Dowans Holding SA v Tanzania Electric Supply Company Ltd
| Jurisdiction | England & Wales |
| Judge | MR JUSTICE BURTON |
| Judgment Date | 27 July 2011 |
| Neutral Citation | [2011] EWHC 1957 (Comm) |
| Docket Number | Case No: 2010 Folio 1539 |
| Court | Queen's Bench Division (Commercial Court) |
| Date | 27 July 2011 |
[2011] EWHC 1957 (Comm)
Mr Justice Burton
Case No: 2010 Folio 1539
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
COMMERCIAL COURT
Royal Courts of Justice
Strand, London, WC2A 2LL
MR RICKY DIWAN and MR DAVID DAVIES (instructed by Stephenson Harwood) for the Claimant
MR ANTONY WHITE QC (instructed by Reed Smith LLP) for the Defendant
Hearing dates: 11 and 12 July 2011
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.
By an Arbitration Award dated 15 November 2010 ("the ICC Award"), an ICC Tribunal (consisting of Mr Gerald Aksen as Chairman, Mr Swithin Munyantwali and Sir Jonathan Parker) ordered the Defendant (also known as TANESCO, the State-owned National Electricity Generation and Supply Co of Tanzania), to pay to the First and Second Claimants jointly sums totalling more than US$65m plus interest and costs. By order of 11 January 2011, Steel J, on a without notice application under CPR 62.18, granted to the Claimants permission under s101(2) of the Arbitration Act 1996 ("the 1996 Act") to enforce the ICC Award in England and Wales.
There have been four applications before the Court, by the Defendant to set aside the order of Steel J under s103(2)(f) of the 1996 Act, alternatively to adjourn the issue of recognition or enforcement of the Award under s103(5) of the Act, and by the Claimants for orders, in the event that there were otherwise an adjournment, for partial recognition and enforcement of the Award and/or for an order, as a term of any such adjournment, that, within 21 days, the Defendant provide to the Claimants security for the sums due under the Award.
This has been the hearing of those applications, which have been ably argued by Mr Antony White QC on behalf of the Defendant and by Mr Ricky Diwan and Mr David Davies on behalf of the Claimants.
The dispute which was resolved by the Award arose out of the enforcement and enforceability of the Emergency Power Off-Take Agreement ("POA") with the Defendant dated 23 June 2006, assigned to the First Claimant on 14 October 2006 and to the Second Claimant on 20 March 2007. Electricity supply commenced on 26 January 2007, and the POA was continuously performed without complaint as to its performance until 11 August 2008. By letter of 30 June 2008, the Defendant stated to the Second Claimant that the POA was void ab initio, since it was entered into in contravention of express prohibitions contained in the Tanzanian Public Procurement Act 2004 and required the Second Claimant to decommission the plant by 1 August 2008. This purported termination of the contract was treated as repudiatory by the Second Claimant. The ICC Award found that the POA was valid, and that payment was due in debt to the Claimants under the contract in respect of supplies during its term in the sum of US$ 19.9m plus interest, and in respect of damages, after set-off for receipt of advance payments, of US$ 36.7m plus interest.
The ICC Award was filed on 10 January 2011 by the Arbitrators, via the ICC, with the High Court of Tanzania under s17 of the Arbitration Act (Chapter 15), which provides by subsection (1) that "An award on a submission on being filed in the court in accordance with this Act shall, unless the court remits it to the reconsideration of the arbitrators or umpire or sets it aside, be enforceable as if it were a decree of the court". A petition was filed with the Tanzanian court by the Defendant on 9 February 2011, seeking to have the ICC Award set aside or remitted for reconsideration: there were also three third party petitions presented to the Court on 31 January, 9 February and 13 February 2011, all challenging registration of the ICC Award by the Tanzanian court. It is common ground that the application will be determined (either on paper or at an oral hearing if such be set by the Court) finally (subject to any appeal) in September 2011. If there were an appeal, the Defendant's evidence is that it could be expedited and could be resolved within 9 to 12 months. The Claimants' evidence is that an appeal would take between 12 and 18 months.
The applications to which I have referred above were supported by evidence including statements from a distinguished Tanzanian legal expert for each side. In the event, subject to the dispute as to the probable timing of any appeal (which it has not been necessary to resolve), the material to be drawn from both such experts has consisted of the Tanzanian Arbitration Act referred to above, the important recent decision of the High Court of Tanzania (per Msumi J) D B Shapriya & Co Ltd v Bish International BV (No 2) [2003] 2 East Africa Law Rep 404 (HCT) (" Shapriya") and the common ground that the Tanzanian courts will pay close regard to, and find persuasive, the decisions of the United Kingdom and the Indian courts. I have not needed to consider in any detail the respects in which they diverge, largely because of the way in which the parties' submissions before me developed (see in particular paragraph 11(iii)(d), (e) and (f) below. They held diametrically opposed views as to what the prospects of success were for the Defendant's application in Tanzania, which I have had to assess.
As can be seen from my summary of the outstanding applications, the relevant subsections of s103 of the 1996 Act in issue before me, were as follows:
"(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—
…
(f) that the award has not yet become binding on the parties or has been set aside or suspended by a competent authority of the country in which, or under the law of which, it was made.
…
(5) Where an application for the setting aside or suspension of the award has been made to such a competent authority as is mentioned in (2)(f), the court before which the award is sought to be relied upon may, if it considers it proper, adjourn the decision on the recognition or enforcement of the award.
It may also on the application of the party claiming recognition or enforcement of the award order the other party to give suitable security."
The New York Convention (on the Recognition of Enforcement of Foreign Arbitral Awards) 1958 superseded the Geneva Convention (on the Execution of Foreign Arbitral Awards) 1927, which provided in Article 1 that a relevant Convention award would "be recognised as binding and…be enforced in accordance with the rules of the procedure of the territory where the award is relied upon, provided that the…award [had] been made in a [Convention] territory" but:
"To obtain such recognition or enforcement, it shall, further, be necessary:
…
(d) that the award has become final in the country in which it has been made, in the sense that it will not be considered as such if it is open to opposition, appel or pourvoi en cassation (in the countries where such forms of procedure exist) or if it is proved that any proceedings for the purpose of testing the validity of the award are pending."
It was further provided by Article 3 that:
"If the party against whom an award has been made proves that under the law governing the arbitration procedure there is a ground…entitling him to contest the validity of the award in a Court of Law, the court may, if it thinks fit, either refuse recognition or enforcement of the award or adjourn the consideration thereof, giving such party a reasonable time within which to have the award annulled by the competent tribunal."
The New York Convention, upon which the UK 1996 Act is based, contained in almost identical wording the provisions of s103(2)(f) in Article V(1)(e), and s103(5) is in almost identical terms to Article VI. It is common ground that the intention of the New York Convention was to make enforcement of a Convention award more straightforward, and in particular to remove the previous necessity for a double exequatur– i.e. the need, before a Convention award could be enforced in any other jurisdiction, for it to be shown that it has first been rendered enforceable in the jurisdiction whose law governs the arbitration (the "home jurisdiction" – an expression which covers the case both where the law of the seat and the governing law of the arbitration are the same and where (as for example in the Indian Supreme Court decision of Oil & Natural Gas Commission v Western Company of North America AIR 1987 SC 674 (" ONGC"), to which I shall refer below) the arbitration which had its seat in London was governed by Indian law. See for example what both sides agree is the seminal commentary on the New York Convention, albeit written in 1981, The New York Arbitration Convention of 1958 – Towards a Uniform Judicial Interpretation by Albert Jan van den Berg ( VDB) at 266:
"Another improvement of the New York Convention's scheme for enforcement of an award is the elimination of the "double exequatur". Under the Geneva Convention the party seeking enforcement of an award had to prove that the award had become "final" in the country in which it was made. In practice this could be proven only by producing an exequatur (leave for enforcement or the like) issued in the country in which the award was made. As the party had also to acquire a leave for enforcement in the country in which he sought enforcement, this amounted to the system of "double exequatur". The thought prevailed at the New York Conference that the acquisition of a leave for enforcement in the country where the award was made was an unnecessary time-consuming...
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