Y (Respondent/Claimant) v S
| Jurisdiction | England & Wales |
| Judge | Mr Justice Eder |
| Judgment Date | 13 March 2015 |
| Neutral Citation | [2015] EWHC 612 (Comm) |
| Docket Number | Case No: 2014 Folio 1479 |
| Court | Queen's Bench Division (Commercial Court) |
| Date | 13 March 2015 |
[2015] EWHC 612 (Comm)
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
COMMERCIAL COURT
Royal Courts of Justice, Rolls Building
Fetter Lane, London, EC4A 1NL
Mr Justice Eder
Case No: 2014 Folio 1479
Mr Ricky Diwan QC and Mr Jeremy Brier (instructed by Gibson Dunn & Crutcher LLP) for the Respondent/Claimant
Mr Alan Maclean QC and Mr Andrew Scott (instructed by Baker & McKenzie) for the Applicant/Defendant
Hearing dates: 6 March 2015
Approved Judgment
These are applications by the defendant ("S") (i) to discharge paragraph 2 of the Order of Flaux J dated 12 December 2014 (the "Flaux J Order") as varied by the Order of Andrews J dated 22 December 2014 (the "Andrews J Order") (the "Discharge Application"); and (ii) for leave under s66 of the Arbitration Act 1996 (the "1996 Act") to enforce a LCIA award dated 11 November 2014 (the "Award") (the "s66 Application").
The applications arise in somewhat unusual circumstances which I would summarise briefly as follows.
S is a Russian national, based in Russia, and in business in the real-estate sector. It is S's case (inter alia) that on 3 March 2008, he entered into an agreement with Y (the alleged "March 2008 Agreement"), a Russian national, and that disputes thereafter arose under the March 2008 Agreement. Those disputes were referred to arbitration pursuant to the alleged arbitration agreement contained in the March 2008 Agreement. In the arbitration, Y asserted, in effect that the March 2008 Agreement (including the arbitration agreement) was not binding and that in any event it did not contain an arbitration agreement; and that therefore the Tribunal had no jurisdiction. In the event, the Tribunal rejected that assertion and numerous other defences advanced on their behalf; and by its Award, the Tribunal substantially upheld S's case in the sum of approximately US$72m. Together with interest, it is S's case that a total of approximately US$84.2 million is due under the Award.
On 9 December 2014, Y issued an Arbitration Claim purporting to challenge the Tribunal's jurisdiction under s67(1)(a) of the 1996 Act on various grounds relating to the SHA. S's case is that such challenge is baseless. The Arbitration Claim also included an application for " … a stay of any enforcement of the Award prior to its determination of this challenge under section 67(1)(a) of the Arbitration Act 1996" (emphasis added). On 10 December 2014, that application was made on behalf of Y to Flaux J without notice to S. In the event, Flaux J made an order on paper inter alia in the following terms:
" 2. No steps to be taken by [S] to enforce the Award prior to the determination of [Y's] challenge to the Award in these proceedings under section 67 of the Arbitration Act 1996.
" 3. [S] may apply to set aside or vary this Order within 7 days of service of the same."
The Order was served on S on the evening of 15 December 2014, with the result that the set aside date fell in the Court vacation.
On 22 December 2014, an oral application was made to the Court without notice on behalf of S to vary the Flaux J Order by discharging paragraph 2 in its entirety. That application came before Andrews J as the vacation Judge. The application was made on grounds that there was no legal basis for paragraph 2 of the Flaux J Order; that it was improperly obtained on a without notice basis; and that it was liable seriously to prejudice S unless discharged. As appears from a note of that hearing, Andrews J expressed concern that what appeared to be an injunction, restraining enforcement steps anywhere in the world, including against K, had been obtained on a without notice application, without a hearing, and without Y having proffered any cross-undertaking in damages to the Court; and apparently stated that she recognised S's legitimate concern that, unless discharged or varied, paragraph 2 of the Flaux J Order might prevent the foreign protective proceedings under consideration.
Notwithstanding these concerns, Andrews J was not prepared to discharge paragraph 2 of the Flaux Order at a without notice hearing but instead varied it as follows:
" 1. Paragraph 2 of the Order of the Honourable Mr Justice Flaux dated 12 December 2014 (the "Order") shall be varied such that:
(1) In respect of the Claimant, the Defendant shall have permission to take steps in jurisdictions other than England and Wales (including without limitation Cyprus) for the purposes of enforcing the Award to the extent of commencing enforcement proceedings and taking steps to preserve assets for enforcement.
(2) It shall not apply to any step to enforce the Award against K.
2. The Application, the evidence filed in support of it, ancillary material such as a note of the hearing, and this Order (the "Application Materials"), shall be served on the Claimant by 4pm on 31 December 2014.
3. Paragraph 2 of the Order as varied shall be discharged unless the Claimant within 7 days of being served with the Application Materials sends to the Defendant's solicitors a letter stating that the Claimant will provide to the Court a cross-undertaking in damages in respect of that paragraph, secured by payment into Court or provision of alternative security in a form and amount which is acceptable to the Defendant or the Court. Any dispute as to the form and/or amount of such security shall be a matter to be determined by a Commercial Court Judge. If the parties are agreed that the cross-undertaking is in appropriate terms as to form and amount of security, then the cross-undertaking may be incorporated into the Order by consent.
4. The Claimant may apply to set aside or vary this Order within 7 days of service of the same.
5. Costs reserved.
6. Liberty to apply."
On 31 December 2014, S served Y with the Andrews J Order and associated materials. Thereafter, the parties' solicitors corresponded regarding S's position that paragraph 2 of the Flaux J Order ought never to have been made; and (without prejudice to that position) the fortification required to satisfy the cross-undertaking that Andrews J envisaged. Meanwhile, S has pursued (and continues to pursue) protective proceedings seeking to preserve assets for the purpose of enforcing the Award in California and Cyprus.
Before turning to consider the two main applications before the court, it is convenient to make certain initial observations about the scheme of the 1996 Act and the procedural rules relating to the enforcement of an arbitration award.
First, I would refer to s1 of the 1996 Act which provides in material part as follows:
" The provisions of this Part are founded on the following principles, and shall be construed accordingly-
(a) …
(b) …
(c) in matters governed by this Part the court should not intervene except as provided by this Part."
In this context, as submitted by Mr Diwan QC, it is important to note what was said by Lord Mance in Ust-Kamenogorsk Hydropower v AES Ust-Kamenogorsk Hydropower [2013] 2 Lloyd's Rep 281 at p289 lhc:
" The use of the word "should" in section 1(c) was also a deliberate departure from the more prescriptive "shall" appearing in article 5 of the UNCITRAL Model Law. Article 5 reads that "In matters governed by this Law, no court shall intervene except where so provided in this Law". Article 5 had been the subject of forceful critique in A New Arbitration Act?, the 1989 report on the UNCITRAL Model Law by the DAC at a time when its chair was Lord Justice Mustill, who had also represented the United Kingdom at UNCITRAL. Even in matters which might be regarded as falling within Part 1, it is clear that section 1(c) implies a need for caution, rather than an absolute prohibition, before any court intervention."
S66 of the 1996 provides in material part as follows:
" 66. Enforcement of the award
(1) An award made by the tribunal pursuant to an arbitration agreement may, by leave of the court, be enforced in the same manner as a judgment or order of the court to the same effect.
(2) Where leave is so given, judgment may be entered in terms of the award.
(3) Leave to enforce an award shall not be given where, or to the extent that, the person against whom it is sought to be enforced shows that the tribunal lacked substantive jurisdiction to make the award.
The right to raise such an objection may have been lost (see section 73).
(4) Nothing in this section affects the recognition or enforcement of an award under any other enactment or rule of law, in particular under Part II of the [1950 c. 27.] Arbitration Act 1950 (enforcement of awards under Geneva Convention) or the provisions of Part III of this Act relating to the recognition and enforcement of awards under the New York Convention or by an action on the award."
As appears from sub-section (1) above and implicit in the words "may" and "by leave of the court", it is plain that the court has a discretion whether or not to grant leave to enforce an award in the same manner as a judgment or order of the court.
In general, the procedural rules relating to the enforcement of arbitration awards are governed by CPR 62.17 and 18 which provide in material part as follows:
" 62.17
This Section of this Part applies to all arbitration enforcement proceedings other than by a claim on the award.
Enforcement of awards
62.18
(1) An application for permission under –
(a) section 66 of the 1996 Act …
… to enforce an award in the same manner as a judgment or order may be made without notice in an arbitration claim form.
…
(9) Within 14 days after service of the order or, if the order is to be served out of the jurisdiction, within such other period as the court may set –
(a) the defendant may apply to set aside the order; and
(b) the award must not be...
To continue reading
Request your trial
-
The Czech Republic v Diag Human SE
...1 Lloyd's Rep 230; Konkola Copper Mines Plc v U&M Mining Zambia Ltd [2014] EWHC 2146 (Comm), [2014] 2 Lloyd's Rep 507; Y v S [2015] EWHC 612 (Comm), [2015] 2 All ER (Comm) 85; Erdenet Mining Corporation LLC v ICBC Standard Bank Plc [2017] EWHC 1090 (Comm), [2018] 1 All ER (Comm) 691; a......
-
IPCO (Nigeria) Ltd v Nigerian National Petroleum Corporation
...A v B (Arbitration: Security) [2010] EWHC 3302 (Comm); [2011] 1 Lloyd's Rep 363; [2011] Bus LR 1020, para 32 per Flaux J; Y v S [2015] EWHC 612 (Comm); [2015] 1 Lloyd's Rep 703, para 33 per Eder J. That cannot by any stretch be said of NNPC's fraud challenge in the light of the evidential ......
-
A Man Of Many Claims: Recent Decisions On Challenging Or Resisting Enforcement Of Arbitral Award
...the subject of at least one court judgment, but the award itself has not become public. The English court judgments are: (a) Y v S [2015] EWHC 612 (Comm) (Eder J) (13 March 2015). Mr. Yegiazaryan issued a challenge to the "Europark" award, alleging that the tribunal had lacked jurisdiction.......