In August, the Standing Committee of the National People’s Congress (NPC) issued a draft interpretation of Hong Kong’s Basic Law regarding “the Congo case” – a case referred to it by the Hong Kong Court of Final Appeal concerning the issue of sovereign immunity.
Coming in the wake of a recent decision of the Hong Kong High Court regarding the related issue of Crown immunity, the decision has potentially far-reaching implications for Hong Kong’s standing as a regional seat of arbitration (see Which arbitration rules are right for you?).
The Congo case involved a dispute over a credit agreement entered into by a state-owned electricity company, Société Nationale d’Electricité (SNEL), in the Republic of Zaire and a finance company, Energoinvest. The agreement related to the construction of a power station in that country. SNEL’s obligations under the agreement were guaranteed by the government of Zaire. After SNEL defaulted, Energoinvest obtained a substantial award in an International Chamber of Commerce (ICC) tribunal against SNEL and the government of Zaire. It later sold its rights under the arbitration award to FG Hemisphere Associates.
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