National Iranian Oil Company (Claimant/Arbitration Respondent) v (1) Crescent Petroleum Company International Ltd (2) Crescent Gas Corporation Ltd (Defendants/Arbitration Claimants)
| Jurisdiction | England & Wales |
| Judge | Mr Justice Burton |
| Judgment Date | 18 July 2016 |
| Neutral Citation | [2016] EWHC 1900 (Comm) |
| Docket Number | Claim No 2014 Folio 1028 |
| Court | Queen's Bench Division (Commercial Court) |
| Date | 18 July 2016 |
[2016] EWHC 1900 (Comm)
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
COMMERCIAL COURT
IN THE MATTER OF THE ARBITRATION ACT 1996
AND IN AN ARBITRATION CLAIM
Court No 27
The Rolls Building
7 Rolls Building
Fetter Lane
London EC4A 1NL
Mr Justice Burton
Claim No 2014 Folio 1028
Mr Gordon Pollock QC, Mr Salim MoollanQC and MS EMILY WOOD (instructed by Hogan Lovells) appeared on behalf of the Defendants/Arbitration Claimants.
The Claimant/Arbitration Respondent did not attend and was not represented.
JUDGMENT APPROVED
This has been the date fixed for the hearing of an arbitration appeal by the Claimants in the arbitration claim, National Iranian Oil Company (NIOC), against the Defendants, two Crescent companies, in respect of an arbitration Award which resulted in a declaration of liability in favour of the Defendants, who were Claimants in the arbitration, issued on 31 July 2014, by a majority of the tribunal, Dr Griffith as chairman and Dr Hossain, and those majority members found in favour of Crescent on all issues.
The minority member, Dr Noori, refused to sign the award and, on 26 August 2014, he issued a statement in which he made clear his fundamental disagreement with the conclusions of the majority.
The notice of appeal against that Award was very lengthy. There was a hearing before Teare J, when he directed the hearing of preliminary issues, leaving the balance of the issues to be dealt with subsequently, as they now were to be, as fixed for today.
I heard the appeal in respect of the preliminary issues and I delivered judgment on 4 March 2016, [2016] EWHC 510 (Comm), finding in favour of the Defendants in relation to all the issues before me, and consequently dismissing those grounds of appeal which were listed to be heard before me.
That left the balance of the grounds, save that there were two issues which were contained in the grounds of appeal, paragraphs 19 and 20, which were abandoned by the Claimant.
The issues which were listed to come on before me are those contained in paragraphs 18, 25 to 29 and 84 to 93 of the Claimant's grounds of appeal, settled by counsel, Mr Swainston QC and Mr Blakeley, who did not appear at the arbitration hearing itself, when the Claimant was represented by three different and eminent QCs.
After the delivery of my judgment, I gave directions for the trial of the surviving grounds. They can be summarised as follows: first that successive NIOC-appointed arbitrators were excluded from the decision-making process by the majority and, in particular, Dr Noori, the final NIOC-appointed arbitrator, was excluded from the decision-making process which produced the Award. This is alleged to amount to an irregularity within s.68(2)(i) of the Arbitration Act 1996.
The second ground was that the majority failed sufficiently to police the arbitration to ensure maintenance of proper civility in submissions, so that the effect was that the appearance of justice was lost in the eyes of NIOC, and that it was, at any rate implicitly if not expressly, submitted that the majority of the Arbitrators was in some way overridden as a result of such actions by or on behalf of Crescent.
On 18 March 2016 I directed that those extant grounds of appeal be heard in the week commencing 18 July, and the hearing was duly listed for today, the 18 July, and tomorrow, 19 July. Meanwhile the arbitration has continued and a quantum hearing is fixed, as I understand it, for later in the year.
Pursuant to my directions, NIOC was to serve evidence in reply to Crescent's evidence by 4 pm on Friday 8 July. However, at 1.24 pm on that day, Eversheds, acting for NIOC, instead of such evidence, sent a letter to the solicitors Hogan Lovells, acting for Crescent, enclosing a Notice of Discontinuance. The letter of July 8 read in material part as follows:
"Our client is discontinuing the Remaining Grounds of its challenge. Our client continues to have serious concerns about the issues raised by the Remaining Grounds; nevertheless, they are being discontinued. To that end please find enclosed by way of service a signed Notice of Discontinuance, which we shall file at Court today.
The decision to discontinue was taken by our client after very careful consideration and is without prejudice to all of the positions it adopted in relation to the Remaining Grounds. Further, our client's decision was made primarily to enable it to focus on the ongoing arbitral proceedings between the parties and, in particular, in order to focus on preparations for the upcoming written submissions, and hearing before the Tribunal. Our client's decision to discontinue should not, therefore, be deemed or interpreted in any way as an admission, concession of, or acquiescence to your clients' position and arguments with regard to the Remaining Grounds."
It is apparent that that letter, although enclosing a Notice of Discontinuance, sought to preserve NIOC's right to make all the same allegations as are pursued in this appeal, or the balance of this appeal, in some other forum. This, however, is the supervisory court, where such allegations should be addressed, and they have been addressed in the appeal which was fixed for today.
On receipt of that Notice of Discontinuance, Crescent applied to seek to set aside such notice. They also sought to challenge the fact that there was no satisfactory order for costs incorporated therein. But the main attack on the Notice of Discontinuance was that it was a way — impermissibly as they submitted — of avoiding the consequences of no longer asking the supervisory court to deal with the allegations made, and seeking to preserve them to be heard elsewhere in a less appropriate court.
In their response to the letter of 8 July, Crescent relied upon the very helpful decision of Aikens J in the Commercial Court, Sheltam Rail Company (Proprietary) Limited v (1) Mirambo Holdings Limited (2) Primefuels (Kenya) Limited [2008] EWHC 829 (Comm), dated 21 April 2008, in which a similar attempt was made, by appellants in the Commercial Court against an arbitration award, to discontinue. That was a case somewhat different, where it seems, as set out in paragraph 28 of his judgment, that Sheltam, the appellant, had intended to pursue its challenges, but had run out of funds to instruct counsel to argue the case. That was why the decision was made to discontinue the arbitration claim forthwith.
Aikens J recited in his judgment as follows:
"26. Mr Mildon [that is counsel for the defendants to the arbitration claim] submitted that in the light of Sheltam's failures to comply with the orders made in the arbitrators' previous awards, then it was likely that Mirambo and Primefuels would have to enforce the award in either South Africa or Kenya or Mauritius (all New York Convention countries) in the future. He submitted that where a party has started an arbitration claim in order to challenge an award under section 67 of the Act, it should not be open to that party to subvert the supervisory jurisdiction of the English court at the last moment by entering a Notice of Discontinuance. To do so would enable the discontinuing party to keep the option of using the same jurisdictional objections to delay or resist enforcement in another New York Convention state."
He set out his reasoning as follows:
"34 … However, I agree with the note at 38.4.1 of the 2007 Edition of Civil Procedure (volume 1) that a court may set aside a Notice of Discontinuance if it concludes that it is an abuse of the process of the court."
He continued that even if he concluded that it was an abuse of process, the court must still have a discretion.
At paragraph 36 he said this:
"In this case the Notice of Discontinuance was issued in respect of an arbitration claim in which the claimant challenged the validity of the Third Partial Final Award. In doing so, the claimant had invoked the supervisory jurisdiction of the court over an LCIA arbitration which has its seat in England and Wales and which is continuing. I have no doubt that if the Rules of the CPR had provided that a Notice of Discontinuance of an arbitration claim challenging the validity of an Award required the permission of the court before the arbitration claim could be discontinued, then, in the circumstances of this case, unconditional permission would not have been granted …
37. It is quite clear from paragraph 5 of the Outline Argument of Mr Hales that Sheltam still regards its challenges under both sections 67 and 68 as being — at the least — arguable. It is, I think, striking that Sheltam did not take the course (which it could have done) of agreeing to the dismissal of the arbitration claim. I infer from this that Sheltam was attempting to achieve a position where it preserved its ability to challenge the validity of a Third Partial Final Award if Mirambo and Primefuels moved to enforce it in another New York Convention State."
In that case, Aikens J accepted an undertaking which was proffered by Sheltam (see paragraph 37), "… not to challenge recognition and enforcement (by Mirambo and Primefuels) by using arguments raised in its section 67 application".
And he said at 38:
"As Sheltam has now given such an undertaking to the court, it seems to me that the Notice of Discontinuance should be allowed to stand. If Mirambo and Primefuels do have to enforce the Third Partial Final Award in a New York Convention State and if Sheltam attempts to resist such recognition and enforcement by raising issues that it might otherwise be entitled to do under Article V.1(c) of the Convention, then...
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