)

ROADRUNNER, Petitioner ) Special Proceedings No.

2014-XXXX-XX and - )
)
SOUTH KOREA, Opponent )
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OPPOSITION TO THE APPLICATION FOR THE RECOGNITION AND

ENFORCEMENT OF FOREIGN ARBITRAL AWARD

SOUTH KOREA, by counsel, respectfully submits its memorandum in

this proceeding:

Statement of the Case

In opposition to the application of the petitioner Roadrunner for

the enforcement of an arbitral award rendered by the London-seated
arbitral tribunal (awarding US$200 million plus interest, costs and fees
in favor of petitioner) respondent, South Korea move this Honorable
Court to refuse recognition and enforcement by virtue of a judgment 1
rendered by the Court of Appeal of England and Wales setting aside
such award.

Statement of the Facts

In order that the Court may be enlightened and guided in the

sequential facts, cited hereunder are the pertinent details:

1. South Korea, through Hana, (a Korean Bank) made investment

arrangements with private investors, one of which is Roadrunner
(a private company).

2. In 1997, the South Korea issued an Emergency Law to alleviate

its debt crisis as a result of the Asian Financial Crisis.
Roadrunner claims its investments were adversely affected as
the governments actions included converting Hanas dollar
calculated tariffs into pesos and freezing them. Thus, Roadrunner
instituted arbitration proceedings seeking for damages from the
South Korea under the Netherlands-South Korea bilateral
investment treaty (BIT). The Netherlands-South Korea BIT
provides a default dispute resolution mechanism under the

1 Annex 1. Judgment from Her Majestys Court of Appeals.

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 UNCITRAL arbitration proceedings.

3. The London-seated Tribunal found South Koreas treatment of the

investment after the debt crisis violated the Netherlands-South
Korea BIT.

4. South Korea filed a petition to annul the award in the court of

first instance in London, which dismissed its petition to set aside
or modify the award in favor of Roadrunner and affirmed the
tribunals award plus interest, costs and fees.

5. South Korea appealed to the Court of Appeals of England and

Wales, which set aside the award against South Korea because of
the arbitrators failure to respect a treaty provision mandating 18
months prior litigation in the hosts states courts. The court said
the arbitral panel exceeded its authority by ignoring the terms of
the Netherlands-South Korea BIT and the UNCITRAL award,
rendered in favor of Roadrunner was wholly based on outside
legal sources and without regard to the contracting parties
agreement establishing a precondition to arbitration.

6. In August 2014, Roadrunner elevated the matter in the Supreme

Court of the United Kingdom. South Korea filed its opposition on
September 1, 2014 and Roadrunner filed its reply on September
14, 2014. On September 18, 2014, the Attorney General was
invited to file a brief expressing the views of the United Kingdom.

7. Roadrunner now requests that this Honorable Court recognize

and enforce the Arbitral Award which the South Korea vigorously
oppose anchoring its defense on the following grounds:

a) The New York Convention2 permits the Philippine courts to refuse

2 Article V, New York Convention on the Recognition and Enforcement of the Foreign
Arbitral Awards. 1. Recognition and enforcement of the award may be refused, at the
request of the party against whom it is invoked, only if that party furnishes to the
competent authority where the recognition and enforcement is sought, proof that: The
parties to the agreement referred to in Article II were, under the law applicable to
them, under some incapacity, or the said agreement is not valid under the law to
which the parties has submitted or, failing any indication thereon, under the law of the
country where the award was made; or
b.) The party against whom the award is invoked was not given proper notice of the
appointment of the arbitrator or of the arbitration proceedings or was otherwise unable
to present his case; or
c.) The award deals with a difference not contemplated by or not falling within the terms
of the submission to arbitration, or it contains decisions on matters beyond the scope
of the submission to arbitration, provided that, if the decisions on matters beyond the
scope of the submission to arbitration can be separated from those not so submitted,
that part of the award which contains decisions on matters submitted to arbitration
may be recognized and enforced; or
d.) The composition of the arbitral authority or the arbitral procedure was not in

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 recognition and enforcement of the foreign award where the
award has not yet become binding on the parties, or has been
set aside or suspended by a competent authority of the country
in which, or under the law of which, that award was made.

b) Contrary to what petitioner advanced, this Honorable Court may

resist the enforcement of the award if the competent authority in
the country where recognition and enforcement is sought finds
that the recognition or enforcement of the award would be
contrary to the public policy of that country.

c) The constitution, jurisdiction and proceeding of the Arbitral

Tribunal was in derogation of the Netherlands-South Korea BIT
requiring investors to pursue local remedies for eighteen (18)
months as a precondition in resorting to arbitration.

d) South Korea has immunity from execution of its assets under the
principle of international law.

The Arguments

Counsel for respondent submits herewith factual and legal basis for
the dismissal of the petition.

Applicability of the New York Convention3

Article V of the New York Convention on which the opposition is

mainly premised, provides that:

1. Recognition and enforcement of the award may be refused, at

the request of the party against whom it is invoked, only if that party
furnishes to the competent authority where the recognition and
enforcement is sought, proof that:

XXXXX

accordance with the agreement of the parties, or, failing such agreement, was not in
accordance with the law of the country where the arbitration took place; or
e.) The award has not yet become binding on the parties, or has been set aside
or suspended by a competent authority of the country in which, or under the
law of which, that award was made.

3 http:// sc.judiciary.gov.ph/jurisprudence/2008/jan2008/143581.htmThe Philippines, South

Korea, and United Kingdom are signatories to the Convention.

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 e.) The award has not yet become binding on the parties, or has
been set aside or suspended by a competent authority of the country
in which, or under the law of which, that award was made.

2. Recognition and enforcement of an arbitral award may also be

refused if the competent authority in the country where recognition
and enforcement is sought finds that:

The recognition or enforcement of the award would be contrary to

the public policy of that country.

The Court of Appeals of England and Wales has made its proper
findings that the UNCITRAL award in favor of Roadrunner was wholly
based on outside legal sources and without regard to the parties
agreement establishing a precondition to arbitration, warranting the
vacation of the arbitral award.

As a result, there is no final award to be enforced and recognized by

this Honorable Court because of its setting aside by the proper court.

The power to set aside an arbitral tribunal award was vested in the
courts of the seat of arbitration. The judgment of the Court of Appeals
in England and Wales must not be disturbed by our courts and judicial
review upon its merits were restricted pending final outcome of the
case. The New York Convention empowers our courts only to deny or
grant recognition and enforcement.
The South Korea, the Philippines, as well as the United Kingdom are
signatories to the New York Convention and are bound by the rules laid
down by it. One of the rules it provides is the setting aside of the award
in the court of the seat of arbitration bars other courts to enforce such
award.

This has been the trend of case law in the international sphere as
illustrated by the case of TermioRio SA ESP et al. v. Electrificadora del
Atlantico, US Disctirct Court, District of Columbia, 17 Mar 2006 4. The
arbitration award was made in Columbia and the Consejo de Estado
was a competent authority in that country to set aside the award being
contrary to law of the Columbia. The District Court accordingly held
that, because the arbitration award was lawfully nullified by the
country in which the award was made, appellants have no cause of
action in the United States to seek enforcement of the award under the
New York Convention.

4 TermioRio SA ESP et al. v. Electrificadora del Atlantico, US Disctirct Court, District of

Columbia, 17 Mar 2006, 421 F Supp. 2d 87

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Public Policy Considerations

The essence of the arbitration is to put an end to the dispute. On

the one hand, totally ignoring the decision setting aside the award by
the country of origin would only create another battlefield and amount
to multi-localisation. Also this would render Article V of the New York
Convention a dead letter because no court would have any regard for
the decisions of the foreign courts setting aside an award and all courts
would take refuge in their own arbitration law.

Another ground for this Court to dismiss the petition is public policy
reasons. Under the BIT, South Koreas consent to arbitration would be
deemed given only when the precondition was fulfilled. Under the
principle of international law, validly concluded treaties are
agreements that have the force of law between the parties to it and
must be complied by them in good faith. Roadrunner made no effort to
seek the intervention South Koreas courts and instead asked
immediate resort to arbitration, clearly in derogation of the treaty that
it is relying upon. To accede to the demands of Roadrunner would run
counter to the norms of international law granting sovereign immunity
to the nations. Under the Constitution, the Philippines adopts the
generally accepted principles of international law as part of the law of
the land and adheres to the policy of peace, equality, justice freedom,
cooperation, and amity with all nations.

The emergency law must not be used as a justification to depart

from the resort to South Korean courts. Earnest efforts must have been
made by Roadrunner to comply with the precondition. Absence of even
an attempt to ask court intervention is an indication of lack of intention
on the part of Roadrunner to comply with the BIT and must be
adjudged in bad faith.5

The Arbitral Tribunal and Its Proceedings

The lack of consent on the part of the South Korea to submit to

arbitration is fatal to the jurisdiction of the tribunal. The constitution of
the arbitral tribunal is not within the bounds of law. Its contention that
South Korea submitted to its jurisdiction and is now estopped from
challenging the tribunals jurisdiction is untenable. South Korea
participated in the arbitration proceedings to challenge its very
jurisdiction invoking the precondition in the BIT. It is not deemed to
have submitted to the arbitral tribunals jurisdiction when it made its
prompt contest.

5 United Kingdom v Iceland, 1973.

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 The UNCITRAL arbitration rules6 is explicit on this in accordance on
the competence-competence doctrine:

Article 16. Competence of arbitral tribunal to rule on its jurisdiction

a.) The arbitral tribunal may rule on its own jurisdiction, including
any objections with respect to the existence or validity of the
arbitration agreement. XXX
b.) A plea that the arbitral tribunal does not have jurisdiction shall
be raised not later than the submission of the defence. XXX

Furthermore, South Korea made its timely challenge on the

authority of the tribunal as regards the its failure to disqualify
arbitrator Charles Brower on the basis of his arbitrary and capricious
rulings in previous arbitrations involving South Korea. The ICC rules of
arbitration, the appointing authority in this case, mandates that every
arbitrator must be and remain impartial and independent of the parties
involved in the arbitration.

The ICC arbitration rules Article 11 (2) is explicit on the matter,

Before appointment or confirmation, a prospective arbitrator shall
sign a statement of acceptance, availability, impartiality and
independence. The prospective arbitrator shall disclose in
writing to the Secretariat any facts or circumstances which
might be of such a nature as to call into question the
arbitrators independence in the eyes of the parties, as well as
any circumstances that could give rise to reasonable doubts as
to the arbitrators impartiality. The Secretariat shall provide such
information to the parties in writing and fix a time limit for any
comments from them.

The failure on the part of Charles Brower to disclose in writing the

fact that he is an arbitrator of number of cases involving South Korea
raises doubts on his independence and credibility.

Regional Trial Courts Jurisdiction, Recognition and Enforceability of

Arbitral Award

Alongside the New York Convention and the ADR Act of 2004 7,
6 UNCITRAL Model Law on International Commercial Arbitration.

7 SEC. 42. Application of the New York Convention.The New York

Convention shall govern the recognition and enforcement of arbitral awards
covered by said Convention.
The recognition and enforcement of such arbitral awards shall be filed
with the Regional Trial Court in accordance with the rules of procedure to be
promulgated by the Supreme Court. Said procedural rules shall provide that
the party relying on the award or applying for its enforcement shall file with the

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Rule 13(4) of the Special Rules of Court for Alternative Dispute
Resolution provides for the legal basis of the regional trial court of
Makati to resist enforcement of the foreign arbitral award. It
incorporates the grounds in the Convention to challenge a foreign
award. This rule provides that a Philippine Court shall not set aside a
foreign arbitral award but may refuse it recognition and enforcement
on any or all of the following grounds:

a. The party making the application to refuse recognition and

enforcement of the award furnishes proof that:

court the original or authenticated copy of the award and the arbitration
agreement. If the award or agreement is not made in any of the official
languages, the party shall supply a duly certified translation thereof into any of
such languages.

The applicant shall establish that the country in which foreign

arbitration award was made in party to the New York Convention.

xxxx

SEC. 43. Recognition and Enforcement of Foreign Arbitral Awards Not

Covered by the New York Convention.The recognition and enforcement of
foreign arbitral awards not covered by the New York Convention shall be done
in accordance with procedural rules to be promulgated by the Supreme
Court. The Court may, on grounds of comity and reciprocity, recognize and
enforce a non-convention award as a convention award.

SEC. 44. Foreign Arbitral Award Not Foreign Judgment.A foreign

arbitral award when confirmed by a court of a foreign country, shall be
recognized and enforced as a foreign arbitral award and not as a judgment of a
foreign court.

A foreign arbitral award, when confirmed by the Regional Trial Court,

shall be enforced in the same manner as final and executory decisions of
courts of law of the Philippines

xxxx

SEC. 47. Venue and Jurisdiction.Proceedings for recognition and

enforcement of an arbitration agreement or for vacations, setting aside,
correction or modification of an arbitral award, and any application with a court
for arbitration assistance and supervision shall be deemed as special
proceedings and shall be filed with the Regional Trial Court (i) where arbitration
proceedings are conducted; (ii) where the asset to be attached or levied upon,
or the act to be enjoined is located; (iii) where any of the parties to the dispute
resides or has his place of business; or (iv) in the National Judicial Capital
Region, at the option of the applicant.

SEC. 48. Notice of Proceeding to Parties.In a special proceeding for

recognition and enforcement of an arbitral award, the Court shall send notice
to the parties at their address of record in the arbitration, or if any part cannot
be served notice at such address, at such partys last known address. The
notice shall be sent al least fifteen (15) days before the date set for the initial
hearing of the application.

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(i). A party to the arbitration agreement was under some incapacity; or
the said agreement is not valid under the law to which the parties have
subjected it or, failing any indication thereof, under the law of the
country where the award was made; or

(ii). The party making the application was not given proper notice of
the appointment of an arbitrator or of the arbitral proceedings or was
otherwise unable to present his case; or

(iii). The award deals with a dispute not contemplated by or not falling
within the terms of the submission to arbitration, or contains decisions
on matters beyond the scope of the submission to arbitration; provided
that, if the decisions on matters submitted to arbitration can be
separated from those not so submitted, only that part of the award
which contains decisions on matters not submitted to arbitration may
be set aside; or

(iv). The composition of the arbitral tribunal or the arbitral procedure

was not in accordance with the agreement of the parties or, failing
such agreement, was not in accordance with the law of the country
where arbitration took place; or

(v). The award has not yet become binding on the parties or has been
set aside or suspended by a court of the country in which that award
was made; or

b. The court finds that:

(i). The subject-matter of the dispute is not capable of settlement or

resolution by arbitration under Philippine law; or

(ii). The recognition or enforcement of the award would be contrary to

public policy.

The court shall disregard any ground for opposing the recognition
and enforcement of a foreign arbitral award other than those
enumerated above.

The interim measure applied for also would not find legal support
in the Hong Kong case of Societe Nationale d Operations Petrolieres de
la Cote dIvoire Holding v Keen Lloyd Resources Ltd. 8 The relevant
arbitration was seated in France and an application to set aside the

8
(2004) 3 HKC 452 (Hong Kong Court of First Instance)

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award has been made in France. Under the French law, this application
triggered a six-month period, the award creditor sought to enforce the
award in Hong Kong. Enforcement was resisted on the ground that the
award had not yet become binding on the parties because the award
had been challenged and a French stay of execution was in place.

Assuming arguendo that South Korea consented to the

arbitration, which implies consent to all natural and logical
consequences of arbitration, this does not necessarily include
attachment of the states property. Immunity from execution is
separate issue form immunity from jurisdiction. A waiver from
execution cannot be implied on the basis of the BIT, there must be
express provision of abandonment of immunity.9

It is submitted that the Honorable Court would have legal grounds to

resist recognition and enforcement of the Arbitral Award on the basis of
Article V New York Convention that was reinforced in our own domestic
laws.

Relief Sought

In light of the arguments submitted, South Korea prays to this

Honorable Court to deny recognition and enforcement the Arbitral
Award of the Arbitral Tribunal.

Respectfully submitted,

(Sgd.) Jessa Belle Q. Tinio

IBP No. 122291

Number 4 Privet Drive, Kings
Cross
Diagon Alley

Counsel for South Korea

9
Article 18 and 19 of the 2004 UN Convention on the Jurisdictional Immunities of States and
their Property. See also the recommendation for the contracting parties with states in Dunham
and Greenberg, op. cit fn 302 at pp. 148-149.

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ANNEX 1

Judgment
From Her Majestys Court of Appeals
England and Wales

In the Matter of An Arbitral Award rendered in favor of

Roadrunner and against South Korea

Before
Lord Boyles, Justice of the Court of Appeals

The decision of the Court of First Instance of London affirming the

arbitral tribunals award of US$200 million plus interest, costs and fees
in favor of Roadrunner and against South Korea is hereby set aside.
Cost against petitioner.

Sgd. Lord Boyle, Justice of the Court of Appeals

England and Wales
July 2014

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