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Guide to dispute resolution in Asia

2008/2009

Contents
Guide to dispute resolution in Asia
Introduction Bangladesh Cambodia China Hong Kong India Indonesia Japan Korea Macau Malaysia Pakistan Philippines Singapore Taiwan Thailand Vietnam Profiles Amir & Amir Law Associates Bou Nou Ouk & Partners Herbert Smith LLP Herbert Smith Amarchand & Mangaldas & Suresh A. Shroff & Co. Hiswara Bunjamin & Tandjung (in association with Herbert Smith) Professor Hiroshi Oda & Herbert Smith (Tokyo) Kim & Chang Joo Nuno Riquito & Associados Advogados Skrine Orr Dignam & Co. SyCip Salazar Hernandez & Gatmaitan Rajah & Tann LLP Formosa Transnational Attorneys-At-Law Herbert Smith (Thailand) Limited LWA Vietnam, Ho Chi Minh City Branch 1 2 8 13 20 27 34 39 47 54 62 71 79 88 94 101 107 115

Published by Herbert Smith 23rd Floor, Gloucester Tower 15 Queens Road Central Hong Kong Tel: +852 2845 6639 Fax: +852 2845 9099 www.herbertsmith.com

No photocopying The information provided in this publication is general and may not apply to any specific situation. Legal advice should always be sought (where appropriate, from local advisers) before taking any action based on the information provided. The publishers and authors bear no responsibility for any acts or omissions contained herein. Information provided is accurate as at May 2008. Herbert Smith 2008

Introduction
This is the sixth edition of the Herbert Smith Guide to Dispute Resolution in Asia. As those who have received previous editions will know, the Guide is intended to provide a concise, accessible overview of the practical issues surrounding dispute resolution across the region. The Guide owes much to the co-operation of a number of leading law firms who have contributed chapters devoted to their respective jurisdictions. I would like to express my gratitude to them for their input. I am very pleased to welcome Amir & Amir Law Associates who have contributed a new chapter on Bangladesh. The latest edition also includes a new question on the procedures for obtaining judgment without proceeding to trial. Otherwise, the format follows the existing model, with the focus being on court litigation and arbitration. Each chapter has been reviewed and updated to address legislative and procedural developments. Herbert Smith also publishes the Guide to financial services regulations in Asia and the Guide to anticorruption regulation in Asia. These publications form part of our comprehensive series of Asian guides. Please contact Lydia Lam at lydia.lam@herbertsmith.com if you would like hard copies of the Guides. We hope that the Guide will prove to be a useful resource. As always, we welcome any feedback from readers. Please contact me if you have any suggestions or comments.

Mark Johnson Head of dispute resolution, Asia Herbert Smith

Bangladesh
Amir & Amir Law Associates

Litigation 1 What is the structure of the legal profession? 2 What is the structure of the court system?
The Bangladesh Bar Council is assigned with the task of administering the legal profession in Bangladesh. Any person willing to practice as a lawyer before the courts and tribunals of Bangladesh must be enrolled with the Bangladesh Bar Council. The enrolment procedure requires a candidate to go through professional exams. Officially, enrolled lawyers are known as Advocates. In order to sit the professional exams, candidates must have a law degree (LL.B.) from any recognised educational institution of Bangladesh or abroad.

Bangladesh has a two-tiered court system, traditionally known as the higher judiciary and the lower judiciary. The higher judiciary comprises of the Supreme Court of Bangladesh. The Supreme Court has two divisions namely the High Court Division and the Appellate Division. The lower judiciary comprises of trial courts, having both civil and criminal jurisdiction.

3 What is the role of the judge (and, where applicable, the jury) in civil proceedings?
Bangladesh has a common law system which is adversarial in nature. Judges, at trial, are passive and their role is governed by the Code of Civil Procedure, 1908. There is no jury system in Bangladesh.

4 What are the time limits for bringing civil claims?

The time limit for bringing a civil claim is laid down in the Limitation Act, 1908. Generally, the time limit for bringing a civil suit varies from 6 months to 12 years, depending on the nature and subject matter of the suit. However, in the case of suits brought by or on behalf of the government, the limitation period is 60 years.

are civil proceedings commenced, and what is the typical procedure 5 How which is then followed?
A civil suit is generally commenced by presentation of a plaint or statement of claim. A plaint must be signed and verified by the plaintiff. Once a plaint is accepted by a competent court, a summons is served on the defendants to appear before the court. The court may refer any dispute to ADR (Alternative Dispute Resolution) before trial is commenced. At trial, the plaintiff and the defendant present respective witnesses and documents to support their respective claims or defence.

is the extent of pre-trial exchange of evidence, and how is evidence 6 What presented at trial?
A party is generally entitled to know beforehand the material facts constituting the case. Pre-trail disclosure of documents is quite common and in some cases required by law. The court may issue summonses to persons whose attendance is required either to give evidence or produce documents. A party may issue interrogatories to another party with the leave of court. A party may apply to the court for an order directing the other party to make discovery of documents in his possession. Parties to the dispute may present both oral and documentary evidence. During the trial the parties are at liberty to present witnesses in support of their claim or defence. Common law principles of examination-in-chief and cross-examination are applicable at the time of deposition of oral witness. Witness statements are also permissible by way of affidavits. Generally, documentary evidence excludes oral evidence wherever applicable.

Guide to dispute resolution in Asia 2008/2009

Bangladesh Amir & Amir Law Associates

what extent are the parties able to control the procedure and the 7 To timetable? How quick is the process?
The Code of Civil Procedure, 1908 has laid down the procedures to be followed in civil suits. Parties may resort to dilatory tactics to slow down the litigation process. The Litigation process is slow and may take years to achieve a final determination.

interim remedies are available to preserve the parties interests pending 8 What judgment?
Courts may grant interim remedies in order to preserve property in dispute, from being wasted, damaged or alienated. Interim remedies include ad-interim injunctions, attachments before judgment, interim sale of moveable properties, orders for detention or inspection of property, the stay of an application of any order, status quo etc.

there procedures available for judgment to be obtained without 9 Are proceeding to trial, on the ground that it is believed there is no defence to the claim? If so, at which stage of the proceedings should such procedures be invoked?
There are a number of circumstances in which civil courts may pronounce judgment without proceeding to trial. If a court is satisfied that a defendant had admitted the claim made against him, a judgment may be pronounced forthwith. Further, if a defendant fails to present a statement of defence within the prescribed time, the court may pronounce judgment. The court may also pronounce judgment without proceeding to trial if the parties are not at issue at all, ie, there is no dispute between them. In addition, if after service of a summons a defendant does not appear before the court, the court may proceed to issue an ex parte judgment.

10 What substantive remedies are available?

The Specific Relief Act, 1877 provides for substantive remedies in civil suits. The available substantive remedies include recovery of possession of property, specific performance of contract, rectification of instruments, cancellation of instruments, declaration of status or right, perpetual or mandatory injunction, damages, compensation and direction etc.

11 What means of enforcement are available?

There are different modes of enforcement of decrees passed in a civil suit. The modes of enforcement include delivery of property, attachment and sale, arrest and detention of the judgment debtor, appointment of receiver etc. Separate proceedings must be filed for enforcement of a decree.

the court have power to order costs? Are foreign claimants required to 12 Does provide security for costs?
The court has discretion to award costs in favour of the wining party. However, in practice this is extremely rare. The court may also award other costs namely, the cost of interrogatories. Compensatory costs may be awarded in respect of a false or vexatious claim or defence. A claimant residing outside Bangladesh, who does not have sufficient immovable properties in Bangladesh, may be required to furnish security for costs. Security for costs may be ordered only in exceptional circumstances.

what ground can the parties appeal, and what restrictions apply? Is there 13 On a right of further appeal? To what extent is enforcement suspended pending an appeal?
The right of appeal is a statutory right. Appeals may be brought against original decrees in respect of both law and fact. The plaintiff cannot be allowed to set up a new case at the appellate stage. The appeal must be filed within the time limit prescribed by the Limitation Act, 1908. There is no provision for a second appeal under the Code of Civil Procedure, 1908. However, a revision may lie against appeal. A further appeal may lie to the Appellate Division of the Supreme Court (Apex Court), if leave is granted.

what extent can domestic and/or foreign state entities claim immunity from 14 To civil proceedings?
Generally, no domestic or foreign state entity enjoys any immunity from civil proceedings, unless exempted by any special law or international treaty.

15 What procedures exist for recognition and enforcement of foreign judgments?


(a) has not been passed by any court of competent jurisdiction; (b) has not been passed on merits of the case; (c) is founded on an incorrect view of international law; (d) has been obtained by fraud; and (e) upholds a claim in violation of any law in force in Bangladesh. Experience shows that foreign judgments in default and summary judgments are very difficult to enforce.

A judgment of a foreign country cannot be enforced in Bangladesh in absence of any reciprocating agreement. Bangladesh enjoys such reciprocity with most common law countries. The decree of any superior court of reciprocating country can be executed under the supervision of District Judge. However, the District Court may refuse to execute a foreign judgment if it -

it permissible for lawyers to charge contingency of conditional fees, or other 16 Is fee arrangements based on the result of the litigation/arbitration?
Lawyers are not allowed to charge contingency or conditional fees in litigation. However, for any other work outside the court setting or litigation ie, recovery of debt out of court procedure, ADR, cross-border transactional work, setting up a project etc, lawyers may charge conditional fees.

Arbitration 17 Is the arbitration law based on the UNCITRAL Model Law? 18 What are the main national arbitration institutions?
The Arbitration Act 2001 is based on the UNCITRAL Model Law. The Arbitration Act 2001 (the 2001 Act) is applicable to all disputes where the parties have agreed to refer the matter to arbitration.

There is no national arbitration institution in Bangladesh. However, the Federation of Bangladesh Chambers of Commerce and Industry has introduced the Bangladesh Council of Arbitration (BCA) as an arbitral body. The BCA is a new body and its aim is to provide a simple, harmonious, cost-effective and speedy process of dispute resolution. Because it is still new, there is little experience of arbitrations being conducted under its rules. Therefore, in Bangladesh, ad-hoc arbitrations are more in vogue than institutional arbitration.

19 Are there any restrictions on who may represent the parties to an arbitration?
A person of any nationality may be an arbitrator. If one party fails to nominate an arbitrator in respect of domestic disputes held in Bangladesh, a District Judge has the power to appoint an arbitrator in an arbitration with a sole arbitrator. Where an international commercial arbitration is concerned, and the arbitration is before a sole arbitrator in which parties cannot agree on the appointment of arbitrator within 30 days of the receipt of request, the Chief Justice may appoint an arbitrator of a nationality other than the nationalities of the parties to dispute.

Guide to dispute resolution in Asia 2008/2009

Bangladesh Amir & Amir Law Associates

20 What are the formal requirements for an enforceable arbitration agreement? 21 Can the court refuse to stay litigation if there is a valid arbitration clause?
the arbitration agreement and any relevant rules are silent, how many 22 If arbitrators will be appointed, and who is the appointing authority?
Parties are free to determine the number of arbitrators. If the parties fail to agree on the number of arbitrators, the arbitral tribunal shall consist of three arbitrators. If the parties have agreed on an even number of arbitrators, the appointed arbitrators shall jointly appoint an additional arbitrator who will act as the Chairman of the tribunal.

An arbitration agreement may be in the form of an arbitration clause in a contract. An arbitration agreement shall be in writing. An exchange of letters, telex, telegrams, fax, e-mail or other means of telecommunications may constitute an arbitration agreement.

Under the 2001 Act, when any party to an arbitration agreement starts legal proceedings against the other party concerning any matter agreed to be referred to arbitration, the court must refer the parties to arbitration and stay the proceedings. However, the courts in Bangladesh have in the past interpreted this provision as applicable only when the venue of arbitration is in Bangladesh.

restrictions placed on the right to challenge the appointment of an 23 Are arbitrator?


The appointment of arbitrators, under the 2001 Act, can be challenged on the following grounds: a. if circumstances exist that give rise to justifiable doubts as to their independence and impartiality; and/or b. if the arbitrator does not possess the qualifications agreed by the parties. Where international commercial arbitration is concerned, a challenge against an arbitrator must first be made to the arbitral tribunal. An appeal against the decision of the tribunal goes to the High Court Division of the Supreme Court. The procedure for challenge may be modified by agreement.

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Does the domestic law contain substantive requirements for the procedure to be followed?
Parties are free to agree on the rules to govern the arbitration. In the absence of an agreement, and where the rules selected by the parties do not cover a particular situation, the 2001 Act sets out the default rules. The arbitral tribunal may determine its own procedure with the consent of the parties.

25 On what ground can the court intervene during an arbitration?


Arbitrators may grant the following interim measures: injunctive relief; security for costs; pre-arbitration disclosure of documents; and preservation of evidence.

The court has limited power, however, to intervene in arbitration. The 2001 Act states that a court may only intervene in limited circumstances as allowed under the Act.

26 Do arbitrators have powers to grant interim or conservatory relief?

The parties may restrict the powers of the arbitral tribunal by agreement. In the absence of a contractual restriction, the 2001 Act confers powers on the tribunal to give interim relief.

27 When and in what form must the award be delivered?

An arbitral award must be in writing and signed by the arbitrator(s). The award must also state the date and place of arbitration.

28 On what ground can an award be appealed to the court?

Parties dissatisfied with the final award may appeal to the High Court Division of the Supreme Court to set aside the award. Such application must be made within 60 days from the receipt of the award. However, no appeal lies against interim orders made by an arbitral tribunal.

29 What procedures exist for enforcement of foreign and domestic awards?

At present, no difference exists between domestic and foreign arbitration awards in respect of enforcement. Once a 60-day period has passed from the date the award was made and if no application has been made to set aside the award the domestic award may be enforced in the same manner as a judgment of the court. As regards foreign awards, the procedure is to apply to the district court in Dhaka to enforce the award. An application for the execution of a foreign award should be accompanied by the arbitral award, agreement for arbitration and such evidence which proves that the award is a foreign award.

30 Can a successful party recover its costs?


Yes.

Alternative dispute resolution


the parties to litigation or arbitration required to consider or submit to any 31 Are alternative dispute resolution before or during proceedings?
Section 89A of the Code of Civil Procedure, 1908 provides for mediation in order to settle disputes in civil suits at an early stage of proceedings. The Arbitration Act, 2001 provides that it shall not be incompatible for an arbitral tribunal to encourage settlement of disputes otherwise than by arbitration.

Reforms 32 Are there likely to be any significant procedural reforms in the near future?
No significant procedural reforms are planned in the near future.

Guide to dispute resolution in Asia 2008/2009

Bangladesh Amir & Amir Law Associates

Amir & Amir Law Associates


Contact Phone Fax Email Website M. Amir-Ul Islam 203 Concord Tower (2nd Floor), 113 Kazi Nazrul Islam Avenue, Dhaka 1000, Bangladesh +880 2 933 0877 +880 2 933 3253 +880 2 933 7746 +880 2 831 7178 amir@bdmail.net www.tlabd.org

Amir & Amir Law Associates has provides comprehensive legal services in the areas of formation of Joint-Ventures; International trade; Foreign Direct Investment; Corporate & Commercial Law; Project Finance; Finance, Banking & Insurance; Documentary Credit; Mergers & Acquisition; Admiralty & Maritime Law; Securities Laws & Regulations; Energy Projects; Tele-communication; Environmental Law; Constitutional Law & Public Interest Litigation; Arbitration International & National; Immigration & Naturalization; Employment Law; Claim Recovery and General Practice; Administrative & Judicial Review; Property, Intellectual Property Law Registration & Litigation.

Cambodia
Bou Nou Ouk & Partners

Litigation 1 What is the structure of the legal profession?


This year, the Cambodian legal profession celebrates its 10th anniversary as an officially recognised profession. The governing body for the profession is the Bar Association of the Kingdom of Cambodia, which is subject to the Law on Statute for Lawyers 1995. One of its roles is to admit new lawyers and grant practising licences to existing lawyers. Individuals can be admitted as lawyers if they hold Cambodian citizenship; have a degree in law from a recognised institution; have passed a lawyers training school and have completed a one-year probation period after training school. Alternatively, persons with a Doctorate degree in law or who have been a court clerk or a judge can be admitted as a lawyer once certain criteria are met. Upon admission to the Bar, lawyers have rights of audience in all of Cambodias courts.

2 What is the structure of the court system?

The three main courts in Cambodia are the Municipal/Provincial Court, the Appeal Court and the Supreme Court. In addition, there is a Constitutional Court which hears complaints on the constitutionality of laws and electoral laws and a military court which hears disciplinary matters for the armed forces. The government is currently preparing draft laws to establish a Commercial Court and Administrative Courts.

is the role of the judge (and, where applicable, the jury) in civil 3 What proceedings?
Courts of First Instance handle cases by a single judge, except for the following types of cases which are heard by a panel of three judges: Cases in which the value of the subject matter of the action equals or exceeds 5 millions Riels, and it is determined that adjudication of the case using a panel of three judges is appropriate, taking into consideration the number of parties and any other relevant circumstances; and cases in which it is established by law that the case should be heard and adjudicated by a panel of three judges. Judges render judgment based on parties claims, factual relevance, and issues.

4 What are the time limits for bringing civil claims?

A person may bring a civil claim for a breach of contract or a debt obligation within five years from the date of the breach of contract, or from the date on which the debt arose. If the contract specifies the date for payment, five years is calculated from the date of the execution of the agreement. The limitation period for tort claims and personal injury claims is three years from the date the person suffered injury or damage.

are civil proceedings commenced, and what is the typical procedure 5 How which is then followed?
Once the plaintiff submits a complaint with a court. The court clerk in charge of the receipt of complaints shall affix a receipt seal with the date of receipt in order to make clear when a complaint was submitted, and make a case dossier by putting a cover thereon with a case number. The court clerk distributes the case dossier to the judge to be in charge of the case in accordance with the case distribution order established in advance every year by the chief of judge (director of court). In cases where there is a problem in using a particular judge, the case shall be distributed to a substitute judge in accordance with the order of appointment of substitute judges established in advance by the chief of judges. The orders for case distribution and for appointment of substitute judges may be changed during the year

Guide to dispute resolution in Asia 2008/2009

Cambodia Bou Nou Ouk & Partners

only by the chief of judges. The judge to whom a case has been distributed shall examine whether or not the complaint contains sufficient information. If the complaint does not fulfil the formal requirements, the judge shall order the complaint to be corrected within a reasonable time. Once the court accepts a complaint as being legitimate as a result of its examination, the court clerk shall serve the complaint on the defendant. The judge shall determine within at least 30 days the date of initial preparatory proceeding for oral argument and summons of parties. The judge shall conduct the clarification of factual relevance by parties and then set the date for oral argument. The judge may be asked by parties to investigate, examine or question any proof or witness at the initial preparatory proceeding and then set the date for oral argument in an open-court for rendering the judgment.

is the extent of pre-trial exchange of evidence, and how is evidence 6 What presented at trial?
The court shall, in all cases, preserve the principle of La Contradiction. Hence the parties shall submit all evidences relating to the case either when lodging the complaint or submit at the initial preparatory proceedings. The parties shall not insert any evidence after the preparatory proceedings for oral argument. However, parties may request the judge to investigate, examine or question any proof or witness, if those are in question. The judge shall take in consideration its power to carry out the investigation.

what extent are the parties able to control the procedure and the 7 To timetable? How quick is the process?
Where a party thinks that his or her rightful interests are being harmed by the courts control of litigation in the preparatory proceedings for oral argument or the actual proceedings for the oral argument or by the courts exercise of its authority to request an explanation, the party may raise an objection to the court. Where an objection is raised, the court shall render a decision on the objection via a ruling. Since small claims litigation aims to resolve a dispute quickly through simplified proceedings, the court, in such proceedings, should designate the date for the oral argument immediately after the filing of an action without conducting preparatory proceedings for oral argument. For complicated cases, the court shall designate the date of the initial preparatory proceedings for oral argument within 30 days of the date of the filing of an action. This is so a defendant has time to spend on the preparation of the defense and the commencement of the proceedings is not delayed. The court shall make efforts to ensure that civil actions are conducted fairly and speedily, and parties to disputes shall pursue civil actions honestly and in good faith. The parties can appeal against any judgment within 30 days from the date of judgment.

interim remedies are available to preserve the parties interests pending 8 What judgment?
In civil matters, the Municipal/Provincial Court can issue interim measures to preserve assets of the parties pending trial. There are no written rules to determine the grounds upon which an order should be granted it is at the sole discretion of the judge.

there procedures available for judgment to be obtained without 9 Are proceeding to trial, on the ground that it is believed there is no defence to the claim? If so, at which stage of the proceedings should such procedures be invoked?
No.

10 What substantive remedies are available?

The court has the power to order any appropriate relief necessary to give effect to its judgment. This may include an order for payment of money, transfer of property, injunctive relief or a declaration that a contract is void, absolving the parties from all legal obligations.

11 What means of enforcement are available?

A party that breaches an interim order may face criminal charges or a civil claim for allowing that assets covered by the orders to be transferred or removed.

the court have power to order costs? Are foreign claimants required to 12 Does provide security for costs?
The court will usually order each party to meet their own costs regardless of whether a party succeeds at trial. Foreign claimants are not required to provide security for costs.

what ground can the parties appeal, and what restrictions apply? Is there 13 On a right of further appeal? To what extent is enforcement suspended pending an appeal?
A party may appeal against an interim order or a judgment of the lower courts within 30 days from the date of the issuance of the judgment or within 45 days if the party appealing was not present in court when the judgment was granted. If there is an appeal to the Supreme Court, in the first instance, it will only hear an appeal on a point of law and not on an issue of fact. If, on hearing the appeal, the Supreme Court is not satisfied with the decision of the Appeal Court, then it has the power to send the case back to the Appeal Court for retrial. If, following that retrial, the case is appealed to the Supreme Court for a second time, then the Supreme Court will hear the appeal on points of law, of fact, or both.

what extent can domestic and/or foreign state entities claim immunity from 14 To civil proceedings?
Cambodia is a party to the Geneva Convention on Protection of Civil and Political Rights and the implementing Protocols. As a result it is obligated under international law to recognise the rights and protection of foreign diplomats. No domestic entity can claim immunity from civil proceedings.

15 What procedures exist for recognition and enforcement of foreign judgments? 16


Lawyers may charge contingency fees, or other fee arrangements based on the litigation/arbitration provided the agreement is in writing and executed by the client. There is no legal limit on such fee arrangements.

No laws or procedures exist for the recognition and enforcement of foreign judgments in Cambodia. However, a foreign arbitral award can be enforced in the Appeal Courts.

Is it permissible for lawyers to charge contingency or conditional fees, or other fee arrangements based on the result of the litigation/arbitration?

Arbitration 17 Is the arbitration law based on the UNCITRAL Model Law? 18 What are the main national arbitration institutions?
Cambodia has promulgated the Law on Recognition and Enforcement of Foreign Arbitral Awards and the Law on Commercial Arbitration. The Law on Commercial Arbitration, which was passed last year, is based on the UNCITRAL Model Law.

There are none in existence at present. However, the recent Law on Commercial Arbitration requires that a National Arbitration Center be set up under the supervision of the Ministry of Commerce.

19 Are there any restrictions on who may represent the parties to an arbitration? 20 What are the formal requirements for an enforceable arbitration agreement?

Under the Law on Commercial Arbitration, there is no restriction on who may represent a party in an arbitration hearing.

The basic requirement is that an enforceable arbitration agreement must be made in writing and executed by all parties to the agreement. There are other subsidiary requirements that mirror the requirements set out in the UNCITRAL Model Law.

Guide to dispute resolution in Asia 2008/2009

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Cambodia Bou Nou Ouk & Partners

21 Can the court refuse to stay litigation if there is a valid arbitration clause?
the arbitration agreement and any relevant rules are silent, how many 22 If arbitrators will be appointed, and who is the appointing authority?

It is possible for the Cambodian court to stay litigation in the presence of a valid arbitration clause. However, in practice, those Cambodian courts that have limited experience of international commercial arbitrations will refuse to grant a stay in favour of arbitration and will allow a party to pursue the substantive claim through the court.

Under the Law on Commercial Arbitration, if the arbitration agreement or the relevant rules are silent, the court may appoint an arbitrator if the parties fail to agree one between them.

restrictions placed on the right to challenge the appointment of an 23 Are arbitrator?


Under the Law on Commercial Arbitration, there is no restriction placed on the right to challenge the appointment of an arbitrator.

the domestic law contain substantive requirements for the procedure to 24 Does be followed?
The Law on Commercial Arbitration contains detailed substantive requirements for the correct procedure that mirror the UNCITRAL Model Law.

25 On what ground can the court intervene during an arbitration?


Yes, these are the same as those powers set out in the UNCITRAL Model Law.

Under the Law on Commercial Arbitration, the court can provide interim measures for arbitration or compel a party/witness to appear if this person fails to comply with a summons for the arbitration panel.

26 Do arbitrators have powers to grant interim or conservatory relief? 27 When and in what form must the award be delivered? 28 On what ground can an award be appealed to the court?
(i) arbitral award is not valid due to limited capacity of a party;

Under the Law on Commercial Arbitration, the award must be made in writing, dated and signed by the arbitrator and it must, unless agreed by the parties, state the reasons for the award. Copies of the award must be served on all parties.

The Commercial Arbitration Law provides that an application to the court to set aside an award may be made where the:

(ii) party making the request was not given the required notice under the laws of Cambodia; (iii) party making the request was unable to present their defence; (iv) arbitral award deals with matters that do not fall within the terms of the arbitration agreement; (v) composition of the arbitral tribunal or the arbitral procedure was not in accordance with the laws of Cambodia; (vi) claims made under the arbitral proceedings relate to a dispute which is not capable of being the subject of an arbitration under the laws of Cambodia; or (vii) arbitral award is in conflict with public policy or the custom of Cambodia.

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29 What procedures exist for enforcement of foreign and domestic awards? 30 Can a successful party recover its costs?
Yes.

The Law on Recognition and Enforcement of Foreign Arbitral Awards provides procedures for the recognition and enforcement of foreign arbitral awards through the Appeal Court. For enforcement, a certified copy of the award is required together with a translation of the award into Khmer language. Once the award is recognised by the Appeal Court it is equivalent to a judgment of the Appeal Court. The task of enforcing that judgment is then given to the Municipal/Provisional Courts.

Alternative dispute resolution


the parties to litigation or arbitration required to consider or submit to any 31 Are alternative dispute resolution before or during proceedings?
There are certain types of agreements in Cambodia which may be entered into by the parties requiring them to attempt to negotiate a settlement in the presence of the Cambodia Development Council. If negotiations fail, then the parties can submit to arbitration or litigation depending on the agreement in the contract. In industrial relations, collective disputes must be referred to conciliation by the officials of the Department of Labour Dispute Resolution of the Ministry of Labour and Vocational Training prior to litigation or arbitration.

Reforms 32 Are there likely to be any significant procedural reforms in the near future?
A new Code of Civil Procedure has been passed and promulgated by the King; however, it will not come into force in July 2007. The Civil Code has also been passed by Parliament but has yet to be promulgated into law. The Code of Criminal Procedure has also been enacted.

Bou Nou Ouk & Partners


Contact Phone Fax Mobile Email Website Mr Ry Ouk # 74, Street 136, Phsar Kandal I, Doun Penh, Phnom Penh, Cambodia +855 23 220 823 +855 23 220 823 +855 12 858 695 ryouk.BNO@online.com.kh www.bnokh.com

Bou Nou Ouk Partners is one of the biggest law firms in Cambodia. The firm provides a full range of legal services to a large international, as well as domestic client base in most industry groups. The firm is divided into three principal departments: Litigation, Corporate Affairs, Projects and Project Finance Investment. A senior partner with the support of several associates heads each department. Our litigation practice includes arbitration and mediation.

Guide to dispute resolution in Asia 2008/2009

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China
Herbert Smith LLP

Litigation 1 What is the structure of the legal profession?


The Chinese legal profession is open only to Chinese citizens who have passed the PRC judicial examination and satisfied certain other admission criteria. Since 2001, there has been a unified examination for judges, prosecutors and other lawyers. Under current rules, the right of individuals to practice as a lawyer is suspended if they work for a nonChinese organisation (eg, a non-Chinese owned law firm). The representative offices of non-Chinese law firms in China are allowed currently by Ministry of Justice regulations to advise on non-Chinese law and, also, to provide information on the impact of the Chinese legal environment, but not to give opinions on Chinese law. Such firms are allowed to be counsel of record and to make submissions in Chinese arbitration proceedings but not in Chinese court proceedings.

2 What is the structure of the court system?

There are four levels of court of general jurisdiction: Basic (at local level), Intermediate (at city level or equivalent), Higher (at provincial level) and the Supreme Peoples Court in Beijing. There are also a number of courts of specialist (eg, maritime) jurisdiction. Cases involving non-Chinese parties must usually be started at the Intermediate level, though the Higher Level Courts may exercise first instance jurisdiction in some very large cases and conversely, some Basic Level Courts are authorised to handle small cases involving non-Chinese parties. The relevant thresholds and related practices for allocation of jurisdiction between the different levels vary regionally.

is the role of the judge (and, where applicable, the jury) in civil 3 What proceedings?
There are no juries in Chinese courts. Judges hear cases either alone or as a panel of three. Compared with common law judges, Chinese judges tend to be relatively inquisitorial, though practices vary. An unusual feature of the Chinese judicial process, from an international perspective, is that, in addition to the judges hearing a case, Chinese courts have adjudication committees to supervise major cases.

4 What are the time limits for bringing civil claims?


(i) Six months for employment law claims;

The ordinary limitation period under Chinese law is two years from when the claimant knew or ought to have known of the alleged infringement of rights. This is subject to a long-stop limitation period of 20 years from when the wrongful act was done. In certain contexts, periods different from the two-year rule apply. For example:

(ii) One year for certain personal injury, sale of goods, landlord and tenant and bailment cases; (iii) Three years for certain environmental damage cases; (iv) Four years for certain international sale of goods and technology transfer cases.

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It is important to seek specific advice as to the precise distinction between these categories, and as to the date on which the limitation period starts to run. Chinese law is unusual (from the international perspective) in that limitation periods may be tolled not only by the commencement of proceeding or by a written acknowledgement of debt, but also by giving notice of an assertion of claim to the intended defendant. Specific advice must, however, be sought in order to take advantage of this rule safely. Certain types of force majeure preventing a claim from being brought may also toll the limitation period. In cases of continuing infringement, the limitation period usually runs from when the claimant first knew or ought to have known of the infringing conduct, but those are certain exceptions in the context of intellectual property.

How are civil proceedings commenced, and what is the typical procedure which is then followed?
The claimant starts proceedings by filing a very simple document known as a (which may be translated as bill of complaint). The court should then decide whether to accept it or not within seven days. There are rules, but also a degree of discretion, governing the question of acceptance. Non-acceptance is appealable. If accepted, the court should send a copy of the bill of complaint to the defendant within five days and the defendant must file a bill of defence within 15 days of receipt of a copy of the bill of complaint. A judicial panel will then be established.

is the extent of pre-trial exchange of evidence, and how is evidence 6 What presented at trial?
Documentary evidence is supposed to be exchanged by the parties in a defined sequence supervised by the court, with the party making an allegation bearing the burden of proving it. This marks a change from the procedure followed up to 2001, whereby primary responsibility for gathering evidence lay with the court, not the parties. In commercial cases, the primary focus at the main hearing (or hearings) is usually on the documentary evidence, with much attention typically being given to questions of authentication. In practice, the court often will not compel attendance of witnesses. Scope for cross-examination of witnesses is, in any event, restricted. In practice, the consequences of false testimony tend to be limited.

what extent are the parties able to control the procedure and the 7 To timetable? How quick is the process?
Control of the proceedings is very much in the hands of the court, though parties of course seek to influence the progress of a matter by communication with the court. Studies indicate that delay is not yet as large a problem as in common law jurisdictions, but this is to a large extent a consequence of the simplicity and (in some cases, regrettably) superficiality of the process. However, sensitive or complex cases often take a long time to resolve.

interim remedies are available to preserve the parties interests pending 8 What judgment?
There are interim remedies available to freeze assets or preserve evidence, but their efficacy varies from place to place, and with the particular legal context. Problems with enforcement and significant requirements for the provision of security by applicants often operate as a practical barrier to the freezing of assets. That said, it is sometimes possible to obtain a successful remedy, particularly in respect of intangible assets, such as shares or bank accounts, the transfer or realisation of which is dependent on a reputable third party which is unlikely to flout a court order.

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there procedures available for judgment to be obtained without 9 Are proceeding to trial, on the ground that it is believed there is no defence to the claim? If so, at which stage of the proceedings should such procedures be invoked?
No. Judgment at first instance can only be made after trial. The procedure for getting to trial is however much less involved than in common law systems, so there is not the same pressure to find a short cut as is felt in common law systems. At second instance, the court is empowered to make a ruling without a trial if it considers this appropriate after examining the files and carrying out such other investigations as it considers appropriate.

10 What substantive remedies are available?


(i)

Financial remedies (including damages) and injunctions may be sought, as well as miscellaneous remedies of lesser commercial significance (such as orders to apologise). However: Whilst, in principle, the basic rules governing damage for loss of profit and consequential damage are similar to the rules applied in common law jurisdictions, a very rigorous approach is often taken to exclude speculative elements with the result that awards are often much lower than would be seen abroad in comparable cases. It is however difficult to generalise about this;

(ii) Problems are often encountered in securing the effective enforcement of injunctions, particularly against locally wellconnected parties.

11 What means of enforcement are available?

There are wide powers to seize assets, though successful execution is variable, depending on location and other circumstances. Significant imprisonment for what would in many other countries be regarded as a serious flouting of the courts authority (eg, perjury or refusing to obey an injunction) is still rare in commercial cases in China. Amendments to the Civil Procedure Law which came into force on 1 April 2008 seek to improve enforcement by: Increasing fines ten-fold for failure to comply with a court order (the old maximum fines were RMB1,000 for individuals and RMB30,000 for legal persons; the new maximum fines are RMB10,000 and RMB300,000 respectively). Providing for non-compliance with a judgment to be publicised in the media and/or reported to credit reference agencies. Empowering courts to prohibit judgment debtors from leaving the country.

the court have power to order costs? Are foreign claimants required to 12 Does provide security for costs?
The unsuccessful party is usually ordered to pay the successful partys court fees, but it is very rare for Chinese courts to order an unsuccessful party to pay a successful partys lawyers fees unless the parties contracted expressly for this. There is no security for costs regime analogous to that of England / Hong Kong.

13

On what ground can the parties appeal, and what restrictions apply? Is there a right of further appeal? To what extent is enforcement suspended pending an appeal?
There is a right of appeal to the court one level above in the hierarchy (ie, Basic to Intermediate, Intermediate to Higher, Higher to Supreme). There is an automatic stay of execution upon the filing of an appeal. The appeal is a re-hearing: there are no precise limitations on grounds of appeal. There is no right of further appeal after the second instance decision.

15

It is important to appreciate, however, that in addition to the appeal process, there is a parallel procedure available for challenging judgments by way of trial supervision on widely-drawn ground (including insufficiency of evidence, error of law or deficiency of process). There are various channels by which this process may be invoked: by approaching the adjudication committee of the court which rendered the judgment, by approaching the court at the next level up in the hierarchy or by approaching the relevant regional Peoples Procuratorate (which is empowered to invoke the trial supervision process by filing a protest against a judgment.) Unlike an appeal, an invoking of the trial supervision process does not operate as an automatic stay of execution. Also unlike an appeal, there is significant discretion as to whether a court will agree to undertake trial supervision. The trial supervision process is seen by some in China as improving justice by giving an additional remedy against incompetent, corruptly obtained or otherwise improper judgments. Critics of the system regard it as dangerously undermining the finality of judgments. For the time being, proponents of the system appear to have the upper hand: amendments to the Civil Procedure Law which came into effect on 1 April 2008 expand yet further the grounds on which trial supervision may be invoked and increase the time limits for doing so (the old time limit was two years from judgment date: the amendments maintain this but also provide for it to be extended indefinitely until three months from when the problem with the judgment was or ought to have been apparent).

what extent can domestic and/or foreign state entities claim immunity from 14 To civil proceedings?
Domestic state entities do not enjoy immunity in theory, but in practice Chinese courts will usually not accept claims against state entities in respect of governmental functions other than in accordance with certain defined circumstances under the Administrative Procedure Law. With respect to diplomatic immunity, China is party to the Vienna Convention on Diplomatic Relations. So far as immunity more generally is concerned China signed the United Nations Convention on Jurisdictional Immunities of States and Their Property in 2005 but it is not yet in force. In the same year, China enacted the Law on the Immunity of Judicial Compulsory Measures against the Properties of Foreign Central Banks.

15 What procedures exist for recognition and enforcement of foreign judgments?


In practice, China only recognises foreign judgments pursuant to specific treaties with the foreign jurisdiction in question. At the time of writing (May 2008), such treaties are in force with approximately 33 countries, but not with some of Chinas largest trading partners, such as the US, UK and Japan. If a relevant treaty exists, it is important to review its terms to check its scope and exceptions. There are also reciprocal enforcement arrangements with Taiwan and Macau. A further arrangement was signed with Hong Kong in July 2006 and was enacted into law in Hong Kong in April 2008, but is not yet in force and will only apply in commercial cases where the parties have included an exclusive Hong Kong or mainland jurisdiction clause; even, then, enforcement will be subject to major exceptions. Furthermore, the arrangement will only be effective in relation to agreements executed after it comes into force, so parties executing agreements prior to that date (which is as yet not fixed) should proceed on the basis that the arrangement does not exist. China participated in the negotiation of the 2005 multilateral Hague Convention on jurisdiction and judgments but the Conventions scope is narrow (similar to the Hong Kong arrangement mentioned above) and it remains to be seen, in any event, whether China will sign and ratify it.

it permissible for lawyers to charge contingency or conditional fees, or other 16 Is fee arrangements based on the result of litigation/arbitration?
Yes in commercial litigation and arbitration cases. No in many other cases.

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Arbitration 17
Is the arbitration law based on the UNCITRAL Model Law?
No. There are substantial differences, most of which can be traced back to the fact that the Chinese notion of arbitration has, at its heart, the notion of submission to a method of state-sponsored dispute resolution, somewhat different from the ordinary courts, but still ultimately deriving its authority from the state, not the parties. Chinese law continues to insist on a significant degree of official involvement in the process, in the shape of a requirement to arbitrate through quasi-governmental bodies known as arbitration commissions, which control the appointment of the presiding arbitrator and must review and approve tribunals awards. That said, increasing scope for party choice has been introduced in recent years, and there appears to be a basis for thinking that this liberalisation process will continue.

18 What are the main national arbitration institutions?


No.

The principal institution of relevance to non-Chinese parties is the China International Economic Trade Arbitration Commission (CIETAC), headquartered in Beijing with branches in Shanghai and Shenzhen. The local arbitration institutions in Beijing and Shanghai also increasingly hear foreign-related cases. There is also a maritime arbitration commission (CMAC) and numerous local commissions.

19 Are there any restrictions on who may represent the parties to an arbitration?
It should be noted, however, that, under current Ministry of Justice regulations, only locally qualified and licensed lawyers may express opinions on Chinese law during an arbitration in mainland China (see question 1 above).

20

What are the formal requirements for an enforceable arbitration agreement?


The basic requirements are that the agreement must be in writing (a concept which the Supreme Peoples Court has ruled, in 2006, should be interpreted broadly, so as to encompass, for example, exchanges of email) and must adequately identity the subject matter. A more important restriction is that domestic arbitrations (which comprise most disputes between two Chinese companies, even if one or both are foreign-owned) must be arbitrated in mainland China by a Chinese arbitration commission; only foreign-related arbitrations may, in the eyes of Chinese courts, be arbitrated elsewhere. See the November 2006 special edition of the Herbert Smith mainland China disputes newsletter 1 for details of this distinction, which sometimes causes trouble for foreign investors in practice.

21 Can the court refuse to stay litigation if there is a valid arbitration clause? the arbitration agreement and any relevant rules are silent, how many 22 If arbitrators will be appointed, and who is the appointing authority?
No, unless the defendant has waived the right to insist on arbitration.2 The default rule under the current rules of CIETAC, the Beijing Arbitration Commission and the Shanghai Arbitration Commission is for there to be three arbitrators unless the parties agree otherwise, subject to some minor exceptions. In a three-arbitrator arbitration, each party appoints one arbitrator and the relevant arbitration commission chairman appoints the presiding arbitrator. The commission chairman also appoints sole arbitrators.
1 Available under Publications at www.herbertsmith.com 2 For what counts as a waiver, see the September 2006 Herbert Smith Mainland China disputes newsletter (available under Publications at www.herbertsmith.com) containing a translation and commentary upon the August 2006 Supreme Peoples Court Interpretation on this and other arbitration law issues.

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This appointment power is a matter of some controversy internationally, but for the time being is clearly provided for in the Arbitration Law and is usually regarded as a mandatory rule of law from which the parties may not validly depart. It remains to be seen whether it will be revised as part of the legislation review of the Arbitration Law in 2008 (see question 32 below).

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Are restrictions placed on the right to challenge the appointment of an arbitrator?


Yes, challenges must be based on the types of ground familiar in international arbitration practice (such as personal relationship, conflict of interest or improper conduct.) In practice, such challenges are usually handled by the arbitration commissions rather than the courts.

the domestic law contain substantive requirements for the procedure to 24 Does be followed?
Not of any real significance, other than the point mentioned in question 22 above and a requirement for the arbitration commission to review and approve a tribunals draft award before it is finalised. Other than on these points, the parties have largely free scope to agree variations. For example, CIETAC has been prepared to conduct arbitrations under ICC rules where the parties have agreed this. In practice, however, the more significant factor affecting procedure tends to be not anything that the parties agree, but rather the identity of the arbitrators, who have great discretion on matters such as witness examination. Typically, arbitrators from a domestic background will emphasise documentary rather than witness evidence, in line with the traditional approach of the Chinese courts.

25 On what ground can the court intervene during an arbitration? 26 Do arbitrators have powers to grant interim or conservatory relief?
In practice, intervention is usually limited to the matters mentioned in question 26 below.

No. Applications for freezing assets or preserving evidence must be referred to a court. There is legal controversy over whether the power to decide what to do with evidence which a court has ordered to be preserved lies with the court or the arbitral tribunal.

27 When and in what form must the award be delivered?

The CIETAC rules as to timing are, in theory, four months in domestic cases and six months in foreign-related cases, both measured from when the tribunal is constituted. The arbitration rules for Beijing Arbitration Commission and Shanghai Arbitration Commission have the same provisions. However, in practice the commissions readily grant extensions to tribunals. There are no published statistics as to case duration. Awards must be made in writing, specifying the claim, the facts of the decision, the reasons for the decision, the tribunals ruling as to costs, and the date of the award. If the parties agree that they do not wish the facts of the dispute and the reasons for the decision to be specified in the arbitration award, this is respected. Awards should be signed by the arbitrators and sealed by the arbitration commission.

28 On what ground can an award be appealed to the court?

In purely domestic arbitrations, there are relatively broad grounds of appeal, including potential for review of the merits, whereas appeals against awards of domestic commissions in foreign-related cases (see question 20 above) must be based on certain jurisdictional or (serious) procedural defects. The Supreme Peoples Court has, in its August 2006 Interpretation on Arbitration Law, sought to limit the scope for parties to rely on trifling procedural defects as a basis for challenging awards.

29 What procedures exist for enforcement of foreign and domestic awards?


Guide to dispute resolution in Asia 2008/2009

Chinese arbitration awards are enforceable like domestic judgments subject to certain exceptions broadly equivalent to the grounds of appeal mentioned in question 28 above.

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Foreign arbitration awards in commercial cases which China law regards as foreign-related (see question 20 above) are enforceable in China under the New York Convention. A special procedure applies, designed to reduce the scope for local judicial protectionism, whereby local courts must obtain Supreme Peoples Court approval before refusing to enforce a foreign or foreign-related Chinese arbitration award. In practice, however, problems may still be encountered in seizing assets depending on the local situation. The remarks above in relation to foreign awards apply equally to Hong Kong awards following an arrangement mirroring the New York Convention which has been in effect between mainland China and Hong Kong since 2000.

30 Can a successful party recover its costs?

Yes, Chinese arbitration tribunals have power to order an unsuccessful party to pay some or all of the process costs incurred by the successful party, including administrative fees, arbitrators fees and lawyers fees (including, sometimes, a success-based element). In practice, the awards made for lawyers fees depend heavily on individual tribunal composition. The reasonableness of such costs is assessed on a broad brush, global basis.

Alternative dispute resolution


the parties to litigation or arbitration required to consider or submit to any 31 Are alternative dispute resolution before or during proceedings?
No in theory, but in practice courts or arbitration tribunals will often push parties to settle, and even seek to mediate a settlement.

Reforms 32
Are there likely to be any significant procedural reforms in the near future?
Possibly. As noted above, certain reforms relating to enforcement and trial supervision have recently come into force, on 1 April 2008. Further incremental reform is likely on an ongoing basis but the details and timing remain unclear. For arbitration, the relevant legislation is scheduled for review in 2008, but expectations are modest.

Herbert Smith LLP


Mainland China dispute resolution practice
Contact Phone Fax Email Website Graeme Johnston 38th Floor, Bund Center, 222 Yan An Road East, Shanghai 200002, China +86 21 2322 2000 +86 21 2322 2322 graeme.johnston@herbertsmith.com www.herbertsmith.com

Our mainland China dispute practice is staffed by lawyers with long experience of handling contentious process both inside and outside mainland China. We believe that we provide a service of unique quality and perspective in dealing effectively with complex large-scale cross-border disputes involving China. We assist both non-Chinese and Chinese businesses with such matters. Headquartered in Shanghai, the practice also draws on dedicated dispute resolution lawyers based in our Hong Kong and Beijing offices. For a more detailed description of the practice, please refer to www.herbertsmith.com/Publications/Mainland+ChinaDisputeResolutionService2006.htm.

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Hong Kong
Herbert Smith

Litigation 1 What is the structure of the legal profession? 2 What is the structure of the court system?
Hong Kongs legal profession is divided into solicitors and barristers. Solicitors advise clients on all aspects of law but there are restrictions on their rights of audience in the courts. Barristers can appear as advocates in all courts, but have only limited rights to advise clients other than through a solicitor. Both professions have formal training and qualification requirements. The judiciary is appointed from solicitors and barristers of at least 10 years standing (or five years in some lower courts). Judges can only be removed in cases of gross misconduct or incompetence.

Civil claims for less than HK$50,000 are brought in the Small Claims Tribunal. Claims for up to HK$1 million are brought in the District Court, and claims above that amount or claims that concern an important legal principle are brought in the Court of First Instance. Appeals from both courts lie as of right with the Court of Appeal from which further appeals may be made, in limited circumstances, to the Court of Final Appeal. Specialist tribunals, such as the Lands Tribunal and the Labour Tribunal, deal with disputes about the matters denoted by their titles; some (such as the Labour Tribunal) do not permit legal representation. The Standing Committee of the National Peoples Congress of the Peoples Republic of China retains the ultimate power to rule on interpretation of Hong Kongs Basic Law.

is the role of the judge (and, where applicable, the jury) in civil 3 What proceedings?
Judges take a passive role, ruling on matters of fact and law after hearing evidence and submissions from the competing parties. A strict doctrine of precedent applies. There are no juries in civil actions, except in defamation cases and other very limited circumstances.

4 What are the time limits for bringing civil claims?

Civil claims must generally be brought within six years of the date when the legal cause of action accrued, except in personal injury claims, which must generally be brought within three years. The time limit for contract claims is extended to 12 years if the contract is made under seal. There are special rules extending the time limit in the case of latent defects and for claims based on allegations of fraud or breach of trust.

are civil proceedings commenced, and what is the typical procedure 5 How which is then followed?
A civil action is started by the plaintiff filing a formal document (usually a writ of summons) at court setting out the grounds of the claim. The plaintiff must serve a court-sealed copy of the document on the defendant, together with an acknowledgement form which the defendant must return to the court if they wish to defend the action. The defendant must file and serve a formal defence (unless they wish to challenge the jurisdiction of the court), and the plaintiff has an opportunity to reply. After this exchange of pleadings, the parties exchange lists of relevant documents and statements of factual and expert witnesses (see question 6, below). A trial date will not generally be fixed until this exchange of evidence is complete.

is the extent of pre-trial exchange of evidence, and how is evidence 6 What presented at trial?
Parties are required to give discovery on the traditional common law basis. They must exchange lists of all documents in their possession, custody or power which are relevant to any issue in dispute, or which may identify a line of enquiry for their opponents. Parties must make copies of all documents available to their opponents unless any particular document is protected by legal or other privilege, or the document was created as part of a genuine attempt to settle

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the dispute. The parties must also exchange written statements of the evidence of any factual or expert witnesses whom they wish to call at trial. The witnesses will then be prohibited from giving any evidence at trial which was not covered in substance in their statements, unless the other party agrees or the court gives permission. The primary source of evidence at trial is oral testimony from the individuals with direct knowledge of relevant facts. Parties may call expert witnesses to address matters of technical knowledge and opinion. The written statements of factual and expert witnesses will generally stand as their evidence in chief at trial. Witnesses may be cross-examined by the opposing party, with the party who called the witness being allowed to re-examine on issues raised in crossexamination. Relevant documents can be admitted into evidence when referred to by a witness or by counsel in the course of cross-examination.

what extent are the parties able to control the procedure and the 7 To timetable? How quick is the process?
The procedures for the conduct of litigation are laid down by the relevant rules of court. The rules for the District and High Courts are similar but not identical. These procedural rules have sufficient inherent flexibility to meet most reasonable requirements. The procedural directions that are made are relatively standard in most civil cases. These can be agreed between the parties, but must usually be approved by the court, which is increasingly willing to impose its own time limits and directions on the parties. Parties requiring more time to comply with directions can apply to the court for an extension. Cases typically take at least two years to come to trial, although smaller matters may be tried more quickly and acceleration is possible where urgency is clearly demonstrated. Summary judgment may be obtained more quickly where the court considers that there is no real defence to the claim.

interim remedies are available to preserve the parties interests 8 What pending judgment?
The District and High Courts have power to freeze a partys assets pending judgment where there is prima facie evidence of a good arguable case against the owner of the assets and a credible risk that they may be dissipated to defeat a judgment. Where appropriate, the court may also grant injunctions or make other prohibitory or mandatory orders in order to preserve the status quo until the trial. Interim orders may also be made (if appropriate, without notice to a defendant) permitting a party to trace the flow of funds through financial institutions, or to enter a defendants premises to search for and seize evidence. The courts also have jurisdiction to order that a defendant or a debtor under a judgment, be prohibited from leaving Hong Kong. It is necessary to persuade the court that the defendant or debtor is about to leave Hong Kong, and that enforcement of any judgment is likely to be obstructed or delayed. It is possible to obtain a prohibition order against a potential defendant prior to the commencement of an action. The prohibition order is obtained ex parte and is valid for a month, but can be extended virtually indefinitely upon subsequent applications until the judgment is satisfied. There are various grounds upon which the prohibition order can be set aside.

there procedures available for judgment to be obtained without 9 Are proceeding to trial, on the ground that it is believed there is no defence to the claim? If so, at which stage of the proceedings should such procedures be invoked?
The summary judgment procedure enables a plaintiff to obtain judgment quickly in cases where there is plainly no arguable defence. This avoids the need for interlocutory procedures, such as discovery, and the expenses and delay in having a full trial. The summary judgment application may cover the whole of the plaintiffs claim, or a particular part of the claim. As a result, if the plaintiff accepts that the defendant has an arguable defence to part of his claim, he may seek summary judgment on the other part to which he believes there is no case. The summary judgment procedure is not available to all types of claim. Libel, slander and claims involving fraud are, amongst others, exempt. A summary judgment application can only be made after the defendant has given notice of intention to defend and has been served with the claim. The application can be made either before or after the defence has been filed. The application should be made promptly but there is no rule of law that it must be made within a reasonable time. However, any delay will be considered by the court when looking at the substance and merits of the application, and when deciding costs.

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10 What substantive remedies are available?

Both the District and High Courts have very wide powers to award remedies, including injunctive relief, declarations, orders for an account of profits and the transfer of property and, most commonly, a monetary award of damages to compensate for the loss suffered. Non-compensatory (punitive or exemplary) damages are awarded only rarely, in cases of particularly outrageous or oppressive conduct by the defendant. Multiple damages are not available. Where damages are not an appropriate or sufficient remedy, the court may instead make whatever prohibitory or mandatory order seems most appropriate in order to give effect to its judgment on the underlying dispute.

11 What means of enforcement are available?


(i)

Judgments and orders are enforced by means of further court procedures and, where necessary, by court officials. There is no procedure for direct enforcement (ie, not involving the court) by the judgment creditor against the debtor. The creditor must initiate the enforcement action, since the court will not enforce a judgment automatically. Standard means of enforcement include: an examination of the debtor (or a corporate debtors directors) under oath to require the debtor to identify all available assets;

(ii) an order empowering a court official to seize the debtors goods and possessions or to take possession of land; (iii) an order requiring a third party who owes a debt to the judgment debtor (eg, a bank holding a debtors funds) to pay that debt instead to the judgment creditor; (iv) an order imposing a charge on land or certain other property in favour of the judgment creditor; (v) an order appointing a receiver to manage the judgment debtors property and/or business with a view to paying off the judgment debt; (vi) an order committing a person (including the director of a company) to prison for wilful disobedience to an order of the court affecting that person or company; and; (vii) an order empowering the judgment creditor or a third party to do some act which the judgment debtor should have done but has not. This list is not exhaustive. The court has wide powers to make such orders as appropriate under the circumstances to give effect to its orders.

the court have power to order costs? Are foreign claimants required to 12 Does provide security for costs?
The court usually orders the losing party to pay the winning partys legal costs. However, the amount payable is assessed by the court, and as a rule of thumb the winning party should not expect to recover more than half to two-thirds of its actual legal expenses. Prior to trial, the court has the power to order that an overseas plaintiff should provide security for the defendants costs, usually by depositing cash in court, but this power is discretionary and will depend in part upon a preliminary assessment of the merits of the case. Domestic plaintiffs are not obliged to provide security, unless they are limited companies and there is credible evidence that they may be unable to pay whatever costs may be awarded against them. Security can only be ordered against a defendant in respect of a counterclaim.

what ground can the parties appeal, and what restrictions apply? Is there 13 On a right of further appeal? To what extent is enforcement suspended pending an appeal?
Appeals to the Court of Appeal generally lie as of right from all orders and judgments of the Court of First Instance except in various specified circumstances, but leave is usually required in the case of orders and judgments of the District Court. A party can appeal: (i) against findings of fact if there is insufficient evidence to support the finding, or if the decision is clearly wrong; and

(ii) against decisions of law, on the basis that the decision is wrong.

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The Court of Appeal has power to receive new evidence if such evidence could not have been obtained with reasonable diligence prior to trial, may have had an important influence on the outcome of the case, and is inherently credible. Leave of the Court of Appeal or Court of Final Appeal is required if a party wishes to appeal a decision of the Court of Appeal. If the dispute on the appeal amounts to HK$1 million or more and the judgment is final, leave is still required, but such leave must not be refused. Leave will be at the discretion of the court for any other judgment, final or interlocutory, and will be granted where the appeal involves a question of general or public importance. An appeal does not operate as an automatic stay of execution, but the court may grant a stay if persuaded that the appeal has a real prospect of success and that it would be rendered pointless if the stay was refused.

what extent can domestic and/or foreign state entities claim immunity from 14 To civil proceedings?
Before the change of sovereignty in 1997, Hong Kong recognised a doctrine of restrictive state immunity, whereby the immunity of a foreign state (or state entity) from action is restricted to acts of a governmental nature. Immunity does not extend to acts of a commercial nature that could be performed equally well by a private individual or trading corporation. It is unclear whether the same approach still applies. As the basic law excludes foreign affairs from the jurisdiction of the Hong Kong courts, the courts may require a certificate from the Chief Executive when adjudicating relevant cases. In 2005, China signed the United Nations Convention on Jurisdiction Immunities of States and Their Property treaty which applies to the immunity of a state and its property from the jurisdiction of the courts of another state. Once it comes into force, it will also be applicable to Hong Kong.

15 What procedures exist for recognition and enforcement of foreign judgments?

The enforcement in Hong Kong of civil and commercial judgments from foreign jurisdictions with which Hong Kong has reciprocal agreements is dealt with by registration under the Foreign Judgments (Reciprocal Enforcement) Ordinance (Cap 319). These may be judgments from Commonwealth or non-Commonwealth jurisdictions. In cases where there is no reciprocal agreement, the enforcing party must begin new proceedings in Hong Kong in which the foreign judgment is pleaded as a debt. In such cases, summary judgment may be granted. In either event, enforcement can be challenged on specified grounds, such as where the foreign court did not have jurisdiction, or where the foreign judgment is not final or conclusive.

it permissible for lawyers to charge contingency or conditional fees, or other 16 Is fee arrangements based on the result of the litigation/arbitration?
Solicitors in Hong Kong are expressly prohibited for entering into contingency fee arrangements in litigious proceedings.

Arbitration 17 Is the arbitration law based on the UNCITRAL Model Law?


What are the main national arbitration institutions?
The Arbitration Ordinance applies the Model Law to international arbitrations. The Ordinance itself prescribes the law applicable to domestic arbitrations. The Ordinance is available online at http://www.justice.gov.hk/home.htm (go to Chapter 341).

18 Are there any restrictions on who may represent the parties to an arbitration? 19
The main arbitration institution is the Hong Kong International Arbitration Centre (http://www.hkiac.org). No. Parties may represent themselves or be represented by any advocate of their choice, whether or not legally qualified.

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What are the formal requirements for an enforceable arbitration agreement?


A purely oral arbitration agreement is rare but would be valid as a matter of common law. However, such an agreement would not fall within the ambit of the Arbitration Ordinance, depriving the parties of the support and supervision provided by the Ordinance. To fall within the ambit of the Ordinance, an arbitration agreement must be in writing, a term which is given a wider definition under the Ordinance than would be the case under Article 7(2) of the Model Law.
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For example, under the Ordinance, an agreement is in writing if evidence of the agreement is in writing, even if the agreement itself is not written.

21

Can the court refuse to stay litigation if there is a valid arbitration clause?
Article 8 of the Model Law applies. The court must stay proceedings in favour of arbitration unless satisfied that the arbitration agreement is null, void, inoperative or incapable of being performed. There is a possible exception in relation to claims for fraud in domestic arbitrations, which may be determined by the court.

the arbitration agreement and any relevant rules are silent, how many 22 If arbitrators will be appointed, and who is the appointing authority?
In domestic arbitrations, the Arbitration Ordinance provides that references are deemed to be to a single arbitrator unless the arbitration agreement provides otherwise. In international arbitrations, the appointing authority will decide whether to appoint one or three arbitrators in default of an agreement between the parties. In both cases, the appointing authority is the HKIAC in default of agreement between the parties.

restrictions placed on the right to challenge the appointment of 23 Are an arbitrator?


Articles 12(2) and 14 of the Model Law apply to international arbitrations. A challenge is permissible: (i) in circumstances that give rise to justifiable doubts as to the arbitrators impartiality or independence;

(ii) if the arbitrator does not possess the qualifications agreed to by the parties; (iii) if they are unable to perform their functions; or (iv) if they fail to act without undue delay. In domestic arbitrations, the Ordinance provides that the court may remove an arbitrator: (i) if they fail to use all reasonable dispatch in proceeding with the reference;

(ii) in cases of actual or perceived bias; or (iii) for serious misconduct.

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Does the domestic law contain substantive requirements for the procedure to be followed?
No, save that an arbitrator: (i) must act fairly and impartially as between the parties;

(ii) must give the parties a reasonable opportunity to present their cases and deal with the cases of their opponents; (iii) must use procedures appropriate to the particular case; and (iv) must avoid unnecessary cost and delay. An arbitral tribunal is not bound by the rules of evidence. It can receive such evidence as it considers relevant and must give it such weight as it considers appropriate.

25 On what ground can the court intervene during an arbitration?

The court has supportive powers and may assist by making orders for interim protection (see below) and for production of evidence. However, the arbitral tribunal has similar powers and therefore the court will generally only intervene on ex parte applications or where a third party is involved over whom the tribunal has no jurisdiction. The court may also rule on questions arising under Article 16(3) of the Model Law concerning the tribunals jurisdiction.

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26 Do arbitrators have powers to grant interim or conservatory relief?

The Arbitration Ordinance and Article 17 of the Model Law give arbitrators powers to make such interim protective orders as they consider necessary, specifically including the power to grant injunctions (see below for enforcement). Arbitrators also have the power (unless the agreement provides otherwise) to make an interim award that is final and binding for the issues it addresses and which cannot therefore be re-opened. By contrast, they may not make provisional awards, these being awards which may be varied on the final determination of the dispute, unless the agreement specifically provides.

27 When and in what form must the award be delivered?


(i) be in writing and signed by the arbitrator; (ii) state the reasons on which it is based; and (iii) state the date and place of the arbitration.

Awards must be delivered within the time specified in the agreement (if any), failing which there is merely the general prohibition against unnecessary delay. Article 31 of the Model Law provides that an award must:

That aside, the law merely provides that an award must be cogent, complete, certain and final.

28 On what ground can an award be appealed to the court?

In international arbitrations, the parties rights to appeal an award are essentially limited to those set out in Article 34 of the Model Law. In domestic arbitrations, the grounds for appeal are more extensive. An award may be remitted for reconsideration by the arbitrator if, for example, the award is incomplete, made in excess of the tribunals jurisdiction, or fails to comply with the general formalities mentioned above. Further, and more generally, a domestic award may be appealed on a question of law with the consent of both parties or with the leave of the court. The court is generally reluctant to grant leave and will judge cases by their place on a notional scale where the presumption of finality is greatest in relation to one-off cases (where the appellant must show that the arbitrator was obviously wrong), and weakest in relation to standard forms of contract in regular use in Hong Kong with facts or events that are likely to recur (where the appellant must show that the arbitrators decision is open to serious doubt).

29 What procedures exist for enforcement of foreign and domestic awards?

An award made in Hong Kong may be enforced in the same way as a judgment of the court, subject to the leave of the court. Where leave is granted, judgment will be entered in the terms of the award in favour of the successful party. In the case of foreign awards, China has acceded to the New York Convention on behalf of Hong Kong, allowing awards made in other contracting states to be recognised and enforced in Hong Kong. Awards from non-contracting states (relevantly, Taiwan) may also be recognised and enforced in Hong Kong, subject to leave of the court. Procedures for reciprocal enforcement of awards have been agreed between the Hong Kong and Chinese authorities on grounds that mirror the New York Convention.

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Can a successful party recover its costs?


The tribunals award may include directions with respect to costs, including the parties legal fees and disbursements and the tribunals own charges. The usual rule is that costs follow the event.

Alternative dispute resolution


the parties to litigation or arbitration required to consider or submit to any 31 Are alternative dispute resolution before or during proceedings?
A court run pilot scheme currently operates in relation to construction cases in the Construction and Arbitration List. The scheme encourages parties at an interlocutory stage of proceedings to consider the possibility of mediation, but they are not required to submit to it. The pilot scheme expires on 31 August 2008.

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Reforms 32
Are there likely to be any significant procedural reforms in the near future?
Legislative changes are underway to implement major procedural reforms in Hong Kong. The Civil Justice Reforms aim to improve the costs-effectiveness of the civil procedure system and to reduce complexity and delays in litigation. The Civil Justice (Miscellaneous Amendments) Bill 2007 which will implement the amendments to the primary legislation, has been passed by the Legislative Council, but is not yet in force. To compliment the provisions introduced by the Bill, amendments will also be made to the related High Court and District Court rules. Amongst other things, it is anticipated that the following rule amendments will play a part of the litigation process in the next couple of years: greater case management by judges (including setting milestone dates for the progress of the action which cannot be varied by the parties), firmer rules on pleadings, provisions for statements of truth, a code of conduct for experts, a new system of sanctioned offers of settlement and payments into court, and clearer judicial sanctions for noncompliance with interlocutory orders. The finalised amendments to the respective court rules will be introduced in the Legislative Council in due course. It is expected that the legislation, both primary and subsidiary, will come into force by April 2009. On 14 July 2006, the Arrangement on Reciprocal Recognition and Enforcement of Judgments in Civil and Commercial Matters was signed with Mainland China. This will provide a mechanism for mutual enforcement of judgments between Hong Kong and the Mainland although it will only apply in commercial cases where the parties have included an exclusive Hong Kong or mainland jurisdiction clause; and even then, enforcement will be subject to major exceptions. The Mainland Judgment (Reciprocal Enforcement) Ordinance, which implements the provisions of the Arrangement in Hong Kong has been published although is not yet in force. The Chief Justice has accepted proposals to allow suitably qualified solicitors higher rights of audience to all courts in Hong Kong. However, legislation will need to be enacted to provide the necessary framework for the granting of higher rights and so the introduction of the reforms is not likely to be for some time yet. The law of arbitration in Hong Kong is currently under review. A consultation paper on the proposed reform of the Arbitration Ordinance was published on 31 December 2007. The key proposed changes are to abolish the distinction between domestic and international arbitrations and to adopt UNCITRAL Model Law in relation to all arbitrations with their seat in Hong Kong (under the current regime, the Model Law only applies to international arbitrations).

Herbert Smith
Contact Phone Fax Email Website Mark Johnson (Head of dispute resolution, Asia) 23rd Floor, Gloucester Tower, 15 Queen's Road Central, Hong Kong +852 2845 6639 +852 2845 9099 mark.johnson@herbertsmith.com www.herbertsmith.com

An international law firm with a network of offices across Europe and Asia, Herbert Smith established its first Asian office in Hong Kong in 1982. The office is the firms largest single presence outside the UK and acts as the firms regional headquarters, co-ordinating activities across all offices in Asia: Bangkok, Beijing, Shanghai, Singapore, Tokyo, and an associated office in Jakarta. Today, the Hong Kong office has more than 200 staff with some 100 lawyers and legal professional staff. The offices longstanding roots in Hong Kongs commercial and financial communities enable it to function locally as a full-service commercial law firm. In addition to the key practice areas of corporate, energy and projects and banking and finance, our reputation for dispute resolution is unrivalled in the region.

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India
Amarchand & Mangaldas & Suresh A. Shroff & Co.

Litigation 1 What is the structure of the legal profession?


The legal bar is unified. Lawyers enrolled with the Bar Council of any state of the Indian Union can appear in any court in India. However, to act (file pleadings etc.) in a High Court, the advocate must be empanelled with that High Court. To act before the Supreme Court of India, the apex court, an advocate must qualify for and be empanelled as an advocate on record. The Bombay High Court recognises as solicitors those advocates who have passed the solicitors examination conducted by the Incorporated Law Society, Mumbai. An advocate of at least 10 years standing and at least 40 years of age who possesses, in the opinion of the relevant High Court, expertise and character befitting the status, may be designated as a senior advocate. A judge of the Supreme Court of India must be a citizen of India and must have served as a judge of a High Court for at least five years, or have practised as an advocate of a High Court for at least 10 years, or must in the opinion of the President of India be a distinguished jurist. A High Court judge must be a citizen of India and must have practised as an advocate of a High Court for at least 10 years or held a judicial office for at least 10 years.

2 What is the structure of the court system?

Civil courts have jurisdiction to try all matters of a civil nature, except such matters which, by specific statute, are within the jurisdiction of specifically constituted tribunals. Jurisdiction of courts is divided by territorial and pecuniary limits. Territorial jurisdiction is based on the habitual residence or place of work of the defendants or the place where the cause of action arose (such as where the contract was made or performed). Pecuniary jurisdiction of a court is determined by the relevant state. In metropolitan areas, the principal court of original jurisdiction is the City Civil Court, and the High Court of the relevant state is the court of appeal. In non-metropolitan areas, the Court of Civil Judge, Senior Division, is the principal court of original jurisdiction and the District Court is the court of appeal. In certain jurisdictions, such as Delhi, Kolkatta, Chennai and Mumbai, the High Courts also exercise original jurisdiction either on a territorial or pecuniary (on claims beyond a particular amount) basis. Usually such original pecuniary jurisdiction is conferred in terms of either the charter of the said High Courts or the Act(s) under which the said High Court has been constituted. Specialised Tribunals have been constituted to deal with issues pertaining to telecommunications and broadcasting, competition, labour, electricity, tax, industrial revival and recovery actions by banks and financial institutions. In these areas an appeal from the tribunal usually lies to a Specialised Tribunal or in some cases directly to the Supreme Court of India. However, the High Court may exercise supervisory review on the orders of such tribunals on limited grounds. The High Court of a state has supervisory jurisdiction over all lower courts and tribunals in that state. The Supreme Court of India is the final court of appeal and has overall supervisory jurisdiction over the state High Courts and all lower courts and tribunals in India.

is the role of the judge (and where applicable, the jury) in civil 3 What proceedings?
There is no trial by jury in India in civil proceedings. Judges rule on matters of fact and law. A judge may, in certain circumstances, examine any person as a witness and elicit facts. The decisions of a High Court are binding on all lower courts and tribunals in that state. However, the High Court of one state is not bound by the decision of a High Court of another state. These decisions are, however, of persuasive value. A decision of the Supreme Court is binding on every High Court and all lower courts and tribunals in India. Decisions of the Privy Council rendered prior to 1950 are also binding on all courts and tribunals. Rulings of English courts, in the absence of any authority of Indian courts, are of persuasive value.
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4 What are the time limits for bringing civil claims?

Time limitation for civil actions is, generally, three years. Limitation for tort claims is, generally, one year. Limitation for suits by or on behalf of the government is 30 years. Limitation is computed from the date of accrual of the cause of action, but under certain circumstances prescribed by statute, such as part-payment or acknowledgement in writing before the expiry of the prescribed period of limitation, limitation may be extended. Except as prescribed by statute, limitation can neither be extended nor curtailed.

are civil proceedings commenced, and what is the typical procedure 5 How which is then followed?
Procedures for commencing civil proceedings may vary from state to state. The relevant states High Court rules will specify the detailed procedures. However, broadly speaking, civil proceedings are commenced by filing a plaint in duplicate, setting out material facts, the cause(s) of action and relief sought. A summons, with a copy of the plaint attached, must be served on the defendant(s) within 30 days of the initiation of the suit (this time may vary in each state). The summons, ordinarily, must be served through an officer of the court, but the court may permit service by courier, facsimile or email. Within 30 days of the date stipulated in the summons, the defendant must appear before the court and file a statement of defence. However, the Supreme Court has held that the timelines are not mandatory and the court may, for sufficient cause, extend the timelines (Kailash v. Nanhku and Ors. (2005) 4 SCC 480). Ordinarily, at the first hearing, or upon an application, the court issues directions for the parties to disclose on oath relevant documents and to offer inspection. After pleadings and disclosure are complete, issues are framed and the matter proceeds to trial. At the hearing of the action, the plaintiff, ordinarily, has the right to begin. Parties then present evidence. The party that began the case also has a right to reply generally on the whole case.

is the extent of pre-trial exchange of evidence, and how is evidence 6 What presented at trial?
Pre-trial exchange of evidence is reasonably extensive. Parties are required to attach to the pleadings, originals (or copies) of documents referred to in the pleadings. If a partys disclosure is insufficient, the other party may, with the leave of the court, require a further disclosure. Either party may, with the leave of the court, issue interrogatories to the other. Answers to interrogatories may be tendered in evidence. A party may also require the other party to offer inspection of documents where necessary for a fair disposal of the suit or in order to save costs, and, failing compliance, obtain an order of inspection from the court. Courts have power to non-suit a plaintiff or to strike out the defence of a defendant who has failed to comply with an order to answer interrogatories or for discovery or for inspection. Apart from documents, either party may lead evidence through witnesses. The court may appoint a commissioner to record evidence. In lieu of evidence in chief, evidence is led by affidavit; followed by cross-examination and, if essential, by re-examination.

what extent are the parties able to control the procedure and the 7 To timetable? How quick is the process?
Litigation is slow and Indian courts are liberal in extending timelines.

interim remedies are available to preserve the parties interests pending 8 What judgment?
Courts have extensive powers to grant interim remedies. These include injunctions to maintain the status quo or to prevent a defendant from removing or disposing of property with a view to defraud creditors; pre-judgment attachment of the assets of a defendant who has absconded or left the local limits of the courts jurisdiction, or in some extreme cases, where the circumstances justify, even when the defendant does not abscond but has removed property from the courts jurisdiction (or is about to do any of the foregoing) to delay the plaintiff, avoid the process of the court or to obstruct or delay the execution of a decree that may be passed against him. A receiver may also be appointed to take charge of a property pending hearing and disposal of the claim.

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there procedures available for judgment to be obtained without 9 Are proceeding to trial, on the ground that it is believed there is no defence to the claim? If so, at which stage of the proceedings should such procedures be invoked?
Summary judgment is provided for under the Code of Civil Procedure, 1908 (CPC). This procedure enables a plaintiff to obtain judgment quickly in cases where there is plainly no arguable defence. This avoids the need for interlocutory procedures, such as discovery, and the expense and delay of a full trial. Summary suits are preferred in cases involving bills of exchange, hundies and promissory notes, where the plaintiff only seeks to recover a debt or liquidated demand in money with or without interest, provided it is on a written contract/guarantee/enactment where the debt is of a nature other than a penalty. The summons, along with the plaint and annexures, are to be served on the defendant, who has to appear before the court within 10 days of service. Where the defendant fails to appear, the contentions stated in the plaint are deemed to be admitted and the plaintiff is entitled to a decree for any sum not exceeding the amount set out in the summons, together with the interest. In the event that the defendant appears, he has to give notice of leave to defend. The defendant is not automatically entitled to leave to defend. The standard used by courts in India to permit a defendant to contest the summary suit has been set out in various judicial pronouncements and may be granted by a court in the following circumstances. i. If the defendant has a good defence to the claim on merits, the defendant is entitled to unconditional leave to defend. If the defendant raises a triable issue indicating that he has a fair, bona fide or reasonable defence (although not a possibly good defence), the defendant is entitled to unconditional leave to defend.

ii.

iii. If the defendant discloses such facts as may be deemed sufficient to entitle him to defend the court may impose conditions at the time of granting leave to defendthe conditions being as to time of trial or mode of trial but not as to payment into court or furnishing security. iv. If the defendant has no defence, or if the defence is sham or illusory or practically moonshine, the defendant is not entitled to leave to defend. v. If the defendant has no defence, or the defence is illusory or sham or practically moonshine, the court may allow the defendant to prove a defence, but at the same time protect the plaintiff imposing the condition that the amount claimed should be paid into court or otherwise secured (as per Uma Shankar Kamal Narain v. M.D. Overseas Ltd. (2007) 4 SCC 133 para. 8).

10 What substantive remedies are available?

Substantive remedies are wide ranging and include declarations, specific performance, permanent injunctions, damages, accounts, etc. Non-compensatory (punitive or exemplary) damages are only awarded in exceptional circumstances.

11 What means of enforcement are available?

Enforcement is achieved by initiating execution proceedings. Execution in respect of a money decree, is normally by attachment and sale of the judgment debtors properties or by attachment of debts. The court has power to require the debtor to be examined on oath to ascertain assets available for execution. A receiver may also be appointed. Decrees for execution of a document or endorsement of a negotiable instrument may be executed by an officer of the court. A money decree may, rarely, be executed by the arrest and detention in civil prison of the judgment debtor. However, this mode of execution can only be used once whilst executing the decree. The decree holder has to provide/deposit with the court amount(s) towards a subsistence allowance for the period for which the judgment debtor is detained in civil prison. The amounts paid are considered as costs in the suit.

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the court have power to order costs? Are foreign claimants required to 12 Does provide security for costs?
Costs are awarded in favour of the winning party but the court has discretion, for reasons recorded in writing, to direct the costs not to follow the event. The court also has power to direct payment of compensatory costs against a party who delays proceedings or who knowingly raises a false or vexatious claim or defence. The court has power to order security for costs from a plaintiff residing outside India, who does not possess sufficient immovable property in India. If the security is not provided, the suit may be dismissed.

what ground can the parties appeal, and what restrictions apply? Is there 13 On a right of further appeal? To what extent is enforcement suspended pending an appeal?
An appeal lies against every original decree unless such appeal is precluded by statute. An appeal also lies against certain original orders specified in the CPC. The first appeal may be on questions of fact and law. Unless precluded by statute, a second appeal to the High Court lies only on substantial questions of law. An appeal lies to the Supreme Court against a judgment or decree or final order of a High Court if the High Court certifies that the case involves a substantial question of law of general importance or, in the opinion of the High Court, the question needs to be decided by the Supreme Court. The Supreme Court has the jurisdiction to entertain an appeal with special leave of the Supreme Court from any order of any Indian court or tribunal. In the case of an appeal arising out of an order of the High Court in exercise of its original jurisdiction, the appeal lies to a division bench of the High Court (under the Letters Patent jurisdiction or the Act enacted to constitute the High Court). The appeal against the division benchs order lies to the Supreme Court on the ground mentioned above. The High Court of a state has power to revise any non-appealable decision of a court subordinate to it if the subordinate court has exceeded its jurisdiction or, has failed to exercise jurisdiction, or has exercised jurisdiction with material irregularity. Enforcement is not suspended merely because an appeal is pending. The appeal court may, for sufficient cause, stay enforcement pending the appeal. In fact, execution of money decrees cannot be stayed unless the appeal court gives reasons for the same in writing.

what extent can domestic and/or foreign state entities claim immunity from 14 To civil proceedings?
Domestic state entities are not immune from civil proceedings except in respect of sovereign functions. However, the government, any state, or a public officer cannot be sued, in respect of any act purporting to be done in the official capacity, except after the expiry of two months following a written notice stating the cause of action. No such notice is required in a suit against a government owned or controlled company or corporation except where a statute specifically requires. Statutory authorities may be granted immunity from civil proceedings in respect of acts done in their official capacity under the relevant statute. A foreign state cannot be sued without the consent in writing of the government. Such consent will not be granted unless it appears to the government that the foreign state has instituted proceedings in the court against the person desiring to sue or trades within the courts jurisdiction or is in possession of immovable property within the courts jurisdiction and is to be sued with reference to such property or for money charged thereon, or has, expressly or impliedly, waived immunity.

15 What procedures exist for recognition and enforcement of foreign judgments?


The government may declare any foreign country to be a reciprocating territory. Decrees of superior courts of reciprocating territories under which a sum of money, not being money payable in respect of taxes or other charges of a like nature, is payable, may be executed in India. Other foreign judgments may be enforced by instituting a suit in India. A foreign judgment is conclusive as to any matter directly adjudicated upon between the same parties or under whom they claim litigating under the same title except where the judgment has not been pronounced by a court of competent jurisdiction, or the judgment is not on merits, or is founded on an incorrect view of international law or is founded on a refusal to recognise Indian law (where

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India Amarchand & Mangaldas & Suresh A. Shroff & Co.

such law applies), or was obtained in proceedings opposed to natural justice, or has been obtained by fraud, or sustains a claim founded on a breach of Indian law.

it permissible for lawyers to charge contingency or conditional fees, or other 16 Is fee arrangements based on the result of the litigation/arbitration?
Contingent / conditional / success fees are not permissible.

Arbitration 17 Is the arbitration law based on the UNCITRAL Model Law? 18 What are the main national arbitration institutions?
In domestic arbitration, the preference is for non-institutional arbitration. The Arbitration and Conciliation Act, 1996 (the Act) is based upon, but is not identical, to the UNCITRAL Model Law. The Indian Council for Arbitration is the main national arbitration institution (http://www.ficci.com/icanet). Certain Chambers of Commerce and the Bombay Incorporated Law Society (fax: +91 22 2267 3470) also provide institutional arbitration.

19 Are there any restrictions on who may represent the parties to an arbitration?
The Act implies no restrictions and parties may be represented by any person of their choice. The current regulatory regime, however, does not permit foreign lawyers to practise in India. Foreign lawyers would therefore be precluded from appearing as representatives of a party in arbitration.

20 What are the formal requirements for an enforceable arbitration agreement? 21 Can the court refuse to stay litigation if there is a valid arbitration clause?

An arbitration agreement must be in writing, but need not be signed. An arbitration agreement is in writing if it is in the form of an arbitration clause contained in an agreement; in exchange of letters, telex, telegram or other means of telecommunications which provide a record of the agreement, or in an exchange of statements of claim and defence in which the existence of the agreement is alleged by one party and not denied by the other.

The court has no discretion to stay, either domestic or international arbitrations, if the pre-conditions specified in the Act are fulfilled. The preconditions are the existence of an arbitration agreement and a party moving an appropriate application before the court to seek a reference to arbitration. The application has to be moved before filing any statement of defence in the proceedings.

the arbitration agreement and any relevant rules are silent, how many 22 If arbitrators will be appointed, and who is the appointing authority?
The parties are free to agree upon any number of arbitrators, so long as it is not an even number. If the parties have not agreed, there will be a sole arbitrator. In the event the parties fail to agree on a nomination or do not constitute the arbitral tribunal, as per their agreement, the party seeking to constitute the tribunal may motion the Chief Justice of the High Court (for domestic arbitration) or the Chief Justice of India (for international arbitration) to assist in the constitution, the Chief Justice (or his designate) can appoint an arbitrator and facilitate constitution of the arbitral tribunal. The designate of the Chief Justice is required to be a judge of the High Court or the Supreme Court.

restrictions placed on the right to challenge the appointment of an 23 Are arbitrator?


The appointment of arbitrators may be challenged if circumstances exist that give rise to justifiable doubts as to their independence or impartiality; or if they do not possess the qualifications agreed by the parties. A party may challenge an arbitrator appointed by them, or in whose appointment they have participated, only for reasons of which they

31

become aware after the appointment has been made. Parties are free to agree upon the challenge procedure. Failing an agreed procedure, the concerned party must within 15 days after becoming aware of any circumstances giving rise to a challenge, send a written challenge to the tribunal. The tribunal is competent to rule on such challenge. A challenge against the decision of the arbitral tribunal in this regard can only be made once the award has been passed by the tribunal. Failure to raise the challenge before the arbitral tribunal would preclude a party from raising the same at the stage of objections to the award.

24

Does the domestic law contain substantive requirements for the procedure to be followed?
The Act reflects the Model Law in that it contains few detailed procedural requirements. The parties are free to agree the procedure to be followed by the tribunal. Failing such agreement, the tribunal may conduct proceedings in the manner it considers appropriate but the parties should be treated with equality and given a full opportunity to present their respective case.

25 On what ground can the court intervene during an arbitration?

The Act endeavours to reduce court intervention. The court may intervene to grant appropriate interim measures such as maintaining the status quo, securing the amount in dispute in arbitration, or the detention, preservation or inspection of the subject matter of the dispute. The court may also intervene, at the request of the tribunal or at the request of a party, to provide assistance in taking evidence. In addition the Chief Justice of a High Court or the Chief Justice of India may intervene to help with the constitution of the arbitral tribunal.

26 Do arbitrators have powers to grant interim or conservatory relief? 27 When and in what form must the award be delivered?
The Act prescribes no period within which an award must be delivered.

Unless otherwise agreed by the parties, the tribunal may order a party to take any interim measure of protection as the tribunal considers necessary and may require a party to provide appropriate security in connection with an interim measure. However, the jurisdiction of the arbitrators is confined to the clauses contained in the agreement and intention inter-se the parties only. Further, arbitrators do not have the power to enforce their orders directly or through judicial intervention.

The award must be in writing, dated and signed by the tribunal and must state the place of arbitration. Unless the parties have otherwise agreed or the award was on agreed terms, the award must state the reasons on which it was based.

28 On what ground can an award be appealed to the court?


(i) a party was under some incapacity; (ii) the arbitration agreement was invalid;

There is no appeal against an arbitral award. However, the court may set aside a domestic award, on the basis of objections preferred before it, if:

(iii) the party was not given proper notice of the appointment of an arbitrator or of the arbitral proceedings or was otherwise unable to present their case; (iv) the award deals with a dispute outside the terms of submission or contains a decision on matters beyond the scope of the submission; (v) the arbitral tribunal or the procedure was not in accordance with the agreement of the parties; (vi) the subject matter of the dispute was not capable of settlement under Indian law; or, (vii) the award conflicts with the public policy of India. The application for setting aside of the award must be made within three months of the making of the award extendable by the court, for sufficient cause, for a further period of 30 days.
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India Amarchand & Mangaldas & Suresh A. Shroff & Co.

An appeal to the court also lies against a decision of the tribunal accepting a plea that the tribunal does not have jurisdiction or that the tribunal is exceeding its authority.

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What procedures exist for enforcement of foreign and domestic awards?


A domestic award is enforced under the Code as if it were a decree of the court, once the period for filing objections to the award has expired and/or the objections filed have been dismissed. The party seeking enforcement of a foreign award must produce: the original award or a copy authenticated in the manner required by the law of the country where the award was made; the original agreement of arbitration or a certified copy and; evidence that the award is a foreign award. Enforcement may be refused on the ground available under the New York Convention 1958 or, as the case may be, the Geneva Protocol and Convention. Courts can also refuse enforcement if the subject matter of the dispute was not capable of settlement by arbitration under Indian law or if the enforcement of the award was contrary to Indian public policy. However, once an award is found to be enforceable, it is deemed to be a decree of the court.

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Can a successful party recover its costs?


Unless otherwise agreed by the parties, costs are in the discretion of the arbitral tribunal.

Alternative dispute resolution


the parties to a litigation or arbitration required to consider or submit to 31 Are any alternative dispute resolution before or during proceedings?
Courts are empowered to direct parties to a litigation to consider alternative dispute resolution. However, there is no power to compel parties to undertake this course of action. One possible method of alternative dispute resolution can be undertaken through the association Lok Adalats, which has been organised under Section 19 of the Legal Services Authorities Act, 1987. Lok Adalats may settle disputes between parties and make awards. However, Lok Adalats does not have any adjudicatory or judicial functions. Parties to an arbitration cannot be required to consider or submit to an alternative dispute resolution.

Reforms 32 Are there likely to be any significant procedural reforms in the near future?
No.

Amarchand & Mangaldas & Suresh A. Shroff & Co.


Contact Phone Fax Email Mrs. Pallavi Shroff Amarchand Towers, 216, Okhla Industrial Estate, Phase II, New Delhi-110 020 +91 11 2692 0500/2692 2900 +91 11 2692 4900 pallavi.shroff@amarchand.com

We have particular expertise in the field of litigation and arbitration. We advise local and international clients, in all main areas of litigation, and in other forms of commercial dispute resolution.

33

Indonesia
Hiswara Bunjamin & Tandjung (in association with Herbert Smith)

Litigation 1 What is the structure of the legal profession?


Currently, the legal profession is divided into advocates, public prosecutors, police officers, and judges. Advocates are entitled to advise on Indonesian law and have a right of audience in court. Advocates must obtain an advocates licence by passing an examination administered by the Advocates Organisation. An individual wishing to become a judge must apply to the Supreme Court, attend a special six-month course and pass an examination. The individual then becomes a candidate judge and serves as an assistant at a District Court. During the candidates clerkship, the Head of the District Court reports to the Supreme Court with a recommendation as to whether the candidate is suitable to become a judge. District and High Court judges can be moved to other District or High Courts, as required by the Supreme Court. The Supreme Court authorises to organise, finance and administer the judiciary. A similar process exists for individuals wishing to become a public prosecutor or police officer.

2 What is the structure of the court system?

The court system in Indonesia has four main divisions: General Courts (in which most civil and criminal cases are handled), Religious Courts, Military Courts and Administrative Courts. In addition, special courts for handling certain types of cases may be established as subdivisions of the General Court. For example, commercial courts have been established to handle bankruptcy and intellectual property rights disputes. Within the General Court system, cases are brought in the first instance in the District Court. The jurisdiction of the District Court is divided geographically. Appeals from the District Court lie as of right to the High Court, and further appeals may be brought in appropriate cases to the Indonesian Supreme Court, which is the final court of appeal.

is the role of the judge (and, where applicable, the jury) in civil 3 What proceedings?
Although Indonesia is a civil law country (and has no jury system in civil proceedings), its judges are required by law to play an inactive role in civil proceedings. The parties are required to provide evidences and legal arguments to the panel of judges (usually three judges) for his/her consideration. There is no doctrine of binding precedent under Indonesian law, although decisions of the High Court and the Supreme Court are persuasive. The courts are obliged to apply their discretion where there is no specific applicable law. The judges must also take into consideration other sources such as Circular Letters issued by the Supreme Court.

4 What are the time limits for bringing civil claims?

In general, all legal claims must be brought within 30 years of the course of action arising. However, there are certain legal claims for which the time limit is shorter. The limitation period in respect of contractual claims can also be limited by agreement between parties.

are civil proceedings commenced, and what is the typical procedure 5 How which is then followed?
Civil proceedings are usually commenced by the plaintiff filing a claim in the District Court located in the region where the defendant is domiciled. Upon registration of the claim, the District Court will summon the parties. At the first hearing, the judges will ask the parties to settle the dispute amicably through mediation. If the dispute is not settled within the next 22 days (although this period can be shorter or longer at the judges discretion), the court will set dates for the hearings. Hearings will then be scheduled every week or once every two weeks for the next several months where the parties will present evidence and arguments to the court in support of their respective cases.

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Indonesia Hiswara Bunjamin & Tandjung (in association with Herbert Smith)

is the extent of pre-trial exchange of evidence, and how is evidence 6 What presented at trial?
There are no procedures for full, pre-trial discovery in Indonesia. The parties may submit documentary evidence to the court in support of their claim or defence. This evidence is then made available to the other party. Either party may make further requests for discovery of specific documents, but the granting of such is always subject to the judges discretion and rarely (if ever) done in practice. The parties may also exchange written statements of the evidence of any factual or expert witnesses whom they wish to call at trial. The primary source of evidence at trial is written evidence, but the testimony of factual or expert witnesses is also admissible. Witnesses may be cross-examined.

what extent are the parties able to control the procedure and the 7 To timetable? How quick is the process?
The parties have no right to control the procedure and timetable. Changes to either the procedure or the timetable are at the sole discretion of the judges. A Circular Letter issued by the Supreme Court requires hearings at the District Court to be concluded with a judgment rendered within six months of the claims registrations. In practice, however, this time limit is extended by the court itself.

interim remedies are available to preserve the parties interests pending 8 What judgment?
The court has the power to freeze a partys assets pending judgment, where there is prima facie evidence supporting a strong claim against the owner of the assets and a proven risk that the owner may dissipate those assets to defeat a judgment. The court also has the power to grant injunctions or make other prohibitive or mandatory orders in order to preserve the status quo until the end of the trial.

there procedures available for a judgment to be obtained without 9 Are proceeding to trial, on the ground that it is believed there is no defence to the claim? If so, at which stage of the proceedings should such procedures be invoked?
There are no procedures available for court judgments to be obtained without proceeding to trial.

10 What substantive remedies are available?

The substantive remedies available include financial compensation for material or immaterial damages, mandatory orders requiring the performance of certain specified acts and/or seizure and forfeiture of assets. The judge may also issue a judgment according to fairness and justice (ex aequo et bono). Indonesian law does not provide for punitive damages, although arguably they are implicit in the concept of immaterial (ie, intangible) damages, which the courts can award.

11 What means of enforcement are available?

Indonesian law does not contain any provisions for direct enforcement of a court judgment by a judgment creditor, except in cases of a bankruptcy judgment. The judgment creditor must apply to the District Court that rendered the judgment for enforcement. If the assets that are to be attached are within the geographical area of another District Court, the District Court that gave the judgment will request the other court to enforce the judgment against the judgment debtors assets. Real or moveable property, shares, and banks accounts, can be attached and sold or auctioned under the supervision of the court. In bankruptcy cases, the courts judgment will be implemented by an independent curator recommended by the creditor or, if no recommendation made, will be appointed under the discretion of the judges.

the court have power to order costs? Are foreign claimants required to 12 Does provide security for costs?
The court has limited power to order costs. The court usually orders the losing party to pay the court fees for the trial, but these are usually minimal. Indonesian law does not provide for security for costs.

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what ground can the parties appeal, and what restrictions apply? Is there 13 On a right of further appeal? To what extent is enforcement suspended pending an appeal?
A party may appeal against a District Court judgment to the High Court as of right. The appeal must be filed within 14 days of the judgment. There is no time limit for the High Court to render its judgment in the appeal, but High Court judgments are usually given within six months to one year of the appeal being filed. Similarly, appeals to the Supreme Court against High Court decisions must be filed within 14 days of the High Court decision. Again, there is no time limit for the Supreme Court to render its decision in the appeal. Typically, however, the Supreme Court can take up to two years to deliver a decision. Enforcement is usually conducted after the final decision of the Supreme Court.

what extent can domestic and/or foreign state entities claim immunity from 14 To civil proceedings?
A foreign state (or state entity) may claim immunity from civil actions for acts of a governmental nature. Immunity does not extend to acts of a commercial nature, which could have been performed by a private individual or a trading corporation. Governmental bodies wishing to resist any obligation to produce high-level, sensitive communications must claim public interest immunity.

15 What procedures exist for recognition and enforcement of foreign judgments?


Foreign judgments are neither recognised nor directly enforceable in Indonesia. A successful judgment creditor in a foreign proceeding is therefore obliged to file a new action in the Indonesian courts and to re-litigate the matter on its merits. However, the foreign judgment can be offered at trial as prima facie evidence of matters governed by the relevant foreign law and of the underlying factual issues. Once a judgment has been secured upon re-trial or reexamination, the judgment can then be enforced against the assets of the judgment debtor in Indonesia in the same way as a domestic judgment.

it permissible for lawyers to charge contingency or conditional fees, or other 16 Is fee arrangements based on the result of the litigation/arbitration?
In practice, it is common in Indonesia for litigation lawyers to charge a contingency fee or a conditional fee. The amount of the fees is agreed between the client and the lawyer.

Arbitration 17 Is the arbitration law based on the UNCITRAL Model Law? 18 What are the main national arbitration institutions?
No. However, Indonesias Arbitration Law (Law No. 30/1999) (the law which regulates the conduct of arbitration proceedings in Indonesia) incorporates many principles of the UNCITRAL Model Law.

The main national arbitration institution is Badan Arbitrase Nasional Indonesia (BANI) (Indonesian National Arbitration Institution), which was established in 1977 by the Indonesian Chamber of Commerce. See http://www.bani-arb.org

19 Are there any restrictions on who may represent the parties to an arbitration? 20 What are the formal requirements for an enforceable arbitration agreement?

No. Parties may represent themselves or be represented by any advocate of their choice, whether or not legally qualified in Indonesia. For disputes under Indonesian law, the advocate must be accompanied by an advisor who is an Indonesian national.

The Indonesian Arbitration Law provides that an arbitration agreement must be in writing and signed by both parties. Electronic communications including e-mail and facsimile are acceptable if they are accompanied by proof of receipt by both parties.

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Indonesia Hiswara Bunjamin & Tandjung (in association with Herbert Smith)

21 Can the court refuse to stay litigation if there is a valid arbitration clause?
the arbitration agreement and any relevant rules are silent, how many 22 If arbitrators will be appointed, and who is the appointing authority?

The Arbitration Law provides that the courts in Indonesia have no jurisdiction over disputes where there is a valid arbitration clause and cannot interfere in the settlement of such disputes. The courts will, however, refuse to stay litigation if the arbitration clause is not enforceable or if the subject matter of the dispute cannot be arbitrated.

If the parties cannot reach an agreement, the chairman of the relevant District Court is the appointing authority. The chairman has the discretion whether to appoint an arbitrator or a panel of arbitrators.

restrictions placed on the right to challenge the appointment of an 23 Are arbitrator?


The appointment of an arbitrator can be challenged if the arbitrator has a familial, financial or occupational relationship with one of the parties. The Arbitration Law also sets out other reasons that may be used to challenge the appointment of an arbitrator. The most common are: (i) failure to meet the qualifications for an arbitrator as stipulated in the Arbitration Law (e.g., over 35 years of age and having 15 years of experience in their field) (ii) having an interest in the arbitration award (iii) any other justifiable reason that gives rise to doubts that the arbitrator will carry out his/her duty freely and be impartial when making an award.

the domestic law contain substantive requirements for the procedure to 24 Does be followed?
There are certain mandatory procedural requirements under the Arbitration Law (eg, the examination of witnesses and experts must be done in accordance with the provisions of the Indonesian Civil Procedure Law). Otherwise, the parties are free to choose the rules that govern the arbitration process and procedures to be followed. If the parties are unable to agree, there are procedures set forth in the Arbitration Law that will be applied.

25 On what ground can the court intervene during an arbitration? 26 Do arbitrators have powers to grant interim or conservatory relief? 27 When and in what form must the award be delivered? 28 On what ground can an award be appealed to the court?
The Arbitration Law provides a right of challenge where: (i) forged or falsified documents were submitted as evidence in the arbitration (ii) a decisive document was concealed (iii) false evidence was given during the hearing (iv) the award contravenes decency and public order

The court may intervene only when one of the parties to the arbitration challenges the appointment of an arbitrator.

Yes, but there is no provision to ensure enforcement of such interim or conservatory measures granted by arbitrators.

The award must be in writing, signed and dated by all of the arbitrators within 30 days of the conclusion of the hearing. The award must also contain, among other items, the reasoning of the arbitrators in arriving at their conclusion. Should there be a difference of opinion on the arbitration panel, each of the arbitrators will be required to submit their own opinion.

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29 What procedures exist for enforcement of foreign and domestic awards?

Indonesia is a party to and has ratified the New York Convention, subject only to minor commercial and reciprocity reservations. Awards from the convention countries are recognised in Indonesia on the ground set out in Article 5 of the Convention. Under the Arbitration Law, a foreign award (an award from a tribunal seated outside of Indonesia) is enforced by obtaining an Exequatur from the chairman of the Central Jakarta District Court. Once the Exequatur is issued, the award is enforceable as a final court judgment. Refusal by the Central Jakarta District Court to recognise and execute a foreign award may be appealed to the Supreme Court, which has 90 days to make a decision. Domestic awards (awards from a tribunal seated within Indonesia) must be registered at the Registrar of the relevant District Court by the arbitrator or their proxy within 30 days of the awards issuance. If the award is not registered in time then it will be unenforceable. Once the award is registered, it is enforceable as a final and binding court judgement.

30 Can a successful party recover its costs?

The tribunal has the discretion to award costs, including the parties legal fees, disbursements and the tribunals own charges, to the winning party.

Alternative dispute resolution


the parties to litigation or arbitration required to consider or submit to any 31 Are alternative dispute resolution before or during proceedings?
The parties to litigation are required to submit to mediation before regular court proceedings commence. The parties can appoint a professional mediator or ask the court for a recommendation of a judge who is not scheduled to hear the parties case.

Reforms 32 Are there likely to be any significant procedural reforms in the near future?
There is currently a new Civil Procedure Law being drafted by the Indonesian government. A draft of this law has been submitted to the parliament for consideration, but we do not expect the law to be finalised and implemented any time soon.

Hiswara Bunjamin & Tandjung (in association with Herbert Smith)


Contact Phone Fax Email Website Zaky Tandjung (partner), Charles Ball (foreign counsel) 23rd Floor, Gedung BRI II, Jl Jend Sudirman Kav 44-46, Jakarta 10210, Indonesia +62 21 574 4010 +62 21 574 4670 zaky.tandjung@hbtlaw.com; charles.ball@hbtlaw.com www.hbtlaw.com

Hiswara Bunjamin & Tandjung is formally associated with Herbert Smith with experienced Herbert Smith lawyers seconded to us from their international network of offices.

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Japan
Professor Hiroshi Oda & Herbert Smith (Tokyo)

Litigation 1 What is the structure of the legal profession?


There are three branches of the legal profession in Japan: judges, public prosecutors and attorneys. Currently, candidates for all three branches go through 18 months of legal training before joining their chosen branch. The entire system has recently been reviewed and a US-style law school system was introduced in April 2004. Law students are required to complete one year of training after finishing law school and must also pass the state examination. Judges are appointed by the state from the pool of legal trainees for 10-year terms. These terms are usually renewed automatically until retirement. Traditionally, attorneys used to be generalists practicing alone or in an office with two to three attorneys. This is still the case with the majority of law firms, but there is a growing tendency in metropolitan centres towards large firms with around 200 lawyers and greater specialisation. Such firms are increasingly involved in cross-border matters.

2 What is the structure of the court system?

There are three principal tiers of civil courts: District Courts, High Courts and the Supreme Court. Civil cases are usually commenced in the District Court at the place where the defendant resides or has their main place of business. Larger District Courts may have specialist divisions for matters such as bankruptcy or intellectual property claims. Appeals from District Courts lie as of right with eight regional High Courts. There is a further, but limited, right of appeal to the Supreme Court. A single judge often hears cases in the first instance court. Otherwise, cases are heard by three judges. As part of the latest judicial reforms, a High Court specialising in intellectual property was set up in Tokyo. Appeals of first instance court judgments involving patents and industrial models, regardless of their territorial jurisdiction, are brought to this specialist court. Also, cases involving the revocation of the decisions of the Patent Office are handled by this court.

is the role of the judge (and, where applicable, the jury) in civil 3 What proceedings?
Japanese civil procedure originates from Austro-German law. Litigation basically follows the adversarial system. The judge reaches a decision based on evidence and legal submissions from both parties. However, the judge is often more interventionist than in Anglo-American countries and will question witnesses and may encourage the parties to produce new evidence. Previous decisions are not formally binding on judges, but, in practice, decisions of the superior courts are generally followed by lower court judges. There are no jury trials in civil cases.

4 What are the time limits for bringing civil claims?

Generally, the time limit for claims under the Civil Code is 10 years from the date it became possible to pursue the claim. There are shorter time limits for certain types of claims. The Commercial Code provides for a general time limit of five years for commercial transactions. Claims in tort must be brought within three years of the date when the incident took place or the defendant was identified, subject to an overall limit of 20 years from the date of the incident. Claims against sellers of goods must be brought within either one year or six months, depending on whether the transaction was between merchants or not.

are civil proceedings commenced, and what is the typical procedure 5 How which is then followed?
The plaintiff begins proceedings by submitting a written complaint to the court specifying the substance and factual grounds for the claim. An assigned judge examines the claim to ensure that it is properly formulated from a technical
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point of view. The court then serves a copy of the complaint with a summons on the defendant, who is directed to provide a written reply to the claim. The court may hold a preparatory hearing in order to identify the contested issues and the evidence required. At the end of this preparatory hearing, the court confirms the issues which are to be proven in a subsequent formal hearing. In cases where the parties live far apart, the preparatory procedures may be conducted by a video conference. The formal hearing consists of a series of hearings held approximately once a month with the Trial Judge, who often handles more than 100 cases simultaneously. The rules of evidence are not complex, and there is no restriction on the evidence that can be produced. The admissibility of this evidence is left almost entirely to the discretion of the court. Parties are entitled to cross-examine their opponents witnesses. A judge may question a witness directly at any time.

What is the extent of pre-trial exchange of evidence, and how is evidence presented at trial?
There is no provision for full pre-trial discovery of documents. However, once a complaint has been submitted to the court, the court is under an obligation to assist the parties in collecting evidence before the trial by requesting documents from the possessor, or by investigation by public agencies. Parties may also apply for an order requiring the opposing party to produce documents. The person holding a requested document is then obliged to produce it unless: (i) the possessor or a relative might then be exposed to prosecution; or

(ii) production would involve unauthorised disclosure of an official secret - this applies only to documents held by civil servants in their capacity as civil servants, and where the production of the document would harm the public interest or seriously inhibit the performance of public duties; or (iii) the document contains information acquired in circumstances imparting privilege or imposing a duty of confidentiality, and it involves technological or professional secrets; or (iv) the document has been created solely for internal management purposes. Documents need not be identified specifically by title and content. It is sufficient for the applicant to present facts which enable the holder to identify the document. If a person fails to comply with an order to produce a document, the court can make findings of fact in favour of the other party. There is no requirement for pre-trial exchange of witness statements. However, in practice, the court often requires the parties to provide a summary of a witness evidence in advance of a hearing. Although the court has the power to order reluctant witnesses to attend a hearing, this seldom happens in practice. Japan has a system of written interrogatories whereby a person who intends to bring an action is entitled to seek written replies from the prospective defendant concerning issues necessary for the preparation of litigation. This is provided that notice is given to the prospective defendant that an action will be brought to court against them within four months. Similarly, the prospective defendant is entitled to request replies to interrogatories from the prospective plaintiff. The court may give assistance to the parties before the action has been brought to court. In addition, in 2003, a new procedure for obtaining evidence before a complaint is filed with the court was introduced. In order for the parties to obtain the information required to file, a party can, having given notice of its intention to commence legal proceedings, make an inquiry in writing on matters of evidential relevance. The prospective defendant is entitled to make a similar inquiry, provided that it has responded in writing to the inquiry made of it by the prospective claimant. A party may refuse to respond to vexatious requests. Furthermore, there is no sanction for non-compliance, but the fact that a party failed to co-operate without a justifiable reason may lead to adverse inferences being drawn by the court. A prospective claimant can also seek the courts assistance to obtain any necessary evidence from a third party provided that the counterparty is notified of the intention to sue. The court can require a third party to submit documents to the court, report on the outcome of any research, or provide an opinion in writing.

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Japan Professor Hiroshi Oda & Herbert Smith (Tokyo)

what extent are the parties able to control the procedure and the 7 To timetable? How quick is the process?
The pace of proceedings is governed by the court, although the parties are consulted. The Japanese court system used to be renowned for lengthy delays, but steps have been taken to speed up procedures. The speeding up of civil procedure was one of the core issues addressed by the latest reform of the judicial system. The new Law on the Speeding up of Civil Procedure was enacted in 2003. The average time at the District Court level from filing the complaint to judgment is, according to the 2007 Supreme Court survey, 7.8 months. If witnesses are summoned, the average is 18.8 months. Intellectual property cases take 12.1 months. 5.5% of cases take more than two years to be heard. The average time needed for appellate proceedings is 6.2 months. By an amendment to the Code of Civil Procedure in 2003, a new system of mandatory tri-partite conferences on case management was introduced. The system for handling intellectual property cases has also gone through a major reform with the aim of reducing the time needed for the procedure by half. Now the court, as well as each of the parties, is under an obligation to ensure that the procedure progresses in accordance with a pre-determined plan. In complicated cases, the court is required, in consultation with the parties, to prepare a plan which sets out the period for the identification of issues and evidence, the questioning of the witnesses and parties, the timing of the oral hearing and the rendering of judgment.

interim remedies are available to preserve the parties interests pending 8 What judgment?
Interim remedies include: (i) provisional attachments, which have the effect of freezing a defendants assets in order to secure a monetary claim;

(ii) provisional dispositions to preserve property which is the subject of the claim; and (iii) provisional dispositions to establish an interim relationship, which are in effect interim declarations of legal rights coupled with orders to preserve those rights pending trial. In all cases, the applicant will have to demonstrate a real risk that any eventual judgment will be rendered valueless without such provisional protection. An order for provisional attachment may be made without notice to the defendant, but the order may be discharged if the defendant provides appropriate security. Orders for provisional dispositions are usually made only after hearing the defendant.

there procedures available for judgment to be obtained without 9 Are proceeding to trial, on the ground that it is believed there is no defence to the claim? If so, at which stage of the proceedings should such procedures be invoked?

No. The Japanese courts will not give judgment without trial on the basis that there is no defence to the claim. However, judges are more active in Japan than in common law jurisdictions and play a key role in the case. This gives scope for the parties to be steered where, for example, a defence is weak. In particular, judges are empowered to and routinely do encourage the parties to settle.

10 What substantive remedies are available?

The court has power to order any appropriate relief necessary to give effect to its judgment. This may include orders for monies or damages to be paid, declarations, an account of profits, the transfer of property and the granting of injunctive relief. Punitive damages are not available.

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11 What means of enforcement are available?


Means of enforcement include: (i) attachment of property the court bailiff may take possession of movable objects, and the court may declare that immovables and claims against third parties are attached. The asset may then be sold or transferred to the creditor; (ii) compulsory administration the court appoints an administrator who manages the property. Any profits derived from that property are paid to the creditor; (iii) substitute performance the court obliges someone to do something at the cost of the defendant; and (iv) indirect compulsion the court obliges someone not to do something and, for instance, imposes fines until the defendant complies.

the court have power to order costs? Are foreign claimants required to 12 Does provide security for costs?
Legal fees are generally not recoverable even if a party wins a case. There is therefore no concept of security for costs except in respect of court fees.

what ground can the parties appeal, and what restrictions apply? Is there 13 On a right of further appeal? To what extent is enforcement suspended pending an appeal?
The first appeal is allowed as a matter of right, but must be filed within two weeks following service of the judgment. It may be based on any grounds and is treated as a re-opening or continuation of the first instance proceedings. New evidence may be offered, but the court may reject it if there had been a delay in producing it at the first instance trial. A second appeal lies on the basis of an error of law only. Finally, an appeal can be made as of right to the Supreme Court on the sole statutory ground of an error of interpretation of the Constitution, or other violation of the Constitution in the original judgment. The Supreme Court also has the discretion to accept appeals where the original judgment was contrary to the precedents of the Supreme Court, or involved other significant matters concerning the interpretation of law. Such appeals are usually handled on a documents-only basis. Enforcement of a judgment will automatically be suspended pending the outcome of an appeal unless, as is common in practice, the court orders otherwise.

what extent can domestic and/or foreign state entities claim immunity from 14 To civil proceedings?
There is no immunity for domestic state entities. With regard to foreign state entities, by a decision dated 21 July 2006, the Supreme Court explicitly changed the precedent established by the decision of the Great Court of Judicature of 1928 and ruled in favour of a restrictive doctrine of sovereign immunity. Referring to the UN Convention on Jurisdictional Immunities of States and Their Property of 2004, the Supreme Court ruled that there is no longer any international customary law which exempts a foreign state for private law matters or matters of a business administration nature.

15 What procedures exist for recognition and enforcement of foreign judgments?


A foreign judgment must first be converted into a Japanese judgment of execution. It may then be enforced in the usual way. The primary requirements for recognition are that: (i) the Japanese defendant received proper service (personal service on a Japanese defendant within Japan is never valid); (ii) the terms of the foreign judgment are not contrary to the public order or good morals of Japan; and (iii) the courts of the relevant foreign country provide reciprocal recognition of Japanese judgments.

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Japan Professor Hiroshi Oda & Herbert Smith (Tokyo)

If all of these requirements are met, the foreign judgment will be enforceable. The Japanese court does not review the foreign judgment on its merits. The Supreme Court has refused enforcement of a judgment which ordered payment of punitive damages, on the ground that it was against public order. Japanese defendants commonly block enforcement of a foreign judgment by starting parallel litigation in a Japanese court. If proceedings are commenced against a Japanese defendant in a foreign court, the Japanese defendant can seek a local declaratory judgment which absolves them of liability to the foreign plaintiff. An enforcement judgment will not be issued if a Japanese court has rendered a final judgment on the same matter.

it permissible for lawyers to charge contingency or conditional fees, or other 16 Is fee arrangements based on the result of the litigation/arbitration?
Contingency or conditional fee arrangements are permitted. However, they are rare in major international disputes, where lawyers tend to charge on the usual time-cost basis.

Arbitration 17 Is the arbitration law based on the UNCITRAL Model Law? 18 What are the main national arbitration institutions?
Yes. The new Arbitration Law promulgated in the Japanese Diet on 1 August 2003 broadly adopts the UNCITRAL Model Law. It became effective as of 1 March 2004. The Law is available online at http://www.kantei.go.jp/foreign/policy/sihou/arbitrationlaw.pdf.

The main Japanese arbitration institutions are the Japan Commercial Arbitration Association (http://www.jcaa.or.jp/e/index-e.html) and the Tokyo Maritime Arbitration Commission of the Japan Shipping Exchange Inc. (http://www.jseinc.org/en/tomac/index/htm).

19 Are there any restrictions on who may represent the parties to an arbitration?
In addition to Japanese lawyers, foreign lawyers practicing outside Japan and registered foreign law solicitors (ie, foreign lawyers registered with the Ministry of Justice to practice in Japan, known as gaikokuho jimu bengoshi) may represent parties to an international arbitration with its seat in Japan.

20 What are the formal requirements for an enforceable arbitration agreement? 21 Can the court refuse to stay litigation if there is a valid arbitration clause?
The court must stay litigation if there is an arbitration clause unless: (i) the arbitration agreement is null and void or invalid on other grounds; (ii) the arbitration agreement is incapable of being performed; or

An enforceable arbitration agreement must be in writing. This may be evidenced in the form of a document signed by all parties, or by an exchange of letters, telegrams, facsimiles or other communication devices for physically separated parties and which provide the recipient with a written record of the content so transmitted. In addition, the arbitration agreement may be recorded in electromagnetic form. This is defined to include any method incapable of recognition by human perception, and used for data-processing by a computer.

(iii) the defendants request for a stay was made after they provided argument in the court proceedings sought to be stayed.

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the arbitration agreement and any relevant rules are silent, how many 22 If arbitrators will be appointed, and who is the appointing authority?
The number and appointment of arbitrators may be decided by agreement between the parties. Should the parties fail to agree the number of arbitrators, then: (i) the number of arbitrators shall be three if the total number of the parties to the arbitration is two; and

(ii) the number of arbitrators shall be determined by the court if the total number of parties to the arbitration is three or more. Should the parties fail to agree on the appointment of the arbitrators, then: (i) if there are two parties and three arbitrators in the arbitration, each party shall appoint one arbitrator and the appointed arbitrators shall appoint a third arbitrator. Where either party or the arbitrators fail to make an appointment, the appointment shall be made by the court; (ii) with two parties and a sole arbitrator, or in an arbitration with three or more parties, appointments shall be made by the court.

restrictions placed on the right to challenge the appointment of an 23 Are arbitrator?


Parties may challenge an arbitrator if the arbitrator does not possess the necessary qualifications agreed between the parties or if circumstances exist that give rise to justifiable doubts as to the impartiality or independence of the arbitrator. A party may only challenge an arbitrator appointed or recommended by that party, if the party became aware of the relevant facts after such appointment. The parties are free to agree the challenge procedure but failing agreement the tribunal shall decide. Such a decision is appealable to the court.

the domestic law contain substantive requirements for the procedure to 24 Does be followed?
Japanese law requires that the arbitral procedure should be in accordance with the parties agreement subject to certain mandatory provisions contained in the Arbitration Law. The parties have a wide discretion in this regard. Failing such an agreement, the tribunal can decide on the procedure at its discretion. The tribunal may appoint experts.

25 On what ground can the court intervene during an arbitration?

In accordance with the Arbitration Law, the Japanese courts may, on the request of one or more of the parties, intervene during an arbitration to: (i) determine the number of arbitrators to be appointed in an arbitration involving three or more parties if the parties fail to do so, or appoint a sole arbitrator or co-arbitrator if one or more parties fails to do so, or a third arbitrator if the two arbitrators appointed by the parties fail to do so; (ii) determine an unsuccessful challenge by a party to the arbitral tribunal as to whether grounds exist to challenge the arbitrator, provided the parties have failed to agree a procedure for challenging an arbitrator; (iii) hear a request by one or more parties to remove an arbitrator for being de jure or de facto unable to perform their functions or for failing to act without undue delay, and may duly remove said arbitrator;

(iv) determine whether an arbitral tribunal has jurisdiction following a preliminary independent ruling by the tribunal that it does have jurisdiction; and (v) provide assistance in the taking of evidence for the arbitration. In addition, the court may, on the request of a party, intervene after the arbitration in respect of an application to enforce or set aside an arbitral award.

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Japan Professor Hiroshi Oda & Herbert Smith (Tokyo)

26 Do arbitrators have powers to grant interim or conservatory relief? 27 When and in what form must the award be delivered?
Yes.

The award must be in writing, dated and signed by the arbitrators and it must, unless agreed otherwise by the parties, state the reasons for the award. Copies of the award must be served on the parties.

28 On what ground can an award be appealed to the court?


An application to the court to set aside an award may be made where: (i) the arbitral award is not valid due to the limited capacity of a party; (ii) the party appealing was not given the required notice of the proceedings under the laws of Japan; (iii) the party making the request was unable to present their defence; (iv) the arbitral award deals with matters not falling within the terms of the arbitration agreement; (v) the composition of the arbitral tribunal or the arbitral procedure was not in accordance with the laws of Japan; (vi) the claims made in the arbitral proceedings relate to a dispute which is not capable of being the subject of arbitration under the laws of Japan; or (vii) the arbitral award is in conflict with the public policy or good morals of Japan.

29 What procedures exist for enforcement of foreign and domestic awards? 30 Can a successful party recover its costs?

Japan is a signatory to the New York Convention, subject to the reciprocity reservation. However, the Arbitration Law adopts the provisions of the Model Law on recognition and enforcement. As a result, Japans New York Convention reciprocity reservation is now redundant. For enforcement one needs a certified copy of the award, together with a translation of the award into Japanese (assuming it was made in a foreign language). Applications for enforcement may be made with no oral hearing.

The arbitral tribunal may, upon the parties agreement, determine the division of costs incurred in the course of the arbitral proceedings.

Alternative dispute resolution


the parties to litigation or arbitration required to consider or submit to any 31 Are alternative dispute resolution before or during proceedings?
Parties to litigation can be ordered by the court, either of its own motion or on the application of one of the parties, to undergo a conciliation process before the formal proceedings. Mandatory conciliation before the formal proceedings applies mainly to family cases. A new ADR law came into force on 1 April 2007. It regulates ADR processes and, in particular, restricts who can act as a third party neutral in an ADR process.

Reforms 32 Are there likely to be any significant procedural reforms in the near future?
There are no significant procedural reforms anticipated in the near future vis--vis court procedure.
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Professor Hiroshi Oda, Sir Ernest Satow Professor of Japanese Law, University College, London
in collaboration with Herbert Smith, Tokyo
Contact Peter Godwin, Partner, Head of dispute resolution 41st Floor, Midtown Tower, 9-7-1 Akasaka, Minato-ku Tokyo 107-6241, Japan +81 3 5412 5412 peter.godwin@herbertsmith.com www.herbertsmith.com

Phone Email Website

Herbert Smiths Tokyo office has leading practices in the fields of dispute resolution, M&A and projects. Uniquely, Herbert Smiths Tokyo office has a team of lawyers dedicated to advising on dispute resolution issues involving litigation, arbitration and alternative dispute resolution. A focus of our practice is assisting our clients to successfully resolve disputes before having to resort to a formal dispute resolution mechanism. We provide top quality, commercially aware legal advice to both Japanese and foreign enterprises based on our familiarity with Japan and our broad experience of international dispute resolution.

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Korea
Kim & Chang

Litigation 1 What is the structure of the legal profession?


All qualified lawyers have rights of audience in court, and there is no distinction between barristers and solicitors. Presently, to qualify as a lawyer, one must pass the Bar Exam and then complete two years of training at the Judicial Research and Training Institution run by the Supreme Court. Public prosecutors or judges are appointed from the pool of qualified lawyers. Judges generally sit for a guaranteed 10-year term, after which they undergo a review. (Supreme Court justices sit for six-year terms). There is a reshuffling of judges every year. Korea has changed its legal education and qualification system, as well as its criminal trial system and rules of evidence. A US-style law school system and post-graduate course was introduced in July 2007. Only law school graduates are entitled to apply for the Bar Exam.

2 What is the structure of the court system?

There are currently three levels of court: the District Court (court of first instance), the High Court (appellate court) and the Supreme Court (the highest court). Cases in the District Court are heard by either one or three judges. An appeal from the District Court with a three-judge bench should be made to the High Court, while an appeal from a one-judge bench should be made to a three-judge appellate division of the District Court. Appeals from the High Court or the appellate division of the District Court should be made to the Supreme Court. In addition to these courts, the government is presently in the process of establishing a special upper level tribunal at the High Court level, which will hear appeals from the High Court and will, in turn, reduce the caseload of the Supreme Court. The relevant legislation is not yet in place and remains pending. There is a small claims division within the District Court, which has a one-judge bench and reviews claims of less than 20 million Korean Won. The judge of the small claims division renders judgments without detailed reasons. There are also specialty courts: the Administrative Court, the Family Court and the Patent Court. Appeals from the Administrative Court and the Family Court should be made to the High Court, and then the Supreme Court. An appeal from the Patent Court (considered an appellate-level court) should be made to the Supreme Court.

is the role of the judge (and, where applicable, the jury) in civil 3 What proceedings?
Judges are usually passive, ruling on matters of fact and law after hearing evidence and submissions from the parties. However, the court may intervene to obtain clarification should it consider this to be necessary and appropriate. Judicial decisions are not considered to be a source of law and are not binding in future cases, although Supreme Court precedents are given de facto recognition as being binding on lower courts. There is no jury system for civil cases, but as of 2008, Korea has introduced a jury system for criminal cases.

4 What are the time limits for bringing civil claims?

General contract claims must be brought within 10 years from the time when the obligation becomes due. However, where one or both parties are merchants, the time limit is five years. Tort claims are barred after three years from the time when the claimant knew or should have known of the tort and the tortfeasor, or 10 years from the time when the tort occurred, whichever is earlier. The time limit for enforcements is 10 years from the date when a judgment became final and conclusive. The filing of an application for prejudgment attachment suspends the time limit for filing a suit. The issuance of a claim letter also suspends the time limit for six months, provided that it is followed by a lawsuit or prejudgment attachment. Some laws provide for shorter time limits, eg, one or three years for certain types of claims, such as claims against attorneys-at-law or for interest payments. Parties can agree to shorten (but not extend) the statute of limitations.

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In some cases, the laws provide for time limits for filing lawsuits, such as a one-year time bar involving contract of carriage by sea cases. This time bar may be extended by agreement.

are civil proceedings commenced, and what is the typical procedure 5 How which is then followed?
Civil proceedings are commenced by filing a complaint with the court. The complaint should set out the parties, and basis and grounds for the claim, together with the relevant evidence. After the complaint is filed, the defendant is required to file a reply within 30 days of the receipt of service. After this, there are usually two rounds of exchanging pleadings and documentary evidence. The court then holds a preparatory hearing, during which it reviews the issues and how the respective parties will support their assertions with evidence. Thereafter, witness statements (or proposed questions for witnesses) and further documentary evidence, as well as other types of evidence (such as expert reports and interrogatories for the relevant parties) will be presented to the court. Then the hearing is set, mainly to hear the testimony of the factual and expert witnesses. The complexity of a case determines the length of the hearings. When the hearings are closed, the court renders a judgment.

is the extent of pre-trial exchange of evidence, and how is evidence 6 What presented at trial?
When the parties submit pleadings, the relevant evidence referred to in the pleadings is attached. The objective is to have the parties submit the bulk of their documentary evidence before the preparatory hearing or, at the latest, before the main hearing. The examination and cross-examination of witnesses is conducted during the main hearing(s).

what extent are the parties able to control the procedure and the 7 To timetable? How quick is the process?
Since the amendment of the Code of Civil Procedure in 2002, courts have become more stringent in setting the timetable for the proceedings. Parties consequently have less flexibility in controlling the procedure and timetable, though they still have some scope for seeking extensions or the rescheduling of hearings. For the submission of pleadings and evidence, the court may determine a time period within which the parties may make their submissions. After this period the parties may not be permitted to submit any further arguments or evidence unless it can be shown that there was just cause for failing to submit within the set period. Assuming that there are usually two rounds of exchanged pleadings and that only one or two hearings are held for the examination of witnesses, the court of first instance may be able to render a decision within eight to 12 months of the complaint having been filed. In the case of a foreign defendant, however, the proceedings could take longer than 12 months if service has to be made abroad (overseas service could take two or three months).

interim remedies are available to preserve the parties interests pending 8 What judgment?
There are three types of interim remedies: (i) prejudgment attachment to secure monetary compensation;

(ii) prejudgment injunction to maintain the status quo; and (iii) prejudgment injunction for a mandatory/prohibitory order. A prejudgment attachment to secure monetary compensation may be obtained through application to the court. The application must provide the details of the basis of the claim and the necessity/urgency of a prejudgment attachment. It must also indicate whether an action on the merits has been or will be filed and whether a prejudgment attachment was previously obtained for the same claim. The proceedings are ex parte. The court will require the posting of countersecurity, the amount of which ranges from one-eighth to four-fifths of the claim amount, depending on the asset to be attached. The counter-security may be posted in cash, by surety bond, or a combination of cash and bond, subject to the courts approval.

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Korea Kim & Chang

A prejudgment injunction to maintain the status quo may be obtained through application to the court if a prima facie claim and the necessity for the remedy are both established. An application, together with the evidence that establishes a prima facie case, must be filed with the court. These proceedings are also conducted ex parte. The court usually requires a counter-security to be posted, the amount of which is set at the courts discretion, but this is usually between one-tenth and one-third of the claim amount in the case of a prejudgment injunction. The counter-security may, in many cases, be posted by way of surety bonds, subject to the courts approval. For the provisional injunction for a mandatory/prohibitory order, the party also has to establish a prima facie case and the necessity for the injunction. For such injunctions, the court normally holds hearings (compulsory in some cases) and/or requires a deposit.

there procedures available for judgment to be obtained without 9 Are proceeding to trial, on the ground that it is believed there is no defence to the claim? If so, at which stage of the proceedings should such procedure be invoked?
There is no summary judgment procedure. However, in the case of monetary claims, the claimant may apply for a payment order. The application should set out the claim with supporting documents. Only one-tenth of the stamp tax (filing fees) needs to be paid with such an application. If the court considers that there is a claim, the court will issue a payment order which will be served on the defendant. If the defendant does not object to the claim, the payment order will have the effect of a judgment. If the defendant objects to the claim, the plaintiff will have to pay the remaining balance (nine-tenths) of the stamp tax, upon which the court proceedings will proceed to a normal lawsuit. Also, if the defendant did not submit the reply after the complaint is served, then the court may consider that the defendants admit the allegations contained in the complaint and render the judgment in favour of the plaintiff.

10 What substantive remedies are available?


There are three types of remedies: (i) declaratory judgments; (ii) judgments making a prohibitory or mandatory order (which includes a judgment for monetary compensation); and (iii) judgments creating a new legal relationship. In the case of personal injury or defamation claims, compensation for pain and suffering would be awarded. Non-compensatory damages, such as punitive and special damages, are not recognised under Korean law.

11 What means of enforcement are available?

A declaratory judgment or a judgment creating a new legal relationship does not need enforcement. Only judgments making mandatory or prohibitory orders need enforcement. If a judgment debtor does not pay a mandatory order for monetary compensation, then the assistance of the court may be obtained. For example, the court may require an auction sale of assets to satisfy the judgment and/or issue an order for an examination of the debtor (or a corporate debtors directors) to disclose all assets (the failure of which will result in criminal sanctions). The procedure for enforcement will depend on the type of assets against which the judgment is to be enforced. For judgments making prohibitory or other mandatory orders, there is little practical means of enforcement in the instance of non-compliance. The only means of enforcement is through sanctions. There is no contempt of court in Korea, so the court indirectly compels the judgment debtor by way of a monetary penalty. For example, the court can impose a penalty payment for each day the order is not honoured, which is paid to the judgment creditor.

the court have power to order costs? Are foreign claimants required to 12 Does provide security for costs?
The court usually orders the losing party to pay the winning partys court costs, which include the stamp tax (filing fees that are based on the claim amount), service or processing fees and witness fees (if a witness, including an expert, is summoned by the court and the party has advanced the costs). However, attorneys fees are recoverable only to the

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extent specified by the tariff schedule set by the Supreme Court, which is calculated using a formula and based on the claim amount. The recoverable attorneys fees are often far less than the amount expended. In cases where there has been an obvious abuse of the process by one party, the other party can claim for reimbursement of reasonable attorneys fees incurred as a result of the abuse by way of a separate action. Upon motion by the defendant, a plaintiff who does not have a presence in Korea can be ordered to post security for court costs. The amount of security for court costs is set at the courts discretion, but is usually about 3% of the claim amount. The security may be posted by way of a surety bond, subject to court approval. Domestic claimants are not required to post security.

what ground can the parties appeal, and what restrictions apply? Is there 13 On a right of further appeal? To what extent is enforcement suspended pending an appeal?
An appeal to the appellate court may be made on findings of both fact and law. The appellate proceedings are considered a trial de novo and new evidence and/or arguments can be produced. However, an appeal to the Supreme Court is generally restricted to arguments on law. For a monetary compensation judgment, a provisional enforcement of the whole or part of the judgment amount pending an appeal should be granted unless there are reasonable grounds for refusal. At the courts discretion, the provisional enforcement may sometimes be suspended upon application on the condition that a deposit (usually equal to the amount suspended) is posted into court, usually in cash, but sometimes by way of a government bond or certain types of negotiable instruments.

what extent can domestic and/or foreign state entities claim immunity from 14 To civil proceedings?
Korea recognises the doctrine of restrictive state immunity, whereby immunity of a domestic and foreign state or state entity from civil proceedings is restricted to acts of a governmental nature. Immunity does not extend to acts of a commercial nature which could be performed equally well by a private individual or trading corporation.

15 What procedures exist for recognition and enforcement of foreign judgments?


Korea is not a party to any convention, treaty or international agreement on the recognition and enforcement of foreign judgments. In order for a foreign judgment to be recognised and enforced in Korea, a recognition and enforcement judgment must be obtained from a Korean court. The court will consider whether the foreign judgment satisfies the conditions required under Korean law for recognition and enforcement, as noted below: (i) the foreign judgment is final;

(ii) the jurisdiction of the foreign court is recognised under the principles of jurisdiction as provided for in Korean law or treaties; (iii) the Korean defendant had responded to the suit without being served, or was served by legal methods (other than public notice or similar methods) with the summons and any orders necessary for the commencement of the suit in advance so that they had sufficient time to prepare the defence; (iv) the judgment is not contrary to Korean public policy; and (v) there is a guarantee of reciprocity by the foreign state in which the judgment was rendered.

it permissible for lawyers to charge contingency or conditional fees, or other 16 Is fee arrangements based on the result of the litigation/arbitration?
Contingency fees or results-based fee arrangements are permitted in Korea. Lawyers and their clients are generally free to agree on fee arrangements without any restrictions. However, if the matter of an attorneys fees is brought before the court, and the court considers that the amount of the fees is manifestly inappropriate in view of the work performed by the lawyers, the amount at stake and the outcome of the case, then the court can intervene and adjust the fees agreed upon to an amount that the court considers appropriate.

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Arbitration 17 Is the arbitration law based on the UNCITRAL Model Law? 18 What are the main national arbitration institutions?
The Arbitration Act, which became effective on 31 December 1999, more or less adopts the UNCITRAL Model Law (Model Law). The Act is available online at the website of the Korean Commercial Arbitration Board (see below).

The only local arbitration institution recognised in Korea is the Korean Commercial Arbitration Board (KCAB) (http://www.kcab.or.kr). However, the Arbitration Act applies not only to institutional arbitrations but also to ad hoc arbitrations. Thus, there is no formal or significant distinction between the two, and parties may pursue ad hoc or institutional arbitration subject to such rules as they may agree on, or as the arbitrator may direct.

19 Are there any restrictions on who may represent the parties to an arbitration? 20 What are the formal requirements for an enforceable arbitration agreement?
(i) it is contained in a document signed by the parties; or (ii) an exchange of letters or other means of communication providing a record of the agreement exists; or (iii) an exchange of statements of claim and defence exists in which the existence of the agreement is alleged by one party and not denied by the other. A reference in a contract to a document (eg, standard general terms) containing an arbitration clause constitutes an arbitration agreement, provided that the contract is in writing and the reference is such as to make that clause part of the contract.

There is no specific provision in the Arbitration Act as to who has rights of audience in an arbitration. In practice, there is no limitation on parties representing themselves or being represented by any advocate of their choice, legally qualified in Korea or elsewhere. It is assumed that such a practice will continue. The Arbitration Act also allows parties to agree upon the language to be used in the arbitration, whether it be English, Korean, both English and Korean, or another language(s) altogether.

An enforceable arbitration agreement must be in writing, either as an arbitration clause in a contract or as a separate agreement. An agreement is considered to be in writing if:

21 Can the court refuse to stay litigation if there is a valid arbitration clause?
the arbitration agreement and any relevant rules are silent, how many 22 If arbitrators will be appointed, and who is the appointing authority?

The court shall dismiss a case if there is a valid arbitration clause and if the arbitration clause is invoked as a defence by the defendant, prior to raising any substantive defence in the case.

The parties are free to determine the number of arbitrators. However, in the absence of an agreement, three arbitrators will be nominated. Under the Arbitration Act, unless otherwise agreed, each party selects one arbitrator, and the two arbitrators then appoint a third. If no agreement can be reached within 30 days, the court may appoint the arbitrator upon motion by either party. No appeal in relation to the courts appointment is allowed. If the arbitration agreement provides for the arbitration to be conducted pursuant to the rules of the KCAB, then the nomination of the arbitrators will be as follows: the parties are provided with a list of 10 candidates from the KCAB roster of arbitrators; the parties then rank the arbitrators on the list in order of preference; the three arbitrators with the highest rankings between the two parties are then nominated to be the arbitration panel. A special set of KCAB rules has been created for international arbitration cases: Rules of International Arbitration for the KCAB which became effective as of February 1, 2007. The Rules of the International Arbitration will apply only if the parties specifically agree to apply such Rules. The main difference between these new rules and the regular KCAB Rules (which are still in effect and apply to the cases pending at the KCAB, unless the parties agree otherwise), is the selection process for arbitrators and the fees for the arbitrators. Under the Rules of the International Arbitration, each side will select one arbitrator and the two selected arbitrators will appoint a third, like the selection procedure provided under the Arbitration Act.
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restrictions placed on the right to challenge the appointment of an 23 Are arbitrator?


The appointment of an arbitrator may be challenged only if circumstances exist that give rise to justifiable doubts as to their impartiality or independence, or if they do not possess the qualifications agreed to by the parties. Further, if the party appointing an arbitrator challenges the appointment of such an arbitrator, the reasons for the challenge must be those of which the party became aware after making the appointment. The challenge is first reviewed and decided upon by the arbitration tribunal. If the tribunal rejects the challenge, the challenging party may then request that the court decide on the challenge within 30 days of receiving notice of the tribunals decision.

the domestic law contain substantive requirements for the procedure to 24 Does be followed?
Korean law does not contain substantive requirements for the procedure to be followed. However, the law does require the arbitrator to act fairly and impartially, give the parties reasonable opportunity to present their cases, use procedures appropriate to the particular case, and avoid unnecessary cost and delay.

25 On what ground can the court intervene during an arbitration?

The court has supportive powers and may assist in taking evidence, or in making orders for interim protection, if either of the parties so request. Additionally, upon request by any party, the court may intervene with respect to the arbitration tribunals jurisdiction in the matter. The application for this request must be made within 30 days of receiving notice of the tribunals decision acknowledging its jurisdiction.

26 Do arbitrators have powers to grant interim or conservatory relief? 27 28 29


When and in what form must the award be delivered?

Upon motion by the parties, the arbitrators have the power to make an interim protective order, including the power to provide appropriate security, unless otherwise agreed to by the parties. There is, however, no practical means of enforcing such interim protective orders made by the arbitrator(s).

The award must be in writing and signed by the arbitrator(s). In addition to the date of the award and place of arbitration, the award must also contain the reasoning behind the decision, unless the parties agree otherwise or if it is a consent award.

On what ground can an award be appealed to the court?


The parties rights to set aside an arbitration award are limited to those listed in the Arbitration Act. These are the same as in the Model Law and include cases where there is an incapacity of a party to the agreement, or where a party was not given proper notice of the appointment of an arbitrator. Any challenge must be made within three months of the service of the award. The rights are very limited, and it is only in very obvious cases of breach of those provisions that the court will review an appeal of the arbitration award.

What procedures exist for enforcement of foreign and domestic awards?


In cases involving domestic awards, the court issues a recognition and enforcement judgment without reviewing the merits of the case, if the award was made pursuant to the provisions of the Arbitration Act. As Korea is a party to the New York Convention (subject to the commercial and reciprocity reservations), Korean courts issue recognition and enforcement judgments on foreign arbitration awards rendered in contracting states pursuant to the provisions of the Convention. An application for an enforcement judgment must be made, and the court will open hearings to hear both sides, although the courts should not look at the merits of the case. Awards rendered in a non-contracting state will have to be reviewed as in the case of a foreign judgment (see question 15 above).

30 Can a successful party recover its costs?


Guide to dispute resolution in Asia 2008/2009

There are no specific provisions in the Arbitration Act dealing with this. However, in practice, the successful party can recover the costs of the arbitration (filing fees, arbitrators costs, etc). Attorneys fees, however, are generally not awarded in arbitration and are borne by each party.

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Korea Kim & Chang

Alternative dispute resolution


the parties to litigation or arbitration required to consider or submit to any 31 Are alternative dispute resolution before or during proceedings?
The Civil Dispute Mediation Act establishes a mediation committee within the court system: there are no private mediation boards or committees. Instead of filing a lawsuit, parties may make an application for mediation to the mediation committee. Only one-fifth of the stamp tax (filing fees) must be paid with such an application and the mediation is carried out by the tribunal that handles mediations. In the mediation, the mediation tribunal tries to facilitate an agreement by the parties. If an agreement is reached, the agreement is recorded in the form of a mediation protocol, which will have the effect of a judgment. If the parties are not able to reach an agreement, but their differences are not substantial, the mediation tribunal may then issue a mediation order, taking into account all the circumstances. If the mediation order is not objected to by either party, it will have the effect of a judgment. If the parties cannot achieve a successful mediation, then the mediation tribunal will declare that the mediation has failed, and the applicant, in order to further proceed, will have to pay the remaining balance of the stamp tax (four-fifths), upon which the court proceedings will proceed as a normal lawsuit. During a lawsuit, if the court believes that there is a possibility of the parties resolving the dispute without proceeding to judgment or that it is more appropriate to resolve the case by mediation, the court may order the parties to attempt mediation. The legal proceedings are paused during the mediation, and then resumed if the mediation fails. The court hearing the case may refer the case to the mediation tribunal, as discussed above, or it may conduct the mediation itself. There has been a growing trend among courts to order the parties to attempt mediation in this manner, instead of rendering a judgment.

Reforms 32 Are there likely to be any significant procedural reforms in the near future?
No.

Kim & Chang


Contact Phone Fax Email Website B.S. Chung Seyang Building, 223 Naeja-dong, Jongno-gu, Seoul, Korea 110-720 +82 2 3703 1103/1114 +82 2 737 9091~3 lawkim@kimchang.com www.kimchang.com

Founded in 1972, Kim & Chang is the largest and most specialised law firm in Korea. It is a full service law firm based in Seoul with approximately 400 professionals including lawyers, tax lawyers, accountants, and patent and trademark attorneys. Its professionals are top graduates of prestigious universities in Korea and abroad, including the United States, Europe and Japan. Many of its attorneys have practiced with major law firms abroad, adding their wealth of experience and expertise in specialised practice areas to the firms resources. The expertise and multi-cultural background of Kim & Changs professionals make the firm the recognised leader in providing specialised legal services for cross border transactions and uniquely qualified to address the legal needs of international companies doing business in Korea. The firm is active in practically all areas of commercial practice. Its practice groups include securities, capital markets and banking, mergers and acquisitions, privatisation, foreign investment, bankruptcy/corporate restructuring, human resources, antitrust and fair trade, international trade, product liability, real property/construction, environment, telecommunications, health care, intellectual property, litigation and arbitration, tax and maritime law. Kim & Chang handles legal matters in English, German, French, Japanese, Chinese and Swedish, as well as Korean.

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Macau
Joo Nuno Riquito & Associados Advogados

Litigation 1 What is the structure of the legal profession?


Qualification and ability to practise in Macau is subject to admission as a member of the Macau Lawyers Association. The profession is organised in a unified manner, with all lawyers qualifying as general practitioners. They are therefore able to advise clients in all matters of law and appear for clients in court proceedings, although some lawyers specialise in one or the other. The judiciary is autonomous vis--vis all other legal professions, and judges are appointed by the Chief Executive subject to a proposal submitted by an independent commission. Magistrates are independent and may only be removed in such cases as are detailed in respective legislation.

2 What is the structure of the court system?

The court system has three levels. All cases, irrespective of the value of the claim, are adjudicated first by the lower court (with specialised adjudication to the Administrative Court on matters of such nature). Access, on appeal, to the higher courts (the Court of Second Instance and the Court of Final Appeal) depends, as a general rule, on the value of the claim (MOP 50.000,00 and MOP 1.000.000,00 respectively). The Standing Committee of the National Peoples Congress of the Peoples Republic of China retains the ultimate power to rule on the interpretation of Macaus Basic Law.

is the role of the judge (and, where applicable, the jury) in civil 3 What proceedings?
Judges take a passive role, ruling on matters of fact and law after hearing evidence and submissions from the opposing parties. Judgments are based on the relevant legal statutes. Depending on the value of the claim or the nature of proceedings, a single judge or a collective court composed of three judges will be formed.

4 What are the time limits for bringing civil claims?

The statutory limitation periods vary significantly, both in duration and in effect. Some merely impose a limitation on the right to bring a claim in court, while others extinguish the substantive right entirely. General liability in tort extends for a period of three years whereas claims under contract or generally equivalent nature are subject to a limitation period of 15 years. Depending on the precise nature of the fact originating the claim (eg, execution of court orders, lease contracts, provision of legal services), the limitation period may be significantly reduced.

are civil proceedings commenced, and what is the typical procedure 5 How which is then followed?
A civil action is begun by the plaintiff filing a formal document (usually a Writ of Summons) at court setting out the grounds of the claim. The court will itself serve copy of the document on the defendant. The defendant must file and serve a defence, which may, within certain procedural limits, include a counter-claim. The plaintiff has, in certain circumstances, an opportunity to reply. After this exchange of pleadings, the parties exchange a list of documents and submit a first indication of further relevant means of evidence to possibly be used at trial, as further explained below.

is the extent of pre-trial exchange of evidence, and how is evidence 6 What presented at trial?
As part of the general duties of collaboration with the court and acting in good faith, a first indication of relevant means of evidence should be exchanged between the parties through the court. Having considered these preliminary submissions on evidence, the court issues a preliminary dispatch which guides the parties on the merits of the case and, consequently, the evidence that must be produced. Once the preliminary dispatch is issued and matters for trial are thereby established, the parties will file shortly thereafter their principal request for evidence, which may include further documentary evidence, identity of witnesses and experts witnesses to be called, court ex officio examination of documents, people or assets and, within certain procedural boundaries, each party is further allowed to call the other party to personally offer evidence at trial.
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Macau Joo Nuno Riquito & Associados Advogados

The primary source of evidence at trial is oral testimony from the individuals with direct knowledge of relevant facts. Each party may first question the witnesses that it may have indicated at a previous stage, the other party being able to address further questions to clarify the statements made and/or to challenge the consistency of the witnesss account of the facts.

To what extent are the parties able to control the procedure and the timetable? How quick is the process?
The procedures for the conduct of litigation are governed by the Civil Proceedings Code. There are very strict rules in terms of time compliance, and non-compliance with court deadlines can attract sanctions. The court has the discretion to extend the time periods for filing evidence in exceptional circumstances. The proceedings may be suspended by agreement of the parties subject to the courts discretion in order to attempt settlement. While all written submissions will normally have to be submitted within 60 days from the date of service of the Writ of Summons, the time for a claim to be brought to trial may vary significantly.

interim remedies are available to preserve the parties interests pending 8 What judgment?
A significant array of interim measures are available and they vary in accordance with the nature of the claim. Most are found in the Civil Proceedings Code (such as provisional seizure or restitution of certain assets, suspension of corporate resolutions, provisional alimony, etc), however they can be customised at the request of the party seeking the relief. It is possible to make urgent applications, with priority over other actions, and in certain circumstances ex parte relief, including injunctions, is available. If an interim order is made, then it will normally remain effective throughout the proceedings (which must be commenced within a certain period after the making of the order). Interim orders can be revoked if there is a change in circumstances. Damages may be awarded if any injunction is found subsequently to have been unjustified.

there procedures available for judgment to be obtained without 9 Are proceeding to trial, on the ground that it is believed there is no defence to the claim? If so, at which stage of the proceedings should such procedures be invoked?
Courts have the power to issue a final decision without the matter proceeding to trial, if it concludes that the parties written submissions offer sufficient evidence to allow the court to proceed immediately for a decision on the merits.

10 What substantive remedies are available?

Substantive remedies are generally defined by statute, and may vary significantly in accordance with the nature of the claim. When the court finds in favour of a party, it will not be able to award in excess of the substance or amount of the claim and, within the applicable statutes, it will be bound by the clear request of the relevant party. The court may order remedies such as indemnity, compensation, restitution of assets or monies, nullification of the legal effects of certain acts, and injunctions.

11 What means of enforcement are available?

Judgments and orders are enforced by further court procedures and, where necessary, by court officials. There is no procedure for direct enforcement (ie, not involving the court) by the judgment creditor against the debtor. The creditor must initiate the enforcement action, since the court will not enforce a judgment automatically. The type of enforcement proceedings will vary in accordance with the nature of the judgement or order. In general terms the following enforcement will proceed according to the following steps: (i) submission of claim for enforcement based on court order/judgment;

(ii) submission of defence to enforcement proceedings within 20 days; (iii) enforcement eg, seizure of assets, rights or entitlements; (iv) discharge of judgment/order.

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Depending on the type of order the main means of enforcement could consist of: (i) seizure and auction of assets (the assets can also be sold by negotiations by an expert appointed by the court); if a third party is liable for the debt the court proceedings for the enforcement have to be submitted against such party; (ii) seizure of earnings; (iii) adjudication of forced sale; (iv) charging orders; (v) periodical penalty payments; (vi) execution of the obligation by a third party at the expense of the debtor.

12

Does the court have power to order costs? Are foreign claimants required to provide security for costs?
The losing party will be ordered to pay the court registry fees and, occasionally, a small percentage of the winning partys legal costs. However, unless the court finds a party to have litigated in bad faith, normally the parties will bear all of their respective legal costs. In certain circumstances where the parties have agreed by contract, and the proceedings are in the nature of a contractual dispute, the court may make a specific award for costs to the winning party. Foreign claimants are not subject to special rules on security for costs. They may be party to local proceedings under the general terms of access to all residents, provided court registry fees are paid as required.

what ground can the parties appeal, and what restrictions apply? Is there 13 On a right of further appeal? To what extent is enforcement suspended pending an appeal?
Appeals to the Court of Second Instance generally lie as of right from all orders and judgments of the Court of First Instance, subject to the value of the claim being above the amount of MOP50.000,00. Through exercising its right to appeal, a party may seek either the annulment of a decision rendered against them, by invoking either cause of nullity legally foreseen (where breach of imperative statute on the layout of the sentence or the powers of the court has occurred), or (alternatively or subordinately) its revocation on grounds of de-merit (where the decision is otherwise wrong on its merit). Leave for appeal will automatically be granted unless the deadline for filing an appeal is missed, the value of the cause is not within the jurisdiction of the appeal court or the appropriate Court Registry fees are not paid. Subject to certain procedural concerns, matters of fact may constitute the object of appeal (including but not limited to supervening facts and/or evidence) and all matters of law may be argued anew. In certain circumstances, leave for appeal will be granted from interim or interlocutory decisions issued by the lower court during the course of proceedings. The effect of the appeal (suspensive or otherwise) will vary in accordance with the procedural circumstances or the subject matter of the decision being challenged. Normally, appeals from a final decision of the lower court judging on the merits of the claim will suspend enforcement of that decision. Appeal to the Court of Last Instance is subject to the above-mentioned value rule, by reference to the amount of MOP1.000.000,00, and to verification of any dissenting vote in the decision awarded by the Court of Second Instance. Its scope will normally be limited to matters of law although the Court of Final Appeal may adjudicate on matters of fact where it is found that breach of imperative statutes governing evidence may have occurred.

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Macau Joo Nuno Riquito & Associados Advogados

what extent can domestic and/or foreign state entities claim immunity from 14 To civil proceedings?
Neither domestic nor foreign state entities may claim immunity where proceedings are found to be of a civil and/or commercial nature. Furthermore, apart from a judicial self-restraint on matters concerning acts of sovereign nature, the local courts and, particularly, the Administrative Court, are empowered to adjudicate in all matters concerning acts and deeds of public authorities, including administrative acts and claims for damages in tort or contract.

15 What procedures exist for recognition and enforcement of foreign judgments?


Without prejudice to bilateral agreements on the recognition and enforcement of foreign judgements, the Civil Proceedings Code generally provides for expedited proceedings for enforcement of foreign judgments. Normally, a foreign court decision will be recognised and enforced in Macau, provided it qualifies as a final decision (res iudicata) supported by authentic documentation. To be enforceable, the foreign judgment must also be issued by a court of proper jurisdiction, not affected by any lis pendens and it must be clear that its enforcement will not breach any fundamental procedural and substantive public policy principles of local law.

it permissible for lawyers to charge contingency or conditional fees, or other 16 Is fee arrangements based on the result of the litigation/arbitration?
Lawyers in Macau are strictly prohibited from entering quota litis arrangements for any professional services. However, this does not prevent a lawyer, when establishing the remuneration for their services, from taking into account the value or significance of the matter.

Arbitration 17 Is the arbitration law based on the UNCITRAL Model Law?


The statutes on arbitration foresee a special regime for international commercial arbitration, as regulated by [DL 55/98/M (http://www.imprensa.macau.gov.mo/bo/i/98/47/declei55.asp)].This regime incorporates the Model Law in full, save in respect of certain adjustments justified by its local legal system. Domestic arbitrations are regulated by the Arbitration Law [DL 26/96/M (http://www.imprensa.macau.gov.mo/bo/i/96/24/declei29.asp)] which is still fundamentally based on the Model Law.

18 What are the main national arbitration institutions?

The main arbitration centre is the World Trade Centre Macau Arbitration Centre (http://www.wtc-macau.com/arbitration/index.htm).

19 Are there any restrictions on who may represent the parties to an arbitration?
There are no restrictions. Parties may choose to represent themselves or to be represented by any advocate of their choice, whether or not qualified as a legal practitioner. Any clause limiting or impairing the appointment of a lawyer as representative to either party is null and void.

20 What are the formal requirements for an enforceable arbitration agreement? 21 Can the court refuse to stay litigation if there is a valid arbitration clause?
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The arbitration agreement must be recorded in writing. It may be a stand-alone agreement (an arbitration bond), or it may be contained in a contract (arbitration clause). Written formalisation is required only as evidence of the existence of an arbitration agreement; therefore any possible written form is admissible.

Article 8 of the Model Law applies. The court will not stay litigation of its own accord if neither party requests arbitration even though a valid arbitration agreement exists or if the arbitration agreement is found to be null, void, inoperative or incapable of being performed.

the arbitration agreement and any relevant rules are silent, how many 22 If arbitrators will be appointed, and who is the appointing authority?
In international and domestic arbitration, the panel consists of three arbitrators. However, in international arbitrations, if the parties fail to agree in appointing the arbitrators, each of them will appoint an arbitrator, the third arbitrator being co-designated by the first two. If one of the parties does not appoint an arbitrator, or when the two arbitrators cannot agree on the third, the court will appoint the third arbitrator upon request by either party. In domestic arbitrations, the parties can exclude the possibility of appointment by the court of the third arbitrator(s). Domestic arbitrations entrusted to institutional arbitration centres will be governed, in this matter, by the regulations of that arbitration centre.

restrictions placed on the right to challenge the appointment of an 23 Are arbitrator?


All arbitrators have to be impartial, independent and qualified and ought to meet any other requirements that may have been agreed between the parties. The parties are therefore only allowed to challenge the appointment of an arbitrator on the following grounds: In international arbitration, under the Model Law: (i) in circumstances that give rise to justifiable doubts as to the arbitrators impartiality or independence;

(ii) if the arbitrator does not possess the qualifications agreed to by the parties; (iii) if they are unable to perform their functions; or (iv) if they fail to act without undue delay. Any challenge to the appointment of the arbitrator must be submitted within 15 days from the date the challenging party received notice on the appointment of all arbitrators; the decision will then be given by the Arbitration Court. If the challenge is unsuccessful, the challenging party may appeal to court for a final ruling. In domestic arbitration: (i) Legal impairment, in the event of which the Arbitrator cannot accept its appointment. This situation arises when the law considers that the arbitrator cannot be impartial (eg, if the arbitrator is a legal representative of either party). Impairments can be raised and/or declared up to the final award in the proceedings. (ii) Lawful refusal, which is also related to the Arbitrators independence, impartiality and qualification to perform as such (eg, in the event the arbitrator has contentious relationship with either party). The parties can normally only invoke refusal causes within 15 days from service of the notice of appointment of the arbitrator concerned. However, the parties may still be able to invoke cause for refusal at a later stage if the facts relating to this cause only came to their knowledge after a delay.

the domestic law contain substantive requirements for the procedure to 24 Does be followed?
The parties can agree the exact terms of procedure to be followed. However the procedure has to positively address the following principles: (i) fairness and impartiality;

(ii) adequate opportunity to argue the claim and/or submit a defence;

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(iii) appropriate to the specifics of the substantive issues in discussion; and (iv) appropriate time-framing and reasonableness of costs. In domestic arbitration the arbitral tribunal is bound by the rules of evidence.

25 On what ground can the court intervene during an arbitration?

The court has supportive powers and may assist by making orders for interim protection (see below) and for production of evidence. However, the arbitral tribunal has similar powers and therefore the court will generally only intervene on ex parte applications or where a third party is involved over whom the tribunal has no jurisdiction. The court may also rule on questions arising under Article 16(3) of the Model Law concerning the tribunals jurisdiction.

26 Do arbitrators have powers to grant interim or conservatory relief?

The Arbitral Tribunal may, on an ex parte application, order any interim or conservatory measures necessary to secure the efficiency of the final award, unless otherwise stipulated in the arbitration agreement. The Arbitrators may also require such measures to be supported by a guarantee delivered by any of the parties. Arbitrators may grant interim relief in domestic arbitrations. However, in domestic arbitrations, it is not a breach or waiver of the arbitration agreement for a party to request the court grants interim or conservatory measures in relation to the arbitration; indeed, such requests are common in domestic arbitrations in Macau.

27 When and in what form must the award be delivered?


The award must:

If the arbitration agreement does not foresee any specific delay, the award must be delivered within six months from appointment of the last arbitrator. This period can be extended by the means of a written agreement signed by both parties.

(i) be delivered in writing and signed by the arbitrator; when the arbitral tribunal is constituted by more than one arbitrator, the award has to be signed by at least the majority of the arbitrators, provided that the reason for the other arbitrators signatures being omitted is duly mentioned; (ii) state the reasons on which it is based, unless the parties agree to waive this requirement; and (iii) state the date and place of arbitration. Domestic arbitration awards should also: (i) give reasons for the decision;

(ii) identify parties and arbitrators; (iii) set out the reference to the arbitration agreement; (iv) explain the object of the agreement; (v) set out the arbitration charges and liability for respective discharge. When the arbitral tribunal is composed of more than one arbitrator, the award is decided by the simple majority of the votes, unless the parties agree that the decision should be taken by a specific majority or casting vote of the presiding Arbitrator.

28 On what ground can an award be appealed to the court?


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In an international arbitration, the award can only be cancelled in the situations described in Clause 34 of the Model Law. In a domestic arbitration, the awards can be either null and void or subject to annulment.

The award is null and void when certain legal principles are not observed, such as: (i) the dispute could not be subject to arbitration, due to the fact that the rights which are the subject of the dispute are incapable of being waived or surrendered (for example, certain irrevocable employment rights cannot be the subject of arbitration); (ii) one of the parties had not been duly summoned and did not take part in the proceedings; (iii) the award does not pronounce on matters it should decide upon, or pronounces on others it should abstain from; and (iv) the award is issued in contravention of public policy. The award may be subject to annulment when: (i) the arbitration tribunal is irregularly constituted or unqualified;

(ii) the parties do not have legal capacity to sign the arbitration agreement; (iii) a violation of the main principles of domestic law occurs, in such a manner that it has influenced the contents of the final award; (iv) the award is not signed; or (v) the award does not refer to the factual and legal grounds upon which it is based. Therefore the award cannot be challenged simply on its merit but, if it is null and void, or subject to annulment as described above, the court may review it. International awards which may be subject to annulment should be challenged within three months of notification of the award to the parties; domestic awards should be challenged within 30 days of such notification. Awards which are null and void can be challenged at any time.

29 What procedures exist for enforcement of foreign and domestic awards?


The authority to recognise and enforce arbitration awards lies with the court.

Arbitration awards are enforceable in the same manner as court awards. Foreign awards are also recognisable and enforceable in Macau under the regime of the Model Law, even if the country where the award was granted is not a contracting party to the New York Convention.

30 Can a successful party recover its costs?

The tribunals award may include directions with respect to costs, including the parties legal fees and disbursements and the tribunals own charges. Parties can agree the criteria on which the costs and legal fees and disbursements should be borne by the parties. A successful party can recover its disbursements for arbitration costs, but not the fees of its legal advisors.

Alternative dispute resolution


the parties to litigation or arbitration required to consider or submit to any 31 Are alternative dispute resolution before or during proceedings?
The parties may be invited by the arbitral tribunal to attempt a settlement.

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Reforms 32 Are there likely to be any significant procedural reforms in the near future?
There is no present indication as to procedural reforms in either litigation or arbitration.

Joo Nuno Riquito & Associados Advogados


Contact Phone Fax Email Website Joo Nuno Riquito (Managing partner) AIA Tower, 10th Floor, 1004, 251-A 301, Avenida Comercial de Macau, Macau SAR +853 2838 9918 +853 2838 9919 jnr@jnradvogados.com www.jnrlegal.com

An international law firm with offices in Portugal and Macau SAR, working also in collaboration with an associate office in Italy. JNR Advogados provides a full range of legal services, with a significant track-record in corporate and contract law, M&A, real estate, urban planning, licensing and construction, foreign investment, civil and commercial litigation.

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Malaysia
Skrine

Litigation 1 What is the structure of the legal profession?


Malaysia has a fused legal profession, and practitioners are known as advocates and solicitors. There are two separate bodies of practitioners: Advocates and Solicitors of the High Court of Malaya, who are entitled to practise in Peninsular Malaysia; and Advocates and Solicitors of the High Court of Sabah and Sarawak, who are entitled to practise in the two East Malaysian states of Sabah and Sarawak. A person is qualified for appointment as a judge of the High Court, Court of Appeal and the Federal Court if they are a Malaysian citizen and, for the 10 years preceding their appointment, have been an advocate and solicitor or a member of the judicial and legal service, or a combination of both. Under Article 122B of the Malaysian Constitution, the appointment of judges is made by His Majesty The King on the advice of the Prime Minister after consulting the Conference of Rulers. All judges of the Superior Courts retire at the age of 66 and shall not be removed from office except in accordance with the provisions of Article 125 of the Malaysian Constitution (ie, for breach of any provision of the code of ethics prescribed under Article 125(3A), or on grounds of inability through infirmity of body or mind or otherwise properly to discharge the functions of office).

2 What is the structure of the court system?

There are three tiers of civil courts: the Subordinate Courts, the High Court and the Appellate Courts. The Subordinate Courts consist of the Magistrate Court and the Sessions Court, with a civil monetary jurisdictional limit of RM25,000 and RM250,000 respectively. Claims exceeding RM250,000 are heard by the High Court. The Appellate Courts consist of the Court of Appeal and the apex court, the Federal Court. There are two separate court systems of co-ordinate jurisdiction operating in Malaysia, namely the High Court of Malaya and the High Court of Sabah and Sarawak, each covering its own territorial jurisdiction. The Islamic Court system runs parallel with the civil court system. The Islamic Court is known as the Syariah Court and its jurisdiction is limited to family disputes, estate claims and certain offences considered criminal under Islamic laws. All parties to proceedings in the Syariah Court must be of the Muslim faith.

is the role of the judge (and where applicable, the jury) in civil 3 What proceedings?
The Malaysian legal system adopts the common law adversarial system and common law rules of precedent. Although judges play a relatively passive role in legal proceedings, they are vested with powers to enable them to play an active role in determining the manner in which the proceedings are to be conducted, including giving pre-trial directions as to the future conduct of the proceedings to ensure its just, expeditious and economical disposal. There are no jury trials in Malaysia.

4 What are the time limits for bringing civil claims?

Limitation periods are governed by the Limitation Act 1953. Generally, claims founded on a contract or on tort must be brought within six years from the date on which the cause of action accrues. Actions for recovery of money secured by a charge or mortgage, for foreclosure and for recovery of land must be brought within 12 years from the date on which the cause of action accrues, whilst an action to recover any penalty or forfeiture must be brought within one year from the date on which the cause of action accrues. The above time limits can be extended by factors such as mistake, fraud, fraudulent concealment or disability.

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are civil proceedings commenced, and what is the typical procedure 5 How which is then followed?
A civil claim is commenced by the plaintiff paying the court fee and filing a formal claim in court. This can be by way of a writ of summons, an originating summons, an originating motion or a petition. A copy of this claim must be served on the defendant. A defendant who intends to defend the claim must file an appearance and enter their defence, failing which a default judgment may be entered. Further pleadings may then be exchanged, followed by discovery of documents and exchange of other evidence as described below. The matter will then be set down for trial.

is the extent of pre-trial exchange of evidence, and how is evidence 6 What presented at trial?
Pre-trial exchange of evidence chiefly concerns the exchange of documents. The discovery process concerns relevant documents which are or have been in a partys possession, custody or power. If either party feels that the list of documents provided by the other side is incomplete, that party may apply for an order to compel discovery and the court has wide powers in dealing with non-compliance of such an order. It is also common for the courts to require parties to identify the agreed facts, to frame the issues to be tried, and to file the agreed and non-agreed bundles of documents. At the trial, the plaintiffs counsel begins by making an opening statement. This is followed by the calling of witnesses, firstly by the plaintiff and thereafter by the defendant. Each witness will be orally examined in chief by counsel for the party calling them, cross-examined by the other side and re-examined by their own sides counsel. Alternatively, the examination in chief of witnesses may be reduced into a witness statement that is exchanged prior to trial, and such a witness statement can be used in court in place of an oral examination in chief. Where expert evidence is to be adduced, this is usually done by way of pre-trial exchange of a written report or affidavit.

what extent are the parties able to control the procedure and the 7 To timetable? How quick is the process?
The Rules of Court govern the procedure. The court generally has control of the timetable but parties have some degree of control over the schedule and timetable of the case. Where the parties have mutually agreed to extend the time schedule, it is usual for the court to accede to the parties request for an extension of time. If the parties are unable to mutually agree to an extension of time, the court has the discretion to consider and decide on such request. Where there is urgency in the hearing or disposal of a matter, a party may file a certificate of urgency, giving the reasons for the early disposal of the matter. The time frame for a matter to be disposed of in a full trial is very subjective. It depends on the courts calendar, the complexity of the case as well as the disposal of interlocutory applications made thereto. As a very general guide, it will take at least one to two years for a case to be heard and disposed of in a full trial.

interim remedies are available to preserve the parties interests pending 8 What judgment?
The interim remedies available include: (i) (ii) (iii) (iv) (v) interlocutory injunctions; Mareva injunctions to prevent dissipation of assets; order for detention, custody or preservation of property which is the subject matter of the action; order for samples to be taken; order for sale of perishable property;

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(vi) (vii)

appointment of a receiver; recovery of property subject to a lien;

(viii) allowance of income of property pendente lite; (ix) (x) interim payments; Anton Piller order to permit an applicant to enter the premises of a respondent to search, inspect and remove evidential material; remedies under the Debtors Act 1957; injunction to restrain a party from pursuing foreign proceedings.

(xi) (xii)

there procedures available for judgment to be obtained without 9 Are proceeding to trial, on the ground that it is believed there is no defence to the claim? If so, at which stage of the proceedings should such procedures be invoked?
A plaintiff, or a defendant with a counterclaim may apply for summary judgment where there is no reasonable defence, or where there is no real or triable issue to be determined at trial, A summary judgment application will be heard and determined based on sworn affidavit evidence, thus avoiding the need for a lengthy and costly trial. The summary judgment procedure cannot however be used for cases involving libel, slander, malicious prosecution, false imprisonment, seduction, breach of promise of marriage, or fraud, and also cannot be used against the government. The application should be filed after the statement of claim is served and the defendant has entered an appearance. Delay per se in filing for summary judgment is not fatal, but the plaintiff will be expected to account to the court for the delay.

10 What substantive remedies are available?


Court judgments and orders can be enforced by way of: (i) (ii) (iii) (iv) (v) (vi) (vii) writ of seizure and sale (for chattels);

The court can order payment of money or damages, grant permanent injunctive relief, make declaratory orders, orders for specific performance, account of profit and other remedies. Punitive and exemplary damages are rarely ordered.

11 What means of enforcement are available?


prohibitory order followed by sale by public auction (for immovable property); writ of possession; writ of delivery; garnishee order (for money in the hands of third parties); charging order (for shares); committal proceedings;

(viii) appointment of receivers by way of equitable execution; (ix) (x) bankruptcy/winding up proceedings; judgment debtor summons.

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the court have power to order costs? Are foreign claimants 12 Does required to provide security for costs?
Payment of costs is usually ordered against the losing party. The amount of costs, unless agreed, will be taxed by the court. Foreign claimants may be required to deposit money in court as security for future costs liability. This requirement to provide security is not automatic, but will depend on the facts and circumstances of the case.

what ground can the parties appeal, and what restrictions apply? Is there 13 On a right of further appeal? To what extent is enforcement suspended pending an appeal?
Appeals to the next level of court hierarchy generally lie as a matter of right for final orders. For interlocutory orders or rulings, the right of appeal is dependent on whether the decision finally disposes of the rights of the parties thereto. The usual grounds of appeal will be error of fact or error of law, procedural irregularity and/or misdirection of law or fact. There are specific time frames for filing an appeal, and the right of appeal in some cases may be subject to leave of court being obtained (eg, leave of the Court of Appeal must be obtained where the value of the appeal is below RM250,000; leave of the Federal Court must be obtained for all civil appeals to the Federal Court). An appeal does not operate as an automatic stay of execution of the order that is the subject of the appeal.

what extent can domestic and/or foreign state entities claim immunity from 14 To civil proceedings?
Foreign states, diplomats, and foreign sovereigns can claim immunity from civil proceedings. Apart from this, no other entity or individual is immune to civil claims. This includes the Governments of Malaysia and the States, as well as organisations and entities linked to the Government.

15 What procedures exist for recognition and enforcement of foreign judgments?


In the case of foreign judgments which fall outside the ambit of the Reciprocal Enforcement of Judgment Act 1958, a fresh action must be brought on the judgment debt in the Malaysian court under the common law.

Under the Reciprocal Enforcement of Judgment Act 1958, judgments of a superior court in reciprocating countries can be registered in Malaysia, and upon registration, such judgments can be enforced in Malaysia.

it permissible for lawyers to charge contingency or conditional fees, or other 16 Is fee arrangements based on the result of the litigation/arbitration?
Contingency or conditional fees and/or other fee arrangements based on the result of litigation/arbitration are prohibited by the Legal Profession Act 1976. Section 112(b) of the Legal Profession Act provides that no advocate and solicitor shall enter into any agreement by which they are retained or employed to prosecute any suit or action or other contentious proceeding which stipulates for or contemplates payment only in the event of success of such suit, action or proceeding. This section contemplates the charging of such fees in both litigation and arbitration proceedings. An advocate or solicitor who is in breach of Section 112(b) will be subject to disciplinary proceedings and if found guilty of misconduct by the Disciplinary Board may be liable to be struck off the Roll or suspended from practice for a period not exceeding five years.

Arbitration 17 Is the arbitration law based on the UNCITRAL Model Law?


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The governing law for arbitration is the Arbitration Act 2005 (the Act), which is based on the UNCITRAL Model Law on International Commercial Arbitration. The Act came into force on 15 March 2006 and repeals and replaces the Arbitration Act 1952 and the Convention on the Recognition and Enforcement of Foreign Arbitral Awards Act 1985. Proceedings which have been commenced before the Act came into force will continue to be governed by the Arbitration Act 1952.

18 What are the main national arbitration institutions?

The main national arbitration institution is the Kuala Lumpur Regional Centre for Arbitration (the Centre) (http://www.rcakl.org.my). Both domestic and international arbitrations are conducted at the Centre. Other professional bodies such as the Bar Council, the Institute of Engineers, the Board of Architects and the Institute of Surveyors also provide arbitration and mediation services. Arbitrations under the auspices of the ICC International Court of Arbitration are also becoming quite common.

19 Are there any restrictions on who may represent the parties to an arbitration?
There are no restrictions as to who can appear and act in an arbitration, and it is possible for parties to engage non-legally trained experts or professionals, or even foreign lawyers, to represent them in an arbitration. Though not compulsory, parties are usually represented by solicitors.

20 What are the formal requirements for an enforceable arbitration agreement?


An arbitration agreement must be in writing. This can be evidenced by: (i) (ii) (iii) a document signed by the parties; an exchange of correspondence or communication between the parties;

The Act defines an arbitration agreement as an agreement by the parties to submit to arbitration all or certain disputes which have arisen or which may arise between them in respect of a defined legal relationship, whether contractual or not.

an exchange of statement of claim and defence in which the existence of an arbitration agreement is alleged by one party and not denied by the other.

21 Can the court refuse to stay litigation if there is a valid arbitration clause?

Where legal proceedings are brought in respect of a matter where there is a valid arbitration clause, the court will, where a party makes an application before taking any other steps in the proceedings, stay those proceedings and refer the parties to arbitration. In imposing a stay of proceedings, the court may impose conditions as it deems fit. However, as provided in section 10(1) of the Act, the court has a discretion to refuse to stay litigation even if there is a valid arbitration clause where: (i) (ii) the court finds that the agreement is null and void, inoperative or incapable of being performed; or there is in fact no dispute between the parties with regard to the matters to be referred.

the arbitration agreement and any relevant rules are silent, how many 22 If arbitrators will be appointed, and who is the appointing authority?
The parties are free to determine the number of arbitrators as well as the procedure for appointing the arbitrator(s). Section 12 of the Act provides that where the parties fail to determine the number of arbitrators, the arbitral tribunal shall, in the case of international arbitration, consist of three arbitrators and in the case of a domestic arbitration, consist of a single arbitrator. Section 13 of the Act also provides that where the parties fail to agree on the procedure for appointing the arbitrator, in the case of international arbitration, each party shall appoint one arbitrator. The two appointed arbitrators shall then appoint the third arbitrator as the presiding arbitrator. Where there is a failure to agree on the appointment in the case of a single arbitrator and the procedure for appointing such an arbitrator, either party may apply to the Director of Centre to appoint an arbitrator.

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restrictions placed on the right to challenge the appointment of an 23 Are arbitrator?


Section 14 of the Act provides that the appointment of an arbitrator may be challenged only if the circumstances give rise to justifiable doubts as to the arbitrators impartiality or independence or if the arbitrator does not possess qualifications agreed to by the parties. The grounds for challenging are restricted to reasons known only after the appointment has been made.

the domestic law contain substantive requirements for the procedure to 24 Does be followed?
Section 15 of the Act makes provision for the procedure to be followed. Unless otherwise agreed by the parties, any party who intends to challenge an arbitrator has 15 days, after becoming aware of the constitution of the arbitral tribunal, or of any grounds for challenging the appointment of an arbitrator, to send a written statement of the reasons for the challenge to the arbitral tribunal. Unless the challenged arbitrator withdraws from office or the other party agrees to the challenge, the arbitral tribunal shall make a decision on the challenge. Where the challenge is not successful, the challenging party may, within 30 days of receiving notice of the decision rejecting the challenge, apply to the High Court to make a decision on the challenge. There will be no appeal against the decision of the High Court. The arbitral tribunal, including the challenged arbitrator, may continue the arbitral proceedings and make an award while a challenge application is pending.

25 On what ground can the court intervene during an arbitration?


Unless otherwise provided, no court shall intervene in any of the matters governed by the Act. Section 11 of the Act provides that a party may, before or during arbitral proceedings, apply to the High Court for any interim measure and the High Court may make orders for: (i) (ii) (iii) (iv) (v) (vi) (vii) security for costs; discovery of documents and interrogatories; giving of evidence by affidavit; appointment of a receiver; securing the amount in dispute; the preservation, interim custody or sale of any property which is the subject-matter of the dispute; ensuring that any award which may be made in the arbitral proceedings is not rendered ineffectual by the dissipation of assets by a party; and

(viii) an interim injunction or any other interim measure. The Act also provides for the High Court to decide on the appointment of arbitrator (s.13(7)), challenges to an arbitrator (s.15(3)), termination of the mandate of an arbitrator (s. 16(3)), taking of evidence (s. 29(1)) and to determine a preliminary point or question of law (s. 41)).

26 Do arbitrators have powers to grant interim or conservatory relief?


(i) security for costs;
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Section 19 (1) of the Act provides that, unless otherwise agreed by the parties, the arbitral tribunal shall have the power to order the following interim measures:

(ii) (iii) (iv)

discovery of documents and interrogatories; giving of evidence by affidavit; the preservation, interim custody or sale of any property which is the subject-matter of the dispute.

27 When and in what form must the award be delivered?


An award shall: (i)

The parties can provide in the arbitration agreement for the time for making an award. The High Court may, unless otherwise agreed by the parties, on application made under section 46 of the Act, extend such time.

be made in writing and signed by the arbitrator. In arbitral proceedings with more than one arbitrator, the signatures of the majority of all members of the arbitral tribunal are sufficient provided that the reason for any omitted signature is stated; state the reasons upon which it is based, unless: a. b. the parties have agreed that no reasons are to be given; or the award is an award on agreed terms (based upon a settlement);

(ii)

(iii)

state its date and the seat of arbitration and shall be deemed to have been made at that seat.

A copy of the award signed by the arbitrator shall be delivered to each party. Within 30 days of receipt of the award, either party may apply to correct (or the arbitual tribunal may on its own initiative correct) any typographical or clerical errors in the award. Parties can also, within 30 days of receipt of the award, apply to the arbitral tribunal to make an additional award as to claims presented in the arbitral proceedings but omitted from the award.

28 On what ground can an award be appealed to the court?


(i) the party making the application can satisfy the court that: a. b. a party to the arbitration agreement was under an incapacity;

Section 37 of the Act covers the grounds whereby an award may be set aside by the High Court. These include situations where:

the arbitration agreement is not valid under the law to which the parties have subjected it, or, failing any indication thereon, under the laws of Malaysia; the party making the application was not given proper notice of the appointment of an arbitrator or of the arbitral proceedings or was otherwise unable to present its case; the award deals with a dispute not contemplated by or not falling within the terms of the submission to arbitration; the award contains decisions on matters beyond the scope of the submission to arbitration; or the composition of the arbitral tribunal or the arbitral procedure was not in accordance with the agreement of the parties, unless such agreement was in conflict with a provision of this Act from which the parties cannot derogate, or, failing such agreement, was not in accordance with this Act; or

c.

d.

e. f.

(ii)

the High Court finds that: a. the subject-matter of the dispute is not capable of settlement by arbitration under the laws of Malaysia; or

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b.

the award is in conflict with the public policy of Malaysia, eg, where the award was induced or affected by fraud or corruption, or where there is a breach of natural justice.

An application to the court to set aside, except in the case of an award induced or affected by fraud or corruption, must be made within 90 days from the date on which the party making the application received the award, or any corrected or additional award as the case may be. Section 42 of the Act also provides that any party may, within 42 days of the publication and receipt of the award, refer to the High Court any question of law arising out of an award. The High Court may, on the determination of a reference, confirm, vary, remit (either in part or in whole) or set aside the award (either in part or in whole).

29

What procedures exist for enforcement of foreign and domestic awards?


On an application in writing to the High Court made pursuant to Section 38 of the Act, an award made in respect of a domestic arbitration or an award from a foreign state shall be recognised as binding and be enforced as a judgment in terms of the award or by action. A foreign state means a state which is party to the Convention on the Recognition of Foreign Arbitral Awards adopted by the United Nations Conference on International Commercial Arbitration in 1958. Section 39 of the Act further provides that the High Court may refuse to recognise or enforce an award, irrespective of the state in which it was made: (i) if the party against whom it is invoked can demonstrate one of the grounds for setting aside an award under Section 37 (see question 28), or where a. the award has not yet become binding on the parties or has been set aside or suspended by a court of the country in which, or under the law of which, that award was made; or

(ii)

if the High Court finds that: a. b. the subject-matter of the dispute is not capable of settlement by arbitration under the laws of Malaysia; or the award is in conflict with the public policy of Malaysia.

The effect of Sections 37 and 39 of the Act is that a party has the option to either challenge and set aside an award made, or remain passive and resist its enforcement at the time the award is registered.

30 Can a successful party recover its costs?


(i) (ii) (iii)

Section 44 of the Act empowers the arbitrator to make an award of costs. The successful party will usually be awarded costs, and the arbitral tribunal has the discretion to: direct to and by whom and in what manner those costs or any part thereof shall be paid; tax or settle the amount of such costs and expenses; and award such costs and expenses to be paid as between solicitor and client.

Alternative dispute resolution


the parties to litigation or arbitration required to consider or submit to any 31 Are alternative dispute resolution before or during proceedings?
No, there is no compulsory requirement for parties intending to litigate to consider or submit to any prior alternative dispute resolution process.

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Reforms 32 Are there likely to be any significant procedural reforms in the near future?
Presently there are no significant procedural reforms pending or anticipated.

Skrine
Contact Wong Chong Wah, Lim Koon Huan 50-8-1, 8th Floor, Wisma UOA Damansara, 50 Jalan Dungun, 50490 Damansara Heights, Kuala Lumpur, Malaysia +603 2094 8111/2081 3999 +603 2094 3211 wcw@skrine.com; lkh@skrine.com www.skrine.com

Phone Fax Email Website

Skrine is one of the largest law firms in Malaysia with a vast exposure in a wide range of legal matters due to its 40 years of experience in the legal industry. Skrine is a full service legal firm delivering practical and effective legal solutions to a large cross-section of the business community. Our clients include private individuals as well as domestic and multinational businesses coming from a broad spectrum of industries including finance, commercial banking, investment banking, telecommunications, insurance, multimedia, construction, electronics, mining, petroleum and gas, aviation, shipping, pharmaceuticals, governmental and private industries.

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Pakistan
Orr Dignam & Co.

Litigation 1 What is the structure of the legal profession?


Pakistan has a fused legal profession, with no distinction between lawyers practising in the courts and those who act only as legal advisers. Lawyers are called Advocates and can advise and appear in courts provided they are licensed to practise by a Bar Council. They must be properly qualified and meet the requirements of the Legal Practitioners and Bar Councils Act 1973 and the enrolment rules of the relevant Provincial Bar Council. The subordinate judiciary is appointed from Advocates and the judicial service of Pakistan. High Court Judges are appointed from the Bar (where an Advocate must have a minimum of 10 years standing and be at least 40 years of age) and from senior members of the subordinate judiciary. The Judges of the superior courts (ie, of the High Court and the Supreme Court) are constitutional appointees and have a constitutional safeguard of tenure. They can only be removed by the Supreme Judicial Council comprising the two senior Chief Justices of the Provincial High Courts, the two next most senior Judges of the Supreme Court and the Chief Justice of Pakistan.

2 What is the structure of the court system?

The Supreme Court of Pakistan is the highest court, with jurisdiction to hear appeals from the High Court of each of the four Provinces. These High Courts exercise appellate jurisdiction over their subordinate courts barring certain specific original jurisdictions (such as company and banking law). The position is different in the City of Karachi in the Province of Sindh, where the original civil jurisdiction of the High Court encompasses virtually all civil claims in excess of a prescribed limit, which is currently 3 million Rupees. For civil matters the subordinate courts consist of two tiers: Civil Courts, the trial courts of first instance, and District Courts which hear appeals from the Civil Courts and in certain instances also exercise original jurisdiction. The Supreme Court has the power, subject to its own rules and any Act of Parliament, to review its own decisions. A decision of the Supreme Court is binding on all other courts of Pakistan. A decision of the High Court is binding on the courts subordinate to it. The Federal Shariat Court deals with Islamic law issues and has the power to strike down any law that is repugnant to the tenets of Islam. Appeals go to the Shariat Appellate Bench of the Supreme Court. Specialist tribunals deal with matters involving banking recovery laws, service matters, customs, sales tax, central excise and industrial relations.

is the role of the judge (and, where applicable, the jury) in civil 3 What proceedings?
There is no jury system in Pakistan. All matters are heard by Judges or Judicial Magistrates.

4 What are the time limits for bringing civil claims?

Under the Limitation Act 1908, civil claims involving recovery of money must generally be brought within three years of the date when the cause of action arose. The limitation for enforcement proceedings ie, for the first execution application of a decree is three years. A suit on a foreign judgment has to be filed within a period of six years from the date of judgment.

are civil proceedings commenced, and what is the typical procedure 5 How which is then followed?
Under the Code of Civil Procedure 1908 (CPC), a civil suit is generally commenced by filing a Plaint, which is a concise statement of facts and relevant law. Supporting documents are attached as Exhibits. The court then issues the summons to the defendant(s) to appear and defend the claim.
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If the defendant does not enter appearance to contest the suit after being given an adequate opportunity to do so, the matter will proceed ex parte. The plaintiff will nevertheless be required to satisfy the court on its claim before a judgment is announced followed by a decree. If a defendant appears to defend the claim, it is ordinarily required to file a Written Statement within 30 days, but this period is invariably extended. Thereafter, the court frames the Issues (points of controversy) upon which evidence will be tendered. After the Framing of Issues, the parties are required to file in court the documents relied upon along with a list of witnesses.

is the extent of pre-trial exchange of evidence, and how is evidence 6 What presented at trial?
The primary documentary evidence is disclosed by the parties with their pleadings. There is no specific obligation to disclose other documents unless an application by the other party is allowed by the court. Such applications include discovery by interrogatories, discovery of documents, or actual production of documents. The courts do not allow a party to use these procedural routes to go on a fishing expedition of the other sides evidence. Witness evidence is normally presented by examination-in-chief, cross-examination and, if necessary, re-examination. It has become the general practice of some High Courts to allow parties to file affidavit evidence for each witness instead of the examination-in-chief, with the affidavit exhibiting documents relied upon. The other side then has a right to crossexamine witnesses on the contents of their affidavits. Expert witnesses are allowed where necessary.

what extent are the parties able to control the procedure and the 7 To timetable? How quick is the process?
Subject to court orders, the parties can extend most time limits by agreement. Substantial changes to procedure are rare, although in practice both the CPC and the practice of the courts are flexible. Cases proceed fairly expeditiously up to the stage of Framing of Issues, but in the High Court they usually then go into hibernation while they await their turn for recording of evidence. This can take several years. Where urgency is clearly demonstrated, there are means available under the CPC to expedite the trial process by the joint efforts of the parties, primarily through recording witness evidence before a court-appointed commissioner instead of the court.

interim remedies are available to preserve the parties interests pending 8 What judgment?
The courts have wide powers to grant interim relief to preserve the parties interests pending judgment. These include attachment of property, granting of injunctions, arrest, and interim prohibitory orders to preserve the status quo, etc. Various conditions must be met before this relief will be granted. When seeking injunctive relief a prima facie case has to be proved, including a threat of irreparable injury. An injunction order will not be confirmed until after a full hearing of the injunction application.

there procedures available for judgment to be obtained without 9 Are proceeding to trial, on the ground that it is believed there is no defence to the claim? If so, at which stage of the proceedings should such procedures be invoked?
Yes. Summary judgment procedures are provided under the CPC. A plaintiff may at any stage apply to a court for summary judgment where unqualified admissions of fact have been made by the defendant in pleadings or otherwise. Further, summary proceedings can be filed for the enforcement of negotiable instruments, eg, promissory notes or bills of exchange. In such proceedings, the defendant is not entitled to appear before the court and defend the suit, unless he applies for and is granted leave to defend the suit within the prescribed period. Where a defendant fails to appear before the court or delays in filing the leave application, the allegations in the Plaint are deemed to be admitted. Further, where a leave application is filed, but it does not reveal any substantial question of law or fact, nor raises any real issue or a plausible defence necessitating a trial, or the defence is illusory, leave will be refused. Similar procedures are prescribed under special banking legislation for the recovery of monies from loan defaulters.

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10 What substantive remedies are available?

The courts have wide powers to award different relief including injunctive relief, declarations, giving directions and awarding damages, including recovery of moneys and mesne profits. Actual loss must be proved in order to recover damages, and the courts are generally conservative in this respect: substantial compensation or damages awards are unusual, and punitive or exemplary damages are rarely awarded.

11 What means of enforcement are available?

Judgments and decrees are enforced through further court proceedings, which can be cumbersome and protracted, particularly where clear assets are unavailable or where judgment debtors seek to delay the matter. Where necessary, court officials are appointed as receivers to sell, take possession, attach, survey, and enforce court orders. Violation of court orders can result in contempt notices being issued by the court. The Banking Recovery law, (where summary jurisdiction is exercised), includes a procedure for direct enforcement without court intervention enabling banks to foreclose in order to recover loans provided certain conditions and procedures are complied with.

the court have power to order costs? Are foreign claimants required to 12 Does provide security for costs?
The courts have a discretionary power in relation to costs, and do not award costs to a successful party as a matter of course. Even where costs are awarded, these are nominal and do not reflect the actual legal expenses incurred. The court has power to order foreign claimants to provide security for costs, usually by depositing cash or furnishing a guarantee in court. However, this power is discretionary and is rarely used.

what ground can the parties appeal, and what restrictions apply? Is there 13 On a right of further appeal? To what extent is enforcement suspended pending an appeal?
Appeals to the High Court generally lie against final orders and judgments only, though certain interlocutory orders can also be appealed. In revenue matters involving government funds, appeals to the High Court must involve questions of law. Most other first appeals can be on questions of fact and law. Appeals to the Supreme Court require leave of that court before being admitted under Article 185(3) of the Constitution, unless the appeal is filed as of right under Article 185(2) from a judgment, decree, or final order of a High Court where the High Court has varied or set aside a judgment, decree or final order of the court immediately below where the monetary value of the subject matter is not less than a prescribed limit (currently 50,000 Rupees). An appeal does not operate as an automatic stay of execution. A separate stay application has to be made to the Appellate court. A stay may be granted (in some cases subject to security being furnished) if the appellant can show that the appeal has a real prospect of success which would be rendered nugatory if the stay was refused.

what extent can domestic and/or foreign state entities claim immunity from 14 To civil proceedings?
Foreign states enjoy a restrictive state immunity under the laws of Pakistan but such immunity does not extend to acts of a commercial nature. Any sovereign act of a government is immune. State entities are fully subject to the jurisdiction of the Pakistan courts.

15 What procedures exist for recognition and enforcement of foreign judgments?


A creditor under a foreign judgment has three options: (i) to seek direct execution under the relevant provisions of the CPC, if the country rendering the judgment is designated by the Government of Pakistan as a reciprocating territory; to file a suit in Pakistan on the basis of a foreign judgment, treating it as a cause of action; or to file a suit on the original cause of action. (ii) (iii)

Enforcement proceedings can only be challenged on specific grounds set out in the CPC where: (i)
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the judgment has not been pronounced by a court of competent jurisdiction;

(ii) (iii)

it has not been given on the merits of the case; it appears on the face of the proceedings to be founded on an incorrect view of international law or refusal to recognise the law of Pakistan in cases where such law is applicable; the proceedings in which the judgment was obtained are opposed to natural justice; it has been obtained by fraud; and it sustains a claim founded on a breach of any law in force in Pakistan.

(iv) (v) (vi)

it permissible for lawyers to charge contingency or conditional fees, or other 16 Is fee arrangements based on the result of the litigation/arbitration?
Under the Pakistan Legal Practitioners and Bar Councils Rules, 1976 (the Rules) (promulgated under the Legal Practitioners & Bar Councils Act, 1973), contingency fees are not expressly prohibited, but the Rules do prohibit lawyers from having any personal interest in their clients case. The Rules also impose upon all advocates, as officers of the court, an independent obligation to assist the court in the imparting of justice, and this may be compromised if they had an interest in the outcome of a case. It therefore follows that it is not permissible to charge contingency/conditional fees or enter into any other arrangement that results in a lawyer acquiring an interest in the case.

Arbitration 17 Is the arbitration law based on the UNCITRAL Model Law?


Pakistans Arbitration Act, 1940 (1940 Act) is based on earlier English arbitration enactments. The 1940 Act deals with domestic arbitrations and provides a complete code for arbitration. On 14 July 2005, a new law was promulgated called the Recognition and Enforcement (Arbitration Agreements and Foreign Arbitral Awards) Ordinance, 2005 (VIII of 2005) (the 2005 Ordinance), which gave legislative effect to the United Nations Convention on the Recognition and Enforcement of Foreign Arbitral Awards. The 2005 Ordinance, which extended to the whole of Pakistan, applied to arbitration agreements made before, on or after 14 July 2005, but not to foreign arbitral awards made before 14 July 2005. The 2005 Ordinance has not been made an Act of Parliament, but has been kept in force by a series of re-promulgations by the President of Pakistan, with the latest promulgation being The Recognition and Enforcement (Arbitration Agreements and Foreign Arbitral Awards) Ordinance 2007. As a matter of general statutory interpretation, the rights and obligations acquired under the previous Ordinances will remain unaffected by these promulgations.

18 What are the main national arbitration institutions?

There are no formal national arbitration institutions in Pakistan. As mentioned above, the 1940 Act provides a complete code for the conduct of domestic arbitrations.

19 Are there any restrictions on who may represent the parties to an arbitration?
Parties may represent themselves or be represented by an Advocate of their choice. The rules do not allow foreign lawyers to represent clients in Pakistan, and this prohibition extends to arbitration proceedings.

20 What are the formal requirements for an enforceable arbitration agreement?

An arbitration agreement should be in writing but need not be contained in a formal document. The naming of arbitrators is not essential, nor is the signing of the agreement, as long as its terms and conditions are readily ascertainable and freely agreed by the parties. Arbitration may be agreed to by correspondence between the parties. It may also be agreed by a statement made by the parties counsel that is recorded by a court. Under the 2006 Ordinance recognition and enforcement of a foreign arbitral award requires a duly authenticated original award (or a duly certified copy), together with the original agreement (or a certified copy), which must include an arbitral clause in a contract signed by the parties, or contained in an exchange of letters.

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21 Can the court refuse to stay litigation if there is a valid arbitration clause?

The 1940 Act provides that where a party to an arbitration agreement commences legal proceedings against the other party in respect of any matter agreed to be referred to arbitration, the other party may apply for a stay of the legal proceedings. The court must be satisfied that there is no sufficient reason why the matter should not be referred in accordance with the arbitration agreement. The court has the discretion to refuse to stay litigation if there are compelling reasons. Under the 2006 Ordinance, the court does not have any discretion to refuse to stay the legal proceedings filed in violation of an arbitration agreement. It is required to refer the parties to arbitration, unless it determines the arbitration agreement to be null and void, inoperative or incapable of being performed. This was confirmed in a case in 2006 in which Orr Dignam & Co. acted. [Travel Automation (Pvt.) Ltd. vs. Abacus International (Pvt.) Ltd. (2006 Corporate Law Decisions 497)].

the arbitration agreement and any relevant rules are silent, how many 22 If arbitrators will be appointed, and who is the appointing authority?
The 1940 Act provides that the reference shall be to a sole arbitrator unless otherwise expressly provided. The sole arbitrator is appointed by consent of the parties. If the parties cannot agree on an appointment, then an application can be made to the court to appoint an arbitrator. Typically, the arbitration clause provides for two arbitrators, one to be appointed by each of the contracting parties. The arbitrators, before entering upon the reference, appoint an umpire. If the arbitrators cannot agree on an award, the matter will be decided by the umpires award.

restrictions placed on the right to challenge the appointment of an 23 Are arbitrator?


The court may, on the application of a party, remove an arbitrator (or umpire) who: (i) (ii) fails to use all reasonable dispatch in entering on and proceeding with the arbitration and making the award, or misconducts themself or the proceedings.

The court can also be asked to revoke the authority of an arbitrator on grounds including partiality or bias.

the domestic law contain substantive requirements for the procedure to 24 Does be followed?
The provisions of the 1940 Act are supplemented by the CPC and Pakistans rules of evidence but these do not have to be strictly adhered to in arbitral proceedings.

25 On what ground can the court intervene during an arbitration?

The courts retain a supervisory jurisdiction over the conduct of arbitrations. This includes the power to intervene in relation to the appointment and removal of arbitrators or umpires, the power to determine the existence or otherwise of an arbitration agreement (which would also decide whether the arbitrators have jurisdiction or not), and power to order the detention, preservation, inspection, interim custody or sale of any goods which are the subject matter of the arbitration and the securing of the amount in dispute.

26 Do arbitrators have powers to grant interim or conservatory relief? 27 When and in what form must the award be delivered?

Under the 1940 Act, unless the arbitration agreement provides otherwise, an arbitrator may have the power to make an interim award. For all other interim relief, it is necessary to apply to the courts.

Where the agreement is silent on the time limit, the arbitrator must make an award within four months of entering on the reference. If an umpire must decide, they must make the award within two months after entering on the reference, or within such time as the court allows. The court may increase the time for making the award, regardless of whether the time limit has expired or not. The arbitrators can also, with the consent of the parties, extend the time for making the award. The award must be in writing and signed by the arbitrators or umpire, and must give sufficient detail of the basis for the decision to enable a court to consider any question of law that may arise.

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28 On what ground can an award be appealed to the court?


(i) (ii) where the arbitrator or umpire has misconducted themself or the proceedings;

An appeal to the court to set aside an award can be made on one or more of the following grounds:

where the award is made after the issue of an order by the court superseding the arbitration or after the arbitration proceedings have become invalid; or where the award is improperly procured or is otherwise invalid.

(iii)

29 What procedures exist for enforcement of foreign and domestic awards?


(i)

In relation to domestic arbitrations under the 1940 Act, the arbitrators or umpire shall, if requested of any party or directed by the court, file the award in court together with any depositions and documents. The court must give notice of the filing to the parties. It will then either: pronounce judgment according to the award, where the court sees no cause to remit the award to the arbitrator for reconsideration; or set the award aside.

(ii)

Once the judgment is pronounced, a decree will follow and (subject to appellate review) the decree may be executed as a judgment of the court. Under the 2006 Ordinance, foreign arbitral awards are recognised and enforced in the same manner as a judgment or an order of the court in Pakistan, except where Article V of the New York Convention applies. Article V provides that the recognition and enforcement of a foreign arbitral award may be refused at the request of a party against whom it is invoked, only if they furnish proof to the effect that the: (i) (ii) parties to the agreement were, under the law applicable to them, under some incapacity; or agreement is not valid under the law to which the parties have subjected it, or under the law of the country where the award was made; or party against whom it is invoked was not given proper notice of the appointment of the arbitrator or of the arbitration proceedings, or was otherwise unable to present their case; or award deals with a matter not contemplated within the terms of the submission to arbitration or contains decisions beyond the scope of the submission to arbitration; or composition of the arbitral tribunal or the arbitral procedure followed was not in accordance with the agreement of the parties, or not in accordance with the law of the country where the arbitration took place; or award has not yet become binding on the parties or has been set aside or suspended by the country in which, or under the law in which the award was made.

(iii)

(iv)

(v)

(vi)

Generally, the recognition and enforcement of foreign arbitral awards may also be refused if the authority in the country where recognition and enforcement is sought finds the subject matter of the dispute is incapable of settlement by arbitration under the law of that country, or the recognition or enforcement of the award will be contrary to the public policy of the country. This principle applies to Pakistan. In November 2006, the President of Pakistan promulgated the Arbitration (International Investment Disputes) Ordinance, 2006 (ICSID Ordinance) which gives effect to the International Convention on the Settlement of Investment Disputes between States and Nationals of Other States (ICSID Convention). The ICSID Ordinance has been kept in force by its repromulgation, with the latest promulgation being the Arbitration (International Investment Disputes) Ordinance, 2007. It is now possible for award holders to avail the procedures stipulated under the ICSID Ordinance to have their award recognised and enforced against the Federal Government of Pakistan. Once an award has been registered in a High Court, then (subject to the provisions of the ICSID Ordinance), it shall, as regards the pecuniary obligations which it imposes, be of the same force and effect for the purposes of execution, as if it had been a judgment of the High Court.

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30 Can a successful party recover its costs?

There is no provision for recovery of costs in the 1940 Act, but the arbitrators may at their discretion award costs. Such an award may not cover the actual costs involved.

Alternative dispute resolution


the parties to litigation or arbitration required to consider or submit to any 31 Are alternative dispute resolution during or before the proceedings?
There is no law at present that requires the parties to consider or submit any form of alternative dispute resolution before or during proceedings. However, most commercial contracts require the parties to try to resolve disputes by following certain agreed procedures, before resorting to arbitration or litigation. The court may, where it considers it necessary having regard to the facts and circumstances of a case, and for securing expeditious disposal of a case, adopt with the consent of the parties alternate dispute resolution (ADR) methods, including mediation, conciliation or any such other means, so long as it is not inconsistent with the provisions of the CPC. However, there have been significant developments in Pakistan for ADR. A mediation centre at Karachi has been established, called the Karachi Centre for Dispute Resolution (KCDR) in collaboration with the International Finance Corporation of the World Bank (IFC) to provide an alternate dispute resolving mechanism for resolution of commercial disputes. The IFCs objective is to promote alternative dispute resolution / mediation for settlement of commercial disputes, especially for small and medium enterprises by developing a professional cadre of mediators, improving court systems for better case management, and establishing a commercial mediation centre, in this instance being the KCDR. The High Court of Sindh and selected civil courts will refer cases to the KCDR.

Reforms 32 Are there likely to be any significant procedural reforms in the near future?
There are significant procedural reforms expected in the near future, for the ADR, namely mediation, conciliation and such other methods incorporated in the CPC. A bill is still pending before the Parliament concerning other proposed procedural amendments relating to the procedure to be followed prior to initiating civil suits against Federal and Provincial Governments and state Corporations and their officers. The proposals state that the concerned government departments of the state Corporation must be given prior notice of the claim, in order to give them an opportunity to examine the claim. The aggrieved person then has the option of pursuing ADR instead of court proceedings.

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Orr Dignam & Co.


Contact Phone Fax Email Sajid Zahid, Joint Senior Partner 1-B State Life Square, I.I. Chundrigar Road, Karachi, Pakistan +92 21 241 5384; +92 21 241 6003; +92 21 241 5086 +92 21 241 6571; +92 21 241 8924 orrdig1@cyber.net.pk

Islamabad Office 3-A, Street No.32, Sector F-8/1, Islamabad, Pakistan Phone +92 51 226 0517-8; +92 51 225 4116; +92 51 225 3086 Fax +92 51 226 0653; +92 51 226 1722 Email orrdignam@comsats.net.pk Website www.orrdignam.com Orr, Dignam & Co. is the largest institutional Firm of lawyers in Pakistan, with fully operational offices at Karachi and Islamabad. The Firm specializes in civil law, with particular emphasis on corporate and company law. The Firm handles arbitrations (both domestic and international), having considerable experience of arbitration under the Pakistan Arbitration Act 1940 and International modes of arbitration, including the Rules of Arbitration and Conciliation of the International Chamber of Commerce and the London Court of International Arbitration. The Firm also has an extensive civil litigation portfolio covering cases in the High Courts and the Supreme Court of Pakistan. The other areas of practice cover privatization, infrastructure projects, construction laws, banking, insurance and financial law, energy law (petroleum, gas and electrical power), commercial contracts, foreign investment laws, information technology and computer law, mergers and acquisitions, maritime and aviation law and charities and NGO laws. The Principal office of the Firm is based at Karachi, which is the commercial centre of Pakistan. The Firm also has a well established office in Islamabad, the capital of Pakistan. This enables it to effectively represent its clients in negotiation with the Government of Pakistan and with regulatory agencies and to serve a large client base in the Province of Punjab and the North West Frontier Province. The Firm was established in 1952 and acts for the multinational corporations operating within and outside Pakistan, foreign and local banks, multilateral agencies, financial institutions and consultants, leading Pakistani industrial and business houses and public sector corporation involved in a wide range of activities.

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Philippines
SyCip Salazar Hernandez & Gatmaitan

Litigation 1 What is the structure of the legal profession?


Any person who has been licensed as a member of the Philippine Bar and who is of good and regular standing may practise law in the Philippines. Lawyers may represent clients before Philippine courts or administrative agencies with quasi-judicial functions. By constitutional fiat, the Supreme Court of the Philippines exercises overall regulation and supervision of the legal profession including admission to the Bar and the authority to discipline lawyers. Judges must be citizens of the Philippines, members of the Philippine Bar and of proven competence, integrity, probity and independence. A member of the Supreme Court and of the Court of Appeals must be at least 40 years of age and have been a judge of a lower court or engaged in the practice of law in the Philippines for 15 years or more.

2 What is the structure of the court system?

The regular courts are organised into four levels. The first level consists of Metropolitan Trial Courts, Municipal Trial Courts and Municipal Circuit Trial Courts. These are trial courts that decide only particular types or classes of cases and civil cases involving relatively small amounts. The second level consists of Regional Trial Courts, which are also trial courts and have jurisdiction over particular classes of cases and civil cases involving higher jurisdictional amounts. They also have general jurisdiction over cases not within the exclusive jurisdiction of any courts, tribunal, person or body exercising judicial or quasi-judicial functions. The third level is the Court of Appeals, which reviews cases decided by the Regional Trial Courts and quasi-judicial agencies. At the highest level is the Supreme Court which exercises appellate and review jurisdiction over cases decided by the Court of Appeals or Regional Trial Courts. As a rule, only questions of law may be raised before the Supreme Court.

is the role of the judge (and, where applicable, the jury) in civil 3 What proceedings?
Judges are neutral and impartial arbiters who decide on questions of fact and law after hearing and considering the evidence submitted by the parties. There are no juries in the Philippine court system. Under the Civil Code, past judicial decisions of the Supreme Court form a part of the legal system of the Philippines. The decisions of the lower courts and the Court of Appeals are merely persuasive.

4 What are the time limits for bringing civil claims?

Civil claims arising from a written contract, an obligation created by law, or a judgment, must be brought within 10 years from the time the right of action accrues. The prescriptive period for actions based upon an oral contract or a quasi-contract is six years, while the prescriptive period for those based on an injury to the plaintiffs rights or on quasidelict is four years. All other actions with prescriptive periods not fixed in the Civil Code or in other laws must be brought within five years from the time the right of action accrues. These periods are generally interrupted when there is written extra judicial demand by the creditor or when there is written acknowledgment of the debt by the debtor.

are civil proceedings commenced, and what is the typical procedure 5 How which is then followed?
A civil action is commenced by filing an original complaint in court. A summons and a copy of the complaint are then served on the defendant or defendants in accordance with the Rules of Court (ROC). If the defendant fails to answer within the required time, judgment by default may be rendered by the court. Otherwise, an exchange of pleadings between the parties takes place, and the issues of fact and law to be tried are identified. After the last pleading is filed, the plaintiff is obliged to set the case for pre-trial. At this time the possibility of amicable settlement is considered;

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generally, the parties undergo a court-annexed mediation. If the mediation is unsuccessful, the pre-trial conference is held and ways of expediting resolution are explored (eg, simplification of issues, possibility of obtaining stipulations or admissions of facts and of documents, limitation of the number of witnesses, resort to discovery procedures, etc). After the pre-trial hearing, the case proceeds to trial. After the trial, the parties may be required to submit closing written memoranda, and the case is submitted for the judges decision.

is the extent of pre-trial exchange of evidence, and how is evidence 6 What presented at trial?
Parties are required to file with the court and serve on each other a pre-trial brief containing: (i) a statement of their willingness to enter into an amicable settlement or submit to alternative modes of dispute resolution, indicating the desired terms of such settlement or submission;

(ii) a summary of admitted facts and proposed stipulation of facts; (iii) the issues to be tried or resolved; (iv) the documents or exhibits to be presented, stating their respective purposes; (v) a manifestation that they have followed (or intend to follow) the discovery procedures of the ROC or intend to request the referral of the case to commissioners; and (vi) the number and names of the witnesses to be presented and a summary of their testimony. Discovery procedures include: (i) depositions upon oral examination or written interrogatories;

(ii) perpetuation of testimony prior to action pending appeal; (iii) written interrogatories to parties; (iv) written requests for admission of material documents or facts; (v) production or inspection of documents or other material matters; and (vi) physical and mental examination of persons. Discovery by production or inspection of documents or other matters extends to any evidence, not otherwise privileged, material to any matter involved in the action in a partys possession, custody, or control. All evidence must be formally offered so that the court may consider it. Testimonial evidence is required to be offered at the time the witness is called to testify in open court. Documentary and object evidence is offered after the presentation of a partys testimonial evidence. Documentary evidence must also be properly authenticated as prescribed by the ROC. For evidentiary purposes, a properly authenticated electronic document is the functional equivalent of a written document. The examination and cross-examination of witnesses is conducted in open court under oath or affirmation.

what extent are the parties able to control the procedure and the 7 To timetable? How quick is the process?
The ROC fixes definite periods for the filing of pleadings. But it is not uncommon for parties to apply to the court for an extension. The parties must agree on the particular dates of the trial which should be continuous and the trial itself should conclude within 90 days of commencement. As a matter of policy, postponements and adjournments are not granted, except on meritorious grounds. In practice, however, except in cases where summary procedure is required, hearings are scheduled approximately three weeks apart. As a result, it takes approximately two years to complete the trial of a case. Intra-corporate matters, and other special cases (eg, ejectment), must undergo summary procedure, and are therefore generally decided within a shorter period.

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Substantial changes to prescribed procedures are uncommon but, with court approval, the parties have flexibility to adopt procedures that suit the dispute. The ROC also permits summary judgments and judgments based on pleadings where actions are decided in an expedited manner.

interim remedies are available to preserve the parties interests pending 8 What judgment?
The ROC provides for the provisional remedies of preliminary attachment, preliminary injunction, receivership, and replevin. A writ of preliminary attachment is an order to the sheriff to attach or seize the property of the party against whom it is issued as may be sufficient to satisfy any judgment for the applicant. A preliminary injunction is an order requiring a party, court, agency, or person to refrain from or to perform a particular act or acts. In receiverships, a receiver is generally appointed to preserve, administer or dispose of the property in litigation. Replevin is the remedy for the recovery of possession of personal property alleged to be wrongfully detained. Applicants are generally required to post a bond executed to the adverse party.

there procedures available for judgment to be obtained without 9 Are proceeding to trial, on the ground that it is believed there is no defence to the claim? If so, at which stage of the proceedings should such procedures be invoked?
The court, upon motion of the claimant, may direct a judgment on the pleadings where an answer to a complaint fails to tender an issue or otherwise admits the material allegations of the pleadings. Judgment on the pleadings is proper when it appears that there is no genuine issue between the parties. This judgment is based exclusively upon the allegations appearing in the pleadings of the parties and its annexes, if any, without introduction of evidence. The application for judgment on the pleadings is available in any action, except for the declaration of nullity or annulment of marriages and legal separation, and is filed at any time after the defendant has filed his answer and prior to the presentation of evidence by the plaintiff. A party seeking to recover a claim may at any time after the answer has been served, move with supporting affidavits, depositions or admissions for a summary judgment upon all or any part of the claim. The court will conduct a hearing on the motion. Judgment sought may then be rendered if the pleadings, together with the supporting affidavits, depositions and admissions, show that there is no genuine issue as to any material fact or there is no defence to the claim and that the moving party is entitled to the judgment as a matter of law. A summary judgment is only available in actions to recover debts, or for liquidated sums of money, or for declaratory relief. This is different from a judgment on the pleadings because, in summary judgment proceedings, there is an issue raised by the other party but, in a judgment on the pleadings, there is failure to tender an issue. Moreover, evidence such as affidavits is permitted in summary judgment proceedings, but not in a judgment on the pleadings.

10 What substantive remedies are available?

Substantive remedies include specific performance, annulment or reformation of contracts, quieting of title, injunctions (prohibitory or mandatory), accounting of profits, transfers of property, and/or the payment of compensatory damages. In certain cases, the court may also order the payment of moral and exemplary damages, interests and/or attorneys fees and costs. In general, the court may grant such relief sought by the prevailing party as may be consistent with the established facts and applicable law.

11 What means of enforcement are available?

Generally, the prevailing party seeks a writ of execution after a final judgment is entered. The court issues a writ of execution requiring the sheriff or other proper court officer to whom the writ is directed to enforce it according to its terms. The sheriff or other proper officer invariably enforces judgments for money by immediate payment on demand, satisfaction by levy of personal and real properties, or garnishment of debts and credits. Judgments for specific acts are executed by conveyance or delivery of deeds, sale of real or personal property, delivery or restitution of real property, removal of improvements on property subject to execution, or delivery of personal property. The losing party or other person against whom a judgment is being enforced is required to obey the writ of execution under pain of contempt. Proceedings may take place for the preferred application of their property and income towards the satisfaction of the judgment.

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A final and executory judgment may be executed on a motion within five years from the date of its entry. After the lapse of this period and before it is barred by the prescriptive period for claims arising from a judgment under the Civil Code (10 years), a judgment may be enforced by an action to revive.

the court have power to order costs? Are foreign claimants required to 12 Does provide security for costs?
The court generally orders the losing party to pay the costs of the suit. As a jurisdictional requirement, the plaintiffs must pay the prescribed docket fees for their action at its commencement, or within such reasonable period of time as may be granted by the court. Applicants are invariably required to put up a bond when provisional remedies are sought. There is no provision for security for costs.

what ground can the parties appeal, and what restrictions apply? Is there 13 On a right of further appeal? To what extent is enforcement suspended pending an appeal?
An appeal may be made on any ground that would warrant the reversal of the judgment or final order such as errors of fact and law. The ROC prescribes specific periods, requirements and procedure for appeal, depending on the origin of the decision subject of the appeal (ie, first level courts, second level courts, etc), and on the errors or irregularities alleged. Failure to comply with the ROC generally causes dismissal of the appeal. An appeal is made to the courts of the level above, and the decision of such courts may be further appealed, generally, to the courts of the level above. An appeal generally stays the execution of the relevant judgment or final order, except judgments in actions for injunction, receivership, accounting and support. However, judgments or final orders may be executed even pending appeal after hearing, upon showing good reasons for immediate execution. This is generally left to the sound discretion of the court. Decisions in intra-corporate matters and special cases (eg, ejectment) by Regional Trial Courts are immediately executory, even pending appeal, unless the trial court approves a bond filed by the judgment debtor or the appellate court restrains the execution. Discretionary execution pending appeal may be further stayed upon the courts approval of a bond filed by the judgment debtor for satisfaction of the judgment in the case that it is finally sustained in whole or in part.

what extent can domestic and/or foreign state entities claim immunity from 14 To civil proceedings?
The Philippines employs the restrictive form of the doctrine of sovereign immunity. Philippine courts distinguish between governmental or sovereign acts of foreign governments and acts that are proprietary or commercial in character. The immunity of states extends only to governmental or sovereign acts and not to private or proprietary acts.

15 What procedures exist for recognition and enforcement of foreign judgments?


The judgment of a foreign tribunal cannot be enforced in the Philippines by mere execution. Such judgment only creates a right of action and it is necessary that a civil suit for its enforcement be brought in the Philippine courts. A confirmatory judgment may be refused in cases where the foreign court lacked jurisdiction, or failed to give proper notice to the defendant, or where there is evidence of fraud or collusion, or a clear mistake as to fact or law.

it permissible for lawyers to charge contingency or conditional fees, or other 16 Is fee arrangements based on the result of the litigation/arbitration?
A contingency fee arrangement (or other fee arrangement based on the result of the litigation/arbitration) is not prohibited by law. It is valid provided that it is fair and reasonable under the circumstances of the case.

Arbitration 17 Is the arbitration law based on the UNCITRAL Model Law?


Guide to dispute resolution in Asia 2008/2009

Arbitration in the Philippines is governed by the relevant provisions of the Civil Code and by the Alternative Dispute Resolution Act of 2004 (ADR Act). The ADR Act provides that international commercial arbitration is governed primarily

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by the UNCITRAL Model Law. Domestic commercial arbitration is governed primarily by the Philippine Arbitration Law, provisions of which are not patterned after the UNCITRAL Model Law. However, under the ADR Act certain provisions of the UNCITRAL Model Law (ie, Articles 8, 10 to 14, 18, 19, 29 to 32) were expressly made applicable also to domestic arbitration. Arbitration of construction disputes continues to be governed primarily by the Construction Industry Arbitration Law.

18 What are the main national arbitration institutions?

In the public sector, the Construction Industry Arbitration Commission has original and exclusive jurisdiction over disputes arising from, or connected with, contracts entered into by parties involved in construction in the Philippines. There are two important private sector-regulated arbitration centers in the Philippines. The Philippine Dispute Resolution Center, Inc. (PDRCI) incorporated by the Arbitration Committee of the Philippine Chamber of Commerce and Industry in 1996, provides a variety of commercial arbitration services. The Philippine Clearing House Corporation (PCHC), which processes the daily exchanges of checks and other demands of most of the countrys commercial banks and financial institutions, has established an Arbitration Committee with jurisdiction over any dispute or controversy between and among the participants of PCHC clearing operations.

19 Are there any restrictions on who may represent the parties to an arbitration?
Under the ADR Act, a party may be represented by any person of their choice in international commercial arbitrations and domestic arbitrations in the Philippines. But only those admitted to the practice of law in the Philippines may appear as counsel in any Philippine court, or any other quasi-judicial body, whether or not such appearance relates to an arbitration in which they appear.

20 What are the formal requirements for an enforceable arbitration agreement?

In domestic arbitration, an agreement to arbitrate a current or future dispute between the parties must be in writing and subscribed by the parties, or by their lawful agents. For international commercial arbitration, an arbitration agreement may be an arbitration clause in a contract or a separate agreement. It must be in writing; in a document signed by the parties or in an exchange of letters, telex, telegrams or other means of telecommunication which provide a record of the agreement. It may also be in an exchange of statements of claim and defence in which the existence of an agreement is alleged by one party and not denied by the other. Reference in a contract to a document containing an arbitration clause constitutes an arbitration agreement provided the contract is in writing and the reference is such as to make that clause part of the contract.

21 Can the court refuse to stay litigation if there is a valid arbitration clause?
the arbitration agreement and any relevant rules are silent, how many 22 If arbitrators will be appointed, and who is the appointing authority?

A court before which an action is brought, in a matter which is the subject of an arbitration agreement, shall, if at least one party so requests not later than the pre-trial conference, or upon the request of both parties thereafter, refer the parties to arbitration. The only exception is where the court finds that the arbitration agreement is null and void, inoperative or incapable of being performed.

If parties fail to determine the number of arbitrators and the procedure for their appointment, three arbitrators shall be appointed. Each party shall appoint one arbitrator, and the two arbitrators appointed shall appoint the third arbitrator. If a party fails to appoint an arbitrator within 30 days from receipt of a request to do so from the other party, or if the two arbitrators fail to agree on the third arbitrator within 30 days from their appointment, the appointment shall be made by the appointing authority provided by law. Under the ADR Act, the Appointing Authority shall mean the person or institution named in the arbitration agreement as the appointing authority; or the regular arbitration institution under whose rules the arbitration is agreed to be conducted; or, in ad hoc arbitration, the National President of the Integrated Bar of the Philippines or their duly authorised representative. Under the draft Special Rules of Court on Alternative Dispute Resolution of the Supreme Court (draft SC Special Rules), the court may act as the Appointing Authority only under limited instances such as when the parties have so designated the court as such or when the Appointing Authority as defined in the ADR Act fails, refuses or is unable to perform its duty within a reasonable time from receipt of request. An order appointing an arbitrator shall be immediately executory and cannot be further reviewed.

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restrictions placed on the right to challenge the appointment of an 23 Are arbitrator?


An arbitrator may be challenged only if circumstances exist that give rise to justifiable doubts as to their impartiality or independence, or if they do not possess qualifications agreed to by the parties. A party may challenge an arbitrator appointed by them, or in whose appointment they have participated, only for reasons of which they become aware after the appointment has been made. The parties are free to agree on a procedure for challenging an arbitrator. In the absence of an agreement, a party who intends to challenge an arbitrator shall, within 15 days after becoming aware of the constitution of the arbitral tribunal or after becoming aware of any circumstance that give rise to justifiable doubts as to an arbitrators impartiality or independence, send a written statement of the reasons for the challenge to the arbitral tribunal. If the challenge before the tribunal is not successful, the aggrieved party may request the Appointing Authority to rule on the challenge and the decision shall not be subject to appeal. Pursuant to the draft SC Special Rules, if the Appointing Authority fails or refuses to act on the challenge within 30 days from receipt of request, any party may renew the challenge with the court. The order of the court resolving the petition cannot be the subject of further judicial review.

the domestic law contain substantive requirements for the procedure to 24 Does be followed?
The ADR Act prescribes the basic procedure to be followed in arbitration proceedings. Subject to the provisions of the ADR Act, the parties are free to agree on the procedure to be followed by the arbitral tribunal in conducting the proceedings. If the parties fail to agree, the arbitral tribunal may generally conduct the arbitration, including the determination of the admissibility, relevance, materiality, and weight of any evidence, in such manner as it considers appropriate. In domestic arbitration, arbitrators are mandated to set a time and place for the hearing of the matters submitted to them, and must cause notice to be given to each of the parties within a specified period. The hearing may proceed in the absence of any party who, after due notice, fails to be present at such hearing or fails to obtain an adjournment, but an award cannot be made solely on the default of a party. The arbitrators shall require the other party to submit such evidence as they may require for making an award. Before hearing any testimony, arbitrators must be sworn, by any officer authorised by law to administer an oath, faithfully and fairly to hear and examine the matters in controversy and to make a just award according to the best of their ability and understanding. Witnesses must also take an oath before the arbitrator. Arbitrators are required to attend every hearing in that matter and hear all the allegations and proofs of the parties. Arbitrators shall receive as exhibits in evidence any document that the parties may wish to submit. At the close of the hearings, the arbitrators shall specifically inquire from all parties whether they have any further proof or witnesses to present. But the parties may, by written agreement, submit their dispute to arbitration by other than oral hearing. In arbitral proceedings with more than one arbitrator, any decision of the arbitral tribunal shall be made by a majority of all its members unless otherwise agreed by the parties. However, questions of procedure may be decided by a presiding arbitrator if so authorized by the parties or all the members of the arbitral tribunal. In international commercial arbitration, the arbitral tribunal holds oral hearings for the presentation of evidence or for oral argument at an appropriate stage of the proceedings, if so requested by a party, unless the parties have agreed that no hearings shall be held. The parties shall be given sufficient advance notice of any hearing and meeting of the arbitral tribunal to inspect goods, other property, or documents.

25 On what ground can the court intervene during an arbitration?

A party aggrieved by the failure, neglect or refusal of another to perform under a written arbitration agreement may petition the proper Regional Trial Court for an order directing that such arbitration proceed in the manner provided for in the agreement. Under the draft SC Special Rules, a court may order the termination of the mandate of an arbitrator who is unable to perform his function or for other reasons fails to act without undue delay upon a petition filed by any party. If a controversy among the parties concerning these grounds remains, a party may request the Appointing Authority to decide on the controversy. It is only when the Appointing Authority fails or refuses to decide on the termination of the mandate within 30 days from the time the request is brought that a court may intervene to terminate the mandate of an arbitrator upon the filing of the necessary petition by any of the party as provided under the draft SC Special Rules. A party may also request the proper court to grant an interim measure of protection before the constitution of the arbitral tribunal or even after the constitution of the tribunal but only to the extent that the tribunal has no power to act
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or is unable to act effectively. A party may also apply to the proper court for assistance in implementing or enforcing an interim measure ordered by an arbitral tribunal. A court in which the action or appeal is pending may issue a protective order to prevent or prohibit disclosure of documents or information containing secret processes, developments, research or other information where it is shown that the applicant shall be prejudiced by unauthorized disclosure. (Under the draft SC Special Rules, a party may request a protective order from the court at anytime there is a need to enforce confidentiality of information obtained, or to be obtained, in any alternative dispute resolution proceeding.) Under the draft SC Special Rules, a party to an arbitration proceeding in the Philippines may request the court to provide assistance in taking evidence (ie, to comply with a subpoena, to appear as witness, to allow inspection, etc) whenever the need arises. Any party to the arbitration may also petition to the court for judicial relief from the ruling of the arbitral tribunal on a preliminary question upholding its jurisdiction. Judicial action is provided for confirming, vacating, modifying or correcting an arbitral award. In international commercial arbitration, judicial action is provided for the setting aside of an arbitral award, or for its recognition and enforcement.

26 Do arbitrators have powers to grant interim or conservatory relief?


A party may request the arbitrators for an interim or provisional relief to: (i) (ii) (iii) (iv) prevent irreparable loss or injury; provide security for the performance of any obligation; produce or preserve any evidence; or compel any other appropriate act or omission.

A party who does not comply with the order shall be liable for all damages resulting from non-compliance, including all expenses and reasonable attorneys fees paid in obtaining the orders judicial enforcement. A party may also request the arbitral tribunal to order any party to take interim measures of protection as may be necessary in respect of the subject of the dispute in arbitration. These measures include preliminary injunctions directed against a party, appointment of receivers or detention, preservation, or inspection of property that is the subject of the dispute in arbitration.

27 When and in what form must the award be delivered?

In domestic arbitration, unless the parties stipulated otherwise in writing, the arbitrators must render the award within 30 days of the closing of the hearings. This period may be extended by mutual consent. There is no express rule on when an award must be delivered in international commercial arbitration. The award must be in writing and signed and acknowledged by a majority of the arbitrators. The reason for any omitted signature must also be stated. The award shall outline the reasons upon which it is based, unless the parties have agreed otherwise or the award is on agreed terms. The award shall also state the date and the place of arbitration. Each party shall receive a copy of the award.

28 On what ground can an award be appealed to the court?

An agreement to refer a dispute to arbitration shall mean that the arbitral award shall be final and binding. Consequently, a party to an arbitration is precluded from filing an appeal questioning the merits of an arbitral award. For domestic arbitration, the Arbitration Law provides specific grounds for the vacation of an arbitral award by the court. These include cases of corruption, fraud, partiality, misconduct, and disqualification of arbitrators. The law also provides specific grounds for the modification or correction of an arbitral award which includes miscalculation of figures, mistake in the description of person, thing or property referred to in the award, an award upon a matter not submitted for arbitration, and an imperfect form of the award.

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In international commercial arbitration in the Philippines, a court may set aside an arbitral award when the arbitration agreement is invalid, when a party was not given proper notice of the appointment of an arbitrator or of the arbitral proceedings, or was otherwise unable to present their case. Other reasons include situations where an award deals with a dispute which is not arbitrable or contains decisions on matters beyond the scope of the submission to arbitration, when the composition of the arbitral tribunal or the arbitral procedure was not in accordance with the parties agreement or the law, when the subject matter of the dispute is incapable of settlement by arbitration under the law, or when the award is in conflict with the public policy of the Philippines. An appeal may be taken from the order of the court confirming, modifying, correcting, setting aside or vacating an award to the Court of Appeals through a petition for review, but it shall be limited to questions of law.

29 What procedures exist for enforcement of foreign and domestic awards?

An arbitral award, foreign and domestic, shall enjoy the presumption that it was made and released in due course of arbitration and is subject to enforcement or confirmation, respectively, unless the adverse party is able to establish a ground for the court to order otherwise. At any time within one month after an arbitral award is issued in a domestic arbitration, any party to the arbitration may apply to the appropriate Regional Trial Court for an order confirming the award. The court must grant such order unless the award is vacated, modified, or corrected (see above). Upon granting of an order that confirms, modifies, or corrects an award, judgment may consequently be entered. The Philippines is a party to the New York Convention and is therefore committed to enforce foreign arbitral awards subject to the commercial and reciprocity reservations. Philippine courts are not allowed to set aside a foreign arbitral awards but may decline recognition and enforcement based on the limited grounds provided under the New York Convention. Under the ADR Act, the recognition and enforcement of foreign arbitral awards must be filed with the appropriate regional trial court in accordance with the rules of procedure published by the Supreme Court. The draft SC Special Rules provide that a party to a foreign arbitration may petition the court for recognition and enforcement at any time after the receipt of the award. Moreover, a court shall only recognize and enforce a foreign arbitral award made in a country not party to the New York Convention when such country extends comity and reciprocity towards arbitral awards made in the Philippines. Otherwise, the court may nevertheless treat such an award as a foreign judgment enforceable under Rule 39 of the Rules of Court. The court where the action for recognition is pending may defer or suspend the proceedings if an application for the setting aside or suspension of the award has been made with a competent authority in the country where the award is made. Foreign and domestic arbitral awards when confirmed by the Regional Trial Court shall be enforced in the same manner as final and executory decisions of the Regional Trial Court.

30 Can a successful party recover its costs?

For domestic arbitration, the Arbitration Law expressly provides that arbitrators have the power to assess, in their award, expenses of any party against another party, when it is deemed necessary. There is no similar provision for international commercial arbitration. Under the draft Implementing Rules and Regulations of the ADR Act, in domestic arbitration and international commercial arbitration conducted in the Philippines, costs of arbitration shall in principle be borne by the unsuccessful party. The costs include costs of legal representation and assistance of the successful party if such costs were claimed during the arbitral proceedings and only if the amount is reasonable but the arbitral tribunal is given the discretion to determine which party shall bear such costs. However, the arbitral tribunal may apportion such costs between the parties if it determines that apportionment is reasonable taking into account the circumstances of the case.

Alternative dispute resolution


the parties to litigation or arbitration required to consider or submit to any 31 Are alternative dispute resolution before or during proceedings?
During pre-trial in civil actions, the parties are required to state in their pre-trial briefs whether or not they are willing to submit to alternative modes of dispute resolution. To this extent, therefore, the parties to a litigation are obliged to consider the possibility of alternative dispute resolution, but they are not necessarily required to submit to it. However,

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in the pre-trial stage, the parties are generally referred to mediation to try to settle the case amicably. In arbitrations, parties are not required to consider or submit to alternative dispute resolution before or during proceedings, but may do so. In fact, in a domestic arbitration, an arbitrator is expressly prohibited from acting as a mediator in the same proceedings, and all negotiations towards settlement of the dispute are expressly mandated to take place without the presence of arbitrators. Under the ADR Act, the parties may agree to refer one or more or all issues arising in a dispute or during its pendency to other forms of alternative dispute resolution.

Reforms 32 Are there likely to be any significant procedural reforms in the near future?
(i) Proposals to revise existing guidelines on court-annexed mediation were made during the National Conference on Court-Annexed/Referred Alternative Dispute Mechanisms held on 27-28 November, 2006 in Manila under the auspices of the Philippine Supreme Court, Philippine Judicial Academy and Philippine Mediation Center. Drafts of the following proposed revisions were circulated and discussed at the Conference: proposed Implementing Rules and Regulations (IRR) on Mediation in the Trial Courts, which seek to introduce significant changes with respect to the accreditation of mediators and the expansion of the coverage of cases that may be mediated; proposed Revised Guidelines for the Implementation of Mediation in the Court of Appeals; and proposed Revised Roles and Responsibilities of Implementing Organisations in the Court of Appeals Mediation Program.

(ii) (iii)

These proposed revisions are still pending approval by the Philippine Supreme Court. To date, the following are also pending for approval: (a) (b) the Implementing Rules and Regulations of the Alternative Dispute Resolution Act of 2004; and the Special Rules of Court on Alternative Dispute Resolution.

SyCip Salazar Hernandez & Gatmaitan


Contact Phone Fax Email Website Ricardo Ma. P.G. Ongkiko 4th Floor SSHG Center, 105 Paseo de Roxas, Makati City 1226 Metro Manila, Philippines +632 817 9811-20 +632 817 3145 rmpgongkiko@syciplaw.com www.syciplaw.com

SyCip Salazar Hernandez & Gatmaitan is the largest law firm in the Philippines, with its principal office in Makati City, the financial and business center of Metropolitan Manila. It has branch offices in the Subic Freeport Zone in Northern Philippines, in Cebu City in Central Philippines, and in Davao City in Southern Philippines. The firm offers a broad and integrated range of legal services, from all aspects of commercial law and practice to litigation, from matters involving constitutional issues to those dealing with family relations. The firm has an active client base made up of, among others, top foreign and local corporations, international organisations and governments. A full service firm, it has capabilities in every area of practice from criminal law to mergers and acquisitions. Throughout its history, the firms ethics, its standards of excellence and diligence, and its sense of duty to its clients, has brought it time and again to the forefront of the Philippines development programs as well as the cutting edge of legal practice.

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Litigation 1 What is the structure of the legal profession? 2


What is the structure of the court system?
There is a hierarchy of courts with the lower being the Subordinate Courts and the higher being the Supreme Court. The Subordinate Courts are made up of the District Courts, Magistrates Courts, Family Courts, Juvenile Courts, Coroners Courts and the Small Claims Tribunals. The civil jurisdiction of the Magistrates Courts extends to claims not exceeding S$60,000 while that of the District Court extends to claims not exceeding S$250,000. Claims above S$250,000 are usually filed in the High Court. The Supreme Court consists of the High Court and the Court of Appeal, which is Singapores highest court. Singapore has a fused profession in which lawyers are generally designated as advocates and solicitors. The profession is however divided into those who undertake contentious work and those who do not.

What is the role of the judge (and, where applicable, the jury) in civil proceedings?
Singapores legal system is adversarial rather than inquisitorial in nature. This means, in theory at least, that the judges take a relatively passive role in the conduct of matters before them. Singapore abolished the jury system more than 40 years ago, so the judges invariably decide both questions of fact and law. Judges deliver their judgments on the basis of evidence and submissions that are received both orally and in writing.

4 What are the time limits for bringing civil claims?

Contractual and tortious claims have to be brought within six years of when the cause of action accrued. Personal injury claims have to be brought within three years. Time limits are prescribed for other types of claims and may be extended in some cases.

are civil proceedings commenced, and what is the typical procedure 5 How which is then followed?
A civil claim is usually commenced by way of a Writ of Summons, which is filed electronically with the courts. The Writ is indorsed with a Statement of Claim, which sets out the material facts relied on by the plaintiff to make out their claim and which concludes with the remedy they seek. The Writ is then served on the defendant. The defendant must then enter an appearance in the action by filing a formal document called a Memorandum of Appearance. If the defendant defaults, the plaintiff may enter judgment on their claim. If the defendant enters an appearance they must then go on to file a Defence and where they have a cross-claim against the plaintiff, a Counterclaim. The plaintiff may, if they wish, file a Reply. If there is a Counterclaim in addition to the Defence, the plantiff should also file a Defence to the Counterclaim. The Statement of Claim, the Defence (and Counterclaim, if any) and the Reply (and Defence to Counterclaim, if any) are called pleadings. After the close of pleadings, parties proceed to discovery, which involves the disclosure to each other of the documents that are relevant to the action, and the exchange of affidavits of evidence-in-chief of the witnesses they intend to call (see question 6). The action is then tried in open court. After the conclusion of the trial, the court will deliver its judgment.

is the extent of pre-trial exchange of evidence, and how is evidence 6 What presented at trial?
The guiding principle of Singapores litigation process is that no party should be able to surprise the other. The parties should know clearly the case they have to meet before the trial commences. The parties are obliged to give discovery of all relevant documents by filing Lists of Documents verified by affidavit. They are then entitled to inspect and take

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copies of each others documents. They are also obliged to identify the witnesses they intend to call for the trial. The evidence that these witnesses intend to give, whether they be witnesses of fact or expert witnesses, is contained in affidavits that are exchanged before the trial. Evidence is presented at trial by the calling of the witnesses that have earlier filed affidavits. The court will generally not receive these affidavits unless the witnesses are called. Once witnesses have been sworn in, they will confirm the evidence they have given on affidavit with any necessary corrections. Witnesses may supplement their evidence generally only to address evidence from the opposing party that they could not have anticipated. After that, the witnesses are cross-examined by opposing counsel on their evidence.

what extent are the parties able to control the procedure and the 7 To timetable? How quick is the process?
Unified Rules of Court govern procedure in both the Subordinate and Supreme courts. Parties generally control proceedings in the Subordinate Courts, i.e, they can decide how much latitude they wish to give each other in relation to the steps to be taken in the action. However, if no steps are taken in an action for a year, whether in the Subordinate Courts or the High Court, the action will be automatically discontinued. The High Court controls the conduct of actions within its purview quite strictly and parties will not be able to grant much indulgence to each other in relation to the steps to be taken. Those steps are directed by the court through a series of pre-trial conferences. If the parties are diligent and the action is not prolonged by interlocutory applications or appeals or for other reasons, civil proceedings in both the Subordinate and High Courts should be tried within nine to 12 months from inception. Appeals to the Court of Appeal are usually disposed of within six months on the ground of decision of the High Court becoming available.

interim remedies are available to preserve the parties interests pending 8 What judgment?
The courts have powers to grant orders to preserve the subject matter of the action or to prevent parties from destroying evidence or dissipating their assets to avoid a judgment.

there procedures available for judgment to be obtained without 9 Are proceeding to trial, on the ground that it is believed there is no defence to the claim? If so, at which stage of the proceedings should such procedures be invoked?

Yes, a party may apply for summary judgment on their claim (or part thereof) if the Defence to it does not disclose a defence to the claim (or part thereof). If the defendants only defence is based on a simple point of law which can be dealt with by the court expeditiously, and further if there are no triable issues, proceedings for summary judgment are also appropriate. If successful, such an application would obviate a trial. The application must be made within 28 days of the deemed close of pleadings (which is 14 days after service of the last pleading in the action be it a Defence, a Reply or a Defence to Counterclaim). There are also other summary procedures available for determining claims or issues in a civil action such as by way of summary determination of a point of law, a trial of a preliminary issue or a striking out of a claim or defence (or part thereof).

10 What substantive remedies are available?

The courts have wide powers to award judgments for money and/or damages, and to award interest thereon, to issue prerogative writs and grant other administrative law remedies, to grant injunctions, to make orders for specific performance, to partition land, to order an account to be given or taken, to charge land or other property, to make declarations of legal rights, and so on.

11 What means of enforcement are available?


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These include writs of execution to allow the judgment creditor to seize and sell the judgment debtors assets (writ of seizure and sale), to obtain payments from a third party that owes money to the judgment debtor (garnishee

proceedings), to obtain possession of immovable property (writ of possession), and to obtain possession of movable property (writ of delivery). The court may also appoint a receiver, or appoint a time for the judgment creditor to examine the judgment debtor on oath to determine what assets the latter may have to satisfy the judgment. If a judgment debtor breaches an injunction or fails to comply with an order for specific performance, the judgment creditor may apply for committal. The court can in appropriate cases fine or imprison the judgment debtor.

12

Does the court have power to order costs? Are foreign claimants required to provide security for costs?
The courts have power to order costs and these are usually awarded in favour of the winning party. The costs awarded will not usually cover all the costs that the winning party has to pay its own solicitors. Foreign claimants are not invariably required to provide security for the defendants costs. It depends on a number of factors such as, for example, how strong a case the claimants have and whether they have any assets within the jurisdiction.

what ground can the parties appeal, and what restrictions apply? Is there 13 On a right of further appeal? To what extent is enforcement suspended pending an appeal?
For civil actions commenced in the Subordinate Courts, an appeal lies as of right to the High Court where the amount in dispute or the value of the subject matter exceeds S$50,000. Otherwise, leave must be obtained in the first instance from the relevant Subordinate Court and failing that from the High Court. Subject to some exceptions (such as rulings on costs), a further appeal lies to the Court of Appeal, although in some situations leave from the Court of Appeal is required. The position is similar in relation to actions commenced in the High Court. An appeal does not operate as a stay of execution and ordinarily the only ground upon which a stay is granted would be that the appeal would otherwise be rendered nugatory.

what extent can domestic and/or foreign state entities claim immunity from 14 To civil proceedings?
There is a general immunity for foreign states, including heads of states in their public capacity, their governments and departments but there is no immunity for state entities that are distinct from the executive organs of the states government and capable of suing and being sued. In some circumstances, no immunity from civil proceedings is granted to foreign states. For example, a foreign state is not immune as respects proceedings relating to a commercial transaction entered into by the foreign state or an obligation of the foreign state which by virtue of a contract (whether a commercial transaction or not) falls to be performed wholly or partly in Singapore. On the domestic front, listed immunity is granted to the Singapore Government. The Government does not have blanket immunity from civil claims, and the bringing of such claims is regulated by statute. Generally, no proceedings, other than proceedings for breach of contract, shall lie against the Singapore Government on account of anything done or omitted to be done or refused to be done by the Singapore Government in exercise of its public duties.

15 What procedures exist for recognition and enforcement of foreign judgments?

Only judgments of the superior courts of some Commonwealth countries (such as New Zealand, Sri Lanka, Malaysia and Brunei Darussalam etc) and of Hong Kong SAR are registrable and enforceable. The procedure for registering the judgment is set out in the Rules of Court. Parties that have obtained a judgment that is not registrable will be obliged to commence fresh proceedings in Singapore.

it permissible for lawyers to charge contingency or conditional fees, or other 16 Is fee arrangements based on the result of the litigation/arbitration?
No, this is strictly prohibited.

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Arbitration 17
Is the arbitration law based on the UNCITRAL Model Law?
Arbitrations in Singapore may be either international or domestic and they are governed by different regimes. An arbitration is international if there is a foreign element, for example, where one of the parties has its place of business outside Singapore when the arbitration agreement was concluded. The International Arbitration Act (IAA) governs international arbitrations and essentially applies the Model Law. Domestic arbitrations are governed by the Arbitration Act (AA), which departs to a greater extent from the Model Law. Both acts are available online at www.statutes.agc.gov.sg.

18 What are the main national arbitration institutions? Are there any restrictions on who may represent the parties to an arbitration? 19
The main institution is the Singapore International Arbitration Centre (SIAC), www.siac.org.sg. No. Foreign lawyers may appear in both International and Domestic arbitrations. A party may even be represented by someone who is not a lawyer.

20 What are the formal requirements for an enforceable arbitration agreement?


It must be in writing.

21 Can the court refuse to stay litigation if there is valid arbitration clause?

Under the IAA, the court may refuse to stay proceedings if it is satisfied that the arbitration agreement is null and void, inoperable or incapable of being performed. Under the AA, the court has a discretion that it must exercise on settled principles. The court will ordinarily grant a stay, unless the claimant can show cause to the contrary, for example where the defendant has no defence to the claim.

the arbitration agreement and any relevant rules are silent, how many 22 If arbitrators will be appointed, and who is the appointing authority?
Where the arbitration agreement is silent on the number of arbitrators to be appointed, under both the IAA and AA, a single arbitrator will be appointed. The appointing authority is the Chairman of the SIAC.

23

Are restrictions placed on the right to challenge the appointment of an arbitrator?


Both the IAA and the AA adopt article 14 of the Model Law, which restricts a challenge to cases where there are justifiable doubts as to the arbitrators impartiality or independence or that the arbitrator possesses the qualifications agreed by the parties.

the domestic law contain substantive requirements for the procedure to 24 Does be followed?
The parties are free to decide the procedure they wish to adopt for the conduct of the arbitration. They may also allow the arbitrator to decide. In the absence of any agreement, both the IAA and AA essentially apply the minimal procedural requirements of the Model Law. The SIAC has rules for both International and Domestic arbitrations and parties may adopt either of these.

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On what ground can the court intervene during an arbitration?


Under the IAA and the AA, the court may intervene by removing an arbitrator if there is justifiable doubt about the arbitrators impartiality or independence. The court may also intervene by hearing an appeal against a holding by a tribunal or by determining a preliminary point of law, subject to the consent of the parties and the tribunal.

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26 Do arbitrators have powers to grant interim or conservatory relief? 27 When and in what form must the award be delivered?

They do, under both the IAA and the AA. The arbitrator may make any interim order in relation to the subject matter of the dispute such as, for example, to preserve evidence or the subject matter of the dispute.

Under both the IAA and the AA, the awards must be in writing and signed by the arbitrator(s) stating the place of arbitration and the date the award is issued. The reasons for the award should be stated, unless otherwise agreed by the parties. No time frame for the issue of the award is stipulated under the IAA and the AA. If, for example, the parties had agreed to the application of the SIAC Domestic Arbitration Rules, the arbitrator would be obliged to give a reasoned award within 45 days of the close of hearing.

28 On what ground can an award be appealed to the court?

Under the AA, an award may be appealed to the court where the parties so agree or where the leave of the High Court is obtained. Leave to appeal will only be granted if the court is satisfied that there is a question of law that will substantially affect the rights of one of the parties and where the tribunals decision is obviously wrong, or where the question is one of public importance, or the decision is at least open to serious doubt.

29 What procedures exist for enforcement of foreign and domestic awards? 30


Can a successful party recover its costs?

Domestic awards may be enforced in Singapore under the IAA and the AA. To enforce a domestic award as a judgment or order of court, an application must first be made to the High Court to obtain leave of court to do so. Foreign awards made in any of the New York Convention countries may also be enforced in Singapore within six years of the making of the award, in the same manner as a domestic award.

Ordinarily, the losing party will be ordered to pay the winning partys costs. These costs will not however fully cover the fees payable by the winning party to its own solicitors.

Alternative dispute resolution


the parties to litigation or arbitration required to consider or submit to any 31 Are alternative dispute resolution before or during proceedings?
Submission to any alternative dispute resolution forum is entirely voluntary. In the Subordinate Courts, parties frequently resort to the free mediation service provided by the courts. Senior district judges conduct the mediation and it is often successful. The Supreme Court also provides a mediation service although it is not free.

Reforms 32
Are there likely to be any significant procedural reforms in the near future?
There are at present no significant procedural reforms to court or arbitral proceedings that have been announced or are pending.

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Singapore Rajah & Tann LLP

Rajah & Tann LLP


Contact Phone Fax Email Website Harish Kumar 4 Battery Road #26-01, Bank of China Building, Singapore 049908 +65 6232 0360 (DID); +65 6535 3600 (General) +65 6438 1995 harish.kumar@rajahtann.com www.rajahtann.com

Founded in the 1950s, Rajah & Tann LLP is one of the largest full service law firms in Singapore and the Asia Pacific. It is a premier firm highly regarded for its leading lawyers and practices. International legal journals and surveys such as the Asia Pacific Legal 500, International Financial Law Review 1000 and Chambers Global - The Worlds Leading Lawyers consistently rate the firm and several of its lawyers, including Senior Counsel Steven Chong, Sundaresh Menon, Quentin Loh, Andre Yeap, Toh Kian Sing and Lee Eng Beng as among the very best in the profession. The Firm was named Construction Law Firm of the Year and Maritime Law Firm of the Year at the Asian Legal Business Leading Law Firms & Deals Awards 2006 as well as 2007. The Firm has distinguished itself with market leading practices in admiralty & shipping, corporate finance & capital markets, corporate & commercial, corporate governance, competition & anti-trust laws, dispute resolution & international arbitration, information technology & communications, intellectual property, infrastructure & construction, insolvency & restructuring, insurance & reinsurance as well as mergers & acquisitions. The Firm is also highly regarded for its International Practices, with its reputable China Practice, unique Japanese Corporate Services Division and the experienced South Asia Practice, and growing Indonesian and Vietnamese practices. It has established an office in Shanghai since 2003 and has an associate office in Malaysia since 2007.

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Taiwan
Formosa Transnational Attorneys-At-Law

Litigation 1 What is the structure of the legal profession? 2 What is the structure of the court system?
The legal profession comprises judges, prosecutors and attorneys. To become a judge or a prosecutor, an individual must pass the stringent National Judiciary Examination held once a year. A similar examination exists for attorneys. Attorneys are subject to disciplinary actions and can be disbarred for gross misconduct by the Disciplinary Committee, but judges and prosecutors are rarely removed from office.

Civil claims are generally brought in the District Court. Claims for less than NT$500,000 may be tried in the Simplified Procedure Court, while small claims procedures apply to claims for monetary claims of less than or equal to NT$100,000. Appeals from the District Court are heard in the High Court and appeals from the High Court are reviewed by the Supreme Court, provided the claims exceed NT$1.5 million.

is the role of the judge (and, where applicable, the jury) in civil 3 What proceedings?
Taiwan is a civil law jurisdiction and there are no jury trials. Judges may take a relatively passive role, simply hearing the evidence and ruling on matters of fact and law and submissions from the parties. Alternatively, they may (and usually do) take a more active role, questioning the parties and witnesses, investigating the facts and gathering relevant evidence. Decisions are made on the basis of both statutes and precedents, although compared with common law jurisdictions, the extent of reliance on precedents is less.

4 What are the time limits for bringing civil claims?

Generally, civil claims must be brought within 15 years after the cause of action accrued. However, claims in tort must be brought within 10 years of the occurrence of the tortuous event and within two years of the date when the claimant first became aware of the damage and the tort-feasor.

are civil proceedings commenced, and what is the typical procedure 5 How which is then followed?
A civil action commences when a plaintiff files a formal claim document with the court. Subject to the payment of court fees, the court then issues and serves the complaint on the defendant. Generally, the case proceeds in a series of short hearings (rarely longer than a few hours) held several weeks apart. The judge typically controls the proceedings, setting hearing dates, helping to formulate issues for argument, investigating evidence and requesting submissions from parties. In addition to presenting oral arguments, a counsel generally submits written submissions.

is the extent of pre-trial exchange of evidence, and how is evidence 6 What presented at trial?
Although there is no pre-trial procedure equivalent to discovery or interrogatories in Taiwan, under the Code of Civil Procedure both parties should exchange relevant documents before trial for the purpose of, among other things, focusing the issues to be tried. The judge may require parties to exchange documents, make statements regarding relevant evidence, and/or clarify and agree on the issues to which parties shall adhere during trial. On appeal, the court may prohibit the submission of new issues not previously formulated and agreed. As a rule, the burden of proof is placed on the party to whom the evidence in question is most advantageous. The court may also, at its own discretion, investigate evidence alleged by the parties. Witnesses and expert witnesses can be called to testify in court and are generally questioned by the judge. Parties themselves may also question the witnesses, and the witnesses are subject to cross-examination by opposing counsel.

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what extent are the parties able to control the procedure and the 7 To timetable? How quick is the process?
The judge generally sets the hearing dates. First instance cases may last six months to one year (or even longer). The court may render decisions more quickly if one partys claim is particularly meritorious. Appeals typically take between eight and 18 months. Pending cases may be suspended by agreement between litigants for up to eight months, during which time they may pursue other options, including an out-of-court settlement.

interim remedies are available to preserve the parties interests pending 8 What judgment?
A party may petition for provisional attachment of assets by presenting prima facie evidence that illustrates an existing risk that his opponents assets may be disposed to defeat a judgment. The court may require security from the petitioner equivalent to one-third to the full value of the claim. The opponent may prevent the attachment by posting a counter-security equivalent to the full value of the claim. A party may also petition for an injunction to preserve the status quo pending trial. In general, an opponent may not avoid an injunction by lodging counter-security.

there procedures available for judgment to be obtained without 9 Are proceeding to trial, on the ground that it is believed there is no defence to the claim? If so, at which stage of the proceedings should such procedures be invoked?
There is no procedure available for judgment to be obtained without proceeding to trial, on the ground that it is believed there is no defence to the claim. However, the Code of Civil Procedure provides that where a party has either abandoned or admitted the claim during oral argument, the court shall, based on such abandonment or admission, enter a judgment against such party.

10 What substantive remedies are available?

In general, remedies available under other legal systems are also available in Taiwan. They include monetary awards for damages, declaration, injunctive relief, assets attachment, orders for an account of profits and the transfer of property, etc. However, punitive damages are rarely awarded and normally only in cases involving particularly outrageous conduct.

11 What means of enforcement are available?


(i)

Judgments and court orders are generally enforced via compulsory execution procedures. In the case of a judgment against a debtor, the standard steps for initiating compulsory execution include: the filing of the judgment creditors application for a writ of execution based on the judgment;

(ii) the seizure of the debtors goods, land or other assets by the court officials, and a court order requiring any third party owing a debt to the judgment debtor to pay that debt instead to a court account pending final distribution; and (iii) sale of the assets seized at a court auction and distribution of the proceeds to all creditors with proven claims. This is only one example. A variety of other enforcement options are available to the court.

the court have power to order costs? Are foreign claimants required to 12 Does provide security for costs?
The court will not award attorney fees, regardless of the outcome of the case, except in the Supreme Court (where a limited amount may be ordered). However, the losing party (or a party withdrawing suit) is responsible for payment of the litigation court costs, which are assessed at each instance of trial. At the first instance of trial (District Court), the court fees are calculated by reference to the amount claimed, but roughly about 1.1% of the amount claimed. At the second (High Court) and third (Supreme Court) instances, court fees are about one and a half times the court fees of first instance (District Court).

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Where a plaintiff is not domiciled in Taiwan, or has no business establishment in Taiwan, the court will, prior to the defendants oral argument and upon the defendants motion, order the plaintiff to post a security in cash equivalent to the court costs, but not in relation to the attorneys costs.

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On what ground can the parties appeal, and what restrictions apply? Is there a right of further appeal? To what extent is enforcement suspended pending an appeal?
Appeals to the High Court against judgments and orders from the first instance trial are generally available as of right. When one party appeals, their opponent may file a cross appeal. In the High Court, neither party may present new evidence or arguments except in extraordinary circumstances, because they are prohibited from raising new issues. Upon petition, the High Court may grant an order for provisional execution of the judgment rendered by the District Court after hearing arguments from both parties. However, it will require the petitioning party to post a bond in an amount equal to one-third of the value of such execution. Alternatively, the party against whom execution is sought may petition the court to stay execution by posting an amount equal to the full value of such execution. Appeals to the Supreme Court may only be based on a misapplication of law by the lower court. With respect to a claim involving assets, the value must equal or exceed NT$1.5 million.

what extent can domestic and/or foreign state entities claim immunity from 14 To civil proceedings?
Immunity from a civil action claimed by a state or state entity is limited to acts of a governmental nature. No such immunity exists for acts of a commercial nature where the state or state entity participated in market activities similar to those of a private entity.

15 What procedures exist for recognition and enforcement of foreign judgments?


Foreign judgments will not be recognised and enforced in Taiwan if: (i) the foreign court rendering the judgment had no jurisdiction over the case according to Taiwan law; (ii) the foreign judgment was rendered by default and the summons or court orders necessary for commencement of the action had not been duly served on the defaulting party in that foreign country or through judicial assistance in Taiwan; (iii) the foreign judgment is deemed inconsistent with Taiwans public policy or good morals; or (iv) judgment rendered in Taiwan are not reciprocally recognised by the subject foreign courts. According to Taiwans Law Governing Compulsory Execution, the party seeking to enforce a final foreign judgment in Taiwan must file a lawsuit in a competent Taiwanese court for permission to enforce that judgment. The parties may appeal to the Supreme Court in Taiwan just as in other civil cases. However, neither party may proceed with any compulsory execution until a judgment approving the enforcement has become final in Taiwan.

it permissible for lawyers to charge contingency or conditional fees, or other 16 Is fee arrangements based on the result of the litigation/arbitration?
Contingency fees are permitted in Taiwan, except in matrimonial and criminal cases.

Arbitration 17 Is the arbitration law based on the UNCITRAL Model Law?


Guide to dispute resolution in Asia 2008/2009

Taiwan amended its Arbitration Law in 1998 to comply with the international standard as defined by the UNCITRAL Model Law. Many of the important provisions of the Model Law can be found in Taiwans Arbitration Law.

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18 What are the main national arbitration institutions?

There are four national arbitration institutions in Taiwan: the Arbitration Association of the ROC (http://www.arbitration.org.tw), the ROC Association of Labor Dispute Arbitration, the Chinese Construction Industry Arbitration Association and the Taiwan Construction Disputes Arbitration Association (http://www.tcaa.org.tw). Parties may pursue ad hoc or institutional arbitration.

19 Are there any restrictions on who may represent the parties to an arbitration?
No. Parties may represent themselves or be represented by any advocate of their choice, whether or not legally qualified.

20 What are the formal requirements for an enforceable arbitration agreement?


An enforceable arbitration agreement must: (i) relate to a dispute whose resolution through arbitration is legally permissible; and (ii) be in writing or expressed in any tangible format, showing a common intent to submit disputes to arbitration.

21 Can the court refuse to stay litigation if there is a valid arbitration clause? 22
If the arbitration agreement and any relevant rules are silent, how many arbitrators will be appointed, and who is the appointing authority?

The Arbitration Law provides that the court must stay litigation in deference to arbitration, unless the opposing party has already presented arguments on the merits of the case.

In such a case the Arbitration Law provides that each party shall elect an arbitrator and the two arbitrators shall jointly elect a third arbitrator as chief arbitrator. Where one party fails to appoint its arbitrator, the other party may petition the arbitration tribunal or the court for an appointment. Where the two arbitrators cannot agree on a chief arbitrator within 30 days, the parties may petition the court for an appointment.

restrictions placed on the right to challenge the appointment of an 23 Are arbitrator?


Arbitrators must act independently and impartially, maintain confidentiality regarding the arbitration, and excuse themselves in cases of actual or perceived bias. In general, parties may challenge an unfit arbitrator and seek their removal. Challenges may also be based on an arbitrators qualifications. An arbitrator must be a reputable person of legal or other professional expertise, such as: (i) a judge or prosecutor;

(ii) an attorney, accountant, architect, technician or other business professional with over five years experience; (iii) an arbitrator in a domestic or international arbitration; (iv) an assistant or a higher level professor with over five years experience at a college accredited by the Ministry of Education; or (v) a professional with expertise and over five years experience in a specialised field. In addition, an arbitrator must not have a serious criminal record or be legally incapacitated.

the domestic law contain substantive requirements for the procedure to 24 Does be followed?
In principle, the domestic law does not contain substantive procedural requirements. However, where the parties have not agreed on the arbitration procedure, the rules of the Arbitration Law shall apply. Where the Arbitration Law does not provide such rules, Taiwans Code of Civil Procedure, or other rules deemed appropriate by the arbitration tribunal, shall apply.

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The rules on service of process prescribed by the Code of Civil Procedure shall apply in arbitration. The Arbitration Law further provides that if expressly authorised by the parties, the arbitration tribunal may apply rules of equity when rendering its decision.

25 26

On what ground can the court intervene during an arbitration?


The court may intervene during an arbitration. For example, if the arbitrators elected by each respective party are unable to decide upon the chief arbitrator within 30 days after their appointment, either party may petition the court for an appointment of the chief arbitrator so that the arbitration proceeding may be proceeded swiftly and expeditiously. Additionally, the arbitration tribunal may request assistance from the court or other bodies, governmental or otherwise, in the investigation and production of evidence.

Do arbitrators have powers to grant interim or conservatory relief?


Arbitrators have no power to grant interim or conservatory relief. In circumstances where a protective order is necessary, a party may petition the court for relief in the form of a provisional seizure in accordance with the asset conservation provisions of the Code of Civil Procedure.

27 When and in what form must the award be delivered?


(i) names and addresses of the parties and their representatives; (ii) names, nationalities and addresses of any interpreters; (iii) the decision;

The arbitration tribunal must issue a written award within 10 days after the hearing containing the following:

(iv) the facts and reasons for the award, unless the parties have agreed that no reasons shall be stated; and (v) the date and place of the award. The original copy of the award must be signed by the arbitrators. The arbitration tribunal must deliver a certified copy to each party, and a certified copy, along with proof of delivery, must be filed with a court registry at the place of arbitration.

28 On what ground can an award be appealed to the court?


A party may apply to the court to revoke the arbitral award if: (i) the arbitral award concerns a dispute not contemplated by the terms of the arbitration agreement or that exceeds the agreements scope, unless the offending portion of the award can be severed; (ii) the grounds for the award were not stated, unless subsequently rectified by the tribunal; (iii) the arbitral award directs a party to act contrary to the law; (iv) the arbitration agreement is nullified, invalid, or has yet to come into effect; (v) the arbitration tribunal fails to provide a party an opportunity to present its case, or a party was not represented in a duly authorised manner during the arbitration proceedings; (vi) the composition of the arbitration tribunal or proceeding is contrary to the arbitration agreement or the law; (vii) an arbitrator fails to disclose bias and appears to be partial, or continues to act despite a legitimate request for their resignation; (viii) an arbitrator violates any duty that carries criminal liability; (ix) a party or any representative thereof has committed a criminal offence in connection with the arbitration;

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(x) the arbitral award relies upon forged or altered evidence or translations; or (xi) any judgment or administrative ruling upon which the arbitral award relies has been reversed or materially altered by a subsequent judgment or ruling. An application to revoke an arbitral award must be submitted within 30 days after the arbitral award has been rendered or delivered.

29

What procedures exist for enforcement of foreign and domestic awards?


Article 37 of Taiwans Arbitration Law provides that a domestic award will not be enforced unless a competent court has, on application of a concerned party, granted an enforcement order. However, the arbitral award may be enforced without an enforcement order if the parties agree in writing and the arbitral award concerns: (i) payment of a specified sum of money, or a certain amount of fungible items or valuable securities; or

(ii) delivery of a specified movable property. The above is binding on the parties, their successors or those taking possession of the contested property for a party or its successors. Taiwan is not a signatory to the New York Convention. Foreign arbitral awards are enforceable only after they have been recognised by the court. To obtain recognition, an application must be filed in court and accompanied by the original arbitration agreement and award, or authenticated copies, together with the full text of the foreign or international organisations arbitration provisions pursuant to which the award was rendered. The court will dismiss an application for recognition of a foreign arbitral award if recognition or enforcement would be contrary to the public order or the good morals of Taiwan, or if the subject matter of the dispute could not be subject to arbitration under Taiwanese law. The court may also refuse recognition (but is not bound to do so) if the country where the arbitral award is made, or whose laws govern the arbitral award, does not recognise and enforce Taiwanese arbitral awards.

30

Can a successful party recover its costs?


The arbitral award may include awards for costs of the arbitration proceedings, but no fees for legal representation may be awarded in principle, except where costs of attorney fees have been agreed in the arbitration agreement.

Alternative dispute resolution


the parties to litigation or arbitration required to consider or submit to any 31 Are alternative dispute resolution before or during proceedings?
Taiwans Code of Civil Procedure provides that certain disputes must be submitted to a reconciliation procedure in court before formal action can be brought. The types of disputes listed in the Code can be broadly categorised as: (i) disputes over real property regarding division of boundary lines, sharing of administrative powers among coowners, or lease tenancy; (ii) disputes among parties involved in a traffic incident or medical treatment; (iii) disputes between an employer and employee with respect to an employment contract; (iv) disputes among partners of a partnership business; (v) disputes over property rights between close family members; and (vi) disputes over property valued at less than NT$100,000.

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Reforms 32
Are there likely to be any significant procedural reforms in the near future?
In order to promote movement towards mediation so as to minimise the number of court cases, the Judicial Yuan amended The Guideline for Strengthening the Court to Implement Civil Mediation (Guideline) on 30 April 2007 by incorporating substantial provisions from The Guideline for Strengthening Mock Conciliation (Mock Mediation Guideline). The Mock Mediation Guideline is thus repealed and replaced by the Guideline. The Guideline applies to every Civil Court and applies to cases subject to mediation in accordance with the Code of Civil Procedure except in family matters. According to the Guideline, the courts should send the Mediation Consent Form, Instructions for Mediation and List of Mediators to the parties along with the first hearing date notice. The court, having regard to the progress of the litigation, should also encourage parties to participate in mediation. To maximise the effect of the Guideline, the court has commenced a selection process with a view to recruit appropriate candidates to act as mediators. The Intellectual Property Court Organisation Act was promulgated on 28 March, 2007 and will come into effect on a date to be prescribed by the Judicial Yuan. According to the Act, the Intellectual Property Court will adjudicate matters in relation to civil, criminal and administrative actions over intellectual property. Currently, any claims arising from identical Intellectual Property Right (IPR) dispute may be presided in Civil Court, Criminal Court as well as Administrative Court due to Taiwans judicial system, which can make IPR litigation in Taiwan very time-consuming and complicated. To avoid such disadvantage and to properly protect the IPR holders, a specialised Intellectual Property Court will be established in the near future to govern matters in relation to civil, criminal and administrative actions over IPR. Moreover, with the implementation of the Intellectual Property Court, judges having dual background of science and the law, will be selected to preside over IPR cases. Also, to provide support and assistance to the judges, the Intellectual Property court shall appoint Technical Examination Officers to collect technical information and provide evaluation, advice and analysis on technologies.

Formosa Transnational Attorneys-At-Law


Contact Phone Fax Email Website Wellington L. Koo Taipei: 15th Floor, Lotus Building, 136 Jen Ai Road, Section 3, Taipei 106, Taiwan, ROC +886 2 2755 7366 +886 2 2755 6486 wellington.koo@taiwanlaw.com www.taiwanlaw.com Kaohsiung: 16F-6 No. 38 Singuang Road, Kaohsiung 802, Taiwan, ROC +886 7 537 1618 +886 7 537 5068

Phone Fax

Formosa Transnational is one of the largest and best-known law firms in Taiwan. We have gained a reputation for being exceptionally strong in dispute resolution, including negotiation, arbitration and litigation over the years. Presently, more than 70 Taiwanese and foreign licensed attorneys together with a team of IT and biotechnology patent engineers coordinate efforts to provide quality legal service to industry leaders in the diverse fields of banking, finance, IT, biotechnology, telecommunications and international trade. We have established three specialised practice groups, namely litigation, corporate, banking and finance and IP group to focus on emerging areas of law. Combining our experiences of local and international laws, familiarity with Taiwanese market, custom and business practices as well as government regulatory requirements, our teams work collaboratively together to provide the most effective and innovative resolution to clients faced with contentious legal issues. Generally, we advise on general legal/regulatory issues, assist in the preparation and interpretation of contracts and help our clients to resolve commercial issues.

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Thailand
Herbert Smith (Thailand) Limited

Litigation 1 What is the structure of the legal profession?


Under the Lawyers Act B.E. 2528 (1985), the term lawyer is defined as a person who is registered and licensed to act as a lawyer by the Lawyers Council of Thailand. Applicants for registration as lawyers must be at least 20 years old and have passed the lawyers licence examination. Thai nationals with a law degree from an institution recognised by the Lawyers Council are eligible to take the examination only if they are members of the Thai Bar Association and have had six months training at a law firm, as well as practise and ethics training. The Lawyers Council registration and licensing requirements apply only to individuals who wish to represent clients in court. There are no registration or training requirements applicable to any other legal consultants. Candidates for positions as judges and public prosecutors must be at least 25 years old and must hold a bachelor of law degree from a recognised institution. To become qualified, a candidate must first pass an examination organised by the Thai Bar Association and then practise for at least two years as an assistant to a judge or a public prosecutor. Judges are appointed by the King on the recommendation of an independent commission, and only the King can remove them on certain limited grounds. There are safeguards designed to protect judges from political interference.

2 What is the structure of the court system?

There are three levels of courts: Courts of First Instance, Courts of Appeal and the Supreme Court. The Courts of First Instance comprise of district courts, provincial courts (whose jurisdiction is geographically limited) and specialised courts such as the Central Taxation Court, Central Juvenile & Family Court, Central Labour Court, Central Intellectual Property & International Trade Court (the IP-IT Court), Administrative Court and the Bankruptcy Court. In civil cases, district courts deal with small claims of not more than Baht 300,000, while provincial courts have general jurisdiction. In Bangkok, however, the Criminal Court and Civil Court take the place of the provincial court for most purposes. The nine Courts of Appeal (whose jurisdiction is also geographically limited) hear appeals from the Courts of First Instance in all cases except those in which the right of appeal lies directly with the Supreme Court (see below). The Supreme Court is the final avenue of appeal. With certain exceptions, trials in all Courts of First Instance are heard by two judges. However, trials in the IP-IT Court are heard by two career judges and one associate judge who has relevant commercial experience. Judges in other specialist courts may also be assisted by associate judges with relevant expertise.

is the role of the judge (and, where applicable, the jury) in civil 3 What proceedings?
Thailand has no jury system. Judges take an active role, ruling on matters of fact and law after hearing evidence and submissions from competing parties. Judges have the power to question witnesses, bring about an agreement or compromise at any stage of the trial and, in the interest of doing so, may order mediation prior to the trial by consent of both parties. Judges may also order that proceedings take place in private. Thailand is a civil law jurisdiction and there is no system of binding judicial precedent. However, Supreme Court decisions are generally used as guidelines in subsequent cases on similar issues.

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4 What are the time limits for bringing civil claims?

Claims for personal injury or wrongful acts (ie, torts, in broad terms) are barred by prescription after one year from the day when both the wrongful act and the identity of the prospective defendant became known to the injured person. In any case, the maximum time limit within which claims may be brought is 10 years from the date when the wrongful act was committed. For many contractual disputes, the prescription period is either two or five years (depending on the nature of the claim). A 10-year period applies where no other time period is specified. However, no action for defective goods can be brought later than one year after discovery of the defect. Other prescription periods apply in particular circumstances (eg, annulment of a shareholders resolution). Prescription periods fixed by law cannot be extended or reduced by agreement of the parties.

are civil proceedings commenced, and what is the typical procedure 5 How which is then followed?
A civil action is commenced by filing a complaint setting out the nature of and basis for the claims and a request for remedies. Upon acceptance of the complaint, the court will issue a summons to answer which the plaintiff must ask the court to serve on the defendant. If the defendant fails to accept the writ, the court may issue an order for substituted service. Failure by the defendant to submit a defence may result in a default judgment as long as the plaintiff has shown evidence of a prima facie case. The defendant may file a counterclaim to which the plaintiff may reply by way of a defence to the counterclaim. A third party may become a party in a case by way of interpleading. After the exchange of pleadings, a pre-trial conference led by the judge will be scheduled for possible compromise negotiations or for identification of the issues in dispute (the settlement of issues). The court will assign among the parties the burden of proving particular matters in issue (taking of evidence). After this procedure is concluded, dates for the trial will be scheduled. Pursuant to the Constitution of Thailand, the hearing of a case requires a full quorum of judges, and only the judge(s) who sat at the hearing of a case can give judgment in the case. Recent improvements in case management mean periodic (eg, monthly) trial hearings are gradually being replaced by single continuous hearings without adjournment unless necessary. All court proceedings are carried out in the Thai language. The judicial system favours a full hearing and adjudication on the merits rather than early disposition on technical grounds. There is no concept of summary judgment, although claims not exceeding Baht 300,000 may be dealt with by the Courts of First Instance under the equivalence of a small claims procedure.

is the extent of pre-trial exchange of evidence, and how is evidence 6 What presented at trial?
Pre-trial discovery is unknown in Thailand. However, civil procedures allow a party to petition for an immediate taking of certain evidence if there is reason to believe that such evidence will be lost or become inaccessible when proceedings are commenced. A party intending to show evidence in support of the case (such as documents, inspection of a place or thing, or testimony of any factual or expert witness) must file a list of the evidence with the court no less than seven days prior to the first day of trial. Where necessary, an additional list of evidence may also be filed within 15 days from the day of the taking of evidence. Evidence not filed at the court within these time limits is inadmissible without the consent of the court. In most cases original documents will be required. For cases in the IP-IT Court, the court may admit English language documents provided both parties consent. In practice, material documents are usually submitted with a Thai translation. In all other cases, any documents in a foreign language must be translated. Except in some specialised courts, where evidence-in-chief may be admitted in the form of a witness statement, witnesses must attend to give oral evidence at trial and may be cross-examined by opposing parties. The testimony must be given in Thai either by the witness or through an interpreter for foreign witnesses.

what extent are the parties able to control the procedure and the 7 To timetable? How quick is the process?
An extension of a procedural time limit is subject to the courts approval, and hearings can be postponed only for reasons acceptable to the court. The court must avoid adjournments where possible. Civil litigation may take between 12 and 48 months from filing the complaint to judgment by the Court of First Instance, though longer periods are not unknown. Appeals in the upper courts may take an additional 18 to 24 months at each level.

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interim remedies are available to preserve the parties interests pending 8 What judgment?
Protective measures before judgment, such as temporary restraining orders and attachment of property, are available at any time after the complaint has been filed. However, such measures are difficult to obtain and are unusual in practice. The court must be satisfied that the defendant intends to remove or conceal assets, that there is a real need for a temporary injunction, or that other urgent grounds exist. The court may require the applicant to deposit money with the court as security for any compensation that the defendant may be entitled to receive if the applicants claim should ultimately fail.

there procedures available for judgment to be obtained without 9 Are proceeding to trial, on the ground that it is believed there is no defence to the claim? If so, at which stage of the proceedings should such procedures be invoked?
No.

10 What substantive remedies are available?

The court has the power to grant a wide range of remedies on application by a party or, where permitted by law, as it sees fit. Those remedies include injunctive relief, declarations, orders for an account of profits and the transfer of property and, most commonly, a monetary award of damages to compensate for actual loss suffered. Non-compensatory (punitive or exemplary) damages are rarely awarded.

11 What means of enforcement are available?

Judgments and orders are enforceable by further court procedures and, where necessary, by legal execution officials. The creditor must initiate the enforcement action. Standard means of enforcement include: (i) issuance of an execution decree empowering a legal execution officer to seize the debtors property and sell it through public auction conducted by the Execution Department; (ii) court examination of the judgment debtor or other persons who are believed to have useful information on property liable to execution of the judgment; (iii) attachment of properties which are to be subsequently delivered or transferred by a third party to the judgment debtor; and (iv) order requiring a third party that owes a debt to a judgment debtor to pay that debt to the judgment creditor instead.

12

Does the court have power to order costs? Are foreign claimants required to provide security for costs?
Legal costs (including lawyers fees) may be apportioned between the parties at the courts discretion, although they are usually borne by the losing party. However, the allowable amount in respect of lawyers fees is small and varies within prescribed limits according to the amount in dispute. A defendant may apply to the court for an order that a non-resident plaintiff deposit security to cover future payment of the defendants court costs and legal fees in the event that the plaintiff loses. If the plaintiff does not comply with such an order, the case will be dismissed.

what ground can the parties appeal, and what restrictions apply? Is there 13 On a right of further appeal? To what extent is enforcement suspended pending an appeal?
Appeals against judgments by the Court of First Instance are generally submitted to the Court of Appeal. Any further appeal lies with the Supreme Court. However, in an attempt to avoid the delays that occur under normal procedures, appeals against judgments rendered by specialised courts (eg, the IP-IT Court) can usually be submitted directly to the Supreme Court. In particular, an appeal regarding a question of law may be filed directly with the Supreme Court, as

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long as there is no objection from the respondent and upon approval of the Court of First Instance. No appeal lies on questions of fact if the value of the property or the amount in dispute does not exceed Baht 50,000, or Baht 200,000 for appeals to the Supreme Court. Appeals must be lodged within one month of the date of judgment and appeals proceed on a documents only basis. Questions of fact or law may be raised on appeal, so long as those questions were addressed in the Court of First Instance and are stated in the appeal document. An appeal does not operate as an automatic stay of execution. However, the appellant may apply to the court for a stay of execution at any time prior to judgment by the Court of Appeal. A stay of execution may be granted if the appellant deposits an amount of money in court sufficient to cover the judgment debt and costs of the action and execution, or has provided security for such an amount to the satisfaction of the court.

what extent can domestic and/or foreign state entities claim immunity from 14 To civil proceedings?
Thai law is not entirely clear on this issue. However, it is generally considered that foreign states and foreign and domestic state agencies/enterprises/etc can only claim immunity for acts of a governmental nature. Immunity does not extend to acts of a commercial nature which could equally be performed by a private company or individual. Domestic state bodies may also be sued in the Administrative Courts in respect of various administrative acts and functions, and in respect of administrative contracts (eg, concession agreements), as provided in more detail in the relevant law. Thai law provides that state property is immune from execution procedures, and similar immunity is often conferred by the law establishing particular public sector bodies.

15 What procedures exist for recognition and enforcement of foreign judgments?

A foreign judgment cannot be enforced directly, and it will not provide sufficient grounds for attaching a judgment debtors assets within the jurisdiction. The creditor must begin new proceedings in Thailand on the merits of the claim. However, the foreign judgment can be relied on as evidence of the debt and may be recognised as a claim adjudicated abroad. In order to determine whether a claim adjudicated abroad is entitled to be recognised in Thailand, the court will examine whether the foreign court that decided the case had the necessary jurisdiction and whether the foreign judgment was final.

it permissible for lawyers to charge contingency or conditional fees, or other 16 Is fee arrangements based on the result of the litigation/arbitration?
Thai law will uphold a contract unless it is expressly prohibited by law or contrary to public order or good morals. There is no specific law or rule prohibiting contingency or conditional fees, or other legal fee arrangements based on the result of litigation/arbitration. The issue of public order and good morals will be considered on a case-by-case basis, but in general it is understood that such arrangements will be permissible under current law. In practice, results-based fee arrangements are not unusual.

Arbitration 17 Is the arbitration law based on the UNCITRAL Model Law? 18


What are the main national arbitration institutions?
The main arbitration institutions are the Thai Arbitration Institute (http://www.judiciary.go.th/adro/sub/tai/en) and the Thai Commercial Arbitration Committee established by the Board of Trade. Parties may pursue ad hoc or institutional arbitration subject to such rules as they agree. Other organisations such as the Securities and Exchange Commission and the Department of Intellectual Property operate industry-specific arbitration schemes, while the Department of Insurance imposes a mandatory requirement that all policies must contain an option (binding on the insurer) for arbitration of claims under the Departments own rules. Thailands Arbitration Act B.E. 2545 (2002) came into force on 30 April 2002 and is substantially based on the Model Law. An informal translation is available online at http://www.sec.or.th/en/iosco/arbitration_act.doc.

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19 Are there any restrictions on who may represent the parties to an arbitration?
(i) where the dispute is not governed by Thai law, or (ii) irrespective of the governing law, where enforcement of the arbitral award need not be requested in Thailand.

Yes. Whereas foreigners may act as arbitrators (subject to compliance with immigration and work permit laws), foreign lawyers may only represent parties to an arbitration:

20 What are the formal requirements for an enforceable arbitration agreement? 21 Can the court refuse to stay litigation if there is a valid arbitration clause?
the arbitration agreement and any relevant rules are silent, how many 22 If arbitrators will be appointed, and who is the appointing authority?

In order for an arbitration agreement to be enforceable under the Arbitration Act, there must be a clear agreement by the contractual parties to submit all or certain of their present or future disputes to arbitration. Furthermore, the arbitration agreement must be in writing, whether in the form of a contract or an exchange of information, letters, telegrams, facsimiles or other documents of a similar nature and bear the signatures of the parties (including electronic signatures).

The court must strike litigation out of court where there is an arbitration clause unless it is satisfied that the arbitration agreement is null, void, inoperative, unenforceable or incapable of being performed.

The Arbitration Act requires that an odd number of arbitrators be appointed. If the arbitration agreement is silent as to the required number of arbitrators, only one arbitrator shall be appointed. If the parties are unable to agree on the arbitrator, either party may file a motion with the competent court requesting the appointment of an arbitrator.

restrictions placed on the right to challenge the appointment of an 23 Are arbitrator?


The appointment of an arbitrator may be challenged only where circumstances exist that give rise to justifiable doubts as to the arbitrators impartiality, or where the arbitrator lacks qualifications agreed by the parties.

24

Does the domestic law contain substantive requirements for the procedure to be followed?
No, save that the tribunal must treat the parties with equality and give each party an opportunity to present its case. In the absence of any prior agreement governing the matter, the arbitrators have the power to follow such procedure as they deem appropriate. The Arbitration Act follows the Model Law in providing detailed procedural provisions regarding matters such as where the arbitration may be held and the language of the hearing.

25 On what ground can the court intervene during an arbitration?

The arbitrators, or any party with the approval of the majority of the tribunal, may make an application for court intervention, where they are of the opinion that a proceeding can only be carried out by a court (such as summoning a witness or ordering production of a document). So long as the request is within its jurisdiction, the court shall accept the application.

26 Do arbitrators have powers to grant interim or conservatory relief? 27 When and in what form must the award be delivered?
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No. However, the parties may file with a competent court an application for provisional measures for the protection of the interests of the party before or during arbitration proceedings. The court may grant such relief if satisfied that it would have had jurisdiction to make such an order if the application had been made in the context of pending litigation.

The award must be in writing and signed by the arbitrators and clearly state the reasons for the decision. The decision must be cast by a majority of votes from the arbitrators. The Arbitration Act does not stipulate a time limit for delivery of the award. Copies of the award must be sent to each party.

28 On what ground can an award be appealed to the court?

A party may apply to the court within 90 days of receipt of the award for the award to be set aside on grounds essentially identical to Article 34 of the Model Law.

29 What procedures exist for enforcement of foreign and domestic awards?


Thailand is a party to the New York Convention and no reservations were entered on accession. Thai law does not distinguish between domestic and international awards. A party seeking to enforce either type of award will have three years to file its application with the court, and the grounds for denying enforcement will essentially be those set out in Article V of the New York Convention.

30 Can a successful party recover its costs?

The tribunals award may include directions with respect to costs, including the tribunals own charges. The usual rule is that costs follow the event. However, under the Arbitration Act and the rules of the Thai Arbitration Institute a partys legal fees and expenses are not recoverable unless otherwise agreed.

Alternative dispute resolution


the parties to litigation or arbitration required to consider or submit to any 31 Are alternative dispute resolution before or during proceedings?
In any case pending at the Court of First Instance, where the court considers there is a possibility of settlement and with the consent of the parties, it is the practice of the court to stay the proceedings and refer the matter to mediation. In mediation, issues in dispute will be heard by an independent third party in an attempt to reach a settlement of some or all of those issues. An initial settlement meeting is also required by the rules of the Thai Commercial Arbitration Committee before a dispute can proceed to arbitration under those rules. The Thai Arbitration Institute will generally offer parties arbitrating under its rules the option of a TAI-facilitated mediation, if they wish to do so.

Reforms 32 Are there likely to be any significant procedural reforms in the near future?
No.

Herbert Smith (Thailand) Limited


Contact Phone Fax Email Website Alastair Henderson 1403 Abdulrahim Place, 990 Rama IV Road, Bangkok 10500, Thailand +662 657 3888 +662 636 0657 alastair.henderson@herbertsmith.com www.herbertsmith.com

Herbert Smiths Bangkok office provides legal advice under Thai and some foreign laws, in Thai and English languages. We advise on general legal issues, assist in the preparation and interpretation of contracts, and help our clients to resolve commercial disputes. We offer specialist skills in the energy, construction and international business sectors with a team that includes Thai lawyers and resident foreign professionals. Herbert Smith has particular expertise in the field of dispute resolution. We advise local and international clients in domestic and international arbitration, in all main areas of Thai litigation, and in other forms of commercial dispute resolution. We provide top quality, commercially aware legal advice, based on familiarity with Thai markets and long experience of local and international laws and business practices.

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Litigation 1 What is the structure of the legal profession?


The legal profession in Vietnam comprises of a legally trained judiciary and lawyers. Under the Law on Organisation of the Peoples Court dated 2 April 2002, the judiciary of the Supreme Peoples Court are appointed by the President of the Socialist Republic of Vietnam. The judiciary of District & Provincial Peoples Courts are appointed by the Chief Judge of the Supreme Peoples Court based on proposals by the Committee for Selection of Judges. Candidates must be Vietnamese citizens and have at least four years legal experience to be selected as a judge of a District Peoples Court. To be selected as a judge of a Provincial Peoples Court, at least five years experience as a judge of a District Peoples Court is needed, or at least 10 years legal experience. To be selected as a judge of the Supreme Peoples Court, a candidate must have at least five years experience as a judge of a Provincial Peoples Court or a minimum of 15 years legal experience. Judges are appointed for terms of five years and, thereafter, are subject to re-selection by the Committee for Selection of Judges and by the President (for Supreme Peoples Court judges) or by the Chief Judge of the Supreme Peoples Court (for Provincial or District Peoples Courts judges). To become a lawyer, one must undertake academic and professional training and successfully complete the qualification requirements. Once qualified, lawyers can establish their own law office or join a Vietnamese law office, a Vietnamese law partnership company or a foreign law firm. A Vietnamese law office may have one or more Vietnamesequalified lawyers, whereas a law partnership company must have at least two Vietnamese-qualified lawyers. A foreign law firm may establish a presence in Vietnam through a branch, a 100% foreign-owned company or a partnership with a Vietnamese law partnership company (collectively referred to as a foreign law firm) but it can only advise on Vietnamese law if it employs Vietnamese-qualified lawyers. Vietnamese lawyers working for a Vietnamese law office may participate, and represent clients of the law office, in legal proceedings before Vietnamese courts but foreign lawyers working for a Vietnamese law partnership company or a foreign law firm may not. Vietnamese lawyers working for law firms including foreign law firms may participate and represent clients in legal proceedings before the Vietnamese court. From 1 January 2007, when the new Law on Lawyers took effect, Vietnamese-qualified lawyers can practise as individual lawyers or in a law office, a law partnership company, a one member limited liability law company, a limited liability law company with two members or more, or a foreign law firm. A foreign law firm will, under the new Law, be able to establish a presence in Vietnam through a branch, a 100% foreign-owned limited liability company or a joint venture limited liability company between a foreign law firm and Vietnamese law firm (collectively referred to as a foreign law firm).

2 What is the structure of the court system?

The court system in Vietnam comprises District, Provincial and Supreme Peoples Courts. The Civil Procedure Code (CPC) consolidates many of the provisions of the previous laws on civil court, economic court and labour court procedures including those on the recognition and enforcement of foreign judgments and foreign arbitral awards. The CPC was passed by the National Assembly of Vietnam at its fifth meeting on 15 June 2004 and became effective on 1 January 2005.

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Under the CPC, District Peoples Courts may, subject to certain exceptions involving foreign parties, hear labour disputes between an individual employee and an employer, civil, marital and family disputes and most other cases involving civil, marital and family issues. It should be noted that there is a difference between disputes and issues and the CPC provides examples of this distinction. Under the CPC, the District Peoples Courts may also hear a variety of economic disputes. However this excludes those relating to air or sea transportation of passengers and cargo; sale and purchase of shares, bonds or valuable papers; investment, finance, banking and insurance; exploitation and exploration; disputes on intellectual property rights and technology transfer for profitable purposes; and disputes between a company and its shareholders or between shareholders of a company. The Provincial Peoples Court and the Supreme Peoples Court are divided into specialist courts, which deal with specific criminal, civil, economic, labour and administrative disputes. Provincial Peoples Courts normally hear cases which do not fall within the jurisdiction of the District Peoples Courts, and any cases which are required to be transferred from the District Peoples Court. Generally, proceedings must be commenced in the court of the province or district where the defendant resides, works, has its head office or where the performance of a contract was to take place.

What is the role of the judge (and, where applicable, the jury) in civil proceedings?
Judges are active arbiters, ruling on matters of law and fact after hearing evidence and submissions from the parties to the action. There is no doctrine of binding precedent, although as a matter of practice, Peoples Courts must follow Supreme Court instructions. A civil hearing at first instance in the Peoples Court is chaired by a judgment board, which comprises a single judge and two Peoples jurors if it is a civil dispute, three judges if it is a request for recognition and enforcement of foreign judgments or foreign arbitral awards, or a sole judge if it is a civil, marital or family issue. In special cases for civil disputes, a hearing at first instance may comprise two judges and three Peoples jurors. Peoples jurors are individuals from Vietnamese state organisations (including government officials, civil servants and military personnel) appointed by the local Peoples Council to participate in the court process. In practice, the Peoples jurors are guided by the judge and generally concur with the judges views. A public prosecutor may, however, be appointed by the local prosecutors office to oversee the judicial process in certain civil and commercial cases. There is no jury in a civil action.

4 What are the time limits for bringing civil claims?


(i) (ii)

The time limit for bringing a civil claim is two years from the date of the breach of a legitimate right or interest (for civil disputes), and one year from the date of the claim rising (for civil issues), unless such claim relates to: disputes regarding inheritance, in which case the time limit is 10 years from the date of death; the invalidity of a civil transaction, in which case the time limit is one year from the date of the transaction in certain circumstances (from 1 January 2006, this time limit will be two years); movable or immovable assets, in which case the time limit is 10 years (for movable assets) or 30 years (for immovable assets), from the date on which a person first took possession of such assets; or labour disputes, in which case the time limit is six months, one year or three years depending on the type of dispute.

(iii)

(iv)

are civil proceedings commenced, and what is the typical procedure 5 How which is then followed?
To commence a civil action, the plaintiff files a petition and should obtain a receipt for filing from the relevant Peoples Court. The court checks the petition to ensure the format and contents comply with Vietnamese law and the case is under its jurisdiction. If all is in order, the court will issue a notice to the plaintiff for advance payment of the court fee. The court fee is normally determined by the amount of the claim and must be paid to the relevant Enforcement Office

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which subsequently provides the court with a copy of the payment receipt. The court then accepts the case, records it in its register and commences an official investigation into the matters set out in the petition. Statements are taken from the parties, from any related third parties and from witnesses to the dispute. In addition, evidence is collected and a court file is prepared in readiness for a hearing. Prior to the hearing, the court must arrange court-supervised conciliation meetings between the parties with a view to settling the dispute. As a matter of practice, at least two conciliation meetings are held. If the conciliation meetings fail to result in a settlement, the court will fix a date for the hearing.

What is the extent of pre-trial exchange of evidence, and how is evidence presented at trial?
A procedure permitting pre-trial exchange of evidence does not exist in Vietnam. Rather, the court obtains statements and evidence from the plaintiff and the defendant. Each party has a right to see the evidence presented by the other party. However, prior permission of the court must be obtained before a review of the other partys evidence will be allowed. While such permission will normally be granted by the court, it is often only granted to a partys appointed lawyer and not to other persons. The parties are permitted to photocopy evidence presented by other parties or collected by the court and can request the court to collect evidence on their behalf where they are unable to obtain it themselves. The primary source of evidence is oral testimony from individuals whom the court has accepted as witnesses with direct knowledge of the matters in dispute. Cross-examination of witnesses is permitted. Expert witnesses may be called to comment upon technical matters, and written evidence in the Vietnamese language may be submitted directly to the court.

what extent are the parties able to control the procedure and the 7 To timetable? How quick is the process?
The court, rather than the parties to the dispute, controls the procedure. The procedural timetable is fixed by law. If the parties cannot reach a settlement at the court arranged conciliation meetings, then by law the hearing must commence within four months from the date on which the court accepted the case. If, however, there is a legitimate reason why a hearing cannot commence (eg, complexity of the case), then this period may be extended by a further two months. If the court determines that the matters in dispute are of an economic or labour nature, then a hearing must commence within two to three months from the date on which the court accepted the case.

interim remedies are available to preserve the partys interests pending 8 What judgment?
The court may issue interim orders during proceedings to protect evidence or ensure enforcement of a judgment at a future date. In urgent cases, the parties can request interim remedies concurrently with submitting the petition to the court. Interim orders may be made to take an inventory of the assets in dispute, to freeze a bank account, to prohibit a party from doing something or to require a party to do something, to permit the harvesting or preservation of products and/or permit the sale of perishable products. However, in practice, interim orders are rarely made.

there procedures available for judgment to be obtained without 9 Are proceeding to trial, on the ground that it is believed there is no defence to the claim? If so, at which stage of the proceedings should such procedures be invoked?
No. There are no procedures available for judgment to be obtained without proceeding to trial on the ground that it is believed there is no defence to the claim.

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10 What substantive remedies are available?

The court has wide powers to provide remedies, including injunctive relief (see above), declarations and orders for an account of profits, transfer of property, or monetary awards of damages to compensate for loss. Non-compensatory damages are only awarded in instances of particularly oppressive conduct and are extremely rare.

11 What means of enforcement are available?

Court orders are currently enforced by reference to procedures set out in the Ordinance on Enforcement of Civil Judgments dated 14 January 2004 (2004 Ordinance). The 2004 Ordinance provides details of the powers of the Office of Judgment Enforcement under the Ministry of Justice, which is the body responsible for managing the enforcement of civil orders. Provincial and District Offices of Judgment Enforcement are responsible for enforcing civil orders from the Peoples Supreme, Provincial and District Courts. A judgment creditor can commence an enforcement action by filing an application for enforcement at the relevant Office of Judgment Enforcement. The Office will review the application and, if it is in order, the office will issue a Judgment Enforcement Decision. The office will then contact the judgment debtor to request settlement of the judgment debt. If the judgment debtor fails to settle the debt within a stated period, the Office will decide on the most effective method of enforcement. Once a Judgment Enforcement Decision has been issued, the Office of Judgment Enforcement must actively enforce the decision on behalf of the judgment creditor. The Office of Judgment Enforcement has wide powers including the right to: (i) deduct sums from the judgment debtors bank account, and seize judgment debtors monies and valuable papers; freeze judgment debtors bank accounts or other assets in bank and credit organisations; distrain assets of the judgment debtor, including those being held by third parties; take possession of the judgment debtors house and land use rights; and ban the judgment debtor from undertaking certain work, or force the judgment debtor to undertake certain work.

(ii) (iii) (iv) (v)

To date and in practice, judgment enforcement has been problematic in Vietnam.

the court have power to order costs? Are foreign claimants required to 12 Does provide security for costs?
The court has the power to order costs. However, lawyers costs must normally be borne by the parties themselves, unless the parties in dispute have agreed otherwise. There is no known example of any Vietnamese court that has awarded lawyers costs to a successful party unless agreed previously by the losing party. However, guidelines on costs are due to be issued by the Vietnamese authorities and are expected to clarify the position on cost recovery. Foreign claimants are not required to provide security for costs.

what ground can the parties appeal, and what restrictions apply? Is there 13 On a right of further appeal? To what extent is enforcement suspended pending an appeal?
Any appeal against a judgment or order of the District Peoples Court must be made to the Provincial Peoples Court. An appeal against a judgment or order of the Provincial Peoples Court must be to the Supreme Peoples Court, whose decision is final.

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Parties have an automatic right to appeal a first instance judgment. The time limit for lodging an appeal is 15 days. The time limit for an appeal runs from the date of judgment. However, if the appellant was absent from the hearing, time runs from the date the appellant receives a copy of the judgment or the date when the judgment was posted on the notice board of the Peoples Committee of the ward in which the appellants head office or residence is located. An appeal generally operates as an automatic stay of execution of enforcement of the first instance judgment. An appeal can also be instigated to reconsider or review a judgment which has already come into effect in the following circumstances: (i) (ii) (iii) (iv) if the conclusion in the judgment does not accord with the objective circumstances of the case; in the event of serious procedural errors; in the event of serious errors in the application of laws; if an important circumstance of the case is discovered in respect of which the person concerned was unaware during the hearing; if there are grounds for believing the conclusion of an inspector or the translation of a translator is incorrect, or evidence has been falsified; if the Judge, Peoples Juror, or Procurator intentionally falsified the files of the case or intentionally reached a conclusion which does not properly comply with the law; or if a judgment or decision of a court or a state body, which has in fact been repealed, is relied upon by the lower court.

(v)

(vi)

(vii)

what extent can domestic and/or foreign state entities claim immunity from 14 To civil proceedings?
Vietnamese law is silent as to whether a domestic state entity can claim immunity from civil proceedings. There is no known case where such a claim has been made. Vietnamese law states that sovereign immunity relates to acts which are governmental, rather than commercial in nature. For this reason, foreign state entities involved in commercial transactions are unlikely to be able to claim immunity from civil proceedings in Vietnam.

15 What procedures exist for recognition and enforcement of foreign judgments?


The CPC incorporates the provisions of the Ordinance on Recognition and Enforcement of Foreign Civil Judgments dated 17 April 1993 and the Ordinance on Recognition and Enforcement of Foreign Arbitral Awards dated 14 September 1995 without substantial change. The CPC provides that a civil judgment or order from a court in a foreign country will be recognised in Vietnam only if such country has signed an agreement with Vietnam regarding enforcement of foreign judgments, or is a co-signatory with Vietnam to an international treaty on the recognition and enforcement of foreign judgments. Agreements with certain COMECON countries on the enforcement of foreign judgments still exist although it is doubtful that a Vietnamese court would enforce judgments from these countries as a matter of practice. At this time, no other agreements exist, and Vietnam is not yet a signatory to an international treaty on the recognition and enforcement of foreign judgments. Therefore, a party wishing to enforce a foreign civil judgment in Vietnam cannot do so, unless it submits an application to the Ministry of Justice for a review of the judgment by the relevant Vietnamese court and such application is accepted. There is no procedure for seeking expedited judgment in any court action in Vietnam which involves consideration of a foreign judgment.

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it permissible for lawyers to charge contingency or conditional fees, or other 16 Is fee arrangements based on the result of the litigation/arbitration?
There is no provision under Vietnamese law which specifically authorises conditional fee arrangements between lawyers and clients. It remains unclear whether such arrangements are permitted under Vietnamese law, although in practice the authorities would be unlikely to object to such arrangements. As for contingency fees, the Ordinance on Lawyers dated 1 October 2001, which governs lawyer/client remuneration arrangements, provides that a client and a Vietnamese law office or a Vietnamese law partnership company may agree on remuneration for a specific litigation case calculated as a percentage of the law suit price. Whilst the meaning is unclear, it is widely considered that this permits contingency fee arrangements in Vietnam. From 1 January 2007, the Law on Lawyers provides that remuneration for lawyers may be calculated as a percentage of the law suit price, contract value or project value. There are no other provisions under Vietnamese law which provide for other forms of fee arrangements based on the result of litigation.

Arbitration 17 Is the arbitration law based on the UNCITRAL Model Law? What are the main national arbitration institutions? 18
Arbitration law in Vietnam is not based on the UNCITRAL Model Law. The Ordinance on Commercial Arbitration came into effect on 1 July 2003 (Arbitration Ordinance), and replaced previous legislation governing the operation of arbitration institutions in Vietnam. Arbitration in Vietnam must now be conducted by Arbitration Councils organised either by officially licensed local Arbitration Centres, or by the parties themselves.

19

Are there any restrictions on who may represent the parties to an arbitration?
No. The parties, whether Vietnamese or foreign, may represent themselves in an arbitration or be represented by an authorised person, whether or not legally qualified. Parties may also invite witnesses.

20 What are the formal requirements for an enforceable arbitration agreement?

The parties to the dispute must have agreed in writing prior to the dispute, or after it arises, that such dispute would be settled by recourse to arbitration. In writing includes mail, telegrams, telex, fax, electronic e-mail or other written forms which clearly express the will of the parties to settle their disputes through arbitration. It should be noted that this does not include electronic signatures at present. The arbitration agreement, whether an arbitration clause in a contract or a separate agreement, must clearly state the institution competent to settle the dispute, be signed by authorised signatories of the parties, and be entered into without intimidation or cheating. The dispute must also arise from commercial activities, defined as one or many commercial acts by business people or organisations (including the sale and purchase of goods, distribution, agency, leasing, financing, insurance, etc.).

21 the arbitration agreement and any relevant rules are silent, how many 22 If arbitrators will be appointed, and who is the appointing authority?
No. The court must stay litigation unless the arbitration agreement is invalid.

Can the court refuse to stay litigation if there is a valid arbitration clause?

Where the parties have agreed to settle the dispute by an Arbitration Council set up through an Arbitration Centre but have failed to agree on the number of arbitrators, three arbitrators will be appointed. The claimant appoints one arbitrator when making the claim to the Arbitration Centre and the respondent appoints one arbitrator within 30 days from the date of receipt of the claim. If the claimant fails to do so, the President of the Arbitration Centre will appoint

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one arbitrator on the claimants behalf. The two appointed arbitrators will jointly appoint a third arbitrator to act as Chairman. If the appointed arbitrators fail to do so, the President of the Arbitration Centre will appoint a third arbitrator as Chairman. Where the parties have agreed that the dispute be settled by an Arbitration Council set up by the parties independently but have failed to agree on the number of arbitrators, three arbitrators will be appointed. The claimant appoints one arbitrator when making the claim, and the respondent appoints one arbitrator within 30 days from the date of receipt of the claim. If the respondent fails to do so, the claimant may request the local provincial court where the respondent is headquartered or resides to appoint an arbitrator on the respondents behalf. The two appointed arbitrators will then jointly appoint a third arbitrator to act as Chairman. If they fail to do so, then either party may request the same local court to appoint a third arbitrator as Chairman.

23

Are restrictions placed on the right to challenge the appointment of an arbitrator?


Arbitrators may be challenged if they are a relative or representative of either party, have an interest in the dispute, or where there are explicit grounds why the arbitrators would not be impartial and objective while performing their duties as arbitrators.

the domestic law contain substantive requirements for the procedure to 24 Does be followed?
No, save that arbitrators must resolve the dispute independently, objectively and impartially. Where one party to the dispute is foreign, the parties may determine rules of procedure, the language of the proceedings and the governing law, provided that any foreign governing law does not contravene the fundamental principles of Vietnamese law.

25

On what ground can the court intervene during an arbitration?


Interim measures may be requested from a local court during arbitration proceedings to provide protection for evidence in the event that such evidence is in danger of being destroyed, to inventory disputed property, to prevent the transfer of disputed property, to prevent any change in the condition of disputed property, to inventory and seal up property at its place of storage, and to freeze bank accounts. The laws are not clear whether interim measures can be applied for if they fall outside of these cases.

26 Do arbitrators have powers to grant interim or conservatory relief? 27 When and in what form must the award be delivered?
No. Only the courts have such power in Vietnam.

An arbitral award must be announced within 60 days of the final day of the arbitral hearings, and is effective from the announcement date. Full texts of the award must be delivered to the parties immediately after the announcement of the award. The arbitral award is made on the basis of a simple majority of votes of the arbitrators (if more than one). The written award must contain the date and place of issuance of the arbitral award, the name of the Arbitration Centre (if applicable), the name(s) and address(es) of the claimant(s) and respondent(s), the full name of the arbitrator(s), a summary of the claim and disputed issues, the basis for the arbitral award, the arbitral award, the decision on arbitration charges and other costs, the time limit for implementation of the award, and the signature(s) of the arbitrator(s). The parties may request certain information relating to the disputed issues and the basis for the award to be excluded from the award decision.

28 On what ground can an award be appealed to the court?

An arbitration award can be appealed to a court if there is no arbitration agreement; the arbitration agreement is invalid; the Arbitration Councils composition or proceedings fail to comply with what the parties had agreed; the dispute is outside the jurisdiction of the Arbitration Council; an arbitrator has breached its obligations of impartiality, confidentiality or honesty; or if the award is counter to the interests of the Socialist Republic of Vietnam.

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29 What procedures exist for enforcement of foreign and domestic awards? 30 Can a successful party recover its costs?

If the arbitration award has not been executed within the time limit provided in the award for its implementation, the party wishing to enforce the award may make a written request to the local provincial Office of Judgment Enforcement for its enforcement. On this point the Arbitration Ordinance does not distinguish between recognised and approved foreign or domestic arbitral awards.

The Arbitration Ordinance provides that the losing party is responsible for arbitration charges. In the absence of agreement on the issue of other costs in the arbitration contract, the recovery of such costs is uncertain.

Alternative dispute resolution


the parties to litigation or arbitration required to consider or submit to any 31 Are alternative dispute resolution before or during proceedings?
As a matter of practice and as referred to previously, the courts will require the parties to a dispute to attend at least two conciliation meetings prior to a court hearing in order to encourage the parties to reach a settlement. With regard to domestic arbitration, there is no requirement under the Arbitration Ordinance that the parties hold conciliation meetings or submit to any other alternative dispute resolution proceedings.

Reforms 32 Are there likely to be any significant procedural reforms in the near future?
We are not aware of any significant procedural reforms in the near future.

LWA Vietnam, Ho Chi Minh City Branch


Contact Konrad Hull, Nguyen Thi Xuan Trinh Eighth Floor, Central Plaza Office Building, 17 Le Duan Boulevard, District 1, Ho Chi Minh City, Vietnam +84 8 824 4395 +84 8 824 4396/822 8588 info@lwavietnam.com www.lwavietnam.com

Phone Fax Email Website

LWA Vietnam specialises in the Indochina region. The firm is one of the oldest-established and largest foreign law firms in Vietnam and, in 1996, was in the first group of law firms to be licensed by the Vietnamese Ministry of Justice. The firm provides advice in all areas of industry and commerce to multi-national and Vietnamese corporate, financial and industrial clients and specialises in foreign direct investment into Vietnam. Our extensive experience in Vietnam has been gained from our lawyers work on over 750 major projects in Vietnam to date, involving investment of around US$9.5 billion in aggregate, in most fields of practice. We also have extensive regional experience, co-operating with other law firms where required. We are a full service firm and are particularly well-known for our work in the inward investment, corporate and commercial, project finance, infrastructure, petroleum and energy, taxation and tax structuring, employment, real and intellectual property and dispute resolution fields. To compliment our status as one of Vietnams leading international law firms LWA Vietnam has established a number of informal strategic alliances with leading Vietnamese law firms and through its extensive experience has developed close working relationships with Vietnamese authorities.

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Profiles
Based in Singapore, Maurice is joint head of dispute resolution for Southeast Asia and is responsible for covering the Singapore, Malaysian and Indonesian markets. Maurice qualified in Australia in 1992 and in Hong Kong in 1996, and joined Herbert Smiths Hong Kong litigation division in 1997. Maurice has advised in relation to a broad range of Southeast Asian matters, with particular emphasis on investment, shareholding, oil and gas and mining disputes. He advises in relation to arbitrations and, in conjunction with local counsel, litigation before the courts of a number of countries and assists clients in relation to regulatory matters and investigations.

Maurice Burke
Partner, Singapore Tel: Fax: +65 6868 8009 +65 6868 8001

Email: maurice.burke@herbertsmith.com

David has experience in a wide variety of substantial commercial disputes including international arbitration in the UK and Asia and litigation in the English and US Courts. Principal industry areas include energy, insurance and reinsurance, and construction / heavy industries. David relocated to Herbert Smiths Tokyo office from London in 2004 and is licensed to advise on English law in Japan as a Gaikokuho Jimu Bengoshi.

David Gilmore
Partner, Tokyo Tel: Fax: +81 3 5412 5412 +81 3 5412 5113

Email: david.gilmore@herbertsmith.com

Peter heads the dispute resolution practice at Herbert Smiths Tokyo office. Peter relocated to the Tokyo office in September 2000 to establish the dispute resolution practice. He is now widely recognised as the pre-eminent foreign dispute resolution lawyer in Japan. He has extensive experience of litigation, arbitration and other forms of dispute resolution in Europe, Asia and the Middle East. He is licensed to advise on English and Hong Kong law in Japan as a Gaikokuho Jimu Bengoshi.

Peter Godwin
Partner, Tokyo Tel: Fax: +81 3 5412 5412 +81 3 5412 5413

Peters practice covers a wide range of contentious matters, including international trade, construction, energy, IP&IT, media, telecoms, employment, joint ventures, fraud, banking and insolvency. Peter has represented clients in various jurisdictions in arbitrations, mediation, public inquiries and in the local courts. Peter is a member of the Chartered Institute of Arbitrators and a founder member of the Japan Arbitration Association.

Email: peter.godwin@herbertsmith.com

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Alastair is the joint head of Herbert Smiths dispute resolution practice in Southeast Asia. He qualified as a lawyer in 1990 and moved to Asia in 1993. Before joining the Bangkok office he worked in London, Hong Kong and Singapore. Alastairs practice covers a wide range of local and international disputes, including construction and infrastructure-related claims, energy disputes, commercial contract disputes and general trade-related cases.

Alastair Henderson
Managing partner, Bangkok Tel: Fax: +66 2 657 3829 +66 2 636 0657

He has extensive experience of successfully representing governments, multinationals and private companies in a wide variety of complex commercial disputes around the world, involving domestic and international arbitrations and local and multi-national litigation.

Email: alastair.henderson@herbertsmith.com

Mark heads Herbert Smiths Asian dispute resolution practice. Based in Asia since 1987, he has conducted a wide range of civil, regulatory matters and white-collar crime matters. He is particularly experienced in respect of contentious issues involving publicly listed companies and securities. On the civil side, Mark regularly represents clients in relation to directors disputes and in respect of cases where the client has been the target of fraudulent activity by employees or others. These cases often have a multi-jurisdictional element to them. On the regulatory side, Mark advises clients in the securities market whom are involved in investigations, particularly in the areas of insider trading and market manipulation.

Mark Johnson
Partner, Hong Kong Tel: Fax: +852 2101 4003 +852 2845 9099

Email: mark.johnson@herbertsmith.com

Graeme leads the mainland China-based dispute resolution practice. His practice has always focused on dispute resolution and of most of his cases have a crossborder dimension. He has wide experience advising on contentious matters, including litigation, arbitration and regulatory investigations. Graeme joined Herbert Smith in 1995 in London and worked there for five years before moving to Herbert Smith Hong Kong in 2001. Since early 2006 he has been based in Shanghai. Graeme is the author of the leading textbook on Hong Kong private international law The Conflict of Laws in Hong Kong (Sweet & Maxwell, 2005) and will also be the editor of Competition Law in China and Hong Kong (to be published by Sweet & Maxwell in late 2008).

Graeme Johnston
Managing partner, Shanghai Tel: Fax: +86 21 2322 2109 +86 21 2322 2322

Email: graeme.johnston@herbertsmith.com

Tim Mak
Partner, Hong Kong Tel: Fax: +852 2101 4141 +852 2845 9099

Tim focuses on contentious and non-contentious regulatory matters in the financial services industry, with an emphasis on regulatory investigations and proceedings. He also advises on related civil and criminal disputes, and where regulatory issues arise in corporate transactions. Tim has appeared as advocate before the civil and criminal courts in Hong Kong, as well as in specialist tribunals like the Insider Dealing Tribunal and the Administrative Appeals Board. After training and qualifying with Herbert Smith, he spent two years as an in-house lawyer with the Hong Kong Securities and Futures Commission, before returning to Herbert Smith in 2002. His clients include investment banks, commercial banks, private banks, fund managers, listed companies and their directors, financial services regulators and other market participants.

Email: tim.mak@herbertsmith.com

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Profiles

Dominic Roughton has extensive experience in international arbitration, with a focus on public international law and international litigation. He is licensed to advise upon English law in Japan as a Gaikokuho Jimu Bengoshi and is the Official Representative of the LCIA in Japan. Dominic has acted and advised upon matters arising from all major industry sectors but has particular industry experience in energy and TMT-related disputes, including joint venture and shareholder disputes. Dominic has acted in arbitrations under ICC, LCIA, SCC and PCA rules and before both pure ad hoc and UNCITRAL tribunals. He has represented clients in all the major arbitral centres of the world, including in London, Paris, Geneva, Zurich, The Hague, New York, Hong Kong and Singapore in disputes under English and other common and civil law systems. Many of his cases have raised issues of public and private international law. They have also involved jurisdictional disputes concerning parallel proceedings, both before other arbitral tribunals and in US and other national courts. He is unique in Asia for his state-to-state arbitration experience.

Dominic Roughton
Partner, Tokyo Tel: Fax: +81 3 5412 5412 +81 3 5412 5413

Email: dominic.roughton@herbertsmith.com

Surapol is a litigation and arbitration specialist with almost 30 years experience in Thai dispute resolution. He is locally and internationally respected as one of the countrys leading lawyers in this field. Surapol worked with Baker & McKenzie in Bangkok before leaving to establish Siam Premier International Law office, where he served as managing partner and head of litigation. As the partner in Herbert Smiths Bangkok office, Surapol handles commercial disputes in the Thai Courts and in Thai arbitration, on behalf of well-known Thai and international clients.

Surapol Srangsomwong
Partner, Bangkok Tel: Fax: +662 657 3888 +662 636 0657

Email: surapol.srangsomwong@herbertsmith.com

Gareth leads the Hong Kong commercial litigation team, as well as being responsible for the Asian insurance practice. He has had wide experience in disputes work, including cases concerning commercial contracts, shareholders disputes, negligence actions, insolvency, fraud, banking cases, defamation proceedings, product liability, employment and restraint of trade. Gareths experience also covers arbitration and mediation work. He has also handled regulatory and criminal investigations and coroners inquests. Gareth has advised clients on all aspects of international insurance and reinsurance law and practice, both contentious and non-contentious.

Gareth Thomas
Partner, Hong Kong Tel: Fax: +852 2101 4025 +852 2845 9099

Email: gareth.thomas@herbertsmith.com

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Guide to dispute resolution in Asia 2008/2009

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