Perkins Engines Company Ltd v Mohammed Samih Huseein Ghaddar
| Jurisdiction | England & Wales |
| Judge | Mr. Justice Bryan |
| Judgment Date | 08 June 2018 |
| Neutral Citation | [2018] EWHC 1500 (Comm) |
| Docket Number | Case No: CL-2018-000293 |
| Court | Queen's Bench Division (Commercial Court) |
| Date | 08 June 2018 |
[2018] EWHC 1500 (Comm)
IN THE HIGH COURT OF JUSTICE
BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES
QUEEN'S BENCH DIVISION
COMMERCIAL COURT
Royal Courts of Justice
The Rolls Building
7 Rolls Buildings
Fetter Lane
London, EC4A 1NL
Mr. Justice Bryan
Case No: CL-2018-000293
Mr. Jasbir Dhillon QC and Mr. Edward Ho (instructed by Mayer Brown International LLP) for the Applicant/Claimant
Mr. Stephen Houseman QC (instructed by Allen & Overy LLP) for the Respondents/Defendants
JUDGMENT APPROVED
The parties appear before me today on the hearing of an application made by the Claimant Perkins Engines Company Limited (“PECL”) dated 2 May 2018 seeking an interim negative anti-suit injunction against the First and Second Defendants, that is Mohammed Ghaddar and Ghaddar Machinery Co. S.A.L (“D1 and D2”) in respect of proceedings commenced by them (as Plaintiffs) against PECL (as Defendant) in Lebanon on 12 April 2018 (the “Lebanese Proceedings”), which PECL say were commenced in breach of an arbitration agreement contained within a Distributor Agreement to which PECL and the Defendants are party.
The application for an interim anti-suit injunction is made within arbitration proceedings commenced by an arbitration claim form issued on 1 May 2018 and served upon the First and Second Defendants pursuant to the Order of Phillips J made on 3 May 2018.
It is supported by a witness statement of a Miles Robinson dated 1 May 2018 and of a Katherine Wren dated 27 April 2018 and opposed in a witness statement of Katie Davies dated 29 May 2018, to which Mr. Robinson has replied in his second statement which was made on 5 June 2018. I confirm that I have read and had careful regard to such statements and the documentation exhibited thereto. Ultimately however, as shall be seen, the issues that arise largely turn on the proper construction of the wording of the arbitration agreement contained within the Distributor Agreement which is a matter of contractual construction of the provision concerned and, as such, a matter for the Court, although I also have before me some evidence of Lebanese law, the potential relevance of which will become apparent in due course.
The interim anti-suit injunction sought is in these terms, namely an injunction to restrain the First and Second Defendants from:-
(1) Pursuing, or taking any further steps in, or procuring or assisting the pursuit of, the proceedings before the Court of First Instance in Sidon (Chamber of Commercial Lawsuits), Lebanon commenced by the Defendants on 12 April 2018 (the Lebanese Proceedings) by themselves, their directors, officers, employees or agents.
(2) Commencing or pursuing, or procuring or assisting the commencement or pursuit of, any further proceedings concerning any dispute arising between them and the Claimant which arises from or relates to the Distributor Agreement dated 1 October 1990, as subsequently amended and novated (the “Distributor Agreement”) in any Court or Tribunal other than a Tribunal constituted in accordance with Clause 23.6 of the Distributor Agreement, alternatively before the English Courts.
PECL is a UK registered company and is a wholly owned, indirect subsidiary of Caterpillar Inc., and one of the world's leading suppliers of gas and diesel engines in the 4–2000 kW range. The Second Defendant is a family-owned Lebanese company which is managed by the First Defendant Mr. Ghaddar. The Defendants were, until recently, distributors of the Claimant's products in Lebanon under the Distributor Agreement.
The Distributor Agreement was concluded on 1 October 1990 and the original parties to it were Perkins Power Sales & Service Limited (“PPSSL”) and Ghaddar Machinery Est. There is a somewhat convoluted history, by reference to which it is said that, as at present and at all material times, PECL is party to the Distributor Agreement as principal and the Defendants are party to the Distributor Agreement as the Distributor. It is unnecessary to investigate that or make any findings in the context of this application, as little or nothing turns on it in circumstances where it is accepted, on behalf of the Defendants, that no issues arise as to title to sue or privity to the Distributor Agreement and the arbitration clause contained within the Distributor Agreement.
Suffice it to say that PECL's case is that, as a matter of Lebanese law, an “Est.” (like Ghaddar Machinery Est.) is not a juridical person with legal capacity to conclude contracts, and as a result the original party to the Distributor Agreement was not Ghaddar Machinery Est. but the individual who stood behind it (i.e., Mr. Ghaddar), whilst in or around October 2005, it is said by PECL that it was agreed that Ghaddar Machinery Co. SAL should be added as a party to the Distributor Agreement, and the agreement it is said was novated so as to include Ghaddar Machinery Co. SAL.
Similarly on 6 October 2010, PECL notified Mr. Ghaddar (both personally and in effect in his capacity as a director of Ghaddar Machinery Co. S.A.L.) that PECL was proposing to “ hold and manage” the Agreement, which PECL says meant that PECL was to take over all obligations, as well as rights, originally held by PPSSL under the Agreement, and the Defendants accepted that proposal by their conduct with the result (says PECL) that in around October 2010 the Distributor Agreement was novated so as to replace PPSSL with PECL.
Whatever the precise circumstances and mechanism by which it was achieved, and I make not findings in relation to that, it is common ground between PECL and the Defendants for the purpose of this hearing that at all material times the parties to the Distributor Agreement are to be regarded as PECL and the Defendants.
The relationship between PECL and the Defendants is a long-standing one under the Distributor Agreement, and the Defendants have bought very many engines from PECL over the years pursuant to the terms of that Agreement.
The evidence relied upon by PECL is to the effect that in January 2017 the Defendants admitted selling 30 engines supplied under the Distributor Agreement into Syria, but that following investigations and dialogue with the Defendants over the course of 2017, it says (per the evidence of PECL at least) that the Defendants had sold in the order of 1,200 engines and at least 200 parts (and possibly more than 600 parts) into Syria, which PECL alleges was in breach of the Distributor Agreement.
The parties disagree about whether the Defendants' sales into Syria amounted to breaches of the Distributor Agreement. PECL says they did and, having served a notice of breach in respect of them on the Defendants (in accordance with Clause 20.2 of the Distributor Agreement) on 9 January 2018, and alleging therein that the Defendants had failed to remedy the breaches complained of within 45 days, subsequently on 2 March they alleged and stated that PECL was entitled to and did terminate the Distributor Agreement on that date. For their part, the Defendants deny that termination of the Distributor Agreement was lawful.
The Lebanese Proceedings
On 12 April 2018 the Defendants commenced the Lebanese Proceedings. In those proceedings the Defendants seek damages under Article 4(2) of the Decree-Law No. 34/67, a Lebanese decree which the Defendants say entitles a commercial representative to damages where their principal has unlawfully terminated the representation agreement. The evidence is that Decree 34/67 is a mandatory provision of Lebanese law containing mandatory rules of Lebanese public policy which had been in force for over 20 years when the Distributor Agreement was concluded in October 1990. The Defendants say that such mandatory rules of Lebanese public policy must be applied in disputes of the kind currently between the parties which are heard by the Lebanese Court and which would give the Lebanese court exclusive jurisdiction over such disputes.
Two weeks after making the present application by arbitration claim form, PECL sent a Notice of Arbitration dated 16 May 2018 to the Defendants purporting to refer the dispute between them to arbitration in England. The Defendants have not taken part in the arbitration and seek to reserve their rights.
The primary basis for the (interim and final) anti-suit injunction sought by PECL in respect of the Lebanese Proceedings is an alleged breach by both the First and Second Defendants of an arbitration agreement contained in the second paragraph of Clause 23.6 of the Distributor Agreement (the “Arbitration Agreement”).
The Arbitration Agreement
Clause 23.6 of the Distributor Agreement provides:
“This Agreement shall be deemed to be an agreement made in England and shall be read and construed and take effect in all respects in accordance with the Laws of England and the Parties hereby submit to the jurisdiction of the English Courts.
To the extent there is no reciprocal enforcement procedures between the United Kingdom and the country in which the Distributor is located, the Parties agree to submit any dispute arising between them that cannot amicably be settled to arbitration. The arbitration shall be held in London, England …”
I should add that the arbitration clause goes on to provide for the number of arbitrators (i.e. a sole arbitrator) and for the procedure which is under UNCITRAL Rules.
It is common ground that the Arbitration Agreement in Clause 23.6 is engaged if, and I quote:
“There is no reciprocal enforcement procedures between the United Kingdom and the country in which the Distributor is located” (i.e. in this case the Lebanon).
The parties, however, disagree about what the words “ ...
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