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src="../images/cmn/spacer.gif" width="165" height="1"></td> <td width="500" align="left"> <table width="350" border="0" cellspacing="0" cellpadding="1"> <tr> <td width="101"><b><font face="verdana,helvetica,arial,sans-serif" size="2" class="knowledgeheading1">Author:</font></b></td> <td width="245"><font face="verdana,helvetica,arial,sans-serif" size="2" class="knowledgecontent1"> <a href="/eng/ourpeople/SusanGordon.htm"><font color="#0000CC">Susan Gordon</font></a> </font></td> </tr> <tr> <td width="101"><b><font face="verdana,helvetica,arial,sans-serif" size="2" class="knowledgeheading1">Service Area:</font></b></td> <td width="245"><font face="verdana,helvetica,arial,sans-serif" size="2" class="knowledgecontent1"> <a href="/eng/ourservices/services_19.htm"><font color="#0000CC">Private Equity & Venture Capital</font></a> </font></td> </tr> <tr> <td width="101"><b><font face="verdana,helvetica,arial,sans-serif" size="2" class="knowledgeheading1">Date:</font></b></td> <td width="245"><font face="verdana,helvetica,arial,sans-serif" size="2" class="knowledgecontent1"> January 2012 </font></td> </tr> <tr> <td width="101"><b><font face="verdana,helvetica,arial,sans-serif" size="2" class="knowledgeheading1">Country:</font></b></td> <td width="245"><font face="verdana,helvetica,arial,sans-serif" size="2" class="knowledgecontent1"> <a href="/eng/aboutus/overview.htm"><font color="#0000CC">Hong Kong</font></a> </font></td> </tr> </table> </td> </tr> <tr> <td width="140" background="/eng/images/knowledge/symbol.gif"></td> <td width="500" valign="top"> <hr> <table width="500" border="0" cellspacing="0" cellpadding="0"> <tr> <td>&nbsp;</td> </tr> <tr> <td> <table border="0" width="500"> <tr> <td width="640"> <p ALIGN="left"><font face="Arial" size="5" color="#003366"><a name="1"></a>Private Equity Newsletter<br> </font><font face="Verdana" size="3" color="#003366"><b>Issue 1 of 2012: January</b></font></p> <P ALIGN="left" style="margin-right: .98"><font face= "verdana" size="2"><b>SUMMARY OF CONTENTS</b></font></P> <div align="left"> <TABLE BORDER=0 CELLPADDING=2 WIDTH=500> <TR> <TD HEIGHT=102 VALIGN="TOP"><P align="left" style="margin-right: .98"><a HREF="#0"><strong><font size="2" face="verdana">NDRC STANDARDISES THE REGULATION OF PRIVATE EQUITY IN CHINA</font></strong></a> <P align="left" style="margin-right: .98"><span style="text-transform: uppercase"><a HREF="#1"><strong><font size="2" face="verdana">Private equity exit strategy: Hong Kong as an IPO hub</font></strong></a> </span> <P align="left" style="margin-right: .98"> <span style="text-transform: uppercase"><a HREF="#2"><strong> <font size="2" face="Verdana">Use of offshore RMB in foreign direct investments in China</font></strong></a></span> <P align="left" style="margin-right: .98"> <a HREF="#3"> <span style="text-transform: uppercase"><strong> <font size="2" face="verdana">The new ICC arbitration rules</font></strong></span></a></TD> </TR> </TABLE> </div> <P ALIGN="left" style="margin-right: .98"><span style="text-transform: uppercase"><font face= "Verdana" size="2"><b><a name="0" id="12">NDRC standardises the regulation of private equity in ChinA</a></b></font></span><br> <font face="verdana" size="2"><strong>by <a href="mailto:flora.cai@deacons.com.hk">Flora Cai</a> and <a href="mailto:francis.chu@deacons.com.hk">Francis Chu</a></strong></font></P> <p ALIGN="left"><font face="verdana" size="2">On 23 November 2011, the National Development and Reform Commission (<strong>NDRC</strong>) issued a <em>Notice on Promoting Regular Development of Equity Investment Enterprises (Fa Gui Ban Cai Jin [2011] No.2864)</em> (<strong>2864 Notice</strong>). The 2864 Notice expands existing regulations covering private equity activities in certain pilot areas to a nationwide level. The pilot scheme regulations, set out in the <em>Notice on Prompting Regular Development and Filing of Equity Investment Enterprises in Pilot Areas (Fa Gui Ban Cai Jin [2011] No.253)</em> (<strong>253 Notice</strong>) issued by the NDRC on 31 January 2011, covered Beijing, Shanghai, Tianjin, Jiangsu province, Zhejiang province and Hubei province.</font></p> <p ALIGN="left"><font face="verdana" size="2">Based on the 253 Notice, the 2864 Notice standardises the establishment and operation of equity investment enterprises (<strong>EIEs</strong>) in China. This article highlights some important aspects in five major areas: establishment, fund raising and operation of EIEs; risk management; responsibilities of management companies; information disclosure; and the nationwide filing system.</font></p> <p ALIGN="left"><font face="verdana" size="2"><strong>1. Establishment, capital raising and operation of EIEs</strong></font></p> <p ALIGN="left"><font face="verdana" size="2">An EIE may be established in the form of a limited liability company, a joint-stock limited company or a partnership under the PRC Company Law or PRC Partnership Law. </font></p> <p ALIGN="left"><font face="verdana" size="2">An EIE may only raise capital on a private placement basis. Advertisements to and solicitations from the general public are prohibited. The 2864 Notice clarifies the permitted number of investors for the EIE: (i) less than 50 investors for a limited liability company, (ii) 2 &ndash; 200 investors for a joint stock limited company as set out in the PRC Company Law, and (iii) 2 &ndash; 50 investors for a limited partnership as set out in the PRC Partnership Law. Where an investor is a collective investment trust, partnership or any other non-legal entity, the number of ultimate investors is included in the count. However, a fund of funds investor is considered as one investor &ndash; this is the first time a Chinese private equity regulation has expressly included the fund of funds vehicle under its regulating scheme.</font></p> <p ALIGN="left"><font face="verdana" size="2">An EIE may either be self-managed or managed by another EIE or by an equity investment management company.</font></p> <p ALIGN="left"><font face="verdana" size="2">The EIE&rsquo;s equity investments are restricted to stock of non-publicly-traded companies. Any unused funds should either be deposited in a bank or be used to purchase fixed-income investment products.</font></p> <p ALIGN="left"><font face="verdana" size="2"><strong>2. Risk management</strong></font></p> <p ALIGN="left"><font face="verdana" size="2">An EIE should properly assess its risks and put in place a risk management mechanism. An EIE is prohibited from providing a guarantee to any enterprises other than those in which it has invested. The 2864 Notice requires the EIE&rsquo;s assets to be held by independent custodians unless otherwise agreed by all investors. </font></p> <p ALIGN="left"><font face="verdana" size="2"><strong>3. Responsibilities of management companies</strong></font></p> <p ALIGN="left"><font face="verdana" size="2">Where the management functions have been delegated, that entity should prepare and implement the investment plan, and disclose to the EIE any relevant information regarding its management. </font></p> <p ALIGN="left"><font face="verdana" size="2"><strong>4. Information disclosure</strong></font></p> <p ALIGN="left"><font face="verdana" size="2">An EIE is required to file its annual business reports and audited financial statements with the authority within four months after the end of the accounting year. An EIE is also required to report to the authority within 10 working days of the occurrence of a major corporate event which includes: constitutional amendments; changes to the capital or external financing of the EIE or the management company; merger or consolidation involving the EIE; changes to the management company or custodian; dissolution, liquidation or receivership of the EIE.</font></p> <p ALIGN="left"><font face="verdana" size="2"><strong>5. Nationwide filing system</strong></font></p> <p ALIGN="left"><font face="verdana" size="2">The NDRC has established a new nationwide filing system. Within one month after the registration with the Administration for Industry and Commerce, an EIE with capital of more than RMB 500 million must submit an application for filing with the NDRC, and an EIE with capital less than RMB 500 million must submit an application for filing with an authority as designated by the provincial government, unless:</font></p> <ul> <li type="square"><font size="2" face="verdana" align="left">the EIE has already been registered as a venture capital enterprise in accordance with the Interim Measures for the Administration of Venture Capital Enterprise; or</font></li> <li type="square"><font size="2" face="verdana" align="left"> the EIE is wholly owned by one entity or individual, or by two or more investors that are wholly-owned subsidiaries of the same entity. </font></li> </ul> <P ALIGN="left" style="margin-right: .98"><span style="text-transform: uppercase"><font face= "Verdana" size="2"><b><a name="1" id="1">Private equity exit strategy: Hong Kong as an IPO hub<br> </a></b></font></span><font face="verdana" size="2"><strong>by <a href="mailto:rhoda.yung@deacons.com.hk">Rhoda Yung</a></strong></font></P> <P ALIGN="left" style="margin-right: .98"><font face="verdana" size="2">Hong Kong is transforming itself to become a global initial public offering (<strong>IPO</strong>) centre. According to Hong Kong Exchanges and Clearing Limited (<strong>HKEx</strong>), Hong Kong has led the world as the major IPO centre for the last two years. Of the Hong Kong IPOs completed in 2010, 45 per cent of the proceeds came from overseas companies' IPOs while the IPOs of Mainland China companies contributed to 50 per cent, with the remaining 5 per cent raised by Hong Kong-based companies. These figures signify Hong Kong is the exchange of choice for many global investors and issuers. </font> </P> <p ALIGN="left"><font face="verdana" size="2"> While Hong Kong may be seen as the gateway for Chinese companies to raise funds, the HKEx is actively diversifying with listings by issuers from major international markets. As noted in the HKEx's Quarterly Report for September 2011, one of its key strategic goals continues to be attracting more international companies to list in Hong Kong. A review paper of the global and local securities market in 2010 published by the Securities and Futures Commission also notes that HKEx attracted companies from various parts of the world, including Brazil, France, Germany, Mongolia, Russia, the US and the UK. This trend continued to build momentum in 2011. In June 2011 alone, two well-known international companies, Prada and Samsonite International, chose Hong Kong over other exchanges to list their shares. </font></p> <p ALIGN="left"><font face="verdana" size="2">Hong Kong will continue to be a favourable venue in the world for IPOs. Being part of China, Hong Kong is unique with its common law jurisdiction and legislation that provides market transparency and protection for investors. More companies and investors are also recognising Hong Kong as an international financial centre.</font></p> <p ALIGN="left"><font face="verdana" size="2">IPOs have always been one of the exit strategies for private equity funds and Hong Kong offers a unique and popular platform for international companies to list their shares.</font></p> <p ALIGN="left"><font face="verdana" size="2">Deacons has produced <em>The Float Guide</em> explaining how to list a company on the HKEx. You can read <em>The Float Guide</em> here: <a href="http://www.deacons.com.hk/upload/other/20120112_TheFloatGuide.pdf" target="_blank">http://www.deacons.com.hk/upload/other/20120112_TheFloatGuide.pdf</a>. </font></p> <p ALIGN="left"><font face= "Verdana" size="2"><b><a name="2" id="2">USE OF OFFSHORE RMB IN FOREIGN DIRECT INVESTMENTS IN CHINA</a></b></font><br> <font face="verdana" size="2"><strong>by <a href="mailto:taylor.hui@deacons.com.hk">Taylor Hui</a> and <a href="mailto:yang.shen@deacons.com.hk">Yang Shen</a></strong></font></p> <p ALIGN="left"><font face="verdana" size="2">On 12 October 2011, the Ministry of Commerce (<strong>MOFCOM</strong>) issued with immediate effect <em>The Notice on Issues Concerning Direct Investment with Offshore Renminbi (Shangzihan [2011] No.889)</em> (<strong>MOFCOM Notice</strong>). The following day, the People's Bank of China issued <em>Administrative Measures on the Renminbi Settlement Business Relating to Foreign Direct Investment </em>(<strong>PBOC Measures</strong>). The MOFCOM Notice regulates the foreign investment aspects of inbound investments made with offshore RMB, while the PBOC Measures cover the relevant currency regulations. The promulgation of these new regulations provides more investment channels for offshore RMB, and is perceived as an important step in the internationalisation of RMB. This article focuses on the MOFCOM Notice.</font></p> <p ALIGN="left"><font face="verdana" size="2"><strong>Scope of use<br> </strong></font><font face="verdana" size="2">The MOFCOM Notice provides that foreign investors may use &quot;lawfully obtained offshore RMB&quot; for inbound investments. &quot;Lawfully obtained offshore RMB&quot; is defined to include: </font></p> <ul type="square"> <li><font size="2" face="verdana" align="left">RMB obtained offshore through cross border trade settlement, and RMB repatriated from China as dividends, share transfer proceeds, capital reductions, liquidation proceeds and early return on investments; and </font></li> <li><font size="2" face="verdana" align="left">RMB obtained offshore through lawful channels, including but not limited to proceeds received from the issuance of offshore RMB denominated bonds and shares. </font></li> </ul> <p><font face="verdana" size="2">Offshore RMB may not be used, directly or indirectly, for acquiring securities or financial derivative products, unless separately approved as a &quot;strategic investor&quot; by MOFCOM, or for making entrusted loans where a bank acts as an intermediary between a lender and a borrower. Foreign investors are required to undertake that the funds will not be used for such purposes.</font></p> <p ALIGN="left"><font face="verdana" size="2">For private equity fund managers, this development introduces the possibility of establishing RMB investment funds in offshore jurisdictions to raise RMB in Hong Kong with a view to making inbound investments across China in various industries including real estate. </font> </p> <p ALIGN="left"><font face="verdana" size="2"><strong> Other applicable regulations<br> </strong></font><font face="verdana" size="2">Inbound investments made with offshore RMB will be subject to the general regulations and approvals applicable to foreign investments in China, including Foreign Investment Industrial Guidance Catalogue, national security review of mergers and acquisitions by foreign investors, and antitrust reviews.</font></p> <p ALIGN="left"><font face="verdana" size="2">Investments will also be subject to industry-specific regulations and approvals, such as those applicable to the banking, securities, and insurance industries.</font></p> <p ALIGN="left"><font face="verdana" size="2">The MOFCOM Notice does not apply to RMB held onshore in China. Accordingly, investments made with RMB which is derived from foreign-invested enterprises (FIEs) in China and which has not been repatriated (such as dividends, share transfer proceeds, capital reductions, liquidation proceeds and early return on investments) remain subject to the current regulations. </font></p> <p ALIGN="left"><font face="verdana" size="2"><strong>Documents<br> </strong></font><font face="verdana" size="2">In addition to the standard application documents required for foreign investments, inbound investments with offshore RMB must be supported by supplying to MOFCOM the following documents: </font></p> <ul type="square"> <li><font size="2" face="verdana" align="left">evidence or documentation of the source of the offshore RMB funds; </font></li> <li><font size="2" face="verdana" align="left">a statement regarding the use of such funds; </font></li> <li><font size="2" face="verdana" align="left">a completed and signed copy of the <em>Cross Border Renminbi Direct Investment Information Form.</em></font></li> </ul> <p><font face="verdana" size="2">MOFCOM's approval is also required to alter the original investment capital of an existing FIE from other currencies to offshore RMB in order to take advantage of the new regulations. A board resolution and the amended contract/articles of association of the FIE must be submitted along with the above documents.</font></p> <p><font face="verdana" size="2"><strong>Procedures</strong></font></p> <p><font face="verdana" size="2">MOFCOM's general delegation to the local authority of approval authority for foreign investments is applicable to inbound investments made with offshore RMB. However MOFCOM's approval is required in the following circumstances: </font></p> <ul type="square"> <li><font size="2" face="verdana" align="left">the amount invested is RMB 300 million or more; </font></li> <li><font size="2" face="verdana" align="left">the business of the FIE involves financial guarantee, financial leasing, small loans or auctioning; </font></li> <li><font size="2" face="verdana" align="left">the FIE is an investment company, venture capital or private equity investment enterprise; </font></li> <li><font size="2" face="verdana" align="left"> </font><font size="2" face="verdana" align="left">the FIE is in industries subject to state regulation, such as cement, iron and steel, electrolysed aluminium and shipbuilding. </font></li> </ul> <p><font face="verdana" size="2">Upon receipt of a local authority's pre-approved <em>Cross Border Renminbi Direct Investment Information Form</em>, MOFCOM shall within 5 business days respond by either granting the approval or issuing opinions.</font></p> <p ALIGN="left"><font face= "Verdana" size="2"><b><a name="3" id="3">THE NEW ICC ARBITRATION RULES</a></b></font><br> <font face="verdana" size="2"><strong>by <a href="mailto:philipp.hanusch@deacons.com.hk">Philipp Hanusch</a></strong></font></p> <p><font face="verdana" size="2"><strong>Introduction </strong></font></p> <p><font face="verdana" size="2">The International Chamber of Commerce (<strong>ICC</strong>) has launched a much-anticipated revised version of its Rules of Arbitration (<strong>ICC Rules</strong>). According to the ICC, its revised ICC Rules aim at better serving the existing and future needs of businesses and governments engaged in international commerce and investment.</font></p> <p><font face="verdana" size="2">The revised ICC Rules came into force on 1 January 2012 and apply to all ICC arbitrations commencing on or after that date, unless the parties agree otherwise. According to the ICC, a case from Spain was the first to be filed under the new ICC Rules, followed by six other cases involving parties from Brazil, Hong Kong, Egypt, India, Jordan, Peru, South Korea and USA. The revised ICC Rules take into account current requirements and developments in arbitration practice and procedure, as well as developments in information technology, since their last revision in 1998.</font></p> <p><font face="verdana" size="2">Some of the more notable revisions include new provisions </font><font face="verdana" size="2">i) in respect of multi-party and multi-contract disputes; ii) for the appointment of an emergency arbitrator to order urgent interim or conservatory measures; and iii) to facilitate the handling of disputes arising under investment treaties and free trade agreements. Other amendments, in the form of new or improved case management procedures and requirements in relation to information to be provided by the Claimant in his Request and by the Respondent in his Answer, aim to make the arbitral process more expeditious and cost-effective. </font></p> <p><font face="verdana" size="2">The following is a brief overview of the more notable changes. </font></p> <p ALIGN="left"><font face="verdana" size="2"><strong>1. ICC arbitration </strong></font></p> <p ALIGN="left"><font face="verdana" size="2">Some of the changes seek to provide clarification on the respective roles of the International Court of Arbitration of the ICC (<strong>ICC Court</strong>), its Secretariat and arbitral tribunals.</font></p> <p ALIGN="left"><font face="verdana" size="2">New Article 1 makes it clear that the ICC Court is the only body authorised to administer arbitrations under the ICC Rules, including the scrutiny and approval of awards rendered in accordance with the ICC Rules. Further, new Article 6 makes it clear that, by agreeing to arbitration under the ICC Rules, the parties have accepted that the arbitration shall be administered by the ICC Court. These clarifications aim at preventing parties from adopting so-called hybrid arbitration clauses, pursuant to which the arbitration is to be governed by the ICC Rules, but administered by an institution other than the ICC.</font></p> <p ALIGN="left"><font face="verdana" size="2">The revised ICC Rules also clarify that ICC arbitration is not only available for international commercial arbitration but also for a full range of disputes, including treaty investment arbitrations. Changes have been made so as to recognise the specifics of treaty investment arbitrations. </font></p> <p ALIGN="left"><font face="verdana" size="2"><strong>2. Request for arbitration and answer</strong></font></p> <p ALIGN="left"><font face="verdana" size="2">Requirements for the Claimant's Request for Arbitration (Article 4) and the Respondent's Answer to the Request (Article 5) have been revised. A Claimant, who intends to make claims under more than one arbitration agreement, is now required to include in his Request an indication of the arbitration agreement under which each claim is made. In addition, in the Request, a Claimant must now describe not only the nature and circumstances of the dispute giving rise to the claim, but also the basis upon which his claims are made. The Request must also now include not just comments (as previously required), but all relevant particulars and any observations or proposals for the place of the arbitration, applicable rules of law and language of the arbitration. Similarly, a Respondent is now also required to state in his Answer (and any Counterclaim), the basis upon which his claims are made and include any observations or proposals in relation to the place of arbitration, applicable rules of law and language of the arbitration.</font></p> <p ALIGN="left"><font face="verdana" size="2"><strong> 3. Notifications and communications</strong></font></p> <p ALIGN="left"><font face="verdana" size="2">Changes have been made with regard to written notifications and communications to reflect changes in technology and modes of communication. Provision is made in the new rules for notifications or communications from the Secretariat and arbitral tribunal to the parties or their representative, to be made by email.</font></p> <p ALIGN="left"><font face="verdana" size="2"><strong>4. Emergency arbitrator provisions</strong></font></p> <p ALIGN="left"><font face="verdana" size="2">New Article 29 allows a party to seek the appointment of an emergency arbitrator, to order, against signatories to the arbitration agreement or their successors (but not third parties), urgent conservatory or interim measures, which cannot await the constitution of the arbitral tribunal. The Emergency Arbitrator Rules are contained in a separate Appendix V to the revised ICC Rules.</font></p> <p ALIGN="left"><font face="verdana" size="2">The appointment of an emergency arbitrator has been previously introduced into the Arbitration Rules of the Singapore International Arbitration Centre and the Arbitration Rules of the Arbitration Institute of the Stockholm Chamber of Commerce and it is not surprising that the revised ICC Rules follow this trend.</font></p> <p ALIGN="left"><font face="verdana" size="2"> The revised ICC Rules permit a Claimant to make an application for interim relief before he has filed his Request for Arbitration, although the Claimant is required to submit his Request within 10 days after his application for relief, unless a longer period is granted by the emergency arbitrator. Failure to do so results in termination of the emergency arbitrator proceedings.</font></p> <p ALIGN="left"><font face="verdana" size="2">Since the ICC Secretariat serves an application for the appointment of an emergency arbitrator on the other party, the emergency arbitrator procedure is not suitable for <em>ex parte</em> applications (such as <em>Mareva</em> injunctions), which remain a matter for the courts.</font></p> <p ALIGN="left"><font face="verdana" size="2">The emergency arbitrator's order is binding on the parties but not on the arbitral tribunal, which can therefore modify or annul it.</font></p> <p ALIGN="left"><font face="verdana" size="2">The availability of relief from an emergency arbitrator may be of less importance in Hong Kong courts, where it may be faster to obtain such relief from the courts. However, the ICC Rules are intended for use worldwide in proceedings conducted in any language and subject to any law and the availability of an emergency arbitrator could be of crucial importance where national courts do not have the jurisdiction or are unlikely to provide such relief to a party involved in an arbitration.</font></p> <p ALIGN="left"><font face="verdana" size="2">Notably, the revised ICC Rules give parties the option to &quot;opt out&quot; of the emergency arbitrator regime. However, parties should consider possible adverse consequences of doing so. The emergency arbitrator provisions will not apply to arbitration agreements concluded before 1 January 2012. </font></p> <p ALIGN="left"><font face="verdana" size="2"><strong>5. The arbitral tribunal</strong></font></p> <p ALIGN="left"><font face="verdana" size="2">While under the previous ICC Rules a prospective arbitrator was required to make a statement of independence, new Article 11 extends the requirements to require a prospective arbitrator to make a statement of acceptance, availability and impartiality, as well as independence.</font></p> <p ALIGN="left"><font face="verdana" size="2">Requiring a potential arbitrator to confirm his availability will help ensure that the arbitrator is able to devote sufficient time to the arbitration.</font></p> <p ALIGN="left"><font face="verdana" size="2">As part of the revision of the language of the ICC Rules, an arbitral tribunal is now presided over by a &quot;president&quot; rather than a &quot;chairman&quot;, so as to reflect gender neutrality. </font></p> <p ALIGN="left"><font face="verdana" size="2"><strong>6. Improving time and cost efficiency</strong></font></p> <p ALIGN="left"><font face="verdana" size="2">One of the main aims of the revised ICC Rules is to improve efficiency, and cost control in arbitrations, so as to avoid unnecessary delay and expense. </font></p> <p ALIGN="left"><font face="verdana" size="2">Accordingly, Appendix IV to the revised ICC Rules gives examples of case management techniques which the arbitral tribunal and the parties can use to control time and costs. Further, new Article 24 introduces a mandatory Case Management Conference (to be convened by the arbitral tribunal when drawing up the Terms of Reference or as soon as possible thereafter) at which the arbitral tribunal shall consult the parties on the appropriate procedural measures to be adopted. Those measures may include one or more of the case management techniques referred to in Appendix IV.</font></p> <p ALIGN="left"><font face="verdana" size="2">New Article 27 requires the arbitral tribunal to inform the parties at the close of the proceedings of the date by which it expects to submit its draft award to the ICC Court for approval.</font></p> <p ALIGN="left"><font face="verdana" size="2">The parties' conduct may now have direct costs consequences, as Article 37 expressly empowers the arbitral tribunal, when making a costs award, to take into account the extent to which each party has conducted the arbitration in an expeditious and cost-effective manner.</font></p> <p ALIGN="left"><font face="verdana" size="2"><strong>7. Multi-party, multi-contract arbitration and consolidation</strong></font></p> <p ALIGN="left"><font face="verdana" size="2">New Articles 7 to 10 provide for joinder of additional parties, claims between multiple parties, arbitrations involving multiple contracts and the consolidation of arbitrations.</font></p> <p ALIGN="left"><font face="verdana" size="2">Article 7 provides that a party wishing to join an additional party to the arbitration shall submit a Request for Joinder against the additional party. However, no additional party may be joined after the confirmation or appointment of any arbitrator, unless all parties, including the additional party agree.</font></p> <p ALIGN="left"><font face="verdana" size="2">In multi-party arbitrations, Article 8 permits any party to make claims or counterclaims against any other party without the authorization of the arbitral tribunal up until the Terms of Reference are signed or approved by the ICC Court. After that, the arbitral tribunal determines the procedure for making a claim or counterclaim. </font></p> <p ALIGN="left"><font face="verdana" size="2"> Where claims arise out of or in connection with more than one contract, Article 9 permits such claims be made in a single arbitration, irrespective of whether such claims are made under one or more than one arbitration agreement under the ICC Rules.</font></p> <p ALIGN="left"><font face="verdana" size="2">Article 10 provides that the ICC Court, at the request of a party, may consolidate two or more arbitrations pending under the ICC Rules into the arbitration which commenced first, where (a) the parties have agreed to consolidation; or (b) all of the claims in the arbitrations are made under the same arbitration agreement; or (c) where the claims in the arbitrations are made under more than one arbitration agreement, the arbitrations are between the same parties, the disputes in the arbitrations arise in connection with the same legal relationship, and the ICC Court finds the arbitration agreements to be compatible.</font></p> <p ALIGN="left"><font face="verdana" size="2"><strong>8. Confidentiality orders</strong></font></p> <p ALIGN="left"><font face="verdana" size="2">New Article 22(3) expressly provides for confidentiality orders, permitting the arbitral tribunal, upon the request of any party, to make orders concerning the confidentiality of the arbitration proceedings or of any other matters in connection with the arbitration and to take measures for protecting trade secrets and confidential information.</font></p> <p ALIGN="left"><font face="verdana" size="2">This is of particular importance where the governing arbitration law does not impose on the parties express confidentiality obligations (for example as they do in Hong Kong, under section 18 of the new Arbitration Ordinance) or implied confidentiality obligations (for example as they do in England). </font></p> <p ALIGN="left"><font face="verdana" size="2">As well as clarifying and updating some of the existing ICC Rules, the revised rules introduce some innovative changes, which will no doubt speed up the arbitral process and make it more cost-effective. </font></p> <p ALIGN="left"><font face="verdana" size="2">Please </font><font SIZE="2" face="Verdana">click <a href="http://www.deacons.com.hk/upload/other/20120117_PrivateEquityNewsletter_2012.1.pdf" target="_blank">here</a></font> <font face="verdana" size="2">to view or download this publication.</font></p> <p><font size="1" face="verdana" align="left"> Whilst every effort has been made to ensure the accuracy of this publication, it is for general guidance only and should not be treated as a substitute for specific advice.</font></p></td> </tr> </table> </td> </tr> </table> </td> </tr> <tr> <td width="140" height="95">&nbsp;</td> <!-- <td width="500" valign="bottom" height="95" align="right"><a href="javascript:window.print();"><img src="/eng/images/cmn/printthispage.gif" border="0"></a>&nbsp;&nbsp;<a href="javascript:window.location = 'mailto:?body=' + window.document.URL;"><img src="/eng/images/cmn/emailthispage.gif" border="0"></a></td>--> <td width="500" valign="bottom" height="95" align="right"><a href="javascript:window.print();"><img src="/eng/images/cmn/printthispage.gif" border="0"></a>&nbsp;&nbsp;<a href="javascript:window.location = 'mailto:?body=' + window.document.URL;window.location = window.document.URL;"><img src="/eng/images/cmn/emailthispage.gif" border="0"></a></td> </tr> <tr> <td width="140" height="95">&nbsp;</td> <td width="500" valign="bottom" height="95" align="right"><a href="/eng/knowledge/knowledge.htm"><img src="/eng/images/knowledge/backup_to_knowledge.gif" width="305" height="36" border="0"></a></td> </tr> </table> <!----> <!--End Template Here--> </td> </tr> <!--Begin Menu--> <tr> <table width="800" border="0" cellspacing="0" cellpadding="0"> <tr> <td width="53"><img src="/eng/images/spacer.gif" width="53" height="10"></td> <td class="index_footer"> <a href="javascript:newPopUp('/eng/header_session/terms_of_use.htm');"><font color="#6699cc">Terms of Use</font></a> | <a href="javascript:newPopUp('/eng/header_session/Disclaimer.htm');"><font color="#6699cc">Disclaimer</font></a> | <a href="javascript:newPopUp('/eng/header_session/privacy.htm');"><font color="#6699cc">Privacy Policy </font></a> | <a href="javascript:newPopUp('/eng/header_session/pic.htm');"><font color="#6699cc">Personal Information Collection Statement</font></a> | <a href="/index.htm"><font color="#6699cc">Deacons International</font></a> <br> Copyright&copy;<script language="javascript">printCurrentYear();</script>, Deacons All rights reserved. </font> <td width="155"> <p><img src="/eng/images/img_hk_asia.gif" width="155" height="18"></p> </td> </tr> <tr> <td width="53"><img src="/eng/images/spacer.gif" width="20" height="20"></td> <td class="footer">&nbsp;</td> <td width="155">&nbsp;</td> </tr> </table> </tr> <!--End Menu--> </table> <!--Begin Menu--> <!-- ******** BEGIN ALLWEBMENUS CODE FOR deacons ******** --> <img name='awmMenuPathImg-deacons' id='awmMenuPathImg-deacons' src='/eng/cmn/js/awmmenupath.gif' alt=''> <script type='text/javascript'>var MenuLinkedBy='AllWebMenus [2]', awmBN='456'; 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