A v B
| Jurisdiction | England & Wales |
| Judge | Mr Justice Foxton |
| Judgment Date | 21 October 2020 |
| Neutral Citation | [2020] EWHC 2790 (Comm) |
| Court | Queen's Bench Division (Commercial Court) |
| Docket Number | Case No: CL-2019-000632 |
| Date | 21 October 2020 |
[2020] EWHC 2790 (Comm)
Mr Justice Foxton
Case No: CL-2019-000632
In Private
IN THE HIGH COURT OF JUSTICE
BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES
COMMERCIAL COURT (QBD)
Royal Courts of Justice
Strand, London, WC2A 2LL
Daniel Margolin QC (of Joseph Hage Aaronson LLP) and Adam Baradon (instructed by Joseph Hage Aaronson LLP) for the Claimant
Richard Power (instructed by JMW Solicitors LLP) for the Defendant
Hearing dates: 12 and 13 October 2020
Draft judgment to parties: 15 October 2020
Approved Judgment
I direct that pursuant to CPR PD 39A para 6.1 no official shorthand note shall be taken of this Judgment and that copies of this version as handed down may be treated as authentic.
INTRODUCTION
This judgment follows the application by the Claimant to enforce an arbitration award issued by consent (the “Consent Award”) pursuant to s.66 of the Arbitration Act 1996.
The Consent Award was made on 4 December 2018 by the sole arbitrator in an LCIA arbitration commenced by the Claimant. On 14 October 2019, the Claimant applied for leave to enforce the Consent Award pursuant to ss.101(2) and 66(1) of the Arbitration Act 1996. On 17 October 2019, Teare J gave the Claimant permission to enforce “the operative part of the Award” in the sum of $39,111,604, but gave the Defendant liberty to apply to set that Order aside, and stayed execution until the time for bringing such a challenge had expired (“the October Order”).
The Defendant applied to set the October Order aside on 7 November 2019. That application came before Moulder J. For the reasons set out in a judgment reported as A v B [2020] EWHC 952 (Comm), she set the October Order aside:
i) so far as it concerned s.101(2), because that applied to awards made outside the United Kingdom and did not apply to the Consent Award as an English award; and
ii) so far as it concerned the application under s.66(1), because the court did not have power to enter judgment in the terms adopted because “the circumstances require a further adjudication, namely that there had been a failure to pay an instalment and the payment had become due” ([30]).
On this last issue she found, on the evidence before her, that the Defendant had raised a triable issue as to whether the Claimant was entitled to enforce the Consent Award in the amount claimed, and she gave directions for a hearing to determine whether or not permission to enforce the Consent Award should be given. This is that hearing.
THE WITNESSES
I heard evidence from three witnesses:
i) For the Claimant, from the Claimant himself and from D, a Ukrainian lawyer whose law firm represented the Claimant.
ii) For the Defendant, from C, the CEO of the Defendant's investment vehicle.
I found the Claimant's evidence confused and at times inconsistent, particularly (and, perhaps, less surprisingly) when it came to the operation of the detailed provisions of the parties' agreements. In parts of his evidence, he sought to align his answers with the Claimant's legal case. I have, therefore, approached his evidence with caution. I do, however, accept his evidence that he was not involved in the detailed implementation of the agreements and that he relied on his professional advisers (lawyers and accountants) to protect his interests, both in drafting the documents and in effecting payments. I also accept that he had become suspicious of (and exasperated by) the Defendant by the time they met on 4 and 11 October 2019.
I found D a careful witness, who was closer to the detail than the Claimant. On one topic – when giving evidence as to her understanding as to the Claimant's obligation to give notice of the bank account to which payment was to be made – I formed the impression that D was taking care to give evidence which aligned with the Claimant's case. I have no doubt that D would have been similarly concerned to protect the Claimant's interests at the meetings on 4 and 11 October 2019, and in particular would have taken steps to ensure that if binding agreements were concluded or assurances intended to be acted on were given at the meetings, they would have been properly documented and their scope carefully delineated.
C was a polished witness who also had a good grasp of the detail. It is to C's credit that he accepted that, at the 4 and 11 October 2019 meetings, it was his understanding that no binding agreements had been reached because any contractual variation had to be in writing. He also gave commendably frank evidence that the timing of the payment made on 17 October 2019 had not been influenced by anything said or done by the Claimant. The overall effect of his oral evidence was rather different to the impression given in C written evidence, which appears to have been stretched in an attempt to establish a triable issue.
In relation to all three witnesses, however, as is so often the case, I have found the inherent probabilities and the contemporaneous documents the most reliable guides to what happened.
I did not hear evidence from the Defendant. It was said that until the service of the Claimant's witness statement on 07 July 2020, neither side was calling evidence from a principal, and that this explained the Defendant's absence. I do not accept this explanation. It is the Defendant who is arguing for the existence of agreements or understandings which departed from the ordinary meaning of the language in the written agreements. In any event, no explanation was offered as to why the Defendant had not provided a witness statement responding to the Claimant's statement of 7 July 2020. In these circumstances, it is open to the court to draw adverse inferences against the Defendant applying the principles summarised in Wisniewski v Central Manchester HA [1989] PIQR 324, 340.
THE FACTUAL BACKGROUND
The Arbitration
The background to this dispute is largely set out in the judgment of Moulder J at [5] – [15] which I will not repeat. The arbitration to which these proceedings relate arises out of the settlement of two earlier LCIA arbitrations by two settlement agreements dated 7 April 2015:
i) The Claimant and the Defendant entered into a deed of settlement under which the Defendant agreed to pay to the Claimant amounts defined as the Principal Sum and Accrued Interest (c. $45 million in total) in quarterly instalments. The parties agreed that certain of the terms of the settlement would be recorded in a consent award.
ii) Two companies affiliated to the Claimant and the Defendant, X Co and Y Co respectively, entered into a settlement agreement, under which Y Co agreed to pay X Co $2 million.
Disputes in relation to those two settlement agreements led to a further LCIA arbitration which was itself compromised, on the eve of the hearing, by a further settlement agreement (“the 2018 Settlement Agreement”) dated 30 November 2018, under which the Defendant agreed to pay the Claimant just over $38m in instalments.
It is significant that the dispute which arose in relation to the two 2015 settlement agreements was a disputed agreement – “the May Agreement” — which the Defendant alleged had been concluded and which it was said had extinguished his liability to the Claimant and transferred it to a third party.
In addition to settling the parties' disputes, the 2018 Settlement Agreement contained a specific acknowledgement by the Defendant that the alleged May Agreement was not a legally effective agreement. C accepted in his evidence that the Defendant had agreed that the alleged May Agreement was not binding because it was not in writing, as the two 2015 settlement agreements required.
The Consent Award
The Consent Award was entered into pursuant to the 2018 Settlement Agreement, and the material provisions had the same numbering as paragraphs in the Consent Award as they did as clauses in the 2018 Settlement Agreement.
The material provisions of the Consent Award are as follows:
“2.1 The Respondent will pay the Claimant:
2.1.1 The sum of USD$34,632,475.62 (the ‘Principal Sum’);
2.1.2 Accrued interest on the Principal Sum, being USD$10,229,128.56
…
2.3 Payment must be paid to the bank account of any of the Claimant's companies and/or payment agents as may be nominated by the Claimant in writing prior to payment. Nomination shall be capable of change by the Claimant 10 business days prior to payment.
3.1 The Respondent must make a payment of USD$2 million on or before 31 December 2018, in partial discharge of the sum referred to in clause 2.1.1 above…
3.2 Thereafter, and subject to clauses 3.3 to 3.5 below, the Respondent must make a payment of USD$1.25 million every quarter, payable on or before 1 January, 1 April, 1 July and 1 October of each calendar year (the ‘Instalments’) until payment in full of the Principal Sum (‘the Final Settlement Date’).
3.3 In the event that the Respondent fails to pay…the instalments or any part thereof on or before the requisite date, the sums referred to in clause 2.1.1 and clause 2.1.2 above… will become due and owing in full and payable immediately.
3.4 In the event that the Respondent fails to procure a pledge of the shares of the [G Co] within 7 business days of this Agreement and in accordance with clause 7 below, the sums referred to in clauses 2.1.1 and 2.1.2… will become due and owing in full and payable immediately.
3.5 In the event that any payment is made by or on behalf of [E Co] (or any nominee or agent or assignee thereof) or any payment received by or on behalf of [F Co] (or any nominee or agent or assignee thereof)...
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