisputed, despite Devas’ objections.
As a result, the Court decided that the liquidation proceedings lacked proper legal safeguards and the liquidation order could not be recognized in the Netherlands.
The court then analyzed the impact of the award’s annulment at the seat. It emphasized that annulment at the seat does not automatically result in the rejection of an enforcement request under the New York Convention. In this case, the court refused to recognize the annulment decisions as they were based on flawed liquidation proceedings and were, therefore, fundamentally defective. The court reasoned that recognizing them would indirectly uphold a finding of fraud reached in violation of due process.
Shanghai Electric v. Reliance and others
Singapore Court of Appeal Rejects Annulment of SIAC Award Over Forgery Allegations
SIAC Case No. 448 of 2019
Institution: SIAC (Singapore International Arbitration Centre)
Seat of arbitration: Singapore
Singapore Court of Appeal upheld Singapore International Commercial Court (“SICC”)’s decision rejecting Reliance’s annulment request, dismissing allegations of forgery in the underlying guarantee agreement.
Background
In 2008, Reliance UK and Shanghai Electric Group (SEC) entered into a supply agreement for equipment and services to construct a power plant in India. As part of the arrangement, a Guarantee Letter was allegedly executed by Reliance Infrastructure Limited (“RINFRA”) as a guarantor for Reliance UK’s obligations.
SEC later claimed it had not received the payments owed under the supply contract and started arbitration under the Guarantee Letter, which contained the arbitration agreement, seeking to hold RINFRA responsible as guarantor.
SIAC tribunal issued its award on 8 December 2022, and SEC announced in a stock exchange filing that it had won an award exceeding USD 146 million. Subsequently, Reliance initiated annulment proceedings before the SICC.
SICC’s Decision on the Annulment Request
In its judgment rendered in 2024, SICC ruled on and rejected Reliance’s annulment request on multiple grounds.
First and foremost, the court found that Reliance had waived any jurisdictional objections by failing to raise them during arbitration, despite later claiming that the Guarantee Letter was forged. Reliance argued that its former officer, who signed the contract, lacked the authority to do so. They submitted fresh evidence before the SICC, including the testimony of the officer stating that he had not signed the contract.
The court ruled that Reliance had not provided sufficient evidence to substantiate its forgery allegations and rejected them.
Court of Appeal’s Reasoning in Upholding SICC’s Decision
In its judgment rendered on 17 December 2024, the Singapore Court of Appeal dismissed the appeal filed by Reliance and upheld the SICC’s decision rejecting the annulment request.
The Court of Appeal upheld the ruling that Reliance had waived any jurisdictional objections by failing to raise them during the arbitration proceedings. By actively participating in the arbitration without contesting the tribunal’s jurisdiction, Reliance Infrastructure forfeited its right to challenge it later.
Regarding the forgery allegations, the Court of Appeal also found no sufficient evidence to support Reliance Infrastructure’s claim that the signatures on the Guarantee Letter were forged. The evidence presented failed to convincingly demonstrate any irregularities, and the court saw no basis to overturn the arbitral award on this ground.
Additionally, the Court of Appeal rejected the argument that public policy concerns justified setting aside the award, emphasizing that Reliance Infrastructure did not meet the high threshold for invoking public policy.
ABOUT THE AUTHOR
Esen Aydın is a Legal Content Manager at Jus Mundi and a PhD candidate at Istanbul University. Her research focuses on private international law and commercial arbitration. She holds two Master’s Degrees in International Arbitration and Dispute Settlement from Istanbul University and SciencesPo, Paris. Prior to joining Jus Mundi, Esen worked as a teaching assistant in Private International Law.
