Leidos Inc. v The Hellenic Republic

JurisdictionEngland & Wales
JudgeMr Justice Jacobs
Judgment Date17 October 2019
Neutral Citation[2019] EWHC 2738 (Comm)
Docket NumberCase No: CL-2018-000672
CourtQueen's Bench Division (Commercial Court)
Date17 October 2019

[2019] EWHC 2738 (Comm)

IN THE HIGH COURT OF JUSTICE

QUEEN'S BENCH DIVISION

COMMERCIAL COURT

The Rolls Building,

Fetter Lane, London, EC4A 1NL

Before:

Mr Justice Jacobs

Case No: CL-2018-000672

Between:
Leidos Inc
Claimant
and
The Hellenic Republic
Defendant

Ben Williams (Solicitor Advocate, King & Spalding) for the Claimant

Craig Morrison (instructed by Enyo Law LLP) for the Defendant

Hearing dates: 11 th October 2019

Approved Judgment

I direct that pursuant to CPR PD 39A para 6.1 no official shorthand note shall be taken of this Judgment and that copies of this version as handed down may be treated as authentic.

Mr Justice Jacobs Mr Justice Jacobs

Introduction

1

On 11 October 2019, I heard argument on issues arising out of an order of Teare J dated 30 October 2018. The principal issue concerned the allocation of the costs of proceedings relating to the enforcement of an arbitration award. But the argument encompassed an issue, on which there is no prior authority, as to the interpretation of the Arbitration Act 1996, s 103 (2) (f), and what is meant by an award which has been suspended by a competent authority of the country in which … it was made”.

2

By his order, Teare J granted the Claimants (“Leidos”) permission to enforce an arbitration award (“the Award”) dated 2 July 2013 which had been made pursuant to an ICC arbitration between Science Applications International Ltd. (the former name of Leidos) and The Hellenic Republic in the same manner as a judgment or of the Court to the same effect.

3

The application to Teare J, resulting in that order, was made pursuant to the Arbitration Act 1996, s 101. As is usually the case, and indeed expressly provided for in CPR 62.18 (1) which concerns the enforcement of awards, Teare J's order was made on the basis of a without notice application. As his order recites, it was made after reading three witness statements submitted by Leidos, namely those of Mr James Cockburn, Mr William O'Brien and Mr Gregory Pelecanos. The order also contained the required protection, as provided for in CPR 62.18 (9) and (10), for the party against whom the order is made: namely, (i) that it must not be enforced until after the end of the period permitted for an application to set the order aside or the determination of that application if made, and (ii) that the order should contain a statement of the party's right to set aside the order and these restrictions on enforcement.

4

At the time that the application to enforce was made, there was an ongoing challenge to the Award by The Hellenic Republic in the Greek courts. There has been a protracted history of challenge which I shall describe in more detail below. In addition, an attempt by Leidos to enforce the Award in Greece had, at the time of the application, recently been halted as a result of a decision of the Greek Supreme Court, so that enforcement in Greece was not possible. As explained in the witness statement of The Hellenic Republic's Greek lawyer, Dimitrios Katopodis – in evidence which was not controversial – Leidos had taken steps in June 2018 to enforce the Award in Greece. These steps had resulted in a petition from The Hellenic Republic to issue an interim order suspending the enforcement of the Award. On 7 September 2018, the Greek Supreme Court accepted this request and issued an interim order, suspending the enforcement of the Award until a further “discussion” in early October. The Greek Supreme Court then published its written decision No. 158/2018 on 18 October 2018. The court's decision was that:

“The court SUSPENDS the enforcement of the arbitrary decision dated 2-7-2013 of the International Arbitrary Court of the International Trade Chamber in the case 16394/GZ/MHZ, until a decision of the Supreme Court is delivered on the petition for cassation dated 14- 3-2018, exercised by the petitioning party against the decision 3567/2017 of the Appeal Court of Athens and on condition of the hearing of the petition for cassation on 3-12-2018.”

5

The reasoning of the majority (there being a dissenting opinion by the Presiding judge) was as follows:

“After the service to the petitioning party on 29-6-2018, a copy of the exemplification order of the above court decision, no further deeds of compulsory enforcement have been followed. From the enforcement of the attacked decision from the [arbitral] decision, it is speculated that a risk of damage will result against the petitioning party, the restitution of which will not be easy, since in case of affirmance of petition for cassation, the reinstatement of the things to the state before the enforcement and the recovery of such a big amount by the petitioning party (it already runs into 50,000,000 euros approximately) will not be easy, since the respondent is a foreign company, has not assets in Greece, whilst the petitioning party offered to pay the amount, asking the respondent to deposit a letter of guarantee, as per provisions of article 4 par.1 of law 3068/2002, and the latter refused by its letter dated 17-9-2018 to deposit a letter of guarantee, pleading unfoundedly an unconstitutionality of the above provision. Therefore, the petition under judgment should become accepted as substantially grounded, as especially specified in the enacting part of the decision.”

6

The effect of this decision was not in dispute. Mr Pelecanos, the Greek lawyer acting for the Claimants, had explained the history of the proceedings in his witness statement served in support of the enforcement application. In a section headed “Temporary Restraining Order and Suspension/ Stay of Enforcement Injunction – Opposition to Payment Order”, he said that “enforcement of the Award in Greece is not possible until the Supreme Court renders its decision” on the challenge to the Award. Similarly, Mr Katopodis for The Hellenic Republic said that:

“the enforcement of the arbitration award has been suspended until the judgment on the appeal application is issued. This means that, as far as the Greek legal order is concerned, Leidos cannot impose compulsory measures against the private property of the State to satisfy its claim which is accepted by the arbitration award, until a judgment has been given by the Supreme Court on the application for appeal”.

7

It was therefore uncontroversial that enforcement of the Award had been suspended pending the outcome of the challenge proceedings.

8

Teare J's order was in due course served upon The Hellenic Republic on 22 March 2019. At the time of service, the challenge by The Hellenic Republic to the Award in the Greek courts had not yet been resolved. After service, but prior to making an application to set aside Teare J's order, The Hellenic Republic proposed to stay that order pending the final resolution of the challenge by the Greek Supreme Court. This offer was refused by Leidos, who would not agree a stay unless The Hellenic Republic paid the full sum due under the Award as security.

9

Accordingly, on 13 June 2019, The Hellenic Republic applied to set aside the Teare J order. The application was supported by a witness statement of Mr Edward Allen. The Hellenic Republic's application was based primarily on the Arbitration Act s.103 (2) (f). Section 103 provides:

“103.- Refusal of recognition or enforcement.

(1) Recognition or enforcement of a New York Convention award shall not be refused except in the following cases.

(2) Recognition or enforcement of the award may be refused if the person against whom it is involved proves –

(f) That the award has not yet become binding on the parties, or has been set aside or suspended by a competent authority of the country in which, or under the law of which, it was made.

(5) Where an application for the setting aside or suspension of the award has been made to such a competent authority as is mentioned in subsection (2)(f), the court before which the award is sought to be relied upon may, if it considers it proper, adjourn the decision on the recognition or enforcement of the award.

It may also on the application of the party claiming recognition or enforcement of the award order the other party to give suitable security.”

Mr Allen's witness statement also made it clear that The Hellenic Republic's case was also based on an allegation of non-disclosure at the time of the without notice application. The essential ground of non-disclosure relied upon concerned the alleged failure of Leidos to draw Teare J's attention to the provisions of s 103 (2) (f), and The Hellenic Republic's potential case that enforcement should be refused on the basis of that section.

10

Within a week of the application to set aside being made, the landscape was transformed. On 20 June 2019, the Greek Supreme Court handed down judgment dismissing The Hellenic Republic's final appeal by way of challenge to the Award. This had the effect also of lifting the Greek Supreme Court's suspension of enforcement. The Hellenic Republic then took steps to pay the amounts due under the Award, and a payment of € 53,158,997.37 was in due course made on 10 September 2019. There is a dispute as to whether the Award has in fact been paid in full, or whether there remain certain outstanding amounts. In particular, there is a dispute concerning a deduction by The Hellenic Republic of around € 1 million in respect of stamp duty, and a smaller dispute as to interest. It was ultimately common ground, however, that these disputes did not fall to be resolved within the context of the present hearing. The parties' respective arguments at the hearing did not, in any significant way, rely upon the existence of these remaining disputes.

11

The effect of the dismissal by the Greek Supreme Court of The Hellenic Republic's challenge, and the lifting of the suspension on enforcement, was that there was no longer any available ground on which it could realistically be argued by The...

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1 cases
  • Alexander Brothers Ltd (Hong Kong S.A.R) v Alstom Transport SA
    • United Kingdom
    • Queen's Bench Division (Commercial Court)
    • 18 Junio 2020
    ...the enforcement proceedings here to be premature and declined to make an Order. 219 It is also true that, as Jacobs J observed in Leidos Inc v Hellenic Republic [2019] EWHC 2738 (Comm) [28] “ the court's decision on a set aside application cannot focus exclusively on the position at an ear......

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