Enercon Gmbh and Another v Enercon (India) Ltd

JurisdictionEngland & Wales
JudgeMr Justice Eder
Judgment Date23 March 2012
Neutral Citation[2012] EWHC 689 (Comm)
Docket NumberCase No: 2011 FOLIO 1399
CourtQueen's Bench Division (Commercial Court)
Date23 March 2012
Between:
(1) Enercon Gmbh
(2) Wobben Properties Gmbh
Claimant
and
Enercon (India) Limited
Defendant
Before:

Mr Justice Eder

IN THE HIGH COURT OF JUSTICE

QUEEN'S BENCH DIVISION

COMMERCIAL COURT

Royal Courts of Justice

Strand, London, WC2A 2LL

David Joseph QC and Joe Delaney (instructed by Cripps Harries Hall) for the Claimants

Philip Edey QC and Malcolm Jarvis (instructed by Enyo Law) for the Defendant

Hearing dates: 12 and 13 March 2012

Mr Justice Eder

Introduction

1

The background to these proceedings and the present applications is complicated and convoluted but in essence concerns a long running dispute between the parties, who are German and Indian interests, with regard to a wind energy joint venture in India. As referred to below, the parties have been engaged for some years in protracted litigation in India. The current dispute concerns various claims by the claimants under an alleged written agreement between the first claimant ("Enercon") as licensor and the defendant ("EIL") as licensee dated 29 September 2006 entitled Intellectual Property Licence Agreement ("IPLA"). The claimants say that these claims (consisting mainly of sums allegedly due by way of royalties and damages) total a minimum amount of approximately Euros 89 million. On 13 March 2008 ie over 4 years ago, the claimants referred their claims to arbitration by appointing Mr VV Veeder QC as their arbitrator pursuant to clause 18 of the IPLA. For reasons which I will briefly explain, that proposed arbitration has ground to a halt. It is now March 2012. The merits of the underlying disputes have not been resolved. Indeed, although the parties appear to have spent considerable amounts of time and money on procedural matters, the determination of the substantive merits appears somewhere in the far distance. The author of Bleak House would be appalled by this story. And rightly so.

2

At the heart of the current dispute is clause 18 of the IPLA which provides as follows:

"18. DISPUTES AND ARBITRATION

18.1 All disputes, controversies or differences which may arise between the Parties in respect of this Agreement including without limitation to the validity, interpretation, construction, performance and enforcement or alleged breach of this Agreement, the Parties shall, in the first instance, attempt to resolve such dispute, controversy or difference through mutual consultation [sic]. If the dispute, controversy or difference is not resolved through mutual consultation within 30 days after commencement of discussions or such longer period as the Parties may agree in writing, any Party may refer dispute(s), controversy(ies) or difference(s) for resolution to an arbitral tribunal to consist of three (3) arbitrators, of whom one will be appointed by each of the Licensor [Enercon] and the Licensee [EIL] and the arbitrator appointed by Licensor shall also act as the presiding arbitrator.

18.2 The arbitrators shall have powers to award and/or enforce specific performance. The award of the arbitrators shall be final and binding on the Parties. In order to preserve its rights and remedies, either Party may seek preliminary injunctive relief or other temporary relief from any court of competent jurisdiction or from the arbitration tribunal pending the final decision or award of the arbitrator(s). Any such application to a court of competent jurisdiction for the purposes of seeking injunctive relief, shall not be deemed incompatible with this agreement to arbitrate or as a waiver of this Agreement to arbitrate.

18.3 All proceedings in such arbitration shall be conducted in English. The venue of the arbitration proceedings shall be London. The arbitrators may (but shall not be obliged to) award costs and reasonable expenses (including reasonable fees of counsel) to the Party(ies) that substantially prevail on merit. The provisions of the Indian Arbitration and Conciliation Act, 1996 shall apply.

The reference of any matter, dispute or claim or arbitration [sic] pursuant to this Section 18 or the continuance of any arbitration proceedings consequent thereto or both will in no way operate as a waiver of the obligation of the Parties to perform their respective obligations under this Agreement."

3

In essence, EIL's case is that the IPLA was and is not legally binding although EIL now concedes that there is a good arguable case to the contrary ie that the IPLA is legally binding. Notwithstanding such concession, it remains EIL's case that there is equally a good arguable case that the IPLA is not binding and, in any event, that although clause 18.3 stipulates that the "venue of the arbitration proceedings" shall be London, "venue" is not synonymous with "seat" and, on the contrary, the "seat" of any arbitration under clause 18 is not London but India.

4

On 28 March 2008 ie shortly after the appointment of Mr Veeder QC, the claimants issued proceedings in this court (Claim No. 2008 Folio 296) seeking a declaration under s.32 of the Arbitration Act 1996 (the "English 1996 Act") that EIL was bound to refer IPLA disputes to arbitration; a declaration that the seat of the arbitration was England; and an anti-suit injunction restraining certain proceedings on behalf of EIL in the Bombay High Court ("BHC") as described further below. After the application for an anti-suit was issued but before it was heard, EIL filed its own claim in the Daman court in India seeking a declaration that the IPLA is not a concluded contract, that EIL is therefore not bound by its arbitration agreement and an anti-suit / anti-anti-suit injunction (which EIL obtained on an interim basis on 8 April 2008) from the Daman court in India restraining Enercon from pursuing the English proceedings.

5

Although it asserted that the IPLA was not legally binding EIL appointed under protest a retired Indian Judge, Mr Justice Reddy, as its arbitrator. Following certain correspondence, the arbitrators indicated that the arbitration agreement contained in Clause 18 was, in their view, unworkable. On 5 August 2008, the arbitrators informed the parties that they were unable to appoint a third arbitrator and that the parties would "doubtless take such steps as they are advised". As appears below, the arbitration then ran into the sand as a result of the initiation and pursuit by EIL of proceedings in India.

6

Eventually, after a delay of more than 3 years, the claimants issued the current proceedings by way of an Arbitration Claim Form dated 21 November 2011 ("ACF") claiming, in particular, (i) the appointment by the court of a third arbitrator pursuant to s.18(a) of the English 1996 Act; and (ii) injunctions pursuant to s.44 of the English 1996 Act and/or s.37 of the Senior Courts Act 1981 in effect prohibiting EIL from commencing or prosecuting proceedings in India (a) to restrain or otherwise to interfere with the application for the appointment of a third arbitrator and (b) to pursue claims in connection with IPLA. Following an application without notice by the claimants, an order was made by Flaux J dated 25 November 2011 giving the claimants leave to serve the ACF out of the jurisdiction and granting both injunctions on an interim basis until disposal of the present proceedings or further order.

7

On 15 February 2011, the claimants made a further application without notice to this court for a freezing injunction against EIL. That application came before me. I duly granted the freezing injunction and certain ancillary relief with regard to the provision of financial information by EIL as set out in my order of that date.

The applications before the court

8

The present hearing is concerned with four main applications viz.

i) EIL's application to challenge the jurisdiction of this court with respect to the claims in the ACF;

ii) Enercon's application under s.18 of the English 1996 Act for the appointment of an arbitrator;

iii) EIL's application to set aside or to vary the anti-suit injunctions granted by Flaux J on 25 November 2011;

iv) EIL's application to set aside or to vary the freezing injunction granted by me on 15 February 2012 and Enercon's application to continue the same.

Summary of main issues

9

In summary, Mr Joseph QC on behalf of the claimants identified the following main issues which arise on these applications:

Jurisdiction for s.18 application

(1) Do the claimants show a good arguable case as to the existence of an agreement to arbitrate in London and as to the seat of that arbitration being England?

(2) If so, is there any good reason not to uphold the permission to serve out of the jurisdiction granted pursuant to the Order of Flaux J?

S.18 application

(3) When considering the claimants' s18 application is the correct test a "good arguable case" or does any different test apply to the questions identified in (1) above and if so is that test satisfied?

(4) Does clause 18.3 of the IPLA on a true application deprive the English courts of its powers under s.18 the English 1996 Act?

(5) If the claimants satisfy the above is there any good reason not to appoint an arbitrator from the proposed list of three ie (i) Lord Hoffmann (ii) Sir Simon Tuckey (iii) Sir Gordon Langley.

(6) Should this court whether with respect to the disposal of the s.18 claim or the question of gateway jurisdiction grant a stay of all proceedings pending the outcome of such appeals as have been or may be brought by EIL in India to the decision of the Daman District Court?

(7) What is the correct approach of the court to the question of consideration of the designated seat? In particular is EIL correct to suggest that the question of whether or not the claimants can...

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