The Danone-Wahaha arbitration begun in May 2007 has passed another milestone with the delivery of a procedural order by the Stockholm Chamber of Commerce (SCC) tribunal in July 2008.
The procedural order relates to various requests for interim measures submitted by Danone in support of its substantive claim against Mr Zong and Wahaha (the respondents) over joint ventures established by Danone and Wahaha (the JVs).
In its request for interim measures, Danone asked the tribunal to order Wahaha not to establish any new companies that compete with the JVs or increase the production capacity of existing competing companies, and to ensure that Danone is granted access to the premises of all of the JVs.
In its decision, the tribunal stated that it was unwilling to delve into the merits of the case at an interim stage of the proceedings and therefore was not in a position to make an order for Danone’s request about the establishment of new competing companies. However, the tribunal ordered the respondents to ensure that Danone had free and unencumbered access to all of the JVs.
In doing so, the tribunal refused to order that Danone provide a monetary security as required by Wahaha, but requested instead that Danone provide an undertaking over damages.
Unlike the UNCITRAL Model Law on International Arbitration, there is no guidance in the SCC rules about the form of interim measures that may be granted by the tribunal; in fact, the SCC rules empower the tribunal to grant any interim measures (article 32 of the SCC rules). The Model Law, on the other hand, specifies the purposes for which interim measures should be granted. Similarly, the SCC rules are silent on the ‘test’ that needs to be satisfied by the applicant before interim relief should be granted. However, the tribunal in this case recognised that it was necessary to take into account factors such as the ‘urgency’ of the relief and the perpetration of wrongful acts that would render useless the purpose of arbitration (in other words ‘irreparable harm’), which were recognised in Swedish law.
The delivery of this procedural order shows the SCC tribunal’s attempt to strike a balance between competing interests at an interim stage. Although the tribunal was unwilling to ‘prejudge’ certain issues at an interim stage, it noted in some length that the evidence presented by Danone gave rise to real concerns of irreparable harm suffered by Danone.