Aiteo Eastern E&P Company Ltd v Shell Western Supply and Trading Ltd
| Jurisdiction | England & Wales |
| Judge | Mr Justice Foxton |
| Judgment Date | 17 November 2022 |
| Neutral Citation | [2022] EWHC 2912 (Comm) |
| Docket Number | Case Nos: CL-2022-000187 and CL-2022-000457 |
| Court | King's Bench Division (Commercial Court) |
[2022] EWHC 2912 (Comm)
Mr Justice Foxton
Case Nos: CL-2022-000187 and CL-2022-000457
IN THE HIGH COURT OF JUSTICE
BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES
KING'S BENCH DIVISION
COMMERCIAL COURT
Stephen Houseman KC (instructed by Stewarts LLP) for the Claimant
Ben Juratowitch KC, Catherine Jung and Belinda McRae (instructed by Freshfields Bruckhaus Deringer LLP) for the Defendant
Hearing date: 9 November 2022
Draft circulated: 10 November 2022
Approved Judgment
I direct that no official shorthand note shall be taken of this Judgment and that copies of this version as handed down may be treated as authentic.
THE HONOURABLE Mr Justice Foxton
This judgment was handed down by the judge remotely by circulation to the parties' representatives by email and release to The National Archives. The date and time for hand-down is deemed to be Thursday 17 November 2022 at 10:30am.
The Honourable
This is the hearing of two applications by the Claimant ( Aiteo) under s.67 of the Arbitration Act 1996 ( the 1996 Act) challenging:
i) a Partial Award of the tribunal dated 15 March 2022 ( the First Award), in which the tribunal held that it had jurisdiction to determine the Defendant's ( SWST's) claims against Aiteo, and rejected Aiteo's challenge to the tribunal's jurisdiction; and
ii) a second Partial Award of the tribunal dated 22 July 2022 ( the Second Award), in which the tribunal made an order for the consolidation of the arbitration with another arbitration.
The background
The parties' disputes arise under a facility agreement ( the Offshore Facility Agreement) entered into between Aiteo and SWST, pursuant to which Aiteo borrowed $512 million from SWST. Aiteo also entered into a facility agreement ( the Onshore Facility Agreement) with another group of lenders, pursuant to which it borrowed $1.488 billion. These transactions were concluded in connection with Aiteo's acquisition of an interest in certain Nigerian oilfields and associated facilities.
Clause 40 of the Offshore Facility Agreement provided that it was governed by English law.
The key clauses of the Offshore Facility Agreement for present purposes are the dispute resolution provisions. In those provisions:
i) Aiteo is referred to as the “Borrower”;
ii) various shareholders in Aiteo are referred to as the “Shareholders”;
iii) Aiteo and the Shareholders are referred to collectively as the “Obligors”; and
iv) SWST and various other entities on the lending side are referred to as the “Finance Parties”.
Clause 41.1 of the Offshore Facility Agreement (“Referral to arbitration”) provides:
“41.1.1 Subject to Clause 41.2 (Finance Parties' option), any Party to this Agreement (other than an Obligor) may elect to refer for final resolution any dispute arising out of or in connection with this Agreement, including any question regarding its existence, validity, or termination or any non-contractual obligations arising out of or in connection with this Agreement (a ‘Dispute’) by arbitration under the Rules of Arbitration of the International Chamber of Commerce (the ‘ICC’) in force at that time (the ‘ICC Rules’), which ICC Rules are deemed to be incorporated by reference into this Clause 41.1.
41.1.2 There shall be three (3) arbitrators, one nominated by the claimant(s) in the request for arbitration, the second nominated by the respondent(s) within thirty (30) days of receipt of the request for arbitration, and the third, who shall act as presiding arbitrator, nominated by agreement of the parties to the Dispute within thirty (30) days of the appointment of the second arbitrator. If any arbitrators are not nominated within these time periods, the International Court of Arbitration of the ICC shall make the appointment(s).
41.1.3 The place and seat of arbitration shall be London, England.
…
41.1.7 Where Disputes arise under this Agreement and under any of the Onshore Facility Agreement and Intercreditor Agreement which, in the absolute discretion of the first arbitrator to be appointed in any of the disputes, are so closely connected that it is expedient for them to be resolved in the same proceedings, that arbitrator shall have the power to order that the proceedings to resolve that dispute shall be consolidated with those to resolve any of the other disputes (whether or not proceedings to resolve those other disputes have yet been instituted) ….”
Clause 41.2 (“Finance Parties' option”) provides:
“41.2.1 Before a Finance Party has submitted a Request for Arbitration or Answer as defined in the Arbitration Rules of the ICC (as the case may be), the Finance Party may by notice in writing to the Borrower require that all Disputes or a specific Dispute be heard by a court of law. If the Finance Party gives such notice, the Dispute to which such notice refers shall be determined in accordance with Clause 41.3 (Jurisdiction).”
Finally, clause 41.3 (“Jurisdiction”) provides:
“41.3.1 If the Finance Party issues a notice pursuant to Clause 41.2 (Finance Parties' option), the provisions of this Clause 41.3 shall apply. (a) The courts of England have exclusive jurisdiction to settle any Dispute. (b) The Parties agree that the courts of England are the most appropriate and convenient courts to settle any Dispute and accordingly no Party will argue to the contrary. (c) This Clause 41.3 is for the benefit of the Finance Parties only. As a result, no Finance Party shall be prevented from taking proceedings relating to a Dispute in any other courts with jurisdiction. To the extent allowed by law, the Finance Parties may take concurrent proceedings in any number of jurisdictions.”
The dispute resolution provisions in the Onshore Facility Agreement were as follows:
“41.1.1 Subject to Clause 41.2 (Finance Parties' option), any dispute arising out of or in connection with this Agreement, including any question regarding its existence, validity, or termination or any non-contractual obligations arising out of or in connection with this Agreement (a ‘Dispute’) shall be referred to and finally resolved by arbitration under the Rules of Arbitration of the International Chamber of Commerce (the ‘ICC’) in force at that time (the ‘ICC Rules’) …
41.2.1 Before a Finance Party has submitted a Request for Arbitration or Answer as defined in the Arbitration Rules of the ICC (as the case may be), the Finance Party may by notice in writing to the Borrower require that all Disputes or a specific Dispute be heard by a court of law. If the Finance Party gives such notice, the Dispute to which such notice refers shall be determined in accordance with Clause 41.3 (Jurisdiction).
41.3.1 If the Finance Party issues a notice pursuant to Clause 41.2 (Finance Parties' option), the provisions of this Clause 41.3 shall apply. (a) The courts of the Federal Republic of Nigeria have exclusive jurisdiction to settle any Dispute. (b) The Parties agree that the courts of the Federal Republic of Nigeria are the most appropriate and convenient courts to settle any Dispute and accordingly no Party will argue to the contrary ….”
On 19 August 2019, SWST and the other lenders sent Aiteo a letter alleging that Aiteo had breached the Offshore and Onshore Facility Agreements, and reserving the right to seek accelerated repayment of the loans. Thereafter relations between Aiteo Eastern and Shell Western followed a Kiplingesque path. Aiteo replied on 10 September 2019, challenging that assertion. SWST and the lenders made a formal demand for repayment on 23 October 2019.
On 31 October 2019, Aiteo commenced proceedings against SWST and the other lenders, together with four other parties, before the Federal High Court of Nigeria ( the Nigerian Proceedings). Aiteo also obtained a without notice interim injunction from Ekwo J which restrained the various lenders from “acting in any way or manner or taking any step to interfere with the res of this dispute by giving effect to the content of [the letter of 23 October 2019], or taking any step to enforce any right in respect of the alleged indebtedness of [Aiteo]”.
In response, on 12 November 2019, SWST and all bar one of the other lenders entered a memorandum of conditional appearance before the Federal High Court, filed a Notice of Appeal ( the NOA), and filed a motion for a stay of the Nigerian Proceedings and other forms of relief. It will be necessary to consider the terms of the NOA below. On 19 November 2019, Aiteo filed responsive evidence and the record of appeal was transmitted to the Nigerian Court of Appeal.
On 11 December 2020, by the service of a Request for Arbitration, SWST commenced what it contends was a valid ICC arbitration against Aiteo. It also sought anti-suit injunctive relief from the Commercial Court, which was granted on a “without notice” basis by Cockerill J on 14 December 2020. The lenders under the Onshore Facility Agreement also served a Notice of Arbitration, and also sought and obtained anti-suit relief.
Aiteo lodged an objection to the jurisdiction of the arbitral tribunal constituted by the ICC in respect of the Offshore Facility Agreement. That jurisdictional challenge was the subject of a preliminary hearing before the tribunal. On 15 March 2022, the tribunal issued the First Award rejecting that jurisdictional challenge.
On 1 April 2022, Sir Nigel Teare handed down judgment granting final anti-suit relief against Aiteo, on the basis that its commencement and continued pursuit of the Nigerian Proceedings breached an obligation owed by Aiteo under clause 41.1 of both the Offshore and Onshore Facility Agreements to arbitrate the disputes which were the subject of the Nigerian Proceedings.
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