LAW

Arbitration Law, Practice and Procedure



Arbitration Law, Practice and Procedure

Introduction

The Arbitration procedures, protocols and rules of resolution and prevention of dispute, also known as (DPR) are specifically structured for providing a non-rigid, effective and streamlined procedures set for the governance of the arbitration process. All arbitration proceedings are governed by the rules administered under the DPR auspices, apart from cases in which the parties provide for different set of Rules or form their own procedures and arbitration rules. These Rules are to be interpreted and applied pursuant to and in conjunction with Hawaii Revised Statutes Section, 658A1, unless it is agreed by the parties in written form for some other governing law, like The United States Arbitration Act.

Background of the case

Holaha, a Hawaiian corporation located in Kailua agreed to supply and install for Teh-Julien, a French-Chinese contracting joint venture, a state of the art baggage handling system for BienVenue, a major Chinese hotel chain. The system was to use special bar-coded baggage tags downloaded at home and attached by the traveler at the point of origin. The tags contained bar-codes with information regarding the exact destination of each traveler's baggage. At Beijing Airport, bags coming off each aero plane would pass through one of a number of electronic portals which would read the tags and route each bag according to the BienVenue hotel where its owner had a confirmed reservation. The contract, valued at USD12.6m, included the design, supply and installation of the system and all its parts, plus the portals and communication network controlling the distribution of the bags to the correct vehicles. The dispute resolution clause in their contract stipulated ad hoc arbitration in Hong Kong (which recently adopted the Model Law as amended in 2006) as the seat of the arbitration, under UNCITRAL Arbitration Rules 2010.After an initial payment of USD 2 million from Teh-Julien to Holaha, work began in Kailua. A further payment was paid as invoiced: USD 3 million in March 2012.

Delivery was to start in August 2012 to be completed by 30 January 2013. By mid-November 2012, few materials had been delivered and installation was seriously behind schedule. Holaha contended that Teh-Julien had demanded many changes to the specifications which required re-designs and, in some cases, different components. Teh-Julien claimed that the changes it requested were minima land that Holaha's lack of organization, financial irresponsibility and poor procurement strategy were the reasons for the delay. Despite negotiations and a failed attempt at mediation, no agreement ensued. Teh-Julien terminated the contract with Holaha and engaged a replacement design outfit from Singapore to complete the work.

Teh-Julien refused to make any further payment to Holaha for the materials or work done, although one interim invoice has now been outstanding since 13 September 2012. Holaha issued a notice of arbitration claiming a declaration that the contract had been wrongfully terminated, plus the sum of USD 7.6 million for work done, materials and equipment supplied, work in hand at its factory, loss of profit and ...