In its recent decision in BVIHC(COM) 2022/0169 Qu Haiping v Window of Trade International Limited and Ors, the BVI Court considered the question of the burden of proof and defences that a defendant can invoke when resisting enforcement of an arbitral award. The Court reconfirmed its pro-enforcement approach to the enforcement of arbitral awards in the BVI.
The facts of the case raised several issues before the BVI Court. Primarily they included: (i) which party has the burden of proving that the award is enforceable; (ii) whether or not the BVI Court can proceed to enforcement pending a challenge in the jurisdiction of the seat of the arbitration; (iii) whether or not a defendant is denied the opportunity to present a case due to refusal by the arbitral tribunal to accept late evidence; (iv) whether a certain degree of proximity between the arbitrator and counsel representing the claimant in arbitration was in violation of the parties’ agreement to have an independent tribunal; (v) whether a legal opinion can be relied upon and stand as expert evidence; and (vi) whether the claimant produced a duly authenticated arbitration agreement and award. The decision also sheds light on the approach taken by the PRC court in respect of some of the above issues but such analysis is outside the scope of this article.
Although the judgment provides a limited overview of the facts of the case, insofar as it is relevant, the arbitral award was made in the PRC and ordered Mr Wu Wei (the second defendant) to transfer the shares he held in Winter of Trade International Limited, a BVI company (the first defendant) registered in Mr Wei’s name to Qu Haiping (the claimant). The claimant applied to enforce the arbitral award in the BVI, but the hearing was adjourned due to a pending set aside application made by the defendants at the seat of arbitration in the PRC.
Madam Justice Mangatal (Ag.) followed the ruling made in Cukurova Holding AS v Sonera Holding BV and held that the defendants had not displaced the Court’s “pre-disposition to favour enforcement of the New York Convention awards” and that the burden of proof rested with the defendants to show “good reasons” why the enforcement should be refused.
Although some jurisdictions treat the arbitral award as a final decision irrespective of whether it was set aside at the seat of arbitration, the BVI Court confirmed the approach generally followed in the common law jurisdictions and adjourned the hearing to allow the parties to ventilate any avenues of setting aside the award at the seat in the PRC Court. Furthermore, the BVI Court respected the reasoning of the PRC Court since the set aside application raised substantially the same grounds for challenge as the defences raised in the BVI enforcement proceedings, namely (i) an excess of powers by the arbitral tribunal; (ii) an inability to present the case at the arbitration and (iii) a lack of the tribunal’s independence.
The BVI Court also followed the dicta in the Cukurova case, taking the view that instances in which a party could claim the defence of an inability to present its case are limited, and that the respective section 86(2)(c)(ii) of the BVI Arbitration Act 2003 should be interpreted narrowly. This will often arise when the party has been prevented from presenting its case by matters outside its control, for example when it had no knowledge of the arbitration . On this occasion, the tribunal’s refusal to accept late evidence did not amount to a “good reason”.
The defendant also raised an argument that the tribunal’s independence was compromised because the tribunal was an alumni of the same university in the PRC as the counsel representing the claimant in arbitration. This argument was dismissed.
Next, the defendant sought to rely on a legal opinion in support of various defences put forward in the BVI proceedings. The Court concluded that such evidence was insufficient to stand as an independent expert opinion and it was given little weight, particularly since no permission was sought to adduce expert evidence, it was addressed and prepared for the benefit of the defendants (not the Court) and did not adhere to the strict requirements for adducing an expert report in the BVI.
Finally, the BVI Court held that it was sufficient to produce a copy of the certified award and arbitration agreement in order to satisfy the formality requirements.
Although the decision does not make any ground-breaking law, it nevertheless serves as a helpful and timely confirmation the approach that the BVI courts would take in respect of some of the defences and other issues that may arise at the stage of recognition and enforcement of an arbitral award in the BVI.