Views
A conference to honor Professor Linda Silberman at NYU
This week a conference took place to honor Professor Linda Silberman at New York University (NYU). She is currently the Clarence D. Ashley Professor of Law Emerita at NYU. The full program is available here.
Anyone who has had the privilege of taking Linda Silberman’s classes would agree with me that she is an outstanding scholar and professor. Someone who takes the art of teaching to another level, a very kind and brilliant person who truly enjoys building the legal minds of the lawyers and academics of the future. In my view, nothing in the academic world compares to taking the “international litigation” class with her. Thus, this is more than a well-deserved event.
The conference flyer indicates the following:
“When Professor Linda Silberman came to NYU in 1971, she was the first woman hired for the NYU Law tenure-track faculty. In 1977, she became the first tenured female professor on the NYU Law faculty. Although she took emerita status in September 2022, she continues as the Co-Director of the NYU Center on Transnational Litigation, Arbitration, and Commercial Law. For over 30 years, Professor Silberman taught hundreds of first-year students Civil Procedure and she is the co-author of a leading Civil Procedure casebook that starts with her name. Throughout her career, Professor Silberman also taught Conflict of Laws and in the past twenty-five years branched out to teach Comparative Procedure, Transnational Litigation, and International Arbitration. Professor Silberman is a prolific scholar and her articles have been cited by numerous courts in the United States, including the Supreme Court, and also by foreign courts. Professor Silberman has been active in the American Law Institute as an Advisor on various ALI projects, including serving as a co-Reporter on a project on the recognition of foreign country judgments. She has also been a member of numerous U.S. State Department delegations to the Hague Conference on Private International Law. In 2021, Professor Silberman gave the general course on Private International Law at the Hague Academy of International Law.”
Below I include some of the publications of Professor Silberman (an exhaustive list is available here):
Relevance of Indian Limitation Law vis-à-vis Foreign-seated International Arbitration With Indian Law As The Applicable Substantive Law
Written by Harshal Morwale, Counsel, Singularity Legal
Introduction
The precise determination of the laws that will govern different aspects of international arbitration is a crucial matter, given that there could be a substantial divergence between different laws, such as the law of the seat and the substantive law of the contract on the same issue. One such issue is limitation.
The determination of the law applicable to limitation is a complex exercise. The different characterization of limitation as a procedural or substantive issue adds more to the complexity. This issue could not be simpler in India. This post is prompted by a recent decision of the Delhi High Court (“DHC”) in Extramarks Education India v Shri Ram School (“Extramarks case”), which although on domestic arbitration, makes various obiter observations on the nature of limitation and flexibility of parties to contract out of the same.
The aim of this post is to explore how would Indian substantive law of the contract impact limitation period and party autonomy, especially in the context of contracting out of limitation in a foreign-seated international arbitration. It will also look at the legality of limitation standstill agreements to defer the limitation period in the context of foreign-seated arbitration by examining prevailing legal principles together with relevant case laws and through the prism of the decision in the Extramarks case.
Classification of limitation in the context of foreign-seated arbitrations – procedural or substantive?
The limitation in India is governed by the Limitation Act, 1963 (“Limitation Act”).
The Supreme Court of India (“SC”) and the Law Commission of India have characterised the law of limitation as a procedural law. That being stated, the SC has also proposed a more nuanced approach to classifying law of limitation noting that while limitation is prima facie a procedural law construct, its substantive law characteristics cannot be wholly discounted.
This distinction was affirmed by the DHC in the NNR Global Logistics case, which concerned the enforcement of a foreign award where the seat of arbitration was Kuala Lumpur and the applicable substantive law of the contract was Indian law. Under Indian law, the limitation for the type of cause of action at stake, in this case, was three years as opposed to Malaysian law, where the limitation was six years. The respondent argued that since Indian law is the substantive law governing the contract, and given that the Limitation Act could be substantive law, Indian limitation law would apply. The DHC rejected this contention and held that the law of limitation is procedural, and the issues of limitation would be governed by procedural/curial law governing the arbitration, i.e., the lex arbitri. However, the DHC’s reasoning is suspect insofar as it makes the link between limitation law and procedural law uncritically, discounting the impact or connection of limitation with the remedy, and the substantive law implications therewith.
While the premise that since the arbitral procedure is governed by the lex arbitri and since limitation is generally a procedural law subject, the lex arbitri must govern the limitation might appear fairly straight forward, there exists a degree of tentativeness as to the characterisation of limitation in the context of international arbitration. The recent DHC decision in the Extramarks case makes some interesting observations which could have a deep impact on the mentioned premise.
In the Extramarks case, the issue at stake was the limitation period for filing an application before the High Court for the appointment of the arbitrator, for a purported India-seated domestic arbitration. The DHC held that conceptually, limitation bars a legal remedy and not a legal right, the legal policy being to ensure that legal remedies are not available endlessly but only up-to a certain point in time. The DHC further held that a party may concede a claim at any time; but cannot concede availability of a legal remedy beyond the prescribed period of limitation. In essence, according to the DHC, passing of limitation bars a remedy, which would generally mean that limitation is a procedural law subject. This distinction is in line with the traditional ‘right is substantive and remedy is procedural’ divide that exists in the common law. However, this position is not a settled one and remedy, could, arguably, be governed by the substantive law governing the contract.
Interestingly, the Singapore Court of Appeal in BBA v. BAZ, drew a distinction between procedural and substantive time bars in the context of international arbitration, noting that time bar of remedy is procedural in nature. Simultaneously, it was also observed that choice of seat does not automatically require application of the seat’s limitation period and the applicable substantive law will have to be looked at. Consequently, the principle that limitation is a procedural law issue and subject to lex arbitri cannot be relied on reflexively.
If the position of the DHC in NNR Global Logistics case is contrasted with the position in Extramarks case, acknowledging the difficulties in making substantive and procedural classification vis-à-vis limitation in international arbitration, then the choice of Indian substantive law in a foreign-seated arbitration could potentially mean that the tribunal presiding over in a foreign-seated arbitration with Indian substantive applicable law could potentially be required to engage in the limitation period analysis from the perspective of the seat as well as the Limitation Act and might be confronted with conflicting limitation periods. However, there lacks judicial clarity as to how to resolve the conflict when there is repugnancy in limitation prescribed in the lex arbitri and the Limitation Act, which would more often be the case.
Notably, Schwenzer and Manner argue that choice of substantive law should prevail over choice of seat and lex causae must govern the question of limitation of actions, notwithstanding whether it is classified as substantive or procedural. Indeed, this is the prevalent position in the civil law jurisdictions. However, this argument, if accepted, will have certain repercussions on the party autonomy, especially from an Indian perspective in the context of standstill agreements, as explored below.
Suspending/Extending Limitation in Foreign-seated Arbitrations
A standstill agreement is a contract between the potential parties to a claim to either extend or suspend the limitation period for a fixed time or until a triggering event occurs without acknowledging the liability.
The legality of such agreements is not entirely clear under Indian law. For instance, Section 28 of the Limitation Act expressly bars agreements that limit the time within which a party may enforce its rights. However, the converse, i.e., the possible extension of limitation, is not discussed in the Limitation Act. According to Section 25(3) of the Indian Contract Act, the parties can enter into an agreement to enforce a time-barred debt as long as there is a written and signed promise to pay the debt, essentially acknowledge the debt/liability. However, as noted above a standstill agreement is not an admission or acknowledgement of liability and hence Section 25(3) would not applicable. It has also been noted that the legality of standstill agreements in India is sub-judice before the Madras High Court.
From an India-seated domestic arbitration perspective, in light of DHC’s ruling in the Extramarks case, that a “party may concede a claim at any time; but cannot concede availability of a legal remedy beyond the prescribed period of limitation”, it would mean that limitation standstill agreements would not be valid.
From a foreign-seated arbitration with Indian substantive applicable law perspective, relying on the NNR Global Logistics case, it may be argued that the seat’s procedural law, including limitation law provisions, will apply and as long as limitation standstill agreements are permitted under the lex arbitri, there should not be an issue. However, given that merits of the claim would be anchored in Indian law, if limitation is viewed from a substantive law perspective, the impact of the Extramarks case ruling on the parties’ ability to enter into standstill agreements in foreign seated arbitration with Indian substantive law appears precarious.
Essentially, the legality of standstill agreements in foreign seated arbitration with Indian substantive law faces a critical impediment explored above, i.e., the divide between substantive and procedural classification. One possible view could be that since the parties have already chosen the seat of the arbitration, all procedural law issues will be governed by law of the seat, if, indeed, limitation is treated as a procedural issue. A second, contrary view may be that the legality of a standstill agreement would be tested on the touchstone of Indian law, since the choice of applicable substantive law of the contract is Indian law under which limitation cannot be conceded beyond the prescribed period by consent.
Given that the impact of Indian substantive law on the issue of limitation and standstill agreements is not entirely clear, in light of the Extramarks case, the tribunals might now be required to consider a relatively unique issue of limitation period alongside large number of other considerations in an international arbitration with Indian substantive applicable law.
Conclusion
In the process of exploring the impact of Indian substantive law of the contract on parties’ freedom to contract out of limitation in a foreign-seated international arbitration, the tensions between procedural law and substantive law in foreign-seated arbitrations vis-à-vis limitation become apparent. The tensions are further compounded by the ruling in the Extramarks case that limitation bars remedy and that the parties cannot contract out of limitation. The exact impact of the Extramarks case on the parties to an international arbitration contemplating standstill agreements remains unclear and the connected issues in this context remain to be seen.
(The opinions of the author are personal and do not represent the opinion of the organisations he is affiliated with.)
China’s Draft Law on Foreign State Immunity Would Adopt Restrictive Theory
Written by Bill Dodge, the John D. Ayer Chair in Business Law and Martin Luther King Jr. Professor of Law at UC Davis School of Law.
On the question of foreign state immunity, the world was long divided between countries that adhere to an absolute theory and those that adopted a restrictive theory. Under the absolute theory, states are absolutely immune from suit in the courts of other states. Under the restrictive theory, states are immune from suits based on their governmental acts (acta jure imperii) but not from suits based on their non-governmental acts (acta jure gestionis).
During the twentieth century, many countries adopted the restrictive theory. (Pierre-Hugues Verdier and Erik Voeten have a useful list of the dates on which countries switched on the last page of this article.) Russia and China were the most prominent holdouts. Russia joined the restrictive immunity camp in 2016 when its law on the jurisdictional immunity of foreign states went into effect. That left China. In December 2022, Chinese lawmakers published a draft law on foreign state immunity, an English translation of which has recently become available. If adopted, this law would move China to into the restrictive immunity camp as well.
China’s draft law on foreign state immunity has important implications for other states, which would now be subject to suit in China on a range of claims from which they were previously immune. The law also contains a reciprocity clause in Article 20, under which Chinese courts may decline to recognize the immunity of a foreign state if the foreign state would not recognize China’s immunity in the same circumstances. Chinese courts could hear expropriation or terrorism claims against the United States, for example, because the U.S. Foreign Sovereign Immunities Act (FSIA) has exceptions for expropriation and terrorism.
In this post, the first of two, I look at the draft law’s provisions on foreign state immunity from suit from a U.S. perspective. In the second post, I will examine the law’s provisions on the immunity of a foreign state’s property from attachment and execution, its provisions on service and default judgments, and its potential effect on the immunity of foreign officials. (more…)
News
The Japanese Yearbook of International Law (Vol. 65, 2022)
The latest Volume (Vol. 65, 2022) of the Japanese Yearbook of International Law – published by the International Law Association of Japan – has been recently released. It features the following articles, case notes as well as English translation of some relevant court decisions relating to private international law.
GLOBALIZATION OF SOCIETY AND INTERNATIONAL FAMILY LAW IN JAPAN
Takami Hayashi, Introductory Note (p. 167)
Ryoko Yamaguchi, Interests of the Child in Child Abduction and Visitation Cases — Differences Between Japan’s Domestic and International Criteria— (p. 169)
Takami Hayashi, Transboundary Child Protection in Japan (p. 191)
HAYAKAWA Shinichiro, Japanese Perspective on Legal Issues of International Surrogacy (p. 213)
Moonsook Kim, International Adoption in Korea (p. 231)
Manabu Iwamoto, International Recovery of Maintenance in Japan (247)
ABLI-HCCH webinar: Cross-border Commercial Dispute Resolution – HCCH 1965 Service Convention (27 June 2023)
Following successful collaborations in 2021 and 2022, the Asian Business Law Institute (ABLI) and the Permanent Bureau of the Hague Conference on Private International Law (HCCH) are teaming up again for their third joint webinar this year on Tuesday 27 June between 4 to 5:10pm (Singapore time) or 10 to 11:10am (CEST).
Titled Cross-border Commercial Dispute Resolution – HCCH 1965 Service Convention, the webinar is expected to discuss, among others, the operation of the Service Convention in practice, how the Service Convention works with the other HCCH Conventions for cross-border dispute resolution, and Singapore’s accession to and upcoming implementation of the Service Convention.
Invited speakers include Sara Chisholm-Batten (Partner, Michelmores LLP), Melissa Ford (Secretary, HCCH), Delphia Lim (2Director, International Legal Division, Ministry of Law, Singapore), Professor Yeo Tiong Min (Singapore Management University), and Professor Yun Zhao (University of Hong Kong and Representative of Regional Office for Asia and the Pacific, HCCH).
For more information or to register, click here. Early bird discount is available till 28 May.
More about the webinar and its speakers can be found in the flyer.
Queries about the webinar can be directed to ABLI at info@abli.asia.
Milan Arbitration Week – 2023 edition
From 22 to 27 May 2023, the 2023 edition of the Milan Arbitration Week will take place, online and in presence. It encompasses a series of events dedicated to domestic, international commercial and investment arbitration, with the participation of renowned Italian and foreign experts from academia and legal profession.
The Milan Arbitration Week is jointly organized by Università degli Studi di Milano and the European Court of Arbitration, in collaboration with DLA Piper-Milan, Comitato Italiano dell’Arbitrato, the Centre of Research DEuTraDiS and the Erasmus + Programme of the European Union.
In particular, this edition will focus on the recent Italian reform of arbitration law; the mechanism of the mandatory mediation; the status quo and future perspectives of surfing on pledges in international arbitration; the umbrella clauses; the recent developments of the relationships between EU Law and investment arbitration. In addition, the MiAW, always attentive to the relationship between university education and arbitration, will host a chat with the winners of the 30th edition of the Willem C. Vis International Commercial Arbitration Moot, as well as the Frankfurt Investment Pre-Moot (Conference and hearings), organized by DLA Piper, Milan.
All information (including how to register) can be found at this link.