Eastern European Engineering Ltd v Vijay Construction (Proprietary) Ltd
| Jurisdiction | England & Wales |
| Judge | Mr Justice Butcher |
| Judgment Date | 20 June 2018 |
| Neutral Citation | [2018] EWHC 1539 (Comm) |
| Court | Queen's Bench Division (Commercial Court) |
| Docket Number | Case No: CL-2015-000613 |
| Date | 20 June 2018 |
[2018] EWHC 1539 (Comm)
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
BUSINESS AND PROPERTY COURTS
COMMERCIAL COURT (QBD)
In the matter of an Arbitration Claim
Royal Courts of Justice
Strand, London, WC2A 2LL
Mr Justice Butcher
Case No: CL-2015-000613
Benjamin Pilling QC and Daniel Khoo (instructed by Cooke, Young & Keidan LLP) for the Claimant
David Lewis QC (instructed by Clyde & Co LLP) for the Defendant
Hearing dates: 7 June 2018
This is an application by the Claimant, Eastern European Engineering Ltd (“EEEL”) for a worldwide freezing order against the Defendant, Vijay Construction (Proprietary) Ltd (“Vijay”).
The application was originally made without notice on 1 March 2018, but Bryan J considered that it was not appropriate that the matter should be decided without notice. He accordingly ordered that the application be adjourned. It is that adjourned hearing which was heard, on notice and inter partes, before me.
The parties
EEEL is a company incorporated and registered in Seychelles. Its business, broadly, is developing, owning, buying and selling, leasing and administering all types of immovable property. It is a subsidiary of the Holding Company Guta Group LLC (“Guta Group”), a multi-national conglomerate with headquarters in Russia. Guta Group is the ultimate owner and operator of the Savoy Resort and Spa Hotel on Mahé, Seychelles (“the Savoy Resort”).
Vijay is also incorporated and registered in Seychelles and carries on business as a construction company. Its managing director is Mr Vishram Jadva Patel (“Mr Patel”), who apparently founded the company in or about 1979.
The dispute and the Award
Between April and December 2011, EEEL entered into six contracts with Vijay relating to the construction of the Savoy Resort. Each of the six contracts was governed by Seychelles law, and contained an ICC arbitration clause providing that the seat of any arbitration should be Paris.
Vijay commenced work on the Savoy Resort under the contracts in 2011, but before the work was completed EEEL terminated the contracts because of alleged delays and defects in the works performed by Vijay. The termination of the contracts gave rise to disputes between the parties, in particular as to the lawfulness of the termination. Each party claimed that it was entitled to be compensated by the other.
On 10 September 2012 EEEL commenced an ICC arbitration. Vijay submitted its Answer and Counterclaim on 11 October 2012, contending that it had not breached the construction contracts, that there were no valid grounds for their termination, and counterclaiming for cancellation charges, expenses, labour costs and lost profit.
Andrew de Lotbinière McDougall, a partner of White & Case in Paris, was appointed as sole arbitrator (“the Arbitrator”) on 22 November 2012. The Arbitrator published a partial award on 17 June 2013 dealing with jurisdictional objections, and concluding that he had jurisdiction to determine EEEL's claims.
On 14 November 2014 the Arbitrator published a final award (“the Award”). By the Award the Arbitrator held, in summary, that EEEL had validly terminated each of the construction contracts and ordered Vijay to pay EEEL damages plus interest and costs in an amount in excess of €14 million. The Award ordered EEEL to make certain (smaller) payments to Vijay. EEEL's evidence before me is that, as at 26 February 2018, the net amount owed by Vijay to EEEL was €18,981,516.39 plus US$ 126,000.
No part of the sums awarded by the Award have been paid by Vijay to EEEL.
Proceedings in relation to the Award
There have been a variety of proceedings commenced either to enforce or to challenge the Award in France, Seychelles and England.
France
France was the seat of the arbitration, and its courts had supervisory jurisdiction over the arbitration. On 12 January 2015, on EEEL's application, the Tribunal de Grand Instance de Paris recognised the Award and declared it executory in France. On 20 January 2015 Vijay's lawyers wrote to the ICC stating that the arbitral process was flawed. The ICC responded on 4 February 2015 rejecting Vijay's allegations. On 17 February 2015, Vijay filed appeals before the Cour d'Appel de Paris seeking to have both the Arbitrator's partial award and the Award cancelled and annulled. On 28 June 2016 the Cour d'Appel dismissed the appeals against both awards. Vijay filed a further appeal against the Cour d'Appel decision in the Cour de Cassation on 29 August 2016. On 11 May 2017, the Cour de Cassation issued a “Resolution Regarding Loss of Right”, which recorded that no memorandum had been filed in support of the appeal within the relevant time limit and consequently the appeal stood dismissed.
Seychelles
There have been four separate sets of originating proceedings in Seychelles.
(1) On 27 January 2015 Vijay commenced proceedings against EEEL seeking that the Supreme Court of Seychelles (viz. the court of first instance) should set aside the Award, declare it null and void, and declare that it is incapable of enforcement or execution in any jurisdiction. These proceedings have been termed the “Seychellois set aside proceedings”. The orders were sought on the basis that (1) the Arbitrator had no jurisdiction to hear the matters in dispute; (2) Vijay was not given an opportunity to present its case fully; (3) the Award was contrary to public policy; and (4) the Arbitrator omitted to make an award on one or more points in dispute. On 11 November 2015 Robinson J ordered that these proceedings be stayed until the Seychellois recognition proceedings (see below) were determined.
(2) On 3 March 2015, EEEL issued proceedings against Vijay alleging that Vijay's failure to pay the Award was a breach of contract and seeking an order that Vijay pay the Award. These proceedings have been termed the “Seychellois breach of contract proceedings”.
(3) On 9 June 2015, EEEL filed a plaint seeking recognition and enforcement of the Award in Seychelles. These have been termed the “Seychellois recognition proceedings”.
(4) On 21 September 2016, EEEL filed a plaint seeking recognition and enforcement of an award for costs which the Cour d'Appel of Paris had made in EEEL's favour.
While it will be necessary to return in more detail to consider the various orders which have been made as to provisional and protective measures in the Seychelles proceedings, at present it is sufficient to describe the course of the Seychellois recognition proceedings.
In those proceedings, as I have said, EEEL sought orders that the Award should be recognised in Seychelles, and that it should be declared and made executory and enforceable there. Vijay resisted recognition and enforcement on five grounds, namely: (1) that the Seychelles court had no power to enforce the Award under statute or common law; (2) the Arbitrator did not have jurisdiction to hear the arbitration on the merits of the dispute; (3) the Arbitrator violated due process by accepting a third report by an expert of EEEL; (4) that EEEL had bribed, blackmailed and harassed a potentially material witness, Mr Sergey Egorov; and (5) that the Arbitrator had failed to deal with an issue arising from Vijay's submissions concerning Article 1230 of the Civil Code of Seychelles Act.
On 18 April 2017 Robinson J issued a judgment allowing enforcement of the Award in Seychelles. She rejected each of Vijay's grounds for resisting enforcement and recognition. On 5 May 2017 Vijay appealed against Robinson J's decision to the Seychelles Court of Appeal, which is the court of ultimate appeal in Seychelles. There were seven grounds of appeal. On 13 December 2017 the Court of Appeal handed down judgment (“the Court of Appeal judgment”). It found in Vijay's favour on one ground, and did not address any of Vijay's other grounds of appeal. The ground on which the Court of Appeal found in favour of Vijay was that there was no legal basis for recognising and enforcing an award in Seychelles under the New York Convention. This result stemmed from the constitutional history of Seychelles, and the conclusion that section 4 of the Courts Act did not enable the Seychelles Supreme Court to exercise the same power as possessed by the High Court in England to recognise and enforce an award under the New York Convention.
England
On 14 August 2015 EEEL made a without notice application, pursuant to s. 101 Arbitration Act 1996, for leave to enforce the Award in the same manner as a judgment and for judgment to be entered in terms of the Award.
That order was granted by Cooke J on 18 August 2015. Judgment was thereby entered against Vijay in the same terms as the Award. Cooke J's order provided that Vijay could within 14 days after service of the order apply to set it aside, and that the Award must not be enforced until any such application had been finally disposed of. On 23 October 2015 Vijay applied to set aside Cooke J's order and in the alternative for a stay of execution of the order pending the determination by the Cour d'Appel de Paris of Vijay's then pending appeal against the decision of the Tribunal de Grand Instance de Paris. Vijay subsequently abandoned its application for a stay. On 8 June 2016 Flaux J ordered that Vijay's application to set aside Cooke J's order be adjourned pending the final determination of the French proceedings seeking to have the Award set aside, and also ordered that Vijay provide security for the Award in the amount of €7.5 million. Vijay did not provide the security ordered and EEEL applied for an order that Vijay do so. EEEL then also applied, on 3 April 2017, to have Vijay's 23 October 2015 application to set aside Cooke J's order dismissed and for leave to enforce the Award.
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