National Investment Bank Ltd v Eland International (Thailand) Company Ltd
| Jurisdiction | England & Wales |
| Judge | Mr Justice Foxton |
| Judgment Date | 17 May 2022 |
| Neutral Citation | [2022] EWHC 1168 (Comm) |
| Docket Number | Case No: CL-2021-000414 |
| Court | Queen's Bench Division (Commercial Court) |
[2022] EWHC 1168 (Comm)
Mr Justice Foxton
Case No: CL-2021-000414
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
COMMERCIAL COURT
Royal Courts of Justice
Strand, London, WC2A 2LL
Dominic Chambers QC (instructed by Rosenblatt) for the Claimant
Harish Salve QC (instructed by Steptoe & Johnson UK LLP) and Leigh Mallon (of Steptoe & Johnson UK LLP) for the Defendant
Hearing date: 9 May 2022
Draft judgment to the parties: 11 May 2022
Approved Judgment
I direct that no official shorthand note shall be taken of this Judgment and that copies of this version as handed down may be treated as authentic.
THE HONOURABLE Mr Justice Foxton
This judgment was handed down by the judge remotely by circulation to the parties' representatives by email and release to The National Archives. The date and time for hand-down is deemed to be Tuesday 16 May 2022 at 09:00am.
This is the Claimant's (“NIB”'s) application for relief under s.72(1) of the Arbitration Act 1996 (“the 1996 Act”). Section 72 provides:
“Saving for rights of person who takes no part in proceedings.
(1) A person alleged to be a party to arbitral proceedings but who takes no part in the proceedings may question—
(a) whether there is a valid arbitration agreement,
(b) whether the tribunal is properly constituted, or
(c) what matters have been submitted to arbitration in accordance with the arbitration agreement,
by proceedings in the court for a declaration or injunction or other appropriate relief.”
The factual background
In 2001, NIB entered into a Collateral Management Agreement (“the 2001 Agreement”) with both the First Defendant (“Eland Thailand”) and the Second Defendant (“Eland Ghana”) (and collectively “Eland”). In 2004, NIB and Eland entered into a further agreement (“the 2004 Agreement”), clause 6 of which provided:
“All parties agree to resolve any differences in a friendly manner by discussions failing which the matter may be referred to an Arbitrator under the Laws of the United Kingdom in London”;
(“the Arbitration Agreement”). It was common ground before me that it was arguable that the Arbitration Agreement applied to disputes arising under both the 2001 and 2004 Agreements.
On 22 April 2014, Eland Thailand commenced proceedings against NIB in the Accra Court in Ghana, advancing various claims under the 2001 Contract (“the Accra Proceedings”). Thereafter:
i) On 19 May 2014, NIB served a defence and counterclaim in the Accra Proceedings alleging that the 2001 and 2004 Agreements formed part of a fraudulent scheme put into effect by Eland.
ii) On 24 December 2014, NIB served a Third Party Notice on Eland Ghana seeking to make it a party to the counterclaim advanced in the Accra Proceedings.
iii) On 3 June 2015, Eland Ghana filed an unconditional Notice of Entry of Appearance in the Accra Proceedings.
iv) On 23 October 2015, NIB applied for permission to amend its counterclaim and Third Party claim so as to advance additional claims.
v) On 11 November 2015, Eland Ghana filed an affidavit in opposition to that application, in terms to which I shall return. The application to amend was refused.
vi) On 15 December 2015, Eland Ghana applied to stay the Accra Proceedings in favour of arbitration.
vii) On 19 February 2016, Mr Justice Jerome Noble-Nkrumah stayed the Accra Proceedings (“the Arbitration Order”).
There was correspondence between the legal representatives of NIB and Eland in January and February 2016 in relation to Eland's attempt to arbitrate the dispute, and, on 23 May 2016, Eland served a document which purported to be a Notice of Arbitration on NIB (“the NOA”).
On 28 April 2020, NIB served notice of its intention to prosecute the Accra Proceedings. On 13 May 2020, Eland filed an Arbitration Claim form with the Commercial Court asking the court to appoint an arbitrator under s.18 of the 1996 Act. That application and the supporting documents were served on NIB, but NIB did not engage with the application.
On 2 September 2020, Andrew Baker J made an order providing for the appointment of a sole arbitrator in the arbitration purportedly commenced by the NOA.
On 15 January 2021, NIB applied to the Accra Court asking it to exercise its inherent jurisdiction to set aside the Arbitration Order. That order (“the Set Aside Order”) was granted on 22 March 2021.
On 9 July 2021, NIB issued the present application. Eland served their evidence in response on 1 October 2021.
The adjournment application
On 22 March 2022, Eland's solicitors, KaurMaxwell LLP, came off the record. On 6 May 2022, the Friday before the hearing, Steptoe & Johnson UK LLP came on the record for Eland and applied to adjourn the hearing. However, on 8 May 2020, Eland's advocates, Mr Salve QC and Mr Mallon, served a detailed skeleton argument addressing the issues which arose.
In the course of my pre-reading of the case, I had formed the view that the issues which arose were relatively straightforward, largely turned on the analysis of undisputed facts, and could readily be argued by Eland's counsel team (particularly in circumstances in which Mr Salve QC had been involved in the matter when KaurMaxwell LLP were on the record). That impression was amply borne out by the hearing, in which I received comprehensive arguments. In addition, I was concerned at the delay which would follow from a late adjournment of the hearing, particularly when the reasons why there had been a change in legal representation and why this had interrupted preparations for the hearing had not been satisfactorily explained.
In these circumstances, and with the agreement of the parties, I decided that argument would proceed, but that it would be open to the court to revisit the issue of adjournment to the extent that the course of argument revealed any areas where Eland's legal team were genuinely in difficulty. In the event, it was possible to complete the argument without any such issue emerging. I therefore refused the adjournment application as I indicated at the end of the hearing.
The s.18 argument
At the hearing, Mr Salve QC took a preliminary argument that the s.18 order made by Mr Justice Andrew Baker precluded NIB from relying on s.72. Section 18 provides as follows:
“18.—Failure of appointment procedure.
(1) The parties are free to agree what is to happen in the event of a failure of the procedure for the appointment of the arbitral tribunal. There is no failure if an appointment is duly made under section 17 (power in case of default to appoint sole arbitrator), unless that appointment is set aside.
(2) If or to the extent that there is no such agreement any party to the arbitration agreement may (upon notice to the other parties) apply to the court to exercise its powers under this section.
(3) Those powers are—
(a) to give directions as to the making of any necessary appointments;
(b) to direct that the tribunal shall be constituted by such appointments (or any one or more of them) as have been made;
(c) to revoke any appointments already made;
(d) to make any necessary appointments itself.
(4) An appointment made by the court under this section has effect as if made with the agreement of the parties.”
It is now clear that for the court to exercise its s.18 powers, it is not necessary for it to reach a final decision on whether or not there is an arbitration agreement between the parties, or whether the dispute which the applicant seeks to refer to arbitration falls within the scope of that arbitration agreement. It is sufficient that the s.18 applicant can show a good arguable case to that effect: London Steam-ship Owners' Mutual Insurance Association Limited v The Kingdom of Spain [2021] EWCA Civ 1589, [58] approving Noble Denton Middle East v Noble Denton International Ltd [2010] EWHC 2574 (Comm). It follows that it is possible for the pre-conditions to a s.18 appointment to be satisfied, and yet for there to be no valid arbitration or no agreement to submit the relevant matters to arbitration for the purposes of s.72(1)(a) and (c).
Mr Salve QC argued that ss.18 and 72 operated together as follows:
i) An appointment by the court under s.18, by virtue of s.18(4), had the same effect as if the non-participating arbitrating party had made the appointment itself.
ii) The effect of doing so was that the non-participating party became a party to the arbitral proceedings, although that left open the question of whether the arbitral tribunal had jurisdiction. This is because it is perfectly possible to participate in the appointment process without accepting the tribunal's jurisdiction, leaving it to the tribunal to determine its jurisdiction under s.30 with a right of challenge under s.67: see s.31(1) (“a party is not precluded from raising [an objection that the arbitral tribunal lacks substantive jurisdiction] by the fact that he has appointed or participated in the appointment of an arbitrator”).
iii) However, someone who participated (or is to be treated as having participated) in the appointment process cannot bring themselves within s.72. Such a person is clearly a party to arbitral proceedings (whereas s.72 only applies to “a person alleged to be a party to arbitral proceedings”) and/or by virtue of being deemed to have participated in the appointment process, they do not meet the s.72(1) requirement of being a person “who takes no part in the proceedings”.
Ingenious as this argument was, and attractively as it was presented, I am unable to accept it. Section 72 provides an important protection to those who do not accept the jurisdiction of the arbitral tribunal and take no part in the arbitral process. The Department Advisory Committee on Arbitration Law...
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