Exmek Pharmaceuticals SAC v Alkem Laboratories Ltd
| Jurisdiction | England & Wales |
| Judge | Mr Justice Burton |
| Judgment Date | 03 November 2015 |
| Neutral Citation | [2015] EWHC 3158 (Comm) |
| Docket Number | Case No: 2014 FOLIO 1038 |
| Court | Queen's Bench Division (Commercial Court) |
| Date | 03 November 2015 |
[2015] EWHC 3158 (Comm)
Mr Justice Burton
Case No: 2014 FOLIO 1038
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
COMMERCIAL COURT
Royal Courts of Justice
Strand, London, WC2A 2LL
Ravi Aswani (instructed by Weil Gotshal & Manges) for the Claimant
Andrew Green QC and Andrew Scott (instructed by Taylor Wessing LLP) for the Defendant
Hearing date: 22 October 2015
This is an application under s.67 of the Arbitration Act 1996 ("the Act") by the Claimant, Exmek Pharmaceuticals SAC, against an award on jurisdiction dated 3 August 2014 by Mr Natarajan as sole Arbitrator, in which he concluded that he had jurisdiction in an arbitration between the Defendant, Alkem Laboratories Limited, as Claimant and the Claimant as Respondent, pursuant to an arbitration provision, whose validity is disputed by the Claimant, contained in a Distribution Agreement dated 6 May 2005. The Claimant, while reserving its position as to jurisdiction, supplied written submissions to the Arbitrator, but did not appear. It is common ground that I must resolve the issue of jurisdiction for myself ab initio, although I am entitled to look at the award: see Dallah Co v Ministry of Religious Affairs of Pakistan [2011] 1 AC 763 at 813 per Lord Mance, where he approved the proposition that " In making its determination, the court may have regard to the reasoning and findings of the alleged arbitral tribunal, if they are helpful, but it is neither bound nor restricted by them".
The history
The Distribution Agreement contained the following clauses relevant to the dispute before me:
" Article 13: PROPER LAW
The proper law of this Agreement is the law of the UK, and the Parties submit to the exclusive jurisdiction of the Courts of the UK and of all Courts having jurisdiction in appeal from the Courts of the UK.
Article 14: ARBITRATION
All disputes and differences whatsoever which will at any time hereafter arise between the parties in relation to this Agreement which the Parties using their best endeavors in good faith cannot resolve shall be referred to arbitration before any legal proceedings are initiated. The arbitration shall be conducted in the UK in accordance with the provisions of the law in the UK in effect at the time of the arbitration and shall be conducted by one or more arbitrators appointed there under."
There were also the following clauses to which the parties make some reference:
"Article 22: VARIATION OF AGREEMENT
A variation of this Agreement is of no force and effect unless it is in writing and signed by the authorized signatory on behalf of each of the Parties.
Article 23: WAIVER
No omission or delay on the part of the Party in requiring due and punctual fulfilment by the other Party of its obligations hereunder shall be deemed to constitute a waiver by the omitting or delaying Party of any of its rights to require such due and punctual fulfilment and, in any event, shall not constitute or be construed as a continuing waiver or as waiver of other or subsequent breaches of the same or other (similar or otherwise) obligations hereunder, or as a waiver of any remedy it might have.
Article 24: SEVERANCE
24.1 In the event that any term or provision of this Agreement can sustain two or more interpretations, one of which results in the term or provision being valid, legal or enforceable, that term or provision will be given that interpretation rather than an interpretation which would or be likely to result in the term or provision being invalid, illegal or unenforceable."
By notice dated 18 March 2008 the Claimant terminated the Distribution Agreement on grounds alleging breach by the Defendant, and " formally request[ed]" that the dispute " be referred to arbitration in the United Kingdom, to be decided by an arbitration tribunal composed by three arbitrators, in keeping with the provisions set forth in clause 14 of the agreement signed between the parties". By letter dated 27 March 2008 the Defendant acknowledged the termination and " with reference to [the Claimant] invoking the provisions of clause 14 of the said Distribution Agreement … hereby signifies its willingness to submit its dispute with [the Claimant] to arbitration, to be conducted in the … United Kingdom".
After a chaser by the Defendant dated 11 April 2008, the Claimant wrote on 15 April 2008 concluding that " both parties will be formally notified within a reasonable length of time to proceed to the designation of the arbitrators who will resolve our dispute, according to the rules and regulations of the United Kingdom".
According to the witness statement of Mr Zubiria Remy of the Claimant, he travelled to London in April/May 2008 and spoke to a Mr Clanchy, a member of the Secretariat of the London Court of International Arbitration ("LCIA"), who indicated, as seems clear, that Articles 13 and 14 would not comply with the requirements of the LCIA; and by letter dated 12 May 2008 the Claimant requested the Defendant to " sign an addendum to the Distribution Agreement … which will enable us to refine the contract terms of clauses 13 and 14". Article 13 was proposed to be amended simply to provide that the agreement would be construed and enforced in accordance with the laws of the United Kingdom and Northern Ireland and Article 14 was to be amended so that the dispute would be " decided by arbitration in accordance with the rules of LCIA … considered to be incorporated into this clause". It was also to provide that the " arbitral tribunal shall consist of … 3 arbitrators … appointed according to the rules of LCIA" and that the place of arbitration would be London, and the arbitration award be final and unappealable.
By letter dated 30 May 2008 the Defendant's general legal counsel said that he would be responding to the 12 May letter once they had had the opportunity to take a comprehensive view of the situation but said that " it prima facie appears that an arbitration proceeding, in the UK, is inevitable … accordingly I am arranging to take the next steps in the matter. This may take some time, since we are in the process of appointing a law firm in London to represent [the Defendant's] interest in arbitration". Mr Zubiria sent an email on 24 June 2008 pressing for a " reply regarding the clarifications needed in the arbitration clause of our contract" and requested them to " expedite the pendings at your end to start as soon as possible the Arbitration process in the UK (London)". After email exchanges between the parties in July and August 2008 Mr Zubiria sent a letter dated 21 August 2008 to " reiterate our request of May 12 2008 for you to agree to sign an addendum to the Distribution Agreement … in order to modify and refine contract terms of clauses 13 and 14 about the applicable law and arbitration process".
A further letter was sent dated 10 November 2008 by Mr Zubiria in similar terms, and after receipt of a fax dated 19 November 2008 from the Defendant, which is not in my papers, he wrote again dated 21 November 2008 reiterating his request, again in similar terms. In response to a fax from the Defendant dated 18 February 2009, which again I have not seen, the Claimant stated in a fax dated 3 March 2009 that " if it is not possible to reach an agreement satisfactory to both parties, the dispute will have to be referred to arbitration as stated in the Distribution Agreement". It seems there were some further discussions in December 2009, and there are emails from the Claimant in December 2009 and August 2010, to which it seems there was no response.
On 7 January 2011 the Claimant presented to the Peruvian Courts its claim against the Defendant dated 17 November 2010, claiming substantial damages for breach of the Distribution Agreement; and an order was issued by the Peruvian Court dated 24 January 2011, which the parties agree should be treated as the date of issue. There was then service on the Defendant in India authorised by the Peruvian Court, which it is common ground was deemed effective on 2 May 2011. This gave an opportunity for the Defendant to challenge the jurisdiction with an absolute deadline, i.e. one which in Peruvian law cannot be extended, of 2 June 2011. I have read and accept the evidence of the Peruvian lawyer instructed by the Defendant at the time, Sr Jorge Vega Soyer, in a letter dated 7 October 2015, as to what he advised the Defendant: Mr Andrew Green QC for the Defendant told me on instructions, and Mr Ravi Aswani for the Claimant did not challenge, that the Defendant instructed such lawyer on 20 May, arranging for translations of documents to be carried out, and received the advice from him on 25 May. Sr Soyer advised the Defendant (wrongly, as both sides accept) that there was a 10 day deadline from the Defendant being notified of the claim for it to make a " plea in bar" on jurisdictional grounds, and that this deadline had expired, and he advised, rightly if it had expired, that " if a relevant plea in bar on the basis of an arbitration agreement is not raised within the 10 day deadline then the Peruvian Courts consider the party to have "tacitly waived" the arbitration agreement at least as a basis for challenging jurisdiction of the Peruvian Courts in respect of the matters raised in the claim: this is an "automatic" consequence, in the sense that the Peruvian Courts do not consider why the deadline was missed, and no applications to challenge jurisdiction can be raised once this deadline has passed" (a proposition with which the Claimant agrees); so that on the (mistaken) basis that the 10...
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