Aiteo Eastern E & P Company Ltd v Shell Western Supply and Trading Ltd
| Jurisdiction | England & Wales |
| Judge | Mr Justice Jacobs |
| Judgment Date | 01 August 2024 |
| Neutral Citation | [2024] EWHC 1993 (Comm) |
| Court | King's Bench Division (Commercial Court) |
| Docket Number | Case No: CL-2024-000050 |
[2024] EWHC 1993 (Comm)
Mr Justice Jacobs
Case No: CL-2024-000050
IN THE HIGH COURT OF JUSTICE
KING'S BENCH DIVISION
BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES
COMMERCIAL COURT
Royal Courts of Justice, Rolls Building
Fetter Lane, London, EC4A 1NL
Ricky Diwan KC (instructed by Stewarts Law LLP) for the Claimant
Ben Juratowitch KC and Belinda McRae (instructed by Freshfields Bruckhaus Deringer LLP) for the Defendants
Hearing dates: 15 th – 16 th May 2024
Approved Judgment
This judgment was handed down remotely at 9.00am on Thursday 1 st August 2024 by circulation to the parties or their representatives by e-mail and by release to the National Archives (see eg https://www.bailii.org/ew/cases/EWCA/Civ/2022/1169.html).
Index
| Section | Para. No |
| A: Introduction | 1 |
| B: Factual Background | 11 |
| C: Legal principles in relation to apparent bias | 41 |
| D: Would the fair-minded and informed observer consider that there was a real possibility that DEG was biased? | 67 |
| D1: Disclosure issues | 67 |
| D2: The ICC decision and its relevance | 113 |
| D3: Application of the informed observer test in the present case | 154 |
| D4: The Lenders' argument based on s. 73 of the 1996 Act and related points | 185 |
| E: Substantial injustice | 189 |
| E1: Aiteo's arguments | 189 |
| E2: The Lenders' arguments | 202 |
| E3: Discussion | 216 |
| F: The application for an extension of time | 246 |
| G: The relief to be granted | 282 |
| Conclusion | 291 |
A: Introduction
The Claimant in these proceedings (“Aiteo”) applies, pursuant to s. 68 of the Arbitration Act 1996 (“the 1996 Act”), to set aside 4 partial awards (“the Awards” and each an “Award”) rendered by a three member arbitration tribunal (“the Tribunal”) appointed by the leading arbitral institution, the International Chamber of Commerce (“ICC”). Aiteo also applies to extend the time to make this application, pursuant to s. 80(5) of the 1996 Act.
The 4 Awards arise out of two ICC arbitral references that were consolidated by the Tribunal. They comprise the following, which are described in more detail below: (i) the Offshore Jurisdiction Award dated 15 March 2022; (ii) the Offshore Jurisdiction Award on Costs dated 22 July 2022; (iii) the Consolidation Award dated 22 July 2022; and (iv) the Onshore Jurisdiction Award dated 25 August 2023. In relation to all of those Awards, Aiteo was the unsuccessful party. The Tribunal accepted the arguments of the opposing parties, who comprise a number of lenders (“the Lenders”) who provided loans to Aiteo.
The grounds for the s. 68 challenge are that there was a serious irregularity affecting the Tribunal within the meaning of s. 68(2)(a) of the 1996 Act. That irregularity is that there was apparent (not actual) bias on the part of one of the members of the Tribunal, the Rt. Hon Dame Elizabeth Gloster DBE (“DEG”). An important and unusual feature of the present case is that a successful challenge to DEG was made to the ICC Court, which is the ICC body responsible for dealing with challenges to arbitrators pursuant to Article 14 of the rules which govern ICC arbitrations, namely the ICC Rules of Arbitration (“the ICC Rules”). The applicable ICC Rules in the present case are the 2017 rules. Challenges are often made, but rarely succeed. The ICC Court gave its unreasoned decision, upholding the challenge on its merits. The challenge was made upon substantially the same grounds as those advanced on the present application under s. 68. Aiteo contends that this decision gives rise to a res judicata or issue estoppel whose effect is to preclude the Lenders from contesting Aiteo's case that there was apparent bias on the part of DEG. Alternatively, Aiteo contends that the decision of the ICC Court is a significant factor in support of its case that there was a serious irregularity.
Aiteo also contends that the serious irregularity, on which it relies, has caused it substantial injustice, because it has been deprived of its fundamental right to present its case and have its case determined by a tribunal that has complied with its duty of impartiality under s.33 of the 1996 Act, being a principle of fundamental and mandatory importance as recognised in s.1(a) the 1996 Act.
The allegation of apparent bias is based upon professional connections between DEG and the solicitors firm representing the parties that nominated DEG as arbitrator, Freshfields Bruckhaus Deringer LLP (“Freshfields”), coupled with the fact that timely disclosure of some of these connections was not made. Aiteo contends that in the period 2018–2023, DEG had received a total of 7 arbitral nominations/appointments and expert instructions, in which Freshfields were acting, plus the appointment in the arbitral reference giving rise to the present challenge. Aiteo contends that there were therefore 8 relevant “relational contacts”. This included 2 expert instructions and one arbitral appointment during the currency of the arbitral proceedings. In fact, the Lenders had sought to appoint DEG to both ICC arbitration references between Aiteo and the Lenders (which would have created 9 “relational contacts”), but the ICC Court rejected this and required the Lenders to elect to nominate DEG in one but not both references. Aiteo contends that the full picture with respect to the professional connections between Aiteo and Freshfields emerged only on 9 December 2023, as a result of DEG's responses to some detailed questions asked by Aiteo's solicitors (“Stewarts”). They also contend that it is relevant that the disclosures made during the course of the ICC arbitral references were all made not in advance of accepting the appointment or instruction, so that objection could have been taken or commitments obtained, but after the fact in various instances.
As far as concerns the extension of time sought under s. 80 (5), Aiteo submits that it is just to grant an extension of time so as to enable the present challenge to be brought.
The applications, both under s. 68 and s. 80(5) are resisted by the Lenders. They argue, in summary, that there is no res judicata or issue estoppel which precludes them resisting Aiteo's argument that there was apparent bias on the part of DEG. They submit that, applying the English law test for apparent bias, a reasonable and fair-minded observer would not conclude that there is a real possibility of bias. They also contend that, for various reasons, Aiteo has failed to establish “substantial injustice”, and that this is the case even if there was apparent bias on the part of DEG. They resist the application for an extension of time principally on the ground that the application lacks merit.
Aiteo's Claim Form, seeking relief under ss. 68 and 80, was issued on 30 January 2024. A number of witness statements were made by the partners at Stewarts and Freshfields with responsibility for the case: Mr Daniel Kevyn Wilmot for Aiteo, and Mr Ryland William Thomas KC for the Lenders. However, the parties' arguments at the hearing made little reference to those witness statements, since the underlying facts were not in dispute and the arguments were essentially legal arguments as to the impact of those undisputed facts. Aiteo's case was argued by Mr Diwan KC, and the Lenders' case by Mr Juratowitch KC and Ms McRae. I am grateful to all counsel for their careful and thorough written and oral submissions.
In Section B, I summarise the factual background. In Section C, I set out the key principles concerning apparent bias in relation to arbitrators as derived from the leading decision: Halliburton Co v Chubb Bermuda Insurance Ltd [2020] UKSC 48 (“ Halliburton”). It is common ground that the relevant test is whether the fair-minded and informed observer, having considered the facts, would consider that there was a real possibility that the tribunal was biased.
I then address the principal issues between the parties which are as follows:
(1) Would the fair-minded and informed observer consider that there was a real possibility that DEG was biased? (Section D).
(2) If so, has Aiteo established that the serious irregularity relied upon (i.e. apparent bias on the part of DEG) has caused or will cause substantial injustice to Aiteo, so as to make it appropriate to grant relief under s. 68 (3) of the 1996 Act? (Section E).
(3) Should an extension of time be granted to Aiteo to make the s. 68 application? (Section F)
(4) If Aiteo is successful in relation to the previous issues, what order, if any, should be made under s. 68 (3)? (Section G)
B: Factual background
The Agreements
Aiteo is a company incorporated in the Federal Republic of Nigeria. On 2 September 2014, Aiteo entered into a number of agreements, comprising:
1 an Offshore Facility Agreement with the Shell Western Supply and Trading Ltd (“Shell”), the 1 st Defendant in these proceedings, and restated most recently on 31 December 2016 (“the Offshore Facility Agreement”); and
2 an Onshore Facility Agreement with the 2nd to 9th Defendants (“the Onshore Lenders”) restated most recently on 31 December 2016 (“the Onshore Facility Agreement”).
These facility agreements provided funding of approximately USD 2 billion to Aiteo for the purchase of an interest in certain Nigerian oil fields and related facilities.
The Offshore Facility Agreement was governed by English law and provided for disputes to be elected to be resolved by way of ICC arbitration seated in London. The...
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