Enforcement of Arbitral Awards Against a State-Owned Entity: A Tale, Two Jurisdictions

• Autore: Rajesh Sharma
• Carica: Senior Lecturer, Criminology and Justice, RMIT University, Melbourne, Arbitrator at Korean Commercial Arbitration Board
• Pagine: 346-366

ARTICLES & ESSAYS

https://doi.org/10.6092/issn.2531-6133/7666

UNIVERSITY OF BOLOGNA LAW REVIEW

ISSN 2531-6133

[VOL.2:2 2017]

This article is released under the terms of Creative Commons Attribution 4.0 International License

346

Enforcement of Arbitral Awards Against a State-Owned Entity: A Tale,

Two Jurisdictions

RAJESH SHARMA†

TABLE OF CONTENTS: 1. Introduction; 2. Worldwide Enforcement Proceedings by F.G.

Hemisphere; 3. F.G. Hemisphere from Jersey to the U.K.; 3.1. Targeted Assets; 3.2.

Ruling by the Royal Court; 3.3. Ruling by the Royal Court of Appeal; 3.4. Ruling by the

Privy Council; 4. F.G. Hemisphere in Hong Kong; 4.1. High Court of Hong Kong; 4.2.

Court of Appeal; 5. The Gécamines Case – Is it Based on Principle?; 6. Gécamines’

Status Considered in Hong Kong; 7. The Impact of the Gécamines Case on Future Cases;

7.1. Where the Liability Is Incurred by the State; 7.2. Where Liability Is Incurred by the

S.O.E.; 8. Conclusion.

ABSTRACT: When a private party enter into arbitration with a State Owned Enterprise

(S.O.E.), there always a concern as to how the arbitral award might be enforced. It

becomes even more worry some if the assets of the S.O.E. are mainly located in its own

country or in a country, which practices absolute immunity principle and treats S.O.Es

as part of a State. Such practice creates an uncertainty for the private parties who are

doing businesses with S.O.Es. On a practical side it is also well known that S.O.Es are

big market player as buyer or seller and therefore they cannot be ignored at least in

commercial sense. This paper analyses the two distinctive approaches adopted by

courts in the U.K. and in Hong Kong on a similar set of facts in which the same group

of S.O.Es were involved. As both Hong Kong and the U.K. are part of the same common

law tradition, this paper also attempts to highlight that courts are now ready to see

S.O.Es as a pure commercial entity rather that as an instrumentalities of a State so far

as enforcement of arbitral awards are concerned.

KEYWORDS: Enforcement of Awards; Sovereign Immunity and Enforcement of Awards; Effect of

Absolute and Restrictive Sovereign Immunity on of Awards; Enforcement Against SO Es,

Treatment of State Assests and SOEs Assets for Enforcement of Awards.

University of Bologna Law Review

[Vol.2:2 2017]

https://doi.org/10.6092/issn.2531-6133/7666

347

1. INTRODUCTION

When a private party enter into arbitration with a State Owned Enterprise

(S.O.E.), there always a concern as to how the arbitral award might be

enforced. It becomes even more worry some if the assets of the S.O.E. are

mainly located in its own country or in a country, which practices absolute

immunity principle and treats S.O.Es as part of a State. Such practice creates an

uncertainty for the private parties who are doing businesses with S.O.Es. On a

practical side it is also well known that S.O.Es are big market player as buyer or

seller and therefore they cannot be ignored at least in commercial sense. In

recent Transpacific Partnership Agreement (T.P.P.) an attempt is made to

control this unruly horse, S.O.Es, though not from commercial arbitration

point of view.

1

This paper analyses the two distinctive approaches adopted by

courts in the U.K. and in Hong Kong on a similar set of facts in which the same

group of S.O.Es were involved. As both Hong Kong and the U.K. are part of the

same common law tradition, this paper also attempts to highlight that courts

are now ready to see S.O.Es as a pure commercial entity rather that as an

instrumentalities of a State so far as enforcement of arbitral awards are

concerned.

2. WORLDWIDE ENFORCEMENT PROCEEDINGS BY F.G. HEMISPHERE

F.G. Hemisphere, a Delaware company, took out court proceedings in various

jurisdictions to enforce the two International Chamber of Commerce

(hereinafter I.C.C.) arbitral awards against the Democratic Republic of Congo

(hereinafter D.R.C.). However, F.G. Hemisphere was not a party to the original

† Senior Lecturer, Criminology and Justice, RMIT University, Melbourne, Arbitrator at Korean

Commercial Arbitration Board; Associate Director and Research Fellow at the Hong Kong WTO

Research Institute; Member, Asian WTO Research Network; Research Fellow at the China-Latin

America Research Centre, Shanghai; Research Fellow at the International Academy of Belt and

Road, Hong Kong; Member, The Centre for Social and Global Studies Centre, Melbourne; Elected

Associate Member of the Academy of C omparative Law. The opinion expressed here is of the

author and that does not represent the opinion of any institution or organization to which the

author is affiliated. The author can be contacted at Rajesh.Sharma@rmit.edu.au.

1

See Sean Miner, Comments on State-Owned Enterprises, in 2 ASSESSING TRANSPACIFIC PARTNERSHIP-

INNOVATIONS IN TRADING RULES, 91-100 (Jeffrey J.Schott & Cathleen Cimino-Isaacs eds., 2016).