InterDigital Inc (IDCC)

[olddog967]

HUAWEI IS FIGHTING THE ARBITRATION AWARD. The arbitration award apparently favored IDCC as Huawei wants to have the award set aside.

On Friday, Huawei filed a Notice that they will move for an order staying proceedings in the enforcement action pending a ruling by the Paris Court of Appeals on Huawei’s petition to annul the underlying arbitration award, They also filed a response in which they requested that IDCC’s petition be stayed pending the annulment decision of the Paris Court of Appeals, and that IDCC enforcement petition be dismissed with prejudice.

In regard to staying the petition because of their filing of an annulment action in the Paris Court of Appeals, in international arbitrations there is a distinction between setting aside an arbitral award and enforcing an arbitral award. In this case, the Paris court is being asked to set aside the award, while the NY District Court was asked to confirm (enforce) the award. The key in determining the jurisdiction that can set aside the award is the place (seat) of the arbitration. Here is one brief explanation:?

“In evaluating an arbitral seat, it is also important to distinguish between?Under both the New York Convention and pre-existing arbitration jurisprudence, the courts of the place in which the arbitration was held or whose procedural law governed an arbitration have primary jurisdiction to review an award and determine its validity. That is, the only place where an arbitration award may be set aside or invalidated is at the place where the award was issued; i.e., the seat of arbitration. The courts of other jurisdictions have secondary jurisdiction and may only determine whether to enforce the foreign award in their jurisdiction. ”

http://www.kslaw.com/library/newsletters/EnergyNewsletter/2013/August/article1.html

This arbitration was conducted by the ICC, whose headquarters is in Paris; however, that does not necessarily mean that the seat of the arbitration was in Paris. Based on arbitration agreement terms, many ICC arbitrations are held (seated) in cities other than Paris, France. In this regard, clauses in a copy of the draft arbitration agreement between Huawei and IDCC show that the Place of Arbitration and the Governing Law were specified, but were redacted, so we don’t know the specified place of arbitration for jurisdictional purposes

Assuming that Huawei’s lawyers know the applicable laws, and that the seat of the arbitration was Paris, France; in that situation the following are the French law conditions that can be used to set aside the award:

(1) the arbitral tribunal wrongly upheld or declined jurisdiction; or
(2) the arbitral tribunal was not properly constituted; or
(3) the arbitral tribunal ruled without complying with the mandate conferred upon it; or
(4) due process was violated; or
(5) recognition or enforcement of the award is contrary to international public policy.

http://www.iaiparis.com/pdf/FRENCH_LAW_ON_INTERNATIONAL_ARBITRATION.pdf

It may not be that easy to have an award set aside. as noted above, the reasons for setting aside the award are related to procedural matters rather than the merits of the case. French courts, like the US, apparently are heavily in favor of arbitration results. According to the following cited article which discusses the new (2011) French arbitration law:

“French courts had in turn shown an extreme pro-arbitration bias as regards all aspects of an arbitration. While assisting, when required, in the constitution of an arbitral tribunal, French courts adamantly refused to interfere in the arbitral process or to exercise anything other than limited scrutiny of the award when seized of an action to set aside or an action to enforce an award.
(Snip)
At the same time, the reform was seen as an opportunity to further refine French law on international arbitration by introducing a number of innovations. With these changes, French law can arguably be characterized today, alongside Swiss law, as the law that has implemented the pro-arbitration policy to its fullest extent.”

http://www.shearman.com/~/media/Files/NewsInsights/Publications/2011/01/France-Adopts-New-Law-On-Arbitration/Files/View-full-article-France-Adopts-New-Law-On-Arbit__/FileAttachment/IA012411FranceAdoptsNewLawOnArbitrationegaillard.pdf

For a final comment regarding procedural matters, it should be noted that the granting of a stay based on a foreign court set aside action is not mandatory for US courts, but is at the discretion of the Judge. In addition, even if a foreign court sets aside the arbitration award, as noted below, it is still possible for a US court to confirm it for enforcement action.

“Based on this overview of the current case law, the reasonable conclusion is that, if the courts follow the lead of the TermoRio and COMMISA courts, a US district court will not enforce an award that has been nullified by the foreign court of the seat of arbitration, unless the order violates ‘basic notions of justice’ or something in the judicial record indicates that the proceedings or judgment were somehow tainted or unauthentic.”

http://www.kslaw.com/imageserver/KSPublic/library/publication/2015articles/3-15-IBA-_Mascarenhas.pdf


For some additional comments see my following post in regard to Huawei’s response to IDCC’s Petition for Confirmation