When enforcing an arbitration award across borders, recalcitrant debtors can sow confusion with obscure legal challenges. But as Kobre & Kim’s Claim Monetization & Dilution team demonstrates in a recent offshore victory for two PRC clients, quick and strategic action can beat back the distractions and maintain a steady path to victory.
June 14, 2022
Parties caught up in complex, cross-border arbitration award enforcement campaigns can expect recalcitrant debtors to avoid enforcement at all costs. Such debtors may try to sow confusion by raising legal challenges, often at the last minute, based on relatively obscure doctrines of law.
A recent Kobre & Kim victory in the British Virgin Islands (BVI) on behalf of two People’s Republic of China (PRC)-based clients enforcing a US $171 million arbitration award demonstrates that when clients are able to quickly anticipate and surgically cut through these distractions, they can maintain pressure on the counterparty and maximize returns on their claim.
Background
In early June 2022, the BVI Commercial Court issued a ruling in favor of Kobre & Kim’s clients concerning the scope of the “revenue rule”, a rarely invoked common law rule against the direct or indirect enforcement of foreign tax laws.
Eight months prior, in October 2021, two PRC-based clients of Kobre & Kim, obtained an arbitration award in the London Court of International Arbitration (LCIA) of around US $171 million against two oil companies incorporated in the BVI and Bahamas.
Under the terms of the LCIA Award, the claimants were to be reimbursed by respondents for certain tax amortization benefits that had accrued to the benefit of respondents following payment of a PRC tax liability by the claimants.
Kobre & Kim has been taking steps to enforce the LCIA Award in several jurisdictions, including the PRC, Hong Kong SAR, the BVI and the Bahamas.
