Minister of Finance (Incorporated) v Aabar Investments PJS
| Jurisdiction | England & Wales |
| Judge | Mr Justice Andrew Baker |
| Judgment Date | 04 November 2021 |
| Neutral Citation | [2021] EWHC 2949 (Comm) |
| Docket Number | Case No: CL-2018-000704 |
| Court | Queen's Bench Division (Commercial Court) |
[2021] EWHC 2949 (Comm)
Mr Justice Andrew Baker
Case No: CL-2018-000704
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
Toby Landau QC and Peter Webster (instructed by Eversheds Sutherland (International) LLP) for the Claimants
Laurence Rabinowitz QC, Craig Morrison and Nathaniel Bird (instructed by Clifford Chance LLP) for the Defendants
Hearing dates: 9, 10, 11 June 2021
Approved Judgment
This is a reserved judgment to which CPR PD 40E has applied. Copies of this version as handed down may be treated as authentic.
This judgment was handed down by the judge remotely by circulation to the parties' representatives by email and release to Bailii. The date and time for hand-down is deemed to be 09.30 am on 4 November 2021.
Introduction
This unusual arbitration claim seeks to challenge under s.67 or s.68 of the Arbitration Act 1996 (‘the Act’) a Consent Award dated 9 May 2017 by which an LCIA arbitration between the parties, LCIA Ref. 163357 (‘Arbitration 1’), was concluded. It came before Robin Knowles J in March 2019, to consider:
(a) an application by the defendants (‘IPIC’ and ‘Aabar’) for the claim to be stayed under s.9 of the Act, alternatively as a matter of case management, pending a further LCIA arbitration between the parties, LCIA Ref. 184124 (‘Arbitration 2’ – there were in fact two references, under the Settlement Deed and Supplemental Settlement Deed to which I refer below, but they were consolidated so I shall use the singular),
(b) an application by the claimants (‘MOFI’ and ‘1MDB’) to restrain IPIC and Aabar by injunction from pursuing Arbitration 2 pending this claim, and
(c) the question whether time should be extended for the bringing of this claim, which was brought on 30 October 2018 whereas s.70(3) of the Act required it to be brought within 28 days of the date of the Consent Award, i.e. on or before 6 June 2017, subject to the power of the court to extend time provided by s.80(5) of the Act.
In relation to extending time, the defendants applied to strike the claim out for failure to make an application to extend time in their Claim Form. Robin Knowles J dismissed that application at the hearing in March 2019, essentially on the basis that although the extension of time application should have been made explicitly within the Claim Form, it was clear enough from the witness statement served in support and referred to compendiously in the Claim Form as setting out the basis of the claim that the claimants accepted that they were out of time and sought the necessary extension. Substantive consideration of the extension of time application was adjourned, with a direction for it to be heard separately but on the basis that it would remain open to the court to decide after full argument that whether to extend time should be put off again so as eventually to be decided only at a ‘rolled-up’ final hearing of the claim.
On the cross-applications for a stay and an injunction, Robin Knowles J handed down a judgment on 8 May 2019 on the basis of which he granted the stay sought by the defendants, on case management grounds, dismissing their reliance on s.9 of the Act, and dismissed the application for an injunction: [2019] EWHC 1151 (Comm). On 26 November 2019, the Court of Appeal allowed an appeal by the claimants, discharging the stay and granting an injunction: [2019] EWCA Civ 2080. While this Claim was stayed and the pursuit of Arbitration 2 was not restrained by injunction, Arbitration 2 progressed as far as service by the defendants (as arbitration claimants), in October 2019, of a reply and defence to counterclaim.
The hearing of the extension of time application was listed for the end of June 2020, but was adjourned twice by consent because of settlement discussions between the parties. It finally came on before me on 9, 10 and 11 June 2021.
There were also before me:
(a) an application by the defendants to strike out the s.67 claim, on an argument that the matters alleged by the claimants did not affect the substantive jurisdiction of the arbitrators in Arbitration 1 so as to give rise to any claim under s.67, and
(b) a responsive cross-application by the claimants for permission to amend the Arbitration Claim Form so as to assert that the matters they had alleged as giving rise to a s.67 challenge amounted, if they did not go to substantive jurisdiction, to a serious irregularity affecting the Consent Award within s.68(2)(b) of the Act (arbitrators exceeding their powers otherwise than by exceeding their substantive jurisdiction).
The defendants' strike-out application was unnecessary, because if the s.67 claim were apt to be struck out it would not be right to extend time for it to be pursued. Having heard Mr Landau QC's opening, I concluded that the s.67 claim could not succeed, on a basis that meant that a claim under s.68(2)(b) also could not succeed. I therefore indicated that I would not extend time for the s.67 claim or grant permission to amend, and that Mr Rabinowitz QC need deal only with the question whether time should be extended for the existing s.68 claim, which is put under s.68(2)(g) (award obtained by fraud or in a way that is contrary to public policy).
This judgment deals primarily with whether time should be extended for the claim under s.68(2)(g), and determines that issue. I do not regard it as necessary or appropriate to defer that determination to a ‘rolled-up’ hearing, although that possibility was previously left open as I mentioned above. This judgment also sets out my reasons for the conclusion I reached concerning the claim under s.67 and/or s.68(2)(b). Except in that section of the judgment, where I refer to the claim brought herein it is to the claim under s.68(2)(g).
The Claim
In Orascom TMT Investments SARL v VEON Ltd [2018] EWHC 985 (Comm), at [2]–[5], I was critical of the common practice in s.68 claims of setting out in the Claim Form bare and excessively brief, that is to say inadequate, particulars, with a compendious reference to a witness statement in which supposedly to find the nature and basis of the claim to be advanced. That bad practice was followed here.
At my encouragement, fuller particulars of the intended claim were prepared during the hearing. They were only ready just as Mr Rabinowitz QC was completing his submissions, but Mr Rabinowitz QC did not object to my considering them if he had an opportunity to comment on them in writing after the hearing. I therefore received the further particularisation of the claim immediately after the hearing, written submissions from Mr Rabinowitz QC dated 21 June 2021, and a written reply from Mr Landau QC dated 23 June 2021.
As pleaded in the Claim Form, the claim under s.68(2)(g) is that:
(a) the Consent Award “ formed part of an attempt by Mr Najib and others to conceal earlier fraudulent activity, contrary to the interests of [MOFI] (and contrary to the interests of the Malaysian people). Moreover, the Defendants knew that Mr Najib was acting in this way.” Mr Najib is Dato' Sri Haji Mohammad Najib bin Tun Haji Abdul Razak, the former Prime Minister and Minister of Finance of Malaysia, whose alleged involvement in what is said to have been kleptocracy on a massive scale is the background to this claim; and
(b) that irregularity caused serious injustice “ to the Claimants (and, as a consequence, to the Malaysian people) because it led to an award comprising grossly disadvantageous terms on behalf of the Claimants and provisions requiring payment of substantial sums to the Defendants, which are not justified by the merits of the claim [i.e. the claim that was before the Arbitration 1 arbitrators] and would not have been awarded had the matter fairly been determined on its merits.”
The notion of injustice through a consent award creating a result that would not have been awarded had the matter been determined fairly on the merits seems to me, provisionally, to create real difficulties. The Consent Award, needless to say, reflected and gave effect to a settlement, in fact a settlement pursuant to a Settlement Deed and Supplemental Settlement Deed (together, ‘the Deeds’) executed by all four parties. It is commonplace and may often be of the essence of a settlement that it will not or may not match what it might be shown (if capable of proof) would have been the result if the arbitration had not been settled; and there is an obvious discomfort if a s.68 challenge, the outcome of which if successful would be a continuation of the subject arbitration from where it had reached just prior to the settlement, depended on proof before the court of what the outcome of that arbitration would have been in the absence of the settlement.
Giving the two propositions pleaded a fair reading, in the context that they are meant to encapsulate a challenge to the Consent Award under s.68(2)(g), the gist of the claimants' claim is that the settlement given effect by the Consent Award was concluded, on the claimants' side, by or at the behest of Mr Najib, to the knowledge of the defendants acting contrary to the claimants' interests by agreeing grossly disadvantageous settlement terms outside any range of terms that an honest individual acting in the claimants' interests might have considered agreeing, in an attempt to conceal earlier fraudulent activity.
As even that very preliminary analysis suggests, there is not in this case an attack on the Consent Award, or the process by which it was procured, separate from or independent of the...
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