Province of Balochistan v Tethyan Copper Company Pty Ltd
| Jurisdiction | England & Wales |
| Judge | Mr Justice Henshaw |
| Judgment Date | 21 April 2020 |
| Neutral Citation | [2020] EWHC 938 (Comm) |
| Date | 21 April 2020 |
| Docket Number | Case No: CL-2019-000491 |
| Court | Queen's Bench Division (Commercial Court) |
[2020] EWHC 938 (Comm)
IN THE HIGH COURT OF JUSTICE
BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES
QUEEN'S BENCH DIVISION
COMMERCIAL COURT
Rolls Building
Fetter Lane
London, EC4A 1NL
THE HONOURABLE Mr Justice Henshaw
Case No: CL-2019-000491
Christopher Hancock QC and Sam Goodman (instructed by Gresham Legal) for the Claimant
Lord Goldsmith QC and Tom Cornell (instructed by Debevoise & Plimpton LLP) for the Defendant
Hearing date: 3 April 2020
Approved Judgment
I direct that pursuant to CPR PD 39A para 6.1 no official shorthand note shall be taken of this Judgment and that copies of this version as handed down may be treated as authentic.
| (A) INTRODUCTION | 2 |
| (B) PROCEDURAL BACKGROUND | 3 |
| (C) APPLICABLE PRINCIPLES | 9 |
| (1) The 1996 Act | 9 |
| (a) Section 1 | 9 |
| (b) Sections 67 and 68 | 10 |
| (c) Section 70(3) | 11 |
| (d) Section 73 | 12 |
| (2) Procedural rules and guidance | 14 |
| (D) SECTION 73(1): FAILURE TO TAKE OBJECTION BEFORE TRIBUNAL | 16 |
| (E) PRECLUSIVE EFFECT OF ICSID DETERMINATION | 19 |
| (F) SECTIONS 70(3) AND 73(2): TIME LIMIT | 20 |
| (G) POB'S SECTION 68 APPLICATION | 21 |
| (H) CONCLUSIONS | 22 |
(A) INTRODUCTION
The Claimant (“ POB”) applies for non-standard directions in its arbitration claim commenced on 5 August 2019, which comprises applications pursuant to sections 67 and 68 of the Arbitration Act 1996 in respect of an ICC partial award dated 8 July 2019 (“ the Award”). POB seeks to contend that the ICC tribunal lacked jurisdiction because the contract containing the arbitration agreement was void for a number of reasons, one of which is that it was allegedly procured by corruption. POB also alleges serious procedural irregularity in a number of respects.
In the underlying ICC arbitration (which has not yet concluded but has been stayed pending the present claim), the Defendant to the present claim (“ TCC”), an Australian mining company, brings claims against POB, a province of the Islamic Republic of Pakistan (“ Pakistan”), arising out of a mining joint venture. More specifically, the claims arise out of a contract known as the Chagai Hills Exploration Joint Venture Agreement (“ the CHEJVA”) dated 29 July 1993 and governed by the law of Pakistan.
The standard directions for arbitration claims, based on the Part 8 procedure, are contained in §§ 6.2–6.7 of CPR PD 62. The non-standard directions which POB seeks are:
i) an order that the parties exchange statements of case;
ii) an order that a CMC be held following the close of pleadings; and
iii) an order bifurcating the claim so that the section 67 application is determined prior to the section 68 application.
TCC opposes POB's application. It contends as follows:
i) Consistently with sections 70(3) and 73(2) of the 1996 Act, POB's arbitration claim should be limited to the grounds of challenge and supporting evidence originally advanced in and accompanying its claim form, submitted within the 28-day period for filing such a claim. POB's application for non-standard directions is in substance an attempt, eight months out of time, to change the basis of its challenge and introduce an entirely new set of wide-ranging allegations concerning TCC's alleged corruption. POB failed to include in its claim form any of the corruption allegations it now seeks to advance, or to submit any of the voluminous evidence for which it now seeks directions, most or all of which it has had in its possession for many, if not all, of the five years since the ICC tribunal issued its decision on jurisdiction in 2014.
ii) POB's jurisdictional challenge, insofar as based on alleged corruption, is precluded by section 73(1) of the 1996 Act, because POB did not previously advance it as a jurisdictional objection in the arbitration itself – but, on the contrary, expressly stated that its corruption allegations did not impugn the ICC tribunal's jurisdiction.
iii) A distinguished ICSID tribunal has already heard, and decisively rejected, the same corruption allegations following extensive litigation in respect of them, a determination which the ICC tribunal subsequently held to be binding on POB in the ICC proceedings. Those allegations could not therefore have been a legitimate basis for POB's section 67 challenge even if they had been included in POB's arbitration claim form.
iv) POB's request for non-standard directions is in reality an attempt to subvert the 1996 Act by transforming the streamlined and efficient process designed to deal with arbitration claims into a full-blown corruption trial with dozens of witnesses, thousands of documents and allegations spanning nearly three decades.
For the reasons elaborated below, the question of which objections POB can properly pursue, consistently with sections 70 and 73 of the 1996 Act, should be resolved first, promptly, before this claim proceeds further. It would be inimical to the proper approach to court intervention in arbitration to permit this claim to turn into a full-blown re-run of POB's corruption allegations if they are prima facie precluded by the 1996 Act. I consider that it would also be unjust for TCC to be required to plead a substantive defence to those allegations unless and until it were determined that POB is entitled to pursue them in this claim. I shall therefore give directions as outlined in section (H) below. I have set out my reasoning for these directions in reasonable detail in deference to the arguments of counsel before me, and in case it is of assistance to the court when hearing further stages of this claim.
(B) PROCEDURAL BACKGROUND
On 28 November 2011, following a dispute regarding the denial of a mining licence, TCC commenced two arbitrations:
i) an arbitration claim against POB pursuant to an arbitration clause in the CHEJVA, and
ii) an arbitration claim against Pakistan under the Australia-Pakistan Bilateral Investment Treaty.
The arbitration against POB proceeded under the ICC rules (“ the ICC arbitration”) and that against Pakistan under the ICSID rules (“ the ICSID arbitration”).
On 7 January 2013, the Supreme Court of Pakistan issued an Order declaring that the CHEJVA and related agreements were “ illegal, void and non est”. Full reasons were reserved and given in a judgment on 10 May 2013 (“ the Pakistan Supreme Court Judgment”). The Defendant's evidence is that that decision reversed a judgment of the Balochistan High Court in June 2007 which, upholding POB's case, held that “[the] CHEJVA was rightly executed,” that POB had the power to enter into the agreement, and that the ‘relaxations’ POB granted were “ strictly in accordance” with the mining rules. However, the Defendant states, POB reversed its position on the petitioners' appeal, after TCC's commencement of the ICC and ICSID arbitrations, telling the Supreme Court that “ If this Honourable Court upholds the CHEJVA and other documentation, then the Memorial will state accordingly and the Government of Balochistan and the Government of Pakistan shall proceed to contest the matter on the merits on CHEJVA and other agreements. On the other hand if this Honourable Court declares CHEJVA void ab init[i]o, then the Government will argue before ICSID that an illegal investment is not protected by BIT and before ICC that arbitrations should end since the agreement from which it derives its jurisdiction has been struck down.”
On 21 October 2014, after a four-day hearing, the ICC tribunal (Lord Collins of Mapesbury, Sir David A.R. Williams QC and Dr Michael Moser) issued a Ruling on Preliminary Issues declaring inter alia that the arbitration agreement in the CHEJVA was valid, the CHEJVA was valid, TCC had standing to invoke the CHEJVA, and that the ICC tribunal had jurisdiction to consider TCC's contractual and non-contractual claims (“ the Jurisdiction Ruling”).
On or around 21 November 2014, the parties agreed that POB's position would not be prejudiced if it did not challenge/review the Jurisdiction Ruling at that time but instead waited until the ICC tribunal had made an award incorporating the Jurisdiction Ruling.
On 31 August 2015, POB requested permission to submit an application to the ICC tribunal for the dismissal of TCC's claims on the basis of its allegations of corruption. On 2 September 2015, Pakistan submitted a similar application in the ICSID arbitration.
On 10 November 2017, the ICSID tribunal (Dr Klaus Sachs, Dr Stanimir Alexandrov and Lord Hoffman) issued two decisions:
i) a Jurisdiction & Liability Decision, in which the ICSID Tribunal found that POB's denial of TCC's mining lease application breached Pakistan's fair and equitable treatment obligation, constituted an unlawful expropriation of TCCA's investment, and unlawfully impaired TCC's investment; and
ii) a Decision on Pakistan's Application, in which the ICSID Tribunal found that Pakistan had not established its allegations of corruption:
“For the reasons set out in detail above and based on its review and evaluation of the evidentiary record, the Tribunal concludes that Respondent has not established any of its individual allegation of corruption that would be attributable to Claimant. The Tribunal has found no proven incident of Claimant exercising, or attempting to exercise, improper influence on Government officials aimed at obtaining rights or benefits relating to Claimant's investment in Pakistan” (Decision on Respondent's Application to Dismiss the Claims, dated 10 November 2017, § 1490)
On 21 September 2018, TCC filed in the ICC arbitration an application for a ruling that POB's corruption allegations and a range of other issues were precluded by the conclusions of the ICSID tribunal.
On 8 July 2019, the ICC tribunal issued the Award, declaring that,...
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Province of Balochistan v Tethyan Copper Company Pty Ltd
...Rep. 159 Colman J highlighted the value of their consideration where there is complexity. 382 As Henshaw J observed in this case ( [2020] EWHC 938 (Comm) at [ 45]), PD 62 paragraph 6.1 permits the court to order a different timetable and, of course, when deciding whether or not to do so th......