Gold Pool JV Ltd v The Republic of Kazakhstan
| Jurisdiction | England & Wales |
| Judge | Mr Justice Andrew Baker |
| Judgment Date | 15 December 2021 |
| Neutral Citation | [2021] EWHC 3422 (Comm) |
| Court | Queen's Bench Division (Commercial Court) |
| Docket Number | Case No: CL-2020-000545 |
[2021] EWHC 3422 (Comm)
IN THE HIGH COURT OF JUSTICE
BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES
QUEEN'S BENCH DIVISION
COMMERCIAL COURT
Royal Courts of Justice, Rolls Building
Fetter Lane, London, EC4A 1NL
Mr Justice Andrew Baker
Case No: CL-2020-000545
Graham Dunning QC, Professor Malcolm Shaw QC and Edward Ho (instructed by Jones Day) for the Claimant
Ali Malek QC and Cameron Miles (instructed by Curtis, Mallet-Prevost, Colt & Mosle LLP) for the Defendant
Hearing dates: 13, 14 December 2021
Approved Judgment
Wednesday, 15 December 2021
( 12:14 pm)
Judgment by Mr Justice Andrew Baker
Introduction
This claim concerns an Agreement for the Promotion and Reciprocal Protection of Investments concluded between Canada and the USSR in Moscow on 20 November 1989 that entered into force on 27 June 1991 (“the FIPA”).
The defendant (“Kazakhstan”) came into being as part of the dissolution of the USSR as the successor state to the USSR in respect of the territory of the Soviet Socialist Republic of Kazakhstan, one of the USSR's member republics. It is common ground that Russia declared itself to be, and was accepted by the international community as, the continuation of the USSR for public international law purposes. So Kazakhstan was, and is, a successor to, but not the continuation of, the USSR.
The claimant (“Gold Pool”) claims that in or about August 1997, it was deprived of a valuable investment in Kazakhstan causing it loss it has claimed can be quantified at over US$900 million. Gold Pool says that the circumstances of the case entitle it to compensation from Kazakhstan if the FIPA was binding between Canada and Kazakhstan at the material time. It is common ground that:
(1) Canada and Kazakhstan concluded no succession treaty in respect of the FIPA providing in terms for that result.
(2) As a successor state, Kazakhstan could have succeeded to the FIPA impliedly through words or conduct (often referred to in this field, not entirely helpfully, as a ‘tacit’ agreement). As Kazakhstan put it in the skeleton argument from Mr Malek QC, “A tacit agreement will exist where the successor state … has indicated by words or conduct that it considers itself to have succeeded to a treaty of the predecessor state … and the other state party to that treaty … indicates by words or conduct that succession is accepted such that the Treaty is in force between them”.
(3) There is no requirement as to form in respect of an implied succession agreement, but the parties must be ad idem.
The FIPA contained an arbitration agreement providing investors of either contracting state with a right to refer to arbitration, in accordance with the Arbitration Rules of the United Nations Commission on International Trade Law, any dispute with the other contracting state relating to the effects of a measure taken by that state on the management, use, enjoyment or disposal of qualifying investments. Gold Pool commenced arbitration against Kazakhstan in respect of its asserted investor protection claim in March 2016, purportedly pursuant to that arbitration agreement, upon the basis, as it alleged, that there had been an implied succession agreement between Canada and Kazakhstan in respect of the FIPA. By an award dated 30 July 2020, the arbitrators found that they lacked jurisdiction ratione voluntatis in respect of Gold Pool's claim because, in their view, Gold Pool had failed to establish any such agreement.
That award followed a full hearing of all issues as to jurisdiction and as to merits, without prejudice to the objection to jurisdiction, the arbitrators having refused an application by Kazakhstan to bifurcate the arbitral proceedings to deal with jurisdiction first and separately. By the award, the arbitrators declared that Kazakhstan did not succeed to the FIPA and that the FIPA was not in force between Canada and Kazakhstan at the date of the award, upheld Kazakhstan's objection to jurisdiction ratione voluntatis and declared that they had no jurisdiction to entertain Gold Pool's claim, ordered costs (and interest on costs) against Gold Pool, and formally rejected all other claims.
The s.67 Claim
By this claim, Gold Pool seeks the setting aside or variation of parts of the award under s.67 Arbitration Act 1996. At the start of the first day of the hearing, I directed that it should continue in public, reversing a direction I made on paper for it to be in private under the default rule of CPR 62.10(3)(b). The existence, nature and outcome before the arbitrators of the jurisdictional issue in the case is in the public domain, and the issue is of public interest. Neither party objected to sitting in public, and I concluded that it was in the interests of justice to do so. There will be no need to anonymise any part of this judgment in any report of it.
The nature of a s.67 claim, and the approach to be adopted by the court, requires no substantial elaboration on this occasion. It involves and requires a rehearing de novo by the court in which the arbitrators' conclusions have no legal or evidential weight. I agree with the explanation of the position in GPF GP Sàrl v Republic of Poland [2018] EWHC 409 (Comm), per Bryan J at [64] to [70]. It has been said that nonetheless the arbitrators' conclusions and reasons may be of interest rather more often than it has been explained why that might be so. For example, in Dallah Real Estate v Pakistan [2010] UKSC 46 at [160], Lord Saville (no less) said that “The findings of fact made by the arbitrators and their view of the law can in no sense bind the court, though of course the court may find it useful to see how the arbitrators dealt with the question” without explaining why a court might find it useful to look at conclusions that have neither legal nor evidential weight before it.
In Republic of Korea v Dayyani et al, [2019] EWHC 3580 (Comm) at [26], Butcher J said that “A challenge under section 67 proceeds by way of a de novo rehearing of the jurisdiction issue(s). The award of the arbitrators has no automatic legal or evidential weight. Nevertheless, and given that the arbitral tribunal has considered the same issues, the court will examine the award with care and interest. If and to the extent the reasoning is persuasive, then there is no reason why the court should not be persuaded by it.” That idea needs to be applied with a degree of caution however as the court's task is to decide the case as presented to it by a party on the rehearing, as Bryan J explained in GPF v Poland at [70]. It should generally be for the parties to decide for themselves to what extent they each may wish to adopt any reasoning of the arbitrators as an argument of their own in court. In short, a s.67 claim does not operate by way of a review of the arbitrators' decision.
In the present case, in fact the arbitrators formulated the applicable legal rule accurately in the award and both parties accept as much. The arbitrators stated the rule in these terms: “ … States may agree to continue a pre-existing treaty relationship following the emergence of one of them as a new State and such agreement may be either explicit or tacit and may lack the ordinary formalities associated with the conclusion of a new treaty. … whether this represents the formation of a new legal agreement between the States concerned, or constitutes an agreement confirming succession to an earlier agreement represent[s] fine shades of nuance, but in either view the existence of an agreement is paramount.”
The question is whether, applying that rule to the facts, there was an implied succession agreement here. The case advanced by Gold Pool is a confined one that raises almost no disputed question of fact. Gold Pool claims that Canada and Kazakhstan impliedly agreed that Kazakhstan had succeeded to the FIPA such that it applied between them and bound them:
(1) by paragraph 3 of a Declaration of Economic Co-operation between Canada and Kazakhstan signed between the two countries at Alma-Ata on 10 July 1992 in English, French, Kazakh and Russian (“the 1992 Declaration”); Alternatively
(2) by Note 43/94 dated 13 April 1994 from the Canadian Embassy in Almaty to the Kazakhstan foreign ministry, unsigned but stamped by the Embassy, and the latter's signed reply dated 21 April 1994 although signed the previous day (“the 1994 Exchange”);. Alternatively
(3) by a recital referring to the FIPA in a Trade Agreement between the Government of Canada and the Government of the Republic of Kazakhstan, signed between the two governments at Ottawa on 29 March 1995 in English, French, Kazakh and Russian, all four texts being said to be equally authentic (“the 1995 Recital” and “the Trade Agreement”).
Since the views of the arbitrators in the very case before the court have no legal or evidential weight, all the more so the views of arbitrators in a different case considering the same or a similar question between different parties. Another Canadian company, World Wide Minerals Limited, together with Paul A Carroll QC, brought an investor protection claim against Kazakhstan pursuant to the FIPA alleging, as does Gold Pool, an implied succession agreement by reference to the 1992 Declaration, the 1994 Exchange and the 1995 Recital. The arbitrators in that case decided that they did have jurisdiction on that basis.
An attempt by Kazakhstan to challenge that decision out of time under s.67 failed: State Party A v Party B et al [2019] EWCH 799 (Comm). It seems that the claim subsequently succeeded on the merits, although there was then a successful challenge under s.68 of the 1996 Act to the resulting damages award, with remission to the arbitrators, as it was held by the court that the arbitrators had...
To continue reading
Request your trial