ETI Euro Telecom International NV v Republic of Bolivia
| Jurisdiction | England & Wales |
| Judge | Tuckey,Lawrence Collins,Stanley Burnton L JJ. |
| Judgment Date | 28 July 2008 |
| Court | Court of Appeal (Civil Division) |
| Date | 28 July 2008 |
Court of Appeal (Civil Division).
Tuckey, Lawrence Collins and Stanley Burnton L JJ.
Gabriel Moss QC and Marcus Haywood (instructed by Orrick, Herrington & Sutcliffe) for the appellant/claimant.
Joe Smouha QC and Paul McGrath (instructed by Stephenson Harwood) for the first respondent/first defendant.
Jeffrey Gruder QC (instructed by Reed Smith) for the second respondent/second defendant.
The following cases were referred to in the judgments:
ABKCO Indus Inc v Apple Films Inc (1976) 39 NY 2d 670.
Bristol Airport plc v PowdrillUNK [1990] BCLC 585.
Casado v Chile (2001) 8 ICSID Rep 373.
Cetelem SA v Roust Holdings LtdUNK [2005] EWCA Civ 618; [2005] 1 CLC 821; [2005] 1 WLR 3555.
Crédit Suisse Fides Trust SA v Cuoghi [1997] CLC 1187; [1998] QB 818.
EC Commission v AMI Semiconductor BelgiumECAS (Case C-294/02) [2005] ECR I 2175.
Ecuador v Occidental Exploration and Production CoUNK [2005] EWCA Civ 1116; [2005] 2 CLC 457; [2006] QB 432.
Elektrim SA v Vivendi Universal SA [2007] 1 CLC 227.
Emmott v Michael Wilson & Partners LtdUNK [2008] EWCA Civ 184.
Germany v United States (Cf LaGrand Case) 2001 ICJ Rep 3.
Grupo Mexicano de Desarrollo SA v Alliance Bond Fund Inc (1999) 527 US 308.
Guinea and Soguipeche v Atlantic Triton Co (1987) 26 ILM 373.
Karaha Bodas Co LLC v Perusahaan Pertambangan Minyak Dan Gas Bumi NegaraECAS (2002) 313 F 3d 70 (2d Cir).
Kensington International Ltd v CongoUNK [2006] EWHC 1712 (Comm); [2007] EWCA Civ 1128; [2007] 2 CLC 791.
Marc Rich & Co AG v Societa Italiana Impianti SpAECAS (Case C-190/89) [1991] ECR I-3855.
MINE v Guinea (1986) 1 ICSID Review–FILJ 383.
Motorola Credit Corp v Uzan (No. 2)UNK [2003] EWCA Civ 752; [2003] 2 CLC 1026; [2004] 1 WLR 113.
Occidental Petroleum Corp v Ecuador (2007).
Refco Inc v Eastern Trading CoUNK [1999] 1 Ll Rep 159.
Siskina, TheELR [1979] AC 210.
Starlight Shipping Co v Tai Ping Insurance Co LtdUNK [2007] EWHC 1893 (Comm); [2007] 2 CLC 440.
Svenska Petroleum Exploration AB v LithuaniaUNK [2006] EWCA Civ 1529; [2006] 2. CLC 797.
Tanzania Electric Supply Co v Independent Power Tanzania Ltd (2005) 8 ICSID Rep 226.
Tokios Tokeles v Ukraine (2007) 11 ICSID Rep 307.
TSB Private Bank International SA v ChabraWLR [1992] 1 WLR 231.
Van Uden Maritime BV v Kommanditgesellschaft in Firma Deco-LineECAS (Case C 391/95) [1998] ECR I-7091.
Vereker v Choi (1985) 4 NSWLR 277.
Freezing injunctions — ICSID arbitration — Bilateral investment treaty — Expropriation — State immunity — Netherlands company obtained 50 per cent ownership of Bolivian telecommunications company and management control on privatisation — Company later re-nationalised — Claimant initiated ICSID arbitration under bilateral Netherlands/Bolivia investment treaty claiming compensation for expropriation — Claimant obtained attachment order in New York in aid of arbitration — Claimant obtained freezing order over London bank deposits in aid of New York proceedings — Freezing order discharged — Court could not make freezing order in aid of New York attachment — New York proceedings not substantive — Court could not make order in aid of ICSID arbitration — Regime under ICSID Convention and Rules would make it inexpedient to grant relief — Bolivia entitled to state immunity — Civil Jurisdiction and Judgments Act 1982, s. 25 — Civil Jurisdiction and Judgments Act 1982 (Interim Relief) Order 1997 — State Immunity Act 1978, s. 13(2).
This was an appeal from a decision of Andrew Smith J [2008] EWHC 1689 (Comm) to set aside freezing orders granted in favour of the appellant (ETI) against the Republic of Bolivia and the respondent (Entel).
In 1995, ETI, a Netherlands company, entered into a series of agreements with the Bolivian Government and Entel, a Bolivian telecommunications company, pursuant to which Entel was privatised. ETI obtained ownership of 50% of Entel's shares, and also was granted management control of Entel.
In June 2006 Bolivia published a national development plan which contemplated the re-nationalisation of various formerly state-owned enterprises that had been privatised in the 1990s. The Bolivian government began to take measures which, according to ETI, adversely affected the value of ETI's investment in Entel, and which were intended to expropriate its interest in Entel without paying fair compensation. In April 2007, the Bolivian government abrogated several earlier decrees relating to Entel's privatisation. ETI submitted a request for arbitration against Bolivia to the International Center for Settlement of Investment Disputes (ICSID) pursuant to the bilateral investment treaty between the Netherlands and Bolivia. ICSID registered ETI's request for arbitration, thereby initiating the ICSID arbitration proceeding. Bolivia formally denounced the ICSID Convention and did not participate in the arbitration. The Bolivian government then nationalised Entel. ETI's case was that nothing would be paid for the expropriated shares.
ETI obtained an ex parte order of attachment in New York in respect of certain bank deposits there in aid of the ICSID arbitration. ETI then obtained from the English court a without notice order against Bolivia and Entel freezing certain bank deposits in London pursuant to s. 25 of the Civil Jurisdiction and Judgments Act 1982 and the Civil Jurisdiction and Judgments Act 1982 (Interim Relief) Order 1997.
Bolivia and Entel applied to set the order aside and the judge did so, holding that the freezing order was not made in relation to the proceedings in New York in the sense required by section 25 of the 1982 Act as extended by the 1997 order; s. 25 of the 1982 Act as implemented by the 1997 order did not extend to making an order in support of ICSID arbitrations; the order should not have been made because it was “inexpedient” under s. 25(2) to grant relief; and Bolivia was entitled to state immunity and there was no independent basis for the order against Entel.
ETI appealed arguing that the New York proceedings could be categorised as “substantive” for the purposes of s. 25, and that there was nothing in the 1997 order which prevented its application to arbitration proceedings, in particular the ICSID arbitration proceedings were proceedings whose subject-matter was not within the scope of the Judgments Regulation (Regulation 44/2001) because of the exclusion of “arbitration” in art. 1 of the Judgments Regulation.
Held, dismissing the appeal:
1. The nature of the New York proceedings was not such as to engage the power of the English court to grant interim relief under s. 25 of the 1982 Act. The foreign proceedings to which s. 25 and the 1997 order were referring were proceedings on the substance of the matter. The English proceedings were not in aid of, or related to, any substantive proceedings in New York, however liberally those expressions were interpreted. The complaint in New York described the proceedings as an “an action for an order of attachment in aid of arbitration” and founded jurisdiction and venue on the fact that property belonging to Entel and/or Bolivia was situate in New York. The New York attachment proceedings constituted interim relief to protect assets pending the outcome of the ICSID arbitration. The New York proceedings were directed solely at assets in New York, and proceedings in England directed at assets in England could not be ancillary to the New York attachment. (Credit Suisse Fides Trust v Cuoghi[1997] CLC 1187; [1998] QB 818, Refco Inc v Eastern Trading CoUNK[1999] 1 Ll Rep 159andMotorola Credit Corp v Uzan (No. 2)UNK[2003] EWCA Civ 752; [2003] 2 CLC 1026applied; Kensington International Ltd v Republic of the CongoUNK[2007] EWCA Civ 1128; [2007] 2 CLC 791considered.)
2. It was plain that arbitral proceedings were not “proceedings” for the purposes of the 1997 order. The better view was that the exclusion of “arbitration” from the scope of the Judgments Regulation was not an exclusion of arbitral proceedings as such at all, but of court proceedings relating to arbitration. But it was not decisive whether arbitral proceedings themselves were “arbitration” for the purposes of art. 1 of the Judgments Regulation and therefore covered by the phrase “whose subject-matter is not within the scope of the [Judgments] Regulation” in art. 2(b) of the 1997 order. Whether or not arbitral proceedings fell within that category, they were not, on a proper construction of s. 25(3) and the 1997 order, “proceedings”. If there were any doubt on that aspect, it would be dispelled by the repeal of the provision for “arbitral proceedings” in s. 25(3)(c), which was decisive. The “proceedings” referred to in s. 25(3)(a) and (b) were not intended to refer and did not refer to arbitration proceedings since they were specifically dealt with in s. 25(3)(c). It could not have been intended in 1982 to include arbitration in s. 25(3)(b) if an entirely separate sub-section (s. 25(3)(c)) was devoted expressly to arbitration. The reason for the repeal of s. 25(3)(c) was that the Arbitration Act 1996 made provision for the grant of interim relief by a court in support of arbitrations by s. 44. The fact that a power to extend s. 44 to ICSID arbitrations existed indicated, if anything, that the power did not exist elsewhere.
3. The effect of the provisions of art. 26 and 47 of the ICSID Convention and r. 39(6) of the ICSID arbitration rules taken together was that the parties had agreed not to seek interim measures in a national court. Although there might be exceptional circumstances which might justify a national court in disregarding the agreement of the parties, that agreement pursuant to the Convention and the rules would of itself normally make an interim order under s. 25 inexpedient, and also make it unnecessary to consider all the other circumstances.
4. Bolivia was entitled to state immunity. Proceedings for a freezing order to...
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