Cameroon Airlines v Transnet Ltd
| Jurisdiction | England & Wales |
| Judgment Date | 29 July 2004 |
| Neutral Citation | [2004] EWHC 1829 (Comm) |
| Docket Number | Case No: 2004 FOLIO 387 |
| Court | Queen's Bench Division (Commercial Court) |
| Date | 29 July 2004 |
[2004] EWHC 1829 (Comm)
the Honourable Mr Justice Langley
Case No: 2004 FOLIO 387
IN THE HIGH COURT OF JUSTICE
QUEENS BENCH DIVISION
COMMERCIAL COURT
Mr M. Bowdery QC and Ms F. Parkin (instructed by Speechly Bircham) for the Claimant
Sir Sydney Kentridge QC, Mr M. Tselentis QC and Mr C. Kimmins (instructed by Linklaters) for the Defendant
Hearing dates: 29th and 30th June and 1 st July 2004
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.
………………………..
The Hon. Mr Justice Langley
The Hon. Mr Justice Langley:
The Application
Cameroon Airlines ("Camair") seeks to challenge the Final Award dated 18 September 2003 of an Arbitral Tribunal in a claim brought by Camair against Transnet Limited ("Transnet").
The application is made pursuant to Section 68 of the Arbitration Act, 1996, on the grounds of "serious irregularity". Camair seeks an order setting aside the Award and remitting the case to the Tribunal for further consideration.
It is not open to Camair to appeal to the court under Section 69 of the 1996 Act on a question of law arising out of the Award because, by agreeing to the ICC Rules, the parties agreed to exclude such an appeal.
It is for that reason that the application is limited to Section 68 and Camair must take on the very considerable challenge of satisfying the provisions of that Section. It is also for that reason that, in summary terms, Camair seeks to make out the plainly serious case that the Tribunal failed to conduct the arbitral proceedings fairly and in particular acted contrary to what is said to have been a "consensus" as to the correct approach to issues of "valuation" without affording the parties an opportunity to address their approach.
It is right to note at the outset that the Tribunal was divided and "the motivated" (or reasoned) partial dissent of the Arbitrator nominated by Camair lends some support to Camair's case. It is also, albeit unfortunately, my judgment that the issues which are raised are not easily disposed of and require, in accordance with the parties' submissions, detailed analysis of the progress and conduct of the arbitration in order to reach a conclusion upon them.
Whilst Camair's application seeks to raise substantive complaints about the Award on costs and interest, Mr Bowdery QC, for Camair, sensibly and rightly acknowledged that those matters could not be brought within Section 68 as separate points but would only be material should the matter be remitted and the Tribunal come to a conclusion which required them to be revisited also.
The Claims in the Arbitration.
The arbitration arose out of and under two contracts ("the maintenance contracts") made in 1994 between Camair and Transnet "trading as South African Airways" ("SAA"). Under the maintenance contracts, SAA was to maintain Camair's single Boeing 747 and its three Boeing 737's until January 2000 (in the case of the 747) and August 1997 (in the case of the 737s). Payment for the maintenance services was to be made substantially on a "power by the hour" basis, a recognised form of agreement requiring payment of a specified sum for every hour an aircraft is flown on the basis that when service and inspection is required it will be carried out at no additional charge. Work not included in the power by the hour charge was to be charged at $40 an hour.
The maintenance contracts were subject to the Arbitration Court of the International Chamber of Commerce (ICC) "and the common law". It was common ground that the proper law of the contracts was South African law.
It was Camair's case in the arbitration that the maintenance contracts had been tainted by bribery and corruption. Camair alleged that Transnet had engaged a company providing agency services for aircraft contracts, Advanced Technics Trust Limited ("ATT"), to bribe various representatives of the Cameroon Government and Camair to secure the award of the maintenance contracts to SAA. The Tribunal accepted that the sums paid by Transnet to ATT as "commission" were to be recouped by SAA in the power by the hour charges under the maintenance contracts.
The claim by Camair followed the Government of Cameroon learning of proceedings between ATT and Transnet in the South African courts in which ATT sought to recover commission it said it was owed by Transnet in relation to the negotiation of the final price at which SAA was to sell its services to Camair.
In those proceedings Transnet denied that ATT was entitled to the sums claimed on the ground that the contract between ATT and Transnet was itself void as its purpose was to channel corrupt payments to Cameroon government officials and senior employees of Camair.
In July 2000 Camair made a demand on Transnet for repayment of all monies paid under the maintenance contracts. The demand was rejected. Camair's request for arbitration was lodged with the ICC on 30 November 2000. Camair claimed rescission of both contracts and sought restitution of sums it had paid under them. The claim was pleaded on 24 May 2001 as follows:
"11. It is common cause that the total amount paid by Claimant to Defendant pursuant to the aforementioned maintenance contracts … was the sum of US$55,553,886.03.
12. Of the sum of US$55,553,886.03 paid by the Claimant to the Defendant the amount paid by Claimant to Defendant as represented the provision for commissions payable to ATT in excess of the Defendant's non-negotiable selling price was the sum of US$9,887,480.38.
13.1. In the circumstances, Claimant is entitled to repayment of the sum of US$55,553,886.03, alternatively Claimant, in the bona fide and reasonable, but mistaken, belief that the amounts were payable to the Defendant, effected payments totalling US$55,553,886.03 to Defendant and Defendant was unjustly enriched at the Claimant's expense in such amount.
13.2. Alternatively to paragraph 13.1, Claimant is entitled to repayment of the sum of US$9,887,430,38, alternatively Claimant, in the bona fide and reasonable, but mistaken belief, that the amounts were payable to the Defendant, effected payments totalling US$9,887,430,38 to Defendant and Defendant was unjustly enriched at the Claimant's expense in such amount.
14. The Claimant has demanded payment of the said sums and the Defendant has refused to make payment thereof.
15. The Claimant therefore seeks an award against the Defendant as follows:
15.1 Payment of the sum of US$55,553,886.03, alternatively US$9,887,480.38;
15.2. Interest thereon a tempore morae."
In the defence dated 20 June 2001 Transnet denied that the maintenance contracts were tainted and that Camair was entitled to repayment of any sum, alleging Camair had received fair value for the services provided under the contracts. Transnet also served a conditional counterclaim in which it claimed that even if the contracts were tainted it was entitled to retain all the sums paid to it.
The relevant pleas were as follows:
"12. AD PARAGRAPH 11 THEREOF
The allegations herein contained are admitted.
13. AD PARAGRAPH 12 THEREOF
The Defendant denies each and every allegation herein contained as if specifically traversed and puts the Claimant to the proof thereof.
14. AD PARAGRAPH 13 THEREOF
14.1. each and every allegation herein contained is denied as if specifically traversed and the Claimant is put to the proof thereof.
14.2. Without derogating from the generality of the denial, Defendant pleads that:
14.2.1. it performed all its obligations under the maintenance contracts and gave good and proper value by way of its services thereunder to the Claimant;
14.2.2. it has not been unjustly enriched nor has the Claimant been prejudiced;
14.2.3. the Claimant has received the services it required and for which it had contracted at a fair cost.
14.3. The Defendant:
14.3.1. avers that if Claimant were to succeed in these proceedings, it would receive the full value in respect of the services rendered by the Defendant without counter-prestation and such benefit would, in all the circumstances, be inequitable and not in accordance with the law;
14.3.2 refers to the conditional counterclaim set out hereinbelow.
DEFENDANTS CONDITIONAL COUNTERCLAIM
1. In the event of it being found that the maintenance contracts entered into by the Claimant and the Defendant were tainted by bribery and/or corruption and that, as a result thereof, the Claimant is entitled to the relief sought herein, then and in that event the Defendant proceeds with the Conditional Counterclaim herein set out.
….
3. The Defendant avers that:
3.1. it performed all its obligations under the maintenance contracts and gave good and proper value by way of its services under the said maintenance contracts, in accordance with the provisions of the Claimant's approved maintenance schedule … and further, in accordance with such instructions, as were given to the Defendant, by the Claimant, from time to time, for the rendering of technical services, in the form of, inter alia, special inspections and/or replacement of parts ….
3.2. at the time it entered into the maintenance contracts, it was not aware of the possible illegality of the maintenance contracts and/or the possible illegality of the performance thereunder.
3.3. as the Defendant has performed under the maintenance contracts and has, in terms of the maintenance contracts, received payment in respect of the maintenance services rendered and the parts replaced on the aircrafts, an award to the effect that the Defendant should repay to the...
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