Nwa v Nvf
| Jurisdiction | England & Wales |
| Judge | Mr Justice Calver |
| Judgment Date | 08 October 2021 |
| Neutral Citation | [2021] EWHC 2666 (Comm) |
| Docket Number | Case No: CL-2020-000649 |
| Year | 2021 |
| Court | Queen's Bench Division (Commercial Court) |
[2021] EWHC 2666 (Comm)
THE HONOURABLE Mr Justice Calver
Case No: CL-2020-000649
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
COMMERCIAL COURT
Royal Courts of Justice
Strand, London, WC2A 2LL
Alexander Goold (Direct Access Counsel) for the First Claimant
Lara Kuehl (Direct Access Counsel) for the Second Claimant
Jonathan D. C. Turner (Direct Access Counsel) for the Defendants
Hearing dates: Wednesday 29 September 2021
The Issue before the court
This case raises the interesting question of whether the failure of a party to comply with a term of an arbitration agreement that the parties should first seek to mediate a settlement of their dispute before referring the dispute to arbitration results in the arbitral tribunal not having jurisdiction to hear the dispute at all (so as to be susceptible to challenge under section 67 of the Arbitration Act 1996 (“the Act”)) or concerns only a challenge to the admissibility of the dispute, on which the tribunal's decision is final (and which does not fall within the scope of section 67 of the Act).
The relevant statutory provisions
The Claimants challenge, pursuant to section 67(1)(a) of the Act, the partial award of the sole arbitrator, Colm Ó hOisín SC (“Mr Ó hOisín SC”) delivered on 7 September 2020 (“the Award”), and made in an arbitration between the parties, administered by the London Court of International Arbitration (“LCIA”), No. 194292 (“the Arbitration”).
In the Award, Mr Ó hOisín SC decided that the agreement between the parties did not make mediation under the LCIA Mediation Procedure (“LCIA Mediation”) a condition precedent to the commencement of an arbitration. He determined that failure to have done so in advance of the Arbitration did not go to jurisdiction; the clause requiring it was not sufficiently clear and certain to make it enforceable; and, in any event, it was arguable that the Defendants (Claimants in the Arbitration), were not in breach of it. He concluded that he had substantive jurisdiction, pursuant to his power to rule on that in Section 30(1) of the Act.
Before this court, the Claimants seek the setting aside and variation of the Award in whole or in part pursuant to sections 67(3)(b) and (c) of the Act.
Statutory framework
The applicable statutory framework is as follows:
i) Section 82 of the Act defines ‘substantive jurisdiction’ as follows:
“‘substantive jurisdiction’, in relation to an arbitral tribunal, refers to the matters specified in section 30(1)(a) to (c), and references to a tribunal exceeding its substantive jurisdiction shall be construed accordingly.”
ii) Section 67 of the Act enables a renewed challenge to be made to the court of an arbitral tribunal's decision as to its own substantive jurisdiction (in the exercise of its supervisory role over English-seated arbitrations in the international context): 1
“(1) A party to arbitral proceedings may (upon notice to the other parties and to the tribunal) apply to the court—
(a) challenging any award of the arbitral tribunal as to its substantive jurisdiction;
…
(3) On an application under this section challenging an award of the arbitral tribunal as to its substantive jurisdiction, the court may by order—
(a) confirm the award,
(b) vary the award, or
(c) set aside the award in whole or in part.”
iii) Section 30 of the Act empowers, in the first instance, an arbitral tribunal to determine its own substantive jurisdiction:
“(1) Unless otherwise agreed by the parties, the arbitral tribunal may rule on its own substantive jurisdiction, that is, as to—
(a) whether there is a valid arbitration agreement,
(b) whether the tribunal is properly constituted, and
(c) what matters have been submitted to arbitration in accordance with the arbitration agreement.
…”
iv) Section 1(c) of the Act provides that:
“(c) in matters governed by this Part the court should not intervene except as provided by this Part.”
Background to the dispute
The factual background to this dispute is as follows.
The Agreement
The dispute resolution clause applicable between the parties is contained in a written agreement dated 25 June 2007 (“The Agreement”). Although the Agreement was expressed to be a heads of agreement, at clause 1.2(a) it is provided that it is intended to be a legally binding agreement between the parties. The Second Claimant, the First Defendant and the Third Defendant were not stated to be parties to the Agreement (the latter two were only to be incorporated subsequently). Whether any of them became so or became liable thereunder, will be issues for the Arbitration, if it continues.
Pursuant to the terms of the Agreement, the parties to it were to reorganise their existing business dealings concerning patents and pending applications for patents of intellectual property developed, principally, by the First Claimant, but also the Second Defendant and others, for the display of life size, high resolution, 3D video holograms which are capable of seeming to appear on a stage and with which real people are able to appear to interact. The applications are various, from entertainment to commercial product launches to politics.
Dispute resolution clause
Clause 10.2 of the Agreement provided, in particular, as follows:
“10.2 Disputes
(a) In the event of a dispute arising out of or in connection with this Agreement, including any question regarding its existence, validity, termination, interpretation or effect, the relevant parties to the dispute shall first seek settlement of that dispute by mediation in accordance with the London Court of International Arbitration (“LCIA”) Mediation Procedure, which Procedure is deemed to be incorporated by reference into this clause insofar as they do not conflict with its express provisions. Any mediation shall take place in London.
(b) If the dispute is not settled by mediation within 30 days of the commencement of the mediation or such further period as the relevant parties to the dispute shall agree in writing, the dispute shall be referred to and finally resolved by arbitration under the LCIA Rules from time to time in force (“the Rules”), which Rules are deemed to be incorporated by reference into this Agreement insofar as they do not conflict with its express provisions.
…”
Despite the submission of Mr Jonathan Turner for the Defendants that the relevant LCIA Mediation Procedure referred to in clause 10.2(a) is the Procedure effective 1 October 1999 (“the 1999 Mediation Procedure”), I consider that the relevant Procedure is in fact the LCIA Mediation Procedure effective 1 July 2012 (“the 2012 Mediation Procedure”). That is because the 1999 Mediation Procedure, which was the relevant Procedure in force when the Agreement was concluded on 25 June 2007, provides in its opening paragraph as follows:
“ Where any agreement provides for mediation of existing or future disputes under the procedure or rules of the LCIA, the parties shall be taken to have agreed that the mediation shall be conducted in accordance with the following procedure (the “Procedure”) or such amended procedure as the LCIA may have adopted hereafter to take effect before the commencement of the mediation.” (emphasis added)
The 2012 Mediation Procedure is the amended procedure which the LCIA had adopted to take effect before the commencement of the mediation in this case, and accordingly that Procedure applies. For present purposes, the relevant provisions of that Procedure are as follows:
“Article 1
Commencing Mediation – prior existing agreements to mediate
1.1 Where there is a prior existing agreement to mediate under the Rules (a “Prior Agreement”), any party or parties wishing to commence a mediation shall send to the Registrar of the LCIA Court (“the Registrar”) a written request for mediation (the “Request for Mediation”), which shall briefly state the nature of the dispute and the value of the claim, and should include, or be accompanied by a copy of the Prior Agreement, the names, addresses, telephone, facsimile, telex numbers and e-mail addresses (if known) of the parties to the mediation, and of their legal representatives (if known) and of the mediator proposed (if any) by the party or parties requesting mediation.
1.2 If the Request for Mediation is not made jointly by all parties to the Prior Agreement, the party requesting mediation shall, at the same time, send a copy of the Request for Mediation to the other party or parties.
1.3 The Request for Mediation shall be accompanied by the registration fee prescribed in the Schedule, without which the Request for Mediation shall not be registered.
1.4 Where there is a Prior Agreement, the date of commencement of the mediation shall be the date of receipt by the Registrar of the Request for Mediation and the registration fee.
1.5 The LCIA Court shall appoint a mediator as soon as practicable after the commencement of the mediation, with due regard for any nomination, or method or criteria of selection agreed in writing by the parties, and subject always to Article 8 of the Rules.”
Request for arbitration
On 18 April 2019, the solicitors then acting for the Defendants sent to the LCIA a Request for Arbitration (“RFA”). In it, the Defendants' solicitors stated as follows:
“As set out in paragraph 5 of the request, the [Defendants] wish to commence the Arbitration as a matter of urgency and so request that this matter be expedited.
Further the [Defendants] request that this Arbitration, once commenced, is immediately...
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