Book: Intolerant Justice: Conflict and Cooperation on Transnational Litigation by Asif Efrat
Summary provided by the author, Asif Efrat
In a globalized world, legal cases that come before domestic courts are often transnational, that is, they involve foreign elements. For example, the case before the court may revolve around events, activities, or situations that occurred in a foreign country, or the case may involve foreign parties or the application of foreign law. Such cases typically present an overlap between the legal authorities of two countries. To handle a transnational case cooperatively, one legal system must cede its authority over the case, in full or in part, to a foreign legal system. This effectively means that a local citizen would be subjected to the laws or jurisdiction of a foreign legal authority, and that raises a host of questions and concerns: Does the foreign legal system abide by the rule of law? Does it guarantee human rights? Will the foreign court grant our citizen the due process and fair treatment they would have enjoyed at home?
The newly published book Intolerant Justice: Conflict and Cooperation on Transnational Litigation (Oxford University Press) argues that the human disposition of ethnocentrism – the tendency to divide the world into superior in-groups and inferior out-groups – would often lead policymakers to answer these questions negatively. The ethnocentric, who fears anything foreign, will often view the foreign legal system as falling below the home country’s standards and, therefore, as unfair or even dangerous. Understandably, such a view would make cooperation more difficult to establish. It would be harder to relinquish the jurisdiction over legal cases to a foreign system if the latter is seen as unfair; extraditing an alleged offender to stand trial abroad would seem unjust; and the local enforcement of foreign judgements could be perceived as an affront to legal sovereignty that contravenes fundamental norms.
This book examines who expresses such ethnocentric views and how they frame them; and, on the other hand, who seeks to dispel these concerns and establish cooperation between legal systems. In other words, the domestic political debate over transnational litigation stands at the center of this book.
In this debate, the book shows, some domestic actors are particularly likely to oppose cooperation on ethnocentric grounds: the government’s political opponents may portray the government’s willingness to cooperate as a dangerous surrender to a foreign legal system, which undermines local values and threatens the home country’s citizens; NGOs concerned for human rights might fear the human-rights consequences of cooperation with a foreign legal system; and lawyers, steeped in local rules and procedures, may take pride in their legal system and reject foreign rules and procedures as wrong or inferior.
By contrast, actors within the state apparatus typically view cooperation on litigation more favorably. Jurists who belong to the state – such as judges, prosecutors, and the justice-ministry bureaucracy – may support cooperation out of a concern for reciprocity or based on the principled belief that offenders should not escape responsibility by crossing national borders. The ministry of foreign affairs and the ministry of defense may similarly support cooperation on litigation that could yield diplomatic or security benefits. These proponents of cooperation typically argue that legal differences among countries should be respected or that adequate safeguards can guarantee fair treatment by foreign legal authorities. In some cases, these arguments prevail and cooperation on litigation is established; in other cases, the ethnocentric sentiments end up weakening or scuttling the cooperative efforts.
These political controversies are examined through a set of rich case studies, including the Congressional debate over the criminal prosecution of U.S. troops in NATO countries, the British concerns over extradition to the United States and EU members, the dilemma of extradition to China, the wariness toward U.S. civil judgments in European courts, the U.S.-British divide over libel cases, and the concern about returning abducted children to countries with a questionable human rights record.
Overall, this book offers a useful analytical framework for thinking about the tensions arising from transnational litigation and conflict of laws. This book draws our attention to the political arena, where litigation-related statutes and treaties are crafted, oftentimes against fierce resistance. Yet the insights offered here may also be used for analyzing judicial attitudes and decisions in transnational cases. This book will be of interest to anyone seeking to understand the challenges of establishing cooperation among legal systems.
Comparative Analysis of Doctrine of Separability between China and the UK
Written by Jidong Lin, Wuhan University Institute of International Law
Separability is a world-recognized doctrine in commercial arbitration. It means that an arbitration clause is presumed to be a separate and autonomous agreement, reflecting contractual commitments that are independent and distinct from its underlying contract. Such a doctrine is embraced and acknowledged by numerous jurisdictions and arbitral institutions in the world.
However, there are different views on the consequences of separability. One of the most critical divergences is the application of separability in the contract formation issue. Some national courts and arbitral tribunals held that in relatively limited cases, the circumstances giving rise to the non-existence of the underlying contract have also resulted in the non-existence of the associated arbitration agreement, which is criticized as an inadequacy of the doctrine of separability. On the contrary, other courts hold the doctrine of separability applicable in such a situation, where the non-existence of the underlying contract would not affect the existence and validity of the arbitration agreement. This divergence would directly affect the interest of commercial parties since it is decisive for the existence of the arbitration agreement, which is the basis of arbitration.
Two contrary judgements were recently issued by two jurisdictions. The Chinese Supreme People’s Court (hereinafter “SPC”) issued the Thirty-Sixth Set of Guiding Cases, consisting of six guiding cases concerning arbitration. In Guiding Case No. 196 Yun Yu v. Zhong Yun Cheng, the SPC explains the Chinese version of separability should apply when the formation of the underlying contract is in dispute. Although the SPC’s Guiding Cases are not binding, they have an important persuasive effect and Chinese courts of the lower hierarchy are responsible for quoting or referring to the Guiding Cases when they hear similar cases. On the other hand, the English Court of Appeal also issued a judgement relating to separability, holding this doctrine not applicable in the contractual formation issue.
- Chinese judgment
The Chinese case concerns a share transfer transaction between Yun Yu Limited. (hereinafter “YY”) and Shenzhen Zhong Yuan Cheng Commercial Investment Holding Co. Limited. (hereinafter “ZYC”). On 9th May 2017, YY sent the Property Transaction Agreement (hereinafter “PTA”) and the Settlement of Debts Agreement (hereinafter “SDA”) to ZYC. The PTA was based on the Beijing Stock Exchange (hereinafter “BSE”) model agreement. PTA and SDA included a dispute resolution clause in which the parties agreed that the governing law should be Chinese law and the dispute should be submitted to Beijing Arbitration Commission. On 10th May 2017, ZYC returned the PTA and SDA to YY with some revisions, including a modification on the dispute resolution clause, which changed the arbitration institution to the Shenzhen Court of International Arbitration. On 11st May 2017, YY commented on the revised version of the PTA and SDA but kept the dispute resolution clause untouched. In the accompanying email, YY stated, “Contracts confirmed by both parties would be submitted to Beijing Stock Exchange and our internal approval process. We would sign contracts only if we got approval from BSE and our parent company.” On the same day, ZYC returned the PTA and SDA with its stamp to YY. On 27th October 2017, YY announced to ZYC that the negotiation was terminated. On 4th April 2018, ZYC commenced arbitration based on the dispute resolution clause in PTA and SDA.
The SPC held that separability means the arbitration agreement could be separate and independent from the main contract in its existence, validity and governing law. To support its opinion, the SPC refers to Article 19 of the People’s Republic of China’s Arbitration Law (hereinafter “Arbitration Law”), which stipulates that: “An arbitration agreement shall exist independently, the amendment, rescission, termination or invalidity of a contract shall not affect the validity of the arbitration agreement.” SPC submits that the expression “(t)he arbitration agreement shall exist independently” is general and thus should cover the issue of the existence of the arbitration agreement. This position is also supported by the SPC’s Interpretation of Several Issues concerning the Application of Arbitration Law (hereinafter “Interpretation of Arbitration Law”), Article 10 of which stipulates: “Insofar as the parties reach an arbitration agreement during the negotiation, the non-existence of the contract would not affect the validity of the arbitration agreement.” Thus, the SPC concluded that the existence of an arbitration clause should be examined separately, independent from the main contract. Courts should apply the general rules of contractual formation, to examine whether there is consent to arbitrate. If the court found the arbitration clause formed and valid, the very existence of the main contract should be determined by arbitration, unless it is “necessary” for the court to determine this matter. The SPC concludes that the PTA and SDA sent by YY on 11st May 2017 constituted an offer to arbitrate. The stamped PTA and SDA sent by ZYC on the same day constituted an acceptance and came into effect when the acceptance reached YY. Thus, there exists an arbitration agreement between the parties. It is the arbitral tribunal that should determine whether the main contract was concluded.
- English judgment
The English case concerns a proposed voyage charter between DHL Project & Chartering Limited (hereinafter “DHL”) and Gemini Ocean Shipping Co. Limited (hereinafter “Gemini”). The negotiations were carried on through a broker. On 25th August 2020, the broker circulated what was described as the Main Terms Recap. It is common ground that the recap accurately reflected the state of the negotiations thus far. Within the Recap, both parties agreed that the vessel would be inspected by Rightship. This widely used vetting system aims to identify vessels suitable for the carriage of iron ore and coal cargoes. Also, both parties agreed that the dispute should be submitted to arbitration. There was an attached proforma, including a provision that the vessel to be nominated should be acceptable to the charterer. Still, that acceptance in accordance with detailed requirements set out in clause 20.1.4 “shall not be unreasonably withheld”. By 3rd September, however, Rightship approval had not been obtained. DHL advised that “(p)lease arrange for a substitute vessel” and finally, “(w)e hereby release the vessel due to Rightship and not holding her any longer.” In this situation, the attached proforma was not approved by DHL, and there is no “clean” fixture, which means the parties did not reach an agreement. After that, Gemini submitted that there is a binding charter party containing an arbitration clause and commenced arbitration accordingly.
The Court of Appeal made a detailed analysis of separability. Combining analysis of numerous cases, including Harbour v. Kansa, Fiona Trust, BCY v. BCZ and Enka v. Chubb, and analysis of International Commercial Arbitration written by Prof. Gary Born, the Courts of Appeal concluded that separability should not be applied if the formation of the underlying contract is in dispute. Separability applies only when the parties have reached an agreement to refer a dispute to arbitration, which they intend (applying an objective test of intention) to be legally binding. In other words, disputes as to the validity of the underlying contract in which the arbitration agreement is contained do not affect the arbitration agreement unless the ground of invalidity impeaches the arbitration agreement itself. But separability is not applicable when the issue is whether an agreement to a legally binding arbitration agreement has been reached in the first place. In this case, the parties agreed in their negotiations that if a binding contract were concluded as a result of the subject being lifted, that contract would contain an arbitration clause. However, based on the analysis of the negotiation and the commercial practice in the industry, the Court of Appeal concludes that either party was free to walk away from the proposed fixture until the subject was lifted, which it never was. Thus, there was neither a binding arbitration agreement between the parties.
Before discussing the scope of the application of separability, one thing needed to be clarified in advance: Separability does not decide the validity or existence of the arbitration agreement in itself. Separability is a legal presumption based on the practical desirability to get away from a theoretical dilemma. However, separability does not mean the arbitration agreement necessarily exists or is valid. It only means the arbitration agreement is separable from the underlying contract, and it cannot escape the need for consent to arbitrate. Therefore, the existence of the arbitration agreement should not be considered when discussing the scope of application of the arbitration agreement.
The justification of the doctrine of separability should be considered when discussing its scope of application. The justification for the doctrine of separability can be divided into three factors: (a) The commercial parties’ expectations. Parties to arbitration agreements generally “intended to require arbitration of any dispute not otherwise settled, including disputes over the validity of the contract or treaty. (b) Justice and efficiency in commerce. Without the separability doctrine, “it would always be open to a party to an agreement containing an arbitration clause to vitiate its arbitration obligation by the simple expedient of declaring the agreement void.” and (c) Nature of the arbitration agreement. The arbitration agreement is a procedural contract, different from the substantive underlying contract in function. If these justifications still exist in the contract formation issue, the doctrine of separability should be applied.
It is necessary to distinguish the contract formation issue and contract validity issue, especially the substantive validity issue, when discussing the applicability of those justifications. The contract formation issue concerns whether parties have agreed on a contract. The ground to challenge the formation of a contract would be that the parties never agree on something, or the legal condition for the formation is not satisfied. The contract substantive validity issue is where the parties have agreed on a contract, but one party argue that the agreement is invalidated because the true intent is tainted. The grounds to challenge the substantive validity would be that even if the parties have reached an agreement, the agreement is not valid because of duress, fraud, lack of capacity or illegality. The formation and validity issues are two different stages of examining whether the parties have concluded a valid contract. The validity issue would only occur after the formation of the contract. In other words, an agreement can be valid or invalid only if the agreement exists.
It is argued that separability should be applicable to the formation of contract. Firstly, separability satisfies the parties expectation where most commercial parties expect a one-stop solution to their dispute, irrespective of whether it is for breach of contract, invalidity or formation. Furthermore, the application of separability would achieve justice and efficiency in commerce. Separability is necessary to prevent the party from vitiating the arbitration obligation by simply declaring a contract not concluded. In short, since the justifications still stand in the issue of contract formation, separability should also apply in such an issue.
The English Court of Appeal rejected the application of separability in the formation of contract holding the parties’ challenge to the existence of the main contract would generally constitute a challenge to the arbitration clause. However, the same argument may apply for invalidity of the underlying contract. Since the arbitration agreement is indeed concluded in the same circumstances as the underlying contract the challenging to the validity of the contract may also challenge the validity of the arbitration clause, while separability still applies. On the contrary, the Chinese approach probably is more realistic. The SPC ruled that separability applies where the formation of the underlying contract is disputed. But before referring the dispute to arbitration, the SPC separately considered the formation of the arbitration clause. Only after being satisfied the arbitration clause is prima facie concluded, the court declined jurisdiction and referred the parties to arbitration.
 Ronan Feehily, Separability in international commercial arbitration; confluence, conflict and the appropriate limitations in the development and application of the doctrine, 34 Arbitration International 355 (2018), p. 356.
 See Blackaby Niegel, Constantine Partasides et al., Redfern and Hunter on International Arbitration, Kluwer Law International; Oxford University Press 2015, pp. 104–107.
 See Gary B. Born, International Commercial Arbitration (3rd edition), Kluwer Law International 2021, pp. 492-493.
 The Guiding Case No. 196: Dispute in Validity of Arbitration Agreement between YunYu Limited and Shenzhen ZhongYuanCheng Commercial Investment Holding Co. Limited.
 DHL Project & Chartering Ltd v Gemini Ocean Shipping Co Ltd  EWCA Civ 1555 (24 November 2022)
 SPC’s Interpretation of Several Issues concerning the Application of Arbitration Law, Fa Shi?2006?No. 7.
 Clean Fixture is a concept in the maritime area. It means the Parties’ confirmation that the contract has been concluded and that there are no further Subjects and/or restrictions to the execution of the agreed Contract. The Fixture is not clean until both parties have waived their subjects/restrictions.
 Harbour Assurance Co (UK) Ltd v Kansa General International Insurance Co Ltd  QB 701.
 Fiona Trust & Holding Corporation v Privalov  UKHL 40,  4 All ER 951.
 BCY v BCZ  SGHC 249,  2 Lloyd’s Rep 583.
 Enka Insaat ve Sanayi AS v OOO Insurance Company Chubb  UKSC 38,  1 WLR 4117
 See McNeill M. S. & Juratowitch B., Agora: Thoughts on Fiona Trust: The Doctrine of Separability and Consent to Arbitrate, 3 Arbitration International 475 (2008).
 See Gary B. Born, International Commercial Arbitration (3rd edition), Kluwer Law International 2021, p. 428.
The standard of human rights review for recognition and enforcement of foreign judgments: ‘due satisfaction’ or ‘flagrant denial of justice’?
Note on Dolenc v. Slovenia (ECtHR no. 20256/20, 20 October 2022)
by Denise Wiedemann, Hamburg (more…)
Conclusions & Decisions of the Council on General Affairs and Policy (CGAP) of the HCCH now available!
The Council on General Affairs and Policy (CGAP) of the HCCH met from 7 to 10 March 2023. The meeting was attended by over 450 participants, representing 80 HCCH Members, 8 non-Member States, 7 intergovernmental organizations, 9 international non-governmental organizations, and members of the Permanent Bureau. The Conclusions & Decisions adopted by CGAP are now available in English and French.
In terms of work relating to possible new legislative instruments, CGAP mandated the establishment of a Working Group on private international law (PIL) matters related to legal parentage generally, including legal parentage resulting from an international surrogacy arrangement. Noting progress made by the Working Group on matters related to jurisdiction in transnational civil or commercial litigation in the development of provisions for a draft Convention, CGAP invited the convening of two further Working Group meetings. It also supported further exploratory work on the PIL implications of the digital economy, including, among other, by mandating the conduct of a study on the PIL implications of CBDCs and by endorsing the launch of the HCCH-UNIDROIT Project on Law Applicable to Cross-Border Holdings and Transfers of Digital Assets and Tokens. Across several projects, CGAP welcomed the cooperation with UNCITRAL, UNIDROIT, and WIPO, including with respect to work in the areas of digital economy, insolvency proceedings and intellectual property.
In relation to post-Convention work, CGAP approved the Toolkit to Prevent and Address Illicit Practices on Intercountry Adoption and the Model Forms for use under the 1993 Adoption Convention, mandated the development of a Template for Country Fact Sheets on available post-adoption services relating to search for origins, and mandated the establishment of a Working Group on financial aspects of intercountry adoption. CGAP also agreed upon the extension of the scope of the International Hague Network of Judges (IHNJ) to matters relating to the 2000 Protection of Adults Convention. CGAP endorsed the Conclusions & Recommendations of the recent meetings of the Special Commissions (SCs) on the practical operation of the 1993 Adoption, 2000 Protection of Adults, and 2007 Child Support Conventions, and welcomed the preparations for the upcoming meetings of the SCs on the practical operation of the 1980 Child Abduction and 1996 Child Protection Conventions, to be held in the second half of 2023, and on the practical operation of the 1965 Service, 1970 Evidence and 1980 Access to Justice Conventions. Finally, CGAP mandated the PB to continue work, in partnership with relevant subject-matter experts, and subject to available resources, to study the 2006 Securities Convention and digital developments in respect of securities markets; the interpretation of analogous institutions for the purpose of Article 2 of the 1985 Trusts Convention; and, in relation to the 2015 Choice of Law Principles, the feasibility, desirability and necessity of developing guidance on applicable law in international contracts providing protection to weaker parties.
From a good governance perspective, CGAP approved the HCCH Strategic Plan for 2023-2028. It also decided to adopt Spanish as an official language of the HCCH as of 1 July 2024. Finally, CGAP decided to recommend Dr Christophe Bernasconi to the Netherlands Standing Government Committee on Private International Law for the position of Secretary General of the HCCH for another five-year mandate.
Out now: Chong and Yip, Singapore Private International Law: Commercial Issues and Practice
This book, by Adeline Chong and Man Yip, faculty members at the Yong Pung How School of Law at the Singapore Management University, is part of the Oxford Private International Law Series. There is a 30% discount for purchases made through the OUP website using the promotion code AUTHFLY30. The publisher’s blurb is as follows:
“There has been significant reform in Singapore private international law in recent years. Developments such as the establishment of the Singapore International Commercial Court, the incorporation of the Hague Convention on Choice of Court Agreements into Singapore law, and the enactment of the Insolvency, Restructuring and Dissolution Act 2018, have all thrown the country into a period of rapid growth.
Singapore Private International Law: Commercial Issues and Practice provides a roadmap to assist readers in navigating this changing landscape. In it, Chong and Yip offer an overview of Singapore’s legal system, exploring how governmental and judicial efforts have capitalised on Singapore’s location at the heart of Asia, its status as a leading financial centre globally, and its modern infrastructure, to make it the hub of choice for cross-border disputes and insolvency and restructuring efforts. Practical guidance is given to matters such as changes to jurisdiction, protective measures, the recognition and enforcement of foreign judgments, general choice of law issues, and issues specific to contract, tort, unjust enrichment, equitable obligations, trusts, property, corporations, and international insolvency and corporate restructuring. The book also looks at how the English common law principles have been implemented and developed in Singapore, with relevant cases, legislation, and foreign sources used to offer a comparative perspective.”
Further information can be found at this link: https://global.oup.com/academic/product/singapore-private-international-law-9780198837596?cc=sg&lang=en&#
ICC Institute Prize | 9th Edition | Deadline: 3 April 2023
For more than 40 years, the ICC Institute of World Business Law has been enhancing ties between the academic world and practising lawyers.
Launched in 2007, the Institute created the Institute Prize as a means to encourage focused research on legal issues affecting international business. Contributing to the understanding and progress of international commercial law around the world, the Institute Prize recognises legal writing excellence.
The Institute Prize is open to anyone 40 years of age or under as of deadline date who submits a doctoral dissertation or long essay (minimum of 150 pages) drafted in French or English on the subject of international commercial law, including arbitration.
Rules and deadlines concerning the next Prize edition in 2023 are finally out. The works submitted for the Prize should be sent to the Secretariat of the Institute at the contact address indicated below: email@example.com by 3 April 2023 at the latest.
It goes without saying that CoL is proud that one of its former editors, Brooke Marshall, was named laureate of the 2021 ICC Institute of World Business Law Prize for her thesis on ‘Asymmetric Jurisdiction Clauses’. And the round before, it was our current editor Tobias Lutzi who won the Prize for his thesis on ‘Regulating the Internet through Private International Law’. We keep our fingers crossed that perhaps again someone from the global CoL community will be successful.