Dallah Real Estate and Tourism Holding Company v The Ministry of Religious Affairs, Government of Pakistan
| Jurisdiction | England & Wales |
| Judge | Lord Justice Moore-Bick,Lord Justice Rix,Lord Justice Ward |
| Judgment Date | 20 July 2009 |
| Neutral Citation | [2009] EWCA Civ 755 |
| Docket Number | Case No: 2008/2613 |
| Court | Court of Appeal (Civil Division) |
| Date | 20 July 2009 |
[2009] EWCA Civ 755
IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION (COMMERCIAL COURT)
The Honourable Mr. Justice Aikens
Royal Courts of Justice
Strand, London, WC2A 2LL
Lord Justice Ward
Lord Justice Rix and
Lord Justice Moore-Bick
Case No: 2008/2613
Miss Hilary Heilbron Q.C. and Mr. Klaus Reichert (instructed by Kearns & Co) for the appellant
Mr. Toby Landau Q.C. and Mr. Patrick Angénieux (solicitor) (instructed by Watson Farley & Williams) for the respondent
Hearing dates : 5 th-7 th May 2009
Lord Justice Moore-Bick :
This is an appeal against an order of Aikens J. setting aside an order made without notice by Christopher Clarke J. giving leave to the appellant, Dallah Real Estate and Tourism Holding Company (“Dallah”), to enforce an arbitration award made under the auspices of the International Chamber of Commerce in Paris against the Ministry of Religious Affairs of the Government of Pakistan. It raises an important question relating to the recognition and enforcement of international arbitration awards under sections 100–103 of the Arbitration Act 1996 which give effect to the Convention on the Recognition and Enforcement of Foreign Arbitral Awards usually known as the New York Convention (“the Convention”).
Background
The background to these proceedings can be described quite shortly. Dallah is a member of a substantial group of Saudi companies which has interests in many fields, including the provision of accommodation, transport and other services to Muslims who wish to undertake the Hajj. The Ministry of Religious Affairs is part of the Government of Pakistan which has responsibility for, among other things, the welfare and safety of pilgrims from Pakistan who wish to perform the Hajj. In February 1995 Mr. Shezi Nackvi of Samaha Holdings Ltd, another company in the group which includes Dallah, approached the Ministry with a proposal that Dallah should make available to pilgrims from Pakistan a substantial amount of accommodation which it proposed to build on a site it was able to acquire for development situated about a mile from the centre of Mecca. Following negotiations Dallah and the Government of Pakistan signed a Memorandum of Understanding on 24 th July 1995 under which Dallah agreed to acquire the land, build accommodation suitable for pilgrims and lease it to the Government for 99 years. The arrangements for financing the project, the terms of the lease and the details of the accommodation were among the many matters that still had to be settled. On 18 th November 1995 Dallah acquired some 43,000 square metres of land in Mecca with a view to implementing the agreement.
Some time before, in December 1994, the Government of Pakistan had approved in principle a proposal to establish a body to be known as the Awami Hajj Trust for the purpose of accepting deposits from prospective pilgrims and investing them in Shariah-compliant schemes in order to help them meet the costs of the Hajj. It appears that as negotiations with Dallah proceeded the Government decided that the Trust would provide a convenient vehicle for the project. At all events, on 31 st January 1996 the President of Pakistan promulgated Ordinance No. VII of 1996 providing for the establishment of the Trust as a body corporate with legal personality, whose objects included mobilising the savings of members, investing them, using the proceeds to defray the costs of travel and subsistence and generally facilitating their performance of the Hajj.
The Trust came into existence on 14 th February 1996 when the Ordinance was published in the Official Gazette. Its Constitution provided for various officers, including a Secretary of the Board of Trustees who was to be the Secretary of the Ministry of Religious Affairs for the time being. Under the constitution of Pakistan the Ordinance automatically lapsed after a period of four months and therefore the continued existence of the Trust depended on its re-publication at regular intervals. It was re-published for the second time as Ordinance No. LXXXI of 1996 on 12 thAugust 1996, but it was subsequently allowed to lapse (whether intentionally or by oversight is unclear) and as a result the Trust ceased to exist on 12 th December 1996.
Negotiations between Dallah and the Government continued well into 1996 culminating in an agreement dated 10 th September 1996 which was expressed to be made between Dallah and the Trust. The Government was not expressed to be a party to the Agreement, nor did it sign it in any capacity. It is unnecessary for the purposes of this judgment to set out the terms of the Agreement apart from clause 23 which provided as follows :
“Any dispute or difference of any kind whatsoever between the Trust and Dallah arising out of or in connection with this Agreement shall be settled by arbitration held under the Rules of Conciliation and Arbitration of the International Chamber of Commerce, Paris, by three arbitrators appointed under such Rules”.
On 6 th November 1996 there was a change of government in Pakistan and before long the relationship between the Government, the Trust and Dallah had broken down. On 19 th January 1997 in a letter written on the headed paper of the Ministry of Religious Affairs Mr. Lutfullah Mufti, who signed as “Secretary”, accused Dallah of having repudiated the Agreement which he therefore purported to treat as discharged. The next day proceedings were issued by Mr. Lutfullah Mufti in the name of the Trust in the Court of the Senior Civil Judge, Islamabad seeking a declaration that Dallah had repudiated the Agreement and an injunction restraining it from asserting otherwise or claiming any rights against the Trust under it. Over the next two years further proceedings followed, to which it will be necessary to refer in more detail at a later stage, in which the Government attempted to establish that it was under no liability to Dallah either. For present purposes, however, it is necessary to add only that on 19 th May 1998 Dallah purported to commence arbitration against the Ministry of Religious Affairs under the rules of the ICC claiming damages for breach of the Agreement. The ICC appointed a distinguished tribunal consisting of Lord Mustill, Mr. Justice Dr. Nassim Hasan Shah and Dr. Ghaleb Mahmassani.
The Government of Pakistan rejected any suggestion that it was a party to the Agreement and therefore challenged the jurisdiction of the tribunal. The tribunal decided to determine the question of jurisdiction first. The Government provided some written submissions under protest, but otherwise declined to take part in the proceedings. On 26 th June 2001 the tribunal published its First Partial Award in Paris in which it held that the Government was bound by the agreement to arbitrate contained in clause 23 of the Agreement and that it therefore had jurisdiction to determine Dallah's claim. In a Second Partial Award published on 19 th January 2004 the tribunal held that the Government had repudiated the Agreement and directed that damages should be assessed, and issues relating to interest and costs determined, at a later hearing. By a Final Award dated 23 rd June 2006 the tribunal awarded Dallah damages in the sum of US$18,907,603 and costs of US$1,680,437.
The present proceedings
The present proceedings were started by an arbitration claim form seeking leave under section 101(2) of the Arbitration Act 1996 to enforce the tribunal's Final Award in the same manner as a judgment of the High Court. On 9 th October 2006 Christopher Clarke J. made an order without notice giving Dallah permission to enforce the award, which led in turn to an application by the Government to set aside the order on the grounds that the arbitration agreement on which the award was based was not valid within the meaning of section 103(2)(b) of the Act.
Section 103 provides, so far as is material to this appeal, as follows:
103 Refusal of recognition or enforcement
(1) Recognition or enforcement of a New York Convention award shall not be refused except in the following cases.
(2) Recognition or enforcement of the award may be refused if the person against whom it is invoked proves—
…
(b) that the arbitration agreement was not valid under the law to which the parties subjected it or, failing any indication thereon, under the law of the country where the award was made;
Aikens J. held that, since the parties had not agreed the law by which clause 23 of the Agreement should be governed, it was subject to French law as the law of the country where the award was made. He heard expert evidence of French law, on the basis of which he made certain findings which he applied in determining whether the Government was a party to clause 23 of the Agreement. He held that it was not, that there was therefore no valid arbitration agreement between it and Dallah and that the award should therefore not be enforced.
Miss Heilbron Q.C. for Dallah made her submissions under the following four broad headings:
(i) that the judge adopted the wrong approach to deciding whether the Government of Pakistan had proved that the arbitration agreement on which Dallah relied was not valid;
(ii) that although the judge's findings of the relevant principles of French law were open to him on the evidence, he failed to apply them correctly to the material before him;
(iii)...
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