Zhong Lun Wins Dismissal for China in Its First Investment Arbitration
On March 9, 2017, the Tribunal constituted by International Centre for Settlement of Investment Disputes (“ICSID”) in Ansung Housing Co., Ltd. v. People’s Republic of China (ICSID Case No. ARB/14/25) rendered an award dismissing all of Ansung’s claims with prejudice.
This is the second international investment arbitration brought against China and the first in which a Tribunal was constituted and a final award delivered. The Department of Treaty and Law of the Chinese Ministry of Commerce (“MOFCOM”) made a statement noting “the Tribunal supported the position of China on the issues of the limitation period for the investor’s claim, the application and scope of the Most-Favorable-Treatment (“MFN”) clause and other important legal issues. China embraces the Tribunal’s interpretation of the treaty and its final ruling.”
Partners Huawei SUN (Picture) and Lijun CAO, with strong support from partner Lingchen PU, led the Zhong Lun team to advise MOFCOM on every aspect of this case throughout the whole proceedings. Zhong Lun worked with the Paris Office of Dentons Europe LLP as co-counsel.
The First Session of the case was held on December 14, 2016. After the one-day hearing, the Tribunal, consisting of the president Lucy Reed (U.S.) and co-arbitrators Michael Pryles (Australian) and Albert Jan van den Berg (Dutch), delivered an oral ruling immediately after deliberation, in favour of China. In its Award released on March 9, 2017, the Tribunal found Ansung’s claim to be time-barred and not protected by operation of the MFN clause. In reaching the latter conclusion, the Tribunal relied on the clear wording of the China-Korea BIT. Consequently, the Tribunal upheld China’s Rule 41(5) Objection, finding that Ansung’s claims under the China-Korea BIT “manifestly lack legal merit”. Further, the Tribunal ordered Ansung to bear all of the arbitration fees and pay 75% of China’s legal fees and expenses.
ICSID Arbitration Rule 41(5) was added in 2006 to provide an expedited procedure for early dismissal of a case. The rule offers the possibility to a respondent to raise an objection that the case is manifestly lacking legal merit at the preliminary stage of the proceeding. Among more than 20 cases in which the host State filed a Rule 41(5) Objection, only two tribunals dismissed the claims entirely, according to public information.
Law Firms: Zhong Lun Law Firm;
Clients: People’s Republic of China;