Nikola Rotenberg v Sucafina S.A.
| Jurisdiction | England & Wales |
| Judge | Mr Justice Eder |
| Judgment Date | 08 April 2011 |
| Neutral Citation | [2011] EWHC 901 (Comm) |
| Court | Queen's Bench Division (Commercial Court) |
| Date | 08 April 2011 |
| Docket Number | Case No: 2010 FOLIO 214 |
[2011] EWHC 901 (Comm)
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
COMMERCIAL COURT
Royal Courts of Justice
Strand, London, WC2A 2LL
The Honourable Mr Justice Eder
Case No: 2010 FOLIO 214
Alexander Gunning (instructed by Gordons Solicitors) for the Claimant
Thomas Raphael (instructed by Hill Dickinson LLP) for the Defendant
Hearing dates: 25 February 2011
Introduction
This matter arises out of certain arbitration proceedings conducted under the Arbitration Rules (the "Rules") of the Coffee Trade Federation Limited (the "CTF") and concerns, in particular, the status of what are described as Interim Appeal Awards of the Appeal Board made pursuant to Rule 48 and an application under s.79 of the Arbitration Act 1996 (the "1996 Act") for an extension of time for compliance with the requirements of Rule 52. (I should mention that I was told that the CTF has joined forces with the British Coffee Association ("BCA"), that the two organisations are now operating under the name of the BCA and that the intention is that the CTF will in due course be wound up. However, it was common ground that this does not affect the questions which I have to determine.)
I attach as an Appendix to this Judgment, extracts from the Rules including the relevant Rules to which I make reference below. In this Judgment, reference to a numbered Rule is to those Rules.
The claimant ("Mr Rotenberg") is a Belgian citizen but was at all material times a resident of the Democratic Republic of the Congo ("the DRC"). He was a co-managing director and shareholder in a Congolese company known as ILFEC which was a general trading company and had expanded its operations into the coffee market.
In 1999, when civil war broke out in the DRC, ILFEC expanded its activities in the north of the DRC and into the Central African Republic (the "CAR"), where it set up a local company known as CAFECA to export coffee from the CAR itself and also to supervise the export of coffee coming from ILFEC's operations in the north of the DRC, routing it through the CAR for final shipment from Cameroon.
The Defendant ("Sucafina") is and was at all material times a Swiss company which specialises in coffee trading.
The original arbitration
On or about 12 September 2002, Sucafina appointed Mr A Kerr of Coffee AG to act as the arbitrator in a dispute which had arisen in relation to 64 contracts for the supply of coffee dating from between about June 1998 and March 2001.
The contracts incorporated the terms and conditions of the European Contract for Coffee 1996 Edition and provided for arbitration in London. The arbitration was subject to the Rules and, in particular, what is described as the "two-stage procedure" under the Rules. This involved a "first stage" where disputes are decided by two arbitrators or, should they be unable to agree, an umpire. Thereafter, under the Rules, there was the possibility of a "second stage" whereby the parties were entitled to appeal against a first stage award to a board of appeal (the "Appeal Board").
The arbitration was initially commenced by Sucafina against Mr Rotenberg, ILFEC and CAFECA. However, in its Statement of Case served in accordance with the Rules, Sucafina presented its claim only against Mr Rotenberg and claimed the sum of US$880,424.84 under the contracts together with interest and costs.
In default of appointment of an arbitrator by Mr Rotenberg, Mr John Brown was appointed as second arbitrator on 23 December 2002. The arbitrators appointed Mr Paul Wilkes to act as umpire.
Sucafina and Mr Rotenberg exchanged submissions in relation to the arbitration. From those submissions, it was clear that the principal issue between the parties was whether the contracts had been made by Sucafina with Mr Rotenberg personally or with ILFEC or CAFECA.
The arbitrators sat in London on about 3 May 2004 and on subsequent dates to evaluate the submissions and supporting evidence but were unable to reach a decision. Accordingly and pursuant to Rule 15, the arbitrators handed the matter over to the appointed umpire, Mr Wilkes, on 20 July 2004.
By an award dated 22 August 2005 and published on 25 August 2005 ("the original award"), Mr Wilkes adjudged and awarded that the losses arising under the disputed contracts were recoverable from Mr Rotenberg and held that Mr Rotenberg was liable to pay US$880,456.85 to Sucafina, together with interest and costs. Mr Rotenberg was also required to pay the arbitration fees totalling £4,500.
The appeal
Pursuant to Rule 32, a party to an arbitration is permitted to appeal to a board of appeal, consisting of 5 members of the CTF panel, appointed by the CTF. Pursuant to Rule 42, an appeal constitutes a new hearing and fresh evidence will be admitted.
Mr Rotenberg exercised that right of appeal on or about 22 September 2005 and submitted his Statement of Case on 22 December 2005. The gist of that case was that the umpire had erred in finding the contracts to have been made with Mr Rotenberg.
A Statement of Defence was served by Sucafina on 27 February 2006 and a Reply was served by Mr Rotenberg on 17 March 2006. Sucafina served Rejoinder Submissions on 24 April 2006.
On 8 June 2006 the CTF notified the parties that a hearing was to be held on 30 June 2006. Following an application by Sucafina that Mr Rotenberg should provide security for costs, on 6 July 2006 the CTF ordered Mr Rotenberg to pay the sum of £25,000 to the CTF by way of security for its fees of the arbitration. That payment was made by Mr Rotenberg on 10 July 2006.
The First Interim Appeal Award of the Appeal Board
By a fax letter dated 4 September 2007, the CTF wrote to Mr Rotenberg's solicitors (Gordons) and Sucafina informing them that the Appeal Board had made an Interim Award and that such award would be published following receipt of a further deposit of £10,600 to be made by Mr Rotenberg. That deposit was duly paid and acknowledged by the CTF in its fax letter dated 28 September 2007.
On 1 October 2007, the CTF wrote to both parties enclosing what it described as "Interim Appeal Award 1003T" ("the First Interim Appeal Award"). That interim appeal award was expressed to be made pursuant to Rule 48 of the Rules which provided: "The board of appeal shall have the power to make an interim award or awards".
By the First Interim Appeal Award, the Appeal Board found that all bar 9 of the relevant contracts were made with ILFEC and CAFECA. The operative part of the First Interim Award was contained in paragraphs 111–115 which stated as follows:
"Under the powers given to it by rule 48 of the CTF Arbitration Rules the board of appeal hereby makes the following INTERIM AWARD:
111. That for the Contracts where it found that ILFEC or CAFECA were the sellers Sucafina's claim against Mr Rotenberg is dismissed and the board of appeal's jurisdiction ceases;
112. That for the Contracts where it found that Mr Rotenberg was the seller Sucafina's claim against Mr Rotenberg stands;
113. That therefore, but for the Contracts mentioned in 112, the decision of the umpire is overturned and the appeal is upheld;
114. That after hearing submissions as to quantum it will make an award as to the amount of Sucafina's claim under these Contracts; and
115. After publishing the award under 114 it will direct the parties to make submissions on costs."
At the very end of the First Interim Appeal Award, the Appeal Board also gave directions with regard to the timetable for the service of the parties' submissions on quantum and stated: "The board stresses that it will only look at submissions on quantum and that it will ignore any submissions relating to any other matter."
The First Interim Appeal Award was an unqualified success for Mr Rotenberg. Whereas the umpire had originally found that he had been a party to 64 contracts and liable to pay US$880,424.84 to Sucafina in respect thereof, the Appeal Board had found that Mr Rotenberg was only a party to 9 contracts. Further, in respect of those 9 contracts, Mr Rotenberg's position was that no monies were in fact due from Mr Rotenberg to Sucafina and that, on the contrary, Sucafina owed Mr Rotenberg US$161,421.42.
On 26 October 2007, Sucafina made an application to the Appeal Board, purportedly pursuant to s.57 of the Arbitration Act 1996 (the "1996 Act"). On 19 November 2007, the CTF wrote to the parties informing them that the Appeal Board had considered Sucafina's application, that it did not fall within s.57 of the 1996 Act and that it was, in effect, a request to reconsider its decision which the Appeal Board was not empowered to do. The body of the letter stated: "In its Interim Award the board of appeal made it clear that it would only look at submissions on quantum or costs. Therefore its jurisdiction to look at any other matters has ceased."
The Second Interim Appeal Award of the Appeal Board
Mr Rotenberg served his short quantum submissions in October 2007, claiming the US$161,421.42 payable under the 9 contracts made with him. Sucafina contested that claim on 8 November 2007, contending that it was not open to Mr Rotenberg to advance a counterclaim. Further short submissions were exchanged in November 2007.
On 21 November 2008, the CTF wrote to the parties enclosing what was described as "Interim Appeal Award 1003T relating to quantum" ("the Second Interim Appeal Award"). The operative part of the Second Interim Appeal Award stated as follows:
"Under the powers given to it by rule 48 of the CTF Arbitration Rules of the board of appeal hereby makes the following INTERIM AWARD:
42. That Sucafina pay Mr Rotenberg the sum of US$161,421.42 but only after it has received payment for the outstanding balance from...
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