Welcome to this issue of the Global DR Legal Update, our quarterly newsletter which aims to bring together the most important global developments in litigation and arbitration.
Since our last edition, the COVID-19 pandemic has had a profound impact on the world. In response, virtually every jurisdiction has enacted legislative and policy measures, many of which impact upon dispute resolution. Although comprehensive coverage of these measures is beyond the scope of this newsletter, Baker McKenzie's Beyond COVID-19 Resource Center offers access to our full suite of legal and regulatory updates to help you understand, prepare and respond quickly to the significant challenges posed by the pandemic.
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Revised Rules of Evidence for Civil Proceedings
The PRC Supreme People’s Court has released revised rules of evidence for civil proceedings. The new provisions, which will come into force on 1 May 2020, replace rules that have been in effect since 2002. Significant provisions include details of the types of electronic data admissible as evidence, a relaxation on the legalization requirements on evidence formed overseas, and an expanded explanation of the duties of disclosure introduced in 2015. It is hoped that these changes will provide greater clarity and efficiency for parties engaged in litigation through the PRC courts. Read more.
One step closer to paperless litigation
Hong Kong has taken the first legislative steps towards the use of electronic documents in court proceedings. A newly-introduced bill aims to make the necessary legislative amendments to implement the Judiciary's Information Technology Strategy Plan. Under this plan, an integrated court case management system (iCMS) is being implemented to streamline and standardize electronic court processes across different levels of courts. This will start with the District and Summons Courts of the Magistrates' Courts, where use of iCMS will initially be voluntary. Key proposals include permitting the electronic filing or sending of documents, the serving of documents between parties electronically (provided there is mutual consent) and the use of digital and other electronic signatures for court-related documents. Read more.
Amendments to the Rules of Civil Procedure and Evidence
The Supreme Court of the Philippines has issued amendments to the Rules of Civil Procedure and the Revised Rules on Evidence, which are intended to both expedite and simplify the litigation process. Notable changes include introducing new ways to serve summons on defendants, restricted grounds for motions to dismiss, provisions for electronic service and filing, and various rules to prevent delays in proceedings. The revised rules will apply to cases filed after 1 May 2020, as well as to cases already pending at that date, except where, in the opinion of the court, the application of the Revised Rules would not be feasible or would work injustice. Read more.
Arbitral awards made in the wrong seat will not be enforced
The Singapore Court of Appeal has ruled that once an arbitration is incorrectly seated (i.e., in a seat not chosen by the parties), in the absence of a waiver by the parties, any subsequent award will not be recognized and enforced by the court. It also found that a party who objects to the tribunal's jurisdiction but does not participate any further in the arbitration proceedings can still rely on that objection in setting aside or enforcement proceedings. The party resisting enforcement does not need to demonstrate actual prejudice arising from the wrong seat, it is sufficient that, had the arbitration been correctly seated, a different supervisory court would have been available to the parties for recourse. Read more.
New “Grand Chamber” for consistent legal interpretation of court decisions issues
Taiwan has established a new "Grand Chamber" to enhance the consistency in the interpretation of statutes in court decisions. The Grand Chamber replaces the “Precedent and Resolution” system of harmonizing conflicting legal interpretations, which was criticized for being detached from the underlying facts of the case and for lacking transparency. By contrast, the new Grand Chamber system conducts oral hearings and welcomes the participation of the parties and experts, and the decisions are binding on the underlying cases from which the legal issues are submitted. It is hoped that the new system will enhance public trust in Taiwan's judicial system. Read more.
New arbitration rules for Finland Chamber of Commerce
The revised rules of the Finland Chamber of Commerce (FAI) entered into force on 1 January 2020. The new rules, which replace rules dating from 2013, seek to increase the efficiency of the arbitration process and reflect international best practice. The changes provide for the increased use of electronic submission of documents, increased flexibility in the choice between the regular and expedited rules, a fixed filing fee of EUR 3,000 (less for expedited proceedings) and the compulsory advance of costs. Although Finland remains a lesser-known arbitral hub in Europe, the number of cases before the FAI is steadily increasing, as its reputation for both efficiency and cost-effectiveness grows. Read more.
Update on the progress of the NCC
The Netherlands Commercial Court has released a progress report following its first year in operation. So far, the court has dealt with four cases, two of which were heard by a single judge and completed within just a few weeks. A three-judge panel recently issued a judgment in the third case, whilst the fourth case remains ongoing, with an interim ruling given last week. The court notes that this compares favorably to the usual 3.5 year period from commencement to completion for commercial cases, citing Baker McKenzie's The Year Ahead 2020. The NCC expects its workload to increase as more contracts include clauses designating NCC as the forum for disputes. Read more.
Changes to civil code make clear that corporate disputes can be arbitrated
Recent amendments to Poland's civil procedure law have put to rest long-standing questions over the arbitrability of disputes over corporate resolutions. These doubts were seen as an argument against inserting arbitration clauses into a company’s articles of association, leading to most corporate disputes being resolved through the national courts. The amendments to the civil code have resolved these questions, paving the way for the use of arbitration in corporate disputes. The changes come as part of a wave of amendments to Polish civil procedure law, including both key reforms and confirmation of already established practice, which aim to ease bureaucracy, increase the efficiency of proceedings and restrict the ability of parties to obstruct proceedings. Read more.
Reforms make appeals process more stringent
New regulations in Ukraine have set a higher threshold for challenging the decisions in the Supreme Court. Previously, a decision on merits could be challenged in the Supreme Court in the event of breach of substantive or procedural law. As a result of the reforms, the claimant must now also prove either that (i) the lower court failed to take into account the relevant position of the Supreme Court on the application of substantive law; (ii) although the lower court took into account the relevant position of the Supreme Court, there is a need to depart from that position; or (iii) there is no relevant position of the Supreme Court. Failure to demonstrate one of these grounds will prevent the appeal from proceeding, likely significantly reducing the number of appeals to the Supreme Court. Read more.
UK leaves the European Union, clarifies future plans for cross-border dispute resolution
The United Kingdom's departure from the European Union officially took place on 31 January 2020. There is now a transition period until the end of 2020 while the UK and EU negotiate additional arrangements, with current rules continuing to apply during this period. The UK has begun to clarify its plans for cross-border dispute resolution after the end of the transition period. These include announcing its intention to deposit a new instrument of accession to the Hague Choice of Court Convention. The UK had previously deposited an instrument of accession to the Convention during Brexit negotiations but later suspended its accession once a withdrawal agreement with the EU, which included a transition period, was secured. The UK has also stated its intention to join the Lugano Convention, governing jurisdiction and the recognition and enforcement of judgments between the EU and non-EU member states. The consent of all existing Convention parties is required for new members to join, and the UK has announced that it has now received statements of support from Norway, Iceland and Switzerland, with the EU's consent the only remaining hurdle. Read more here and here.
São Paulo enacts a law to foster arbitration and mediation
The City of São Paulo has enacted new legislation to foster out-of-court resolution of disputes. The law makes clear that public servants have the obligation to adopt out of court methods such as arbitration whenever possible. Other provisions aimed at reducing litigation and promoting ADR include the requirement to implement a public policy broadening the adoption of out-of-court solutions, lowering the criteria and thresholds for the City of São Paulo to settle cases, and providing for specific taskforces aiming at settling as many disputes as possible involving specific matters that trigger a significant amount of lawsuits. It is expected that São Paulo will substantially increase the number of administrative law agreements with arbitral clauses and, consequently, in the medium-term, the number of arbitrations. Read more.
Canada ratifies US-Mexico-Canada Agreement
The Canadian Parliament has ratified the U.S.-Mexico-Canada Agreement. The USMCA was created to replace the North American Free Trade Agreement, following the United States' demands to renegotiate the treaty. The USMCA was originally signed in November 2018 but has been going through the process of ratification by the three signatory countries, with Canada being the last to formally ratify the agreement. The bill will now move to Canada's Governor-General for her sign-off, which is a formality. The USMCA is expected to enter into force at the start of June 2020. Read more.
Hague Service Convention takes effect in Nicaragua
The Hague Service Convention has entered into force in Nicaragua. The Convention, a multilateral international treaty that seeks to facilitate the service of documents by a party in a signatory state on a party in another signatory state, now has 75 Contracting Parties. Nicaragua's adherence to the Convention should simplify both the process of serving foreign parties connected to Nicaraguan litigation and the summonsing of Nicaraguan parties involved in foreign proceedings. Read more.
Application to reject award based on public-policy defense under the New York Convention fails
The United States Court of Appeals for the Eleventh Circuit has affirmed the judgment of a district court denying a request to reject an arbitral award based on the public-policy defense under the New York Convention. The court held that that the test for whether a court should refuse to enforce a foreign arbitral award based on public policy is not whether the claimant was provided with all of her statutory rights under US law during arbitration. Rather, the public-policy defense “applies only when confirmation of enforcement of a foreign arbitration award would violate the forum state’s most basic notions of morality and justice.” In applying this test, the court decided that the defendant had not made that showing and that enforcing the arbitral award does not violate the US's most basic notions of morality and justice. Read more.
Domestic arbitration agreement may still fall under New York Convention
The Fifth Circuit Court of Appeals has ruled that a domestic arbitration agreement contemplating overseas obligations is sufficient to make the arbitration subject to New York Convention for jurisdiction purposes. The court determined that the arbitral award fell under the Convention, even though the agreement created a Delaware company comprised of U.S. citizen-members, with a principal place of business in Texas, and provided for arbitration in Texas applying Delaware substantive law. The court found that an award arising out of a legal relationship between U.S. citizens falls under the Convention if the "relationship involves property located abroad, envisages performance or enforcement abroad, or has some other reasonable relation with one or more foreign states." The inquiry is not into the parties' relationship, but the legal relationship giving rise to the arbitral award (i.e., the agreement) and whether it is foreign in nature. Read more.
Singapore Convention on Mediation to enter into force
UNCITRAL's Convention on the Enforcement of Mediation Settlements, known as the "Singapore Mediation Convention," is set to enter into force following ratification by Singapore, Fiji and Qatar. The Convention seeks to encourage confidence in mediation by creating an international mechanism for enforcement, similar to how the New York Convention acts as a framework for the enforcement of arbitral awards. It was signed in August 2019 but would not come into effect until six months after ratification by at least three United Nations states. Following the required three ratifications on 12 March 2020, the Convention will enter into force on 12 September 2020. Read more.
Seychelles, Palau and Ethiopia ratify New York Convention
The Seychelles, Palau and Ethiopia have deposited instruments of accession to the Convention on Recognition and Enforcement of Foreign Arbitral Awards 1958, known as the New York Convention, respectively becoming the 162nd, 163rd and 164th countries to do so. The Convention requires contracting states to recognize and enforce arbitral awards made in other contracting states in the same way they would for a domestic award, subject to certain limited exceptions. The Convention will enter into force in Seychelles on 3 May 2020, in Palau on 29 June 2020 and in Ethiopia on a future date yet to be determined. Read more here, here and here.
Seoul Protocol offers guidelines for remote arbitration hearings
A new protocol has been released, offering guidance on best practice for video conferencing in International Arbitration. The guidance has been published by the Korea Commercial Arbitration Board, in collaboration with international arbitration practitioners in Asia Pacific. Although timely during the COVID-19 pandemic, which has forced many arbitral bodies to operate remotely, the Seoul protocol has been in development since 2018. It reflects the belief that there is an increasing desire for international arbitrations to operate remotely, in whole or in part, for reasons of convenience, cost and environmental concerns. Read more.
Comments sought on draft ICCA-IBA Roadmap to Data Protection in International Arbitration
The ICCA-IBA Joint Task Force on Data Protection in International Arbitration has released a consultation draft of its Roadmap "Roadmap to Data Protection in International Arbitration" for public comment. The task force was created in 2019 to produce practical guidance on the data protection obligations that may apply to participants in international arbitration, with a particular focus on the EU General Data Protection Regulation. An initial draft was released in March 2019, and this latest version reflects comments provided on that draft. Comments on the draft consultation are open until 31 May 2020. Read more.