DeHeng Assisted a Chinese Company as Expert Witness to Win a Case of Judicial Review of an ICC Arbitral Award at the Court of Appeal of Paris
2021-09-30
On September 14, 2021, the International Commercial Chamber of the Court of Appeal of Paris issued a judgment rejecting in its entirety the request of the applicant of the State of Pakistan (hereinafter referred to as the "Pakistani Party") to set aside the ICC arbitral award No. 21004, confirming no substantial review of the content of the ICC arbitration award, and ordering the Pakistani party to bear all litigation costs of the revocation case and pay all attorney's fees to the Chinese State-owned enterprise (hereinafter referred to as the "Chinese Company"). It meant a full victory for the Chinese Company in the international commercial arbitration case.
As a member of China Three Gorges Corporation, the Chinese Company is one of the representative actors in the "Going Global" strategy of Chinese enterprises. Since its establishment in the 1980s, it has carried out a number of major projects, including foreign aid and international project contracting. In 2015, the Chinese Company submitted to the ICC International Court of Arbitration a dispute over a highway construction contract with the Pakistani Party. After hearing the case, the Paris Arbitral Tribunal of ICC awarded that the Pakistani party should compensate the Chinese Company for all the economic losses caused by its failure to perform the contract. The Pakistani Party then filed a request to the Court of Appeal of Paris to challenge the independence and impartiality of the sole arbitrator, and to request the Court to revoke the arbitration award on the grounds that the arbitration procedure was flawed.
According to the Pakistani Party, the sole arbitrator, proposed by the Pakistani Party and approved by the Chinese Company, served as the legal counsel for another Chinese company which had an actual interest in the Chinese Company. But the appointed arbitrator did not disclose this conflict of interest after being selected, thus compromising his independence and impartiality as the arbitrator, which constituted an improper arbitration procedure.
Dr. Frank Wu of DeHeng was mandated by the Chinese Company to issue expert opinions to the Paris Court of Appeal as an expert witness. After analyzing the case, Dr. Wu assessed that the key to this case was to prove that the other Chinese company for which the sole arbitrator served as consultant had no actual interest in the Chinese Company concerned, so the arbitrator's nondisclosure of the relationship with the previous Chinese company did not constitute solid grounds for questioning his independence and impartiality. In his expert opinion, Dr. Wu argued that there was no factual or legal overlap or confusion between the two Chinese companies, by examining the legal subjects, history, international honors, relationships of upstream investors, relations with downstream subsidiaries, the overlap of the management board, the company's legal name and intellectual property rights, financial investment interaction between the two Chinese companies, and citing hundreds of pages of factual materials to support his argument. His opinion was fully adopted by the Paris Court of Appeal and was cited in the final judgment, playing a key role in upholding the original arbitration award and defending the legitimate rights and interests of the Chinese Company.
Since the international arbitration is generally more flexible than judicial proceedings and relies more on evidence provided by both parties, expert witnesses are always to play a vital role in the process of arbitration. Specifically, expert witnesses put forward judgmental opinions on the points in dispute of the case to the arbitral tribunal for reference, based on their professional knowledge and practical experience, and their argument often has a critical impact on the final judgement. At the same time, the opinion of the expert witness is equally important in the judicial review of the arbitral award. After the arbitral award is rendered, if one party holds that there are problems in the arbitral proceedings that may affect the legitimacy of the award, it may apply to the court at the place where the arbitral tribunal is located for the rescission of the arbitral award. During the review process, the expert witness provides expert opinions on specific issues that may affect the procedural fairness, which serve as an important basis for the court judgment.
As Chinese enterprises participate increasingly in international arbitration, understanding and mastering the expert witness system as well as cooperating with experienced expert witnesses will be the key to defending their lawful rights and interests and international reputation. In the future, DeHeng's cross-border legal service team will continue to give full play to its cross-jurisdiction service capability and resources to assist Chinese enterprises in international arbitration and cross-jurisdiction judicial review, and make full use of the expert witness system, to obtain the positive effect of the case, and protecting the clients’ legitimate rights to the greatest extent.
