African Fertilizers and Chemicals NIG Ltd (Nigeria) v Shipsnavo GmbH & Company Reederei KG [QBD (Comm)]
| Jurisdiction | England & Wales |
| Judge | Mr Justice Beatson |
| Judgment Date | 29 September 2011 |
| Neutral Citation | [2011] EWHC 2452 (Comm) |
| Docket Number | Case No: CLAIM NO. 2011 FOLIO 900 |
| Court | Queen's Bench Division (Commercial Court) |
| Date | 29 September 2011 |
[2011] EWHC 2452 (Comm)
The Honourable Mr Justice Beatson
Case No: CLAIM NO. 2011 FOLIO 900
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
COMMERCIAL COURT
Royal Courts of Justice
Strand, London, WC2A 2LL
Dominic Happé (instructed by MFB) for the Applicant
Nichola Warrender (instructed by Winter Scott) for the Respondent
Hearing date: 12 September 2011
In an Order made on 4 August 2011 (and varied on 15 August) Teare J gave the claimant ship-owner, BD Shipsnavo GmbH & Co Reederei KG, leave pursuant to section 66 of the Arbitration Act 1996 ("the 1996 Act") to enforce an arbitration award made on 18 July 2011 by Mr Baker-Harber and Mr Hamsher, and to enter judgment against the defendant, African Fertilizers and Chemicals NIG Ltd (Nigeria), in the terms of the award.
The defendant applied for Teare J's order to be set aside on the ground that, as the material parts of the arbitration award were in purely declaratory terms, there was no jurisdiction to make it. Its application notice states (paragraph 3) that "permission can only be given under section 66(1) and (2) Arbitration Act 1996 if a judgment in terms of the award would be capable of being enforced by use of one or more of the available means of execution and the judgment is not so capable, being only declaratory". At the end of the hearing I refused the defendant's application. I now give my reasons for doing so.
The award was made pursuant to an arbitration agreement contained in a bill of lading on the CONGENBILL 1994 form for the carriage of the defendant's cargo on board the claimant's vessel, the MV Christian D, from Constanta in Romania to Lagos in Nigeria. The bill of lading, dated 4 October 2010, incorporated the terms and conditions of the underlying voyage charter, dated 21 September 2009, which was on a GENCON 1994 form and included an English law and arbitration clause. The dispute between the parties arises out of the grounding of the vessel off Kythria Island when General Average was declared.
Prior to the London arbitration, the defendant commenced arbitration proceedings in Romania. On 18 March 2011 I granted the claimant an injunction restraining the defendant from continuing the Romanian arbitration. The defendant also commenced proceedings in the Maritime and River Division of the Constanta Court. On 14 April 2011 Field J granted the claimant an interim declaration that the London arbitration clause in the GENCON charter-party was validly incorporated into the bill of lading and was binding on the defendant, and that the Romanian arbitration and court proceedings were in breach of the agreement to arbitrate in London. No application has been made to set aside those orders and the inter partes hearing was adjourned to permit the London arbitration to take place.
The material part of Mr Baker-Harber and Mr Hamsher's award is:
"B WE FIND, HOLD AND DECLARE that:—
(1) The London arbitration clause from the Charterparty dated 21 September 2010 was validly incorporated into the Bill of Lading dated 4 October 2010.
(2) The London arbitration clause is binding on the Defendants.
(3) The Tribunal has jurisdiction over all and any disputes arising out of the Bill of Lading and/or the Charterparty, including:—
(a) The Claimants' claim for a declaration of entitlement to a contribution in General Average and/or a contribution in General Average and/or all claims for damages for breach by the Defendants of the London arbitration clause; and
(b) The Defendants' claims for a declaration or order of non-liability to contribute to General Average and/or common average expenses and/or any claims for loss and/or damage against the Claimants arising from the Defendants' provision of any General Average and/or salvage guarantees whether such claims are pursued in contract and/or tort (and for the avoidance of doubt all claims being pursued by the Receivers in the River and Maritime Division in the Court of Constanta in File No 4983/118/2011); because theses claims are within the scope of the London arbitration clause and the Tribunal has jurisdiction in respect of the same."
The award, which was a final award, also awarded the claimant its costs.
Section 66 is in the section of the 1996 Act containing the powers of the court in relation to an award. It provides:—
" 66 Enforcement of the award
(1) An award made by the tribunal pursuant to an arbitration agreement may, by leave of the court, be enforced in the same manner as a judgment or order of the court to the same effect.
(2) Where leave is so given, judgment may be entered in terms of the award.
(3) Leave to enforce an award shall not be given where, or to the extent that, the person against whom it is sought to be enforced shows that the tribunal lacked substantive jurisdiction to make the award.
The right to raise such an objection may have been lost (see section 73).
(4) Nothing in this section affects the recognition or enforcement of an award under any other enactment of rule of law, in particular under Part II of the Arbitration Act 1950 (enforcement of awards under Geneva Convention) or the provisions of Part III of this Act relating to the recognition and enforcement of awards under the New York Convention or by an action on the award."
The other legislative provision relevant to this application is Article 34 of Regulation 44/2001 ("the Brussels Regulation"). The claimant sought an order under section 66 because of its concern that, notwithstanding the arbitration award, the defendant will obtain judgment in its favour in the Romanian Court and will then seek to have that judgment recognised and enforced in England under the Brussels Regulation: see paragraphs 24–25 of Mr Scott's statement. If, however, an English judgment is first obtained, the claimant would rely on Article 34(3) of the Regulation to resist the recognition of an irreconcilable subsequent judgment of the Romanian court.
Article 34 provides in material part:
"A judgment shall not be recognised:
1. if such recognition is manifestly contrary to public policy in the Member State in which recognition is sought
……
3. if it is irreconcilable with a judgment given in a dispute between the same parties in the Member State in which recognition is sought."
There are two limbs to the submissions made on behalf of the defendant by Mr Happé. The first is that enforcement of a purely declaratory arbitration award is not possible. Mr Happé recognised that the recent decision of Field J in West Tanker Inc v Allianz SpA & Another ("The Front Comor") [2011] 2 Lloyds Rep 117, which is under appeal, is inconsistent with this submission, but submits that it is wrong and should not be followed. The second limb, which he described as not free-standing, is that in the light of the decision of the ECJ in Case C-414/92 Solo Kleinmotoren v Boch [1994] ECR I-2237, a judgment entered under section 66 in the terms of an arbitration award does not constitute a judgment within the meaning of the term in Article 34(3) of the Brussels Regulation. This, he argued, is because it does not involve any consideration by the Court of the issues between the parties but is simply a mechanism for summary enforcement. Accordingly, he submitted that entering judgment in terms of the award pursuant to section 66 would not give the claimant what it wants and there is therefore no purpose in doing so.
The first limb relies on the distinction between enforcement and recognition which is drawn in the 1996 Act, for instance in section 101, in the context of New York Convention awards. Invoking the support of Redfern & Hunter on International Arbitration, (2009) §§ 11–20–11–24, Mr Happé submitted that enforcement consists not merely of recognising the legal force and effect of an award, but ensuring that it is carried out by using legal sanctions, whereas recognition is purely a defensive process. He contended that the claimant wishes to use a judgment entered in the terms of the award to defend any future proceedings to enforce a Romanian judgment, and that use is purely recognition and not enforcement.
Mr Happé relied on Margulies Brothers Ltd v Dafnis Thomaides & Co (UK) Limited [1958] 1 Lloyd's Rep. 205, and 207 per Lord Evershed MR, and Tongyuan (USA) International Trading Group v Uni-Clan Ltd. 19 January 2001. He submitted that the Margulies Brothers case both binds this court and reflects sound principle because (see Dalmia Cement Ltd v National Bank of Pakistan [1974] 2 Lloyd's Rep. 98, at 107–109) leave can only be given to enforce an award "in the same manner as a judgment" to the same effect, and a declaration is not a coercive order and cannot be enforced by any normal means of execution: see St George's Healthcare NHS Trust v S [1999] Fam 26 at 60C-D and Zamir & Woolf, The Declaratory Judgment (3 rd ed) §1–02. He also relied on Haji-Ioannou v Frangos [2009] EWHC 2310 (QB) at [84].
What of "The Front Comor"? In that case Field J stated (at [28]) that the purpose of section 66(1) and (2):
"is to provide a means by which the victorious party in an arbitration can obtain the material benefit of the award in his favour other than by suing on it" and that where there is an appreciable risk of the losing party obtaining an inconsistent judgment in a member state which it might try to enforce within this jurisdiction, and "the victorious party's objective…is to establish the primacy of a declaratory order over an inconsistent judgment, the court will have...
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