ETI Euro Telecom International NV v Republic of Bolivia and Another
| Jurisdiction | England & Wales |
| Judgment Date | 11 July 2008 |
| Neutral Citation | [2008] EWHC 1689 (Comm) |
| Court | Queen's Bench Division (Commercial Court) |
| Date | 11 July 2008 |
| Docket Number | No.468 and 469 of 2008 |
[2008] EWHC 1689 (Comm)
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
COMMERCIAL COURT
Royal Courts of Justice
Mr.Justice Andrew Smith
No.468 and 469 of 2008
Mr. G. Moss QC and Mr. Haywood (instructed by Orrick, Herrington & Sutcliffe) appeared on behalf of the Claimant.
Mr. P. McGrath (instructed by Stephenson Harwood) appeared on behalf of the First Defendant.
Lord D. Brennan QC (instructed by Reed Smith) appeared on behalf of the Second Defendant.
(As approved by the Judge)
MR. JUSTICE ANDREW SMITH:
On 9 May 2008 the claimants (whom I shall call �E.T.I.�) applied to me without notice for an order against the Republic of Bolivia and against the 2 nd defendant (whom I call �Entel�) to prevent some deposits at Deutsche Bank, London being removed from England and Wales or being dealt with or diminished in value. I made the order and on 16 May 2008 Mr. Justice Flaux extended it. On 12 June 2008 Entel applied to have the order discharged. On 30 June 2008 the Republic of Bolivia made a similar application. The order was challenged on various bases, including that the court has no jurisdiction to make the order; that there was material non-disclosure, and that there was not sufficient evidence of a risk of dissipation. Those applications are listed for hearing over two days on 29 and 30 July.
On 1 July 2008 Stephenson Harwood, solicitors for the Republic of Bolivia, wrote a letter to the court and Reed Smith, solicitors for Entel (or who claim to be instructed for Entel) countersigned it to record their agreement with its contents. In the letter Stephenson Harwood wrote:
�� We have set out what we consider to be various jurisdictional barriers to the injunctive relief obtained on 9 May 2008. We consider those points to be both clear and unanswerable. We have given the claimant an opportunity to consider these points so that, consistent with their continuing duty for full and frank disclosure, they could themselves apply to the court for the immediate discharge of the relief wrongly obtained. Unfortunately they have not provided their substantive response to the points we have raised. Given the force of the points and the fact that we are dealing with one of the court's most draconian forms of relief, we respectfully submit that this matter cannot and should not be expected to await a two day hearing now listed for the end of July. If, as we say, the points fatally undermine the entitlement to the relief granted then the injunctive relief should be immediately discharged�.
Orrick, Herrington & Sutcliffe, E.T.I.'s solicitors, required until 7 July 2008 to respond to the points raised by the defendants. The matter was listed for directions on 9 July and I offered the defendants today's hearing, on 10 July 2008, to present an argument that the order should be discharged on the basis of limited grounds without waiting for the more extended hearing on 29 and 30 July. The defendants wishes to make such an application, confining their arguments on 10 July 2008 to questions of, or closely related to, their points about jurisdiction.
In view of the nature of the challenge to the order advanced before me, there is no need for a detailed explanation of the facts but I shall set out something of the background. I do so on the basis of E.T.I.'s assertion of the position. It might be that the defendants take issue with some of these matters but, to my mind, E.T.I.'s evidence sufficiently establishes them for present purposes.
In 1995 E.T.I. entered into agreement with the Republic of Bolivia and Entel, the Bolivian communications company, whereby Entel was privatised and E.T.I. became owners of half the shares in Entel and, it says, took managerial control. E.T.I. paid something over US$600m and thereafter made substantial investments in Entel and, in 2005, there was a capital distribution.
In 2007 ABN Amro Bank NV was engaged to place a value on E.T.I.'s stake in Entel and considered that it was worth between US$294m and US$325m. E.T.I. says that its value increased thereafter. In January 2006 President Evo Morales took office in Bolivia, advocating significant State intervention in the economy. It is E.T.I.'s contention that the Government began to take measures that adversely affected the value of its investment in Entel, and were designed to expropriate its interest without paying fair compensation.
On 12 October 2007 E.T.I. submitted a request for arbitration to ICSID, the International Centre for the Settlement of Investment Disputes, part of the World Bank based in Washington D.C. established to hear disputes between investors and States under bi-lateral treaties. It sought to recover damages against Bolivia to compensate it for injuries from the Government's actions. The request was based on its rights under a bi-lateral investment treaty between the Kingdom of the Netherlands and the Republic of Bolivia signed on 10 March 1992. E.T.I. is a Netherlands company.
The treaty is concerned with the legal relationship between Bolivia and Dutch nationals who made investments in Bolivia, and provides for various protections for Dutch nationals who do so. It includes a dispute resolution machinery for arbitration of disputes between either the Dutch or the Bolivian Government and an investor from the other State. The treaty provides that if both States have acceded to the Convention on the Settlement of Investment Disputes between States and nationals of other States of 18 March 1965 (and the Netherlands and Bolivia have) then any disputes that may arise between one of the contracting States and a national of another shall be submitted for conciliation or arbitration to ICSID in accordance with the Convention.
On 2 May 2007 Bolivia formally denounced the ICSID Convention, but it is E.T.I.'s contention that that denunciation did not take effect before 2 November 2007. On 29 October 2007 Bolivia submitted a letter to ICSID objecting to its jurisdiction over the reference submitted by E.T.I. Nevertheless, on 31 October 2007 ICSID registered E.T.I.'s request for arbitration. Bolivia has not participated in the ICSID reference. The tribunal is not yet constituted. E.T.I. says that this is the result of Bolivia not complying with the ICSID rules. In view of the state of the evidence before me, I proceed on the basis that Bolivia has indeed not complied with the ICSID rules for constituting a tribunal, although it is right to point out that the ICSID Convention also contains provisions (in particular Articles 37�40) for machinery for the constitution of a tribunal notwithstanding one party to the dispute is not co�operating, and had that machinery been used by E.T.I. a tribunal could by now have been constituted.
On 1 May 2008, at a May Day rally, President Morales announced that Bolivia was nationalising E.T.I.'s interest in Entel and pronounced a Supreme Decree to that effect. On the same day police took control of Entel's main offices in Bolivia.
Entel, according to E.T.I., maintains cash reserves in London, including some renewable time deposits at Deutsche Bank. There is a dispute, which I cannot resolve in this judgment, as to whether they are or have been used for day-to-day operating expenses.
On 5 May 2008 E.T.I. obtained ex parte an order of attachment in the courts of the South District of New York. It provided for the Marshal to levy upon, amongst other property, deposits held by Entel in J.P. Morgan Chase Bank NA. E.T.I.'s complaint is headed: �Complaint for order of attachment in aid of international arbitration�. The complaint itself makes it clear that the order is sought �in aid of� the ICSID arbitration. Proceedings are continuing in the New York court. E.T.I. seeks to have the order confirmed and the Republic and Entel (or those purporting to act for Entel) oppose that motion.
On 9 May 2008 E.T.I. sought its order from me, relying upon s.44 of the Arbitration Act 1996, and s.25 of the Civil Jurisdiction and Judgments Act 1982, the latter contention being on the basis that there are �proceedings� before the New York court. It is said that I should discharge the order because the court had no jurisdiction to make it or that the court's jurisdiction provides no proper basis for making it. These arguments were advanced by Mr. Paul McGrath, representing the Republic of Bolivia:
(1) That the court had no jurisdiction under either s.44 of the Arbitration Act 1996 or s.25 of the Civil Jurisdiction and Judgments Act 1982 to grant an interim injunction in support of the New York attachment proceedings and/or an ICSID arbitration by the claimant (�E.T.I.�) against Bolivia.
(2) If s.25 of the CJJA applies it is not expedient to grant an interim relief in aid of the ICSID arbitration; see Articles 26 and 47 of the ICSID Convention and Rule 39.6 of the ICSID arbitration rules.
(3) The court had no jurisdiction because of s.30(2)(a) of the State Immunity Act 1978 to grant an interim injunction against Bolivia.
These arguments were supported by Lord Brennan QC. He was instructed by Messrs. Reed Smith to represent Entel. I should record that E.T.I. dispute whether Reed Smith are properly authorised to act and give instructions on behalf of Entel, but I cannot, and need not, go into that question.
In response to Bolivia's arguments, E.T.I. no longer maintains that the court has jurisdiction under the 1996 Act to make the order. The 1996 Act has only limited application to ICSID arbitrations. ICSID arbitrations are subject to the Arbitration (International...
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