Sadruddin Hashwani and Others v Omv Maurice Energy Ltd
| Jurisdiction | England & Wales |
| Judge | Lord Justice Moore-Bick,Lord Justice Lewison,Mr. Justice Hayden |
| Judgment Date | 17 November 2015 |
| Neutral Citation | [2015] EWCA Civ 1171 |
| Docket Number | Case No: A3/2015/2186 & A3/2015/2283 |
| Court | Court of Appeal (Civil Division) |
| Date | 17 November 2015 |
[2015] EWCA Civ 1171
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
COMMERCIAL COURT
Mr. Justice Burton
Royal Courts of Justice
Strand, London, WC2A 2LL
Lord Justice Moore-Bick
Vice-President of the Court of Appeal, Civil Division
Lord Justice Lewison
and
Mr. Justice Hayden
Case No: A3/2015/2186 & A3/2015/2283
Mr. Michael Brindle Q.C. and Mr. Brian Dye (instructed by Zaiwalla & Co LLP) for the appellants
Mr. Christopher Hancock Q.C. and Mr. Chris Smith (instructed by Bentleys, Stokes & Lowless) for the respondent
Hearing date : 15 th October 2015
Introduction
This is an appeal against an order made by Burton J. on the hearing of an application under section 72 of the Arbitration Act 1996 for a declaration that the International Chamber of Commerce ("ICC") does not have jurisdiction to hear and determine certain disputes which have arisen between the appellants, Zaver Petroleum Corporation Ltd ("Zaver") (a company incorporated in Pakistan) and Ocean Pakistan Ltd ("OPL") (a company incorporated in California) and the respondent, OMV Maurice Energy Ltd ("OMV") (a company incorporated in Mauritius). By his order dated 25 th June 2015 the judge held that the ICC does have jurisdiction in respect of the dispute between OMV and OPL and he made a declaration accordingly. He was less certain, however, that it had jurisdiction in respect of the dispute between OMV and Zaver and therefore stayed the proceedings to give the arbitrators appointed by the ICC an opportunity to decide that question. This is the appeal of OPL and Zaver against the judge's order. OMV cross-appeals, seeking to set aside the judge's order staying the proceedings in relation to Zaver. It contends that the same order should be made in relation to Zaver as was made in relation to OPL.
The application arises out of a complex set of agreements entered into for the purposes of exploring for oil in an area of Sindh and Baluchistan. On 29 th December 1999 the President of Pakistan issued a Petroleum Exploration Licence in relation to an area identified as the Mehar Block in favour of OPL, an American company, then called Orient Petroleum Inc., and the Government of Pakistan, referred to as "Government Holdings". OPL was granted a 95% working interest and Government Holdings a 5% working interest. On the same date the President entered into a Petroleum Concession Agreement ("PCA") with OPL and Government Holdings which contained the terms under which exploration and production operations were to be carried out. It is unnecessary to refer to any particular provisions of the PCA other than Article XXVIII, which contained provisions for arbitration to which it will be necessary to refer in more detail at a later stage.
On the same date OPL and Government Holdings also entered into a Joint Operating Agreement ("JOA"), which contained detailed provisions for carrying out operations within the concession area. The agreement was annexed to, and was expressed to be part of, the PCA. It contained its own arbitration clause in Article 17, which provided that any dispute arising out of it should be dealt with mutatis mutandis in accordance with Article XXVIII of the PCA.
On 30th March 2000, OPL entered into a Farmout Agreement ("FOA") with Zaver and OMV (then called Petronas Carigali (Pakistan) Ltd), under which it agreed to transfer to them the bulk of its interest in the Mehar Block concession, so as to produce the following working interests: OMV 75%; OPL 15%; Zaver 5%; Government Holdings 5%. It was also agreed that OMV would become the operating company in place of OPL.
Two documents, each described as a Deed of Assignment, but more properly characterised as a novation, were executed by OPL, the President and Government Holdings to give effect to the FOA, one with OMV with an effective date of 14 th May 2000 and one with Zaver with an effective date of 20 th October 2000. OMV and Zaver thereby became parties to the PCA and the JOA as from the effective dates.
In due course a disagreement erupted between OMV on the one hand and OPL and Zaver on the other in relation to operations in the Mehar Block. OPL and Zaver maintained that OMV was in breach of the JOA and stopped paying their respective shares of the operating costs. There were proceedings between the parties in the Pakistani courts, but although both sides sought to extract from them some support for their positions in the present appeal, I do not think that they have any real relevance to the questions we have to decide. In November 2014 OMV sought to refer the dispute to arbitration under the auspices of the ICC. In response OPL and Zaver issued an application under section 72 of the Arbitration Act 1996 seeking a declaration that the ICC did not have jurisdiction in the matter. (I refer to "dispute" in the singular as a matter of convenience and without prejudice to the contention that as a matter of law there are in fact two separate disputes in this case, one between OMV and OPL and one between OMV and Zaver.) To complete the picture, I should mention that OMV made an application under section 9 of the Act or the court's inherent jurisdiction for the proceedings under section 72 to be stayed, but that has played no significant part in the appeal and it is unnecessary to spend time on it.
The arbitration clauses
In order to explain the nature of the issues that arise in these proceedings it is necessary to refer in greater detail to the terms of the various arbitration clauses.
Article XXVIII of the PCA provides as follows:
"28.1 Any question or dispute arising out of or in connection with the terms of this Agreement or the Licence or any Lease (regardless of the nature of the question or dispute), shall, as far as possible, be settled amicably. Failing an amicable settlement within a reasonable period, such dispute shall be submitted to the International Center for Settlement of Investment Disputes (ICSID) established by the "Convention on the Settlement of Investment Disputes Between States and Nationals of Other States" and THE PRESIDENT and the Working Interest Owners, to the extent required by said Convention, hereby consent to arbitration thereunder.
…
28.2 If for any reason, the request for arbitration proceedings is not registered by ICSID, or if the ICSID fails or refuses to take jurisdiction over such dispute, such difference or dispute shall be finally settled by arbitrators under the Rules of Arbitration of the International Chamber of Commerce (the "Chamber Rules") and by three (3) arbitrators appointed in accordance with the Chamber Rules. The arbitrators shall not be nationals of Pakistan or of the country of the other party to the dispute nor shall any of such arbitrators be employees or agents or former employees or agents of any of the parties to the proceedings.
28.3 This Article is only applicable in case of a dispute between foreign Working Interest Owners inter se or between foreign Working Interest Owners and THE PRESIDENT, provided that in the event of a dispute between the Pakistani Working Interest Owner(s) inter se, or between the Pakistani Working Interest Owners and THE PRESIDENT, the arbitration shall be conducted in accordance with the Pakistan Arbitration Act."
Article 17 of the JOA provides as follows:
"Any dispute arising out of this Joint Operating Agreement shall be dealt with mutatis mutandis in accordance with Article XXVIII of the Concession Agreement."
Article 7 of the FOA provides as follows:
"7.2 This Agreement and the relationship between the Parties shall be governed by and Interpreted in accordance with the laws of the Islamic Republic of Pakistan. With respect to all disputes to be resolved hereunder, the Parties agree that the forum will be in Islamabad, Pakistan and any dispute shall first be settled by negotiation by the Parties and then resolved by reference to three Arbitrators each one to be nominated by the Parties in accordance with the Arbitration Act 1940 or any other statutory laws enforced for the time being in Pakistan. And in case of any disagreement between the Arbitrators, by an Umpire to be appointed by the Arbitrators but with the consent of the Parties, whose decision shall be final and binding upon the Parties.
7.3 However, there shall be no bar on the Parties to settle any dispute through the laws of England after exhausting option/remedy available under Article 7.2 above."
Article 29.6 of the PCA provides that the Pakistan Petroleum (Exploration and Production) Rules 1986 ("the Rules") are to remain applicable for the purposes of the agreement. For reasons which will become apparent it is therefore also necessary to mention Rule 73, which provides as follows:
"Arbitration — Except as otherwise agreed, any question or dispute regarding a Petroleum right or any matter or thing connected therewith shall be resolved by arbitration in Pakistan, and in accordance with Pakistani laws."
The proceedings below
Before the judge OPL and Zaver contended that the provision for ICC arbitration, which is to be found in Art. XXVIII of the PCA, had not survived the execution of the FOA as far as disputes involving any one or more of the parties to that agreement were concerned. They argued that any dispute of that kind relating to the concession, whatever its origin, was to be determined by arbitration under Article 7.2 of the...
To continue reading
Request your trial
-
Minister of Finance (Incorporated) 1Malaysia Development Berhad v International Petroleum Investment Company Aabar Investments PJS
...but it applies with particular force in circumstances such as the present case. 48 Moreover, in Hashwani v. OMV Maurice Energy Ltd [2015] EWCA Civ 1171, [2015] 2 CLC 800 (“ Hashwani”) at [31], Moore-Bick LJ suggested that it was the court's responsibility to decide a challenge to the juri......
-
ACE Engineering Ltd v Montreal Management Consultants Est Development General Service
...1 ALL E R 98, [1998] 1 WLR 896 4 Supra 5 Fiona Trust Case supra per Lord Hope of Craighead at paragraph 28 6 [1993] 1 ALL E R 664 7 [2015] EWCA Civ 1171 8 See Exhibit “ALB 3”… The 9 [2010] EWCA 1429 @ paragraph 17 10 [1998] 1 ALL E R 98 at page 114 – 115 11 [1973] 2 ALL E R 39 at page ......
-
ACE Engineering Ltd v [1] Montreal Management Consultants EST Development General Service
...1 ALL E R 98, [1998] 1 WLR 896 4 Supra 5 Fiona Trust Case supra per Lord Hope of Craighead at paragraph 28 6 [1993] 1 ALL E R 664 7 [2015] EWCA Civ 1171 8 See Exhibit “ALB 3” … The Contract 9 [2010] EWCA 1429 @ paragraph 17 10 [1998] 1 ALL E R 98 at page 114 – 115 11 [1973] 2 ALL E R 3......