State A v Party B

JurisdictionEngland & Wales
JudgeSir Michael Burton
Judgment Date29 January 2019
Neutral Citation[2019] EWHC 799 (Comm)
CourtQueen's Bench Division (Commercial Court)
Date29 January 2019
Docket NumberCase No: CL-2018-000453

[2019] EWHC 799 (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, Rolls Building

Fetter Lane, London, EC4A 1NL

Before:

Sir Michael Burton QC

sitting as a High Court Judge

Case No: CL-2018-000453

Between:
State A
Applicant
and
(1) Party B
(2) Party C
Respondents

Christopher Harris, Sir Michael Wood and Cameron Miles (instructed by Reed Smith) for the Applicant

David Foxton QC and Edward Ho (instructed by Jones Day) for the Respondents

Hearing dates: 21–22 January 2019

APPROVED REDACTED JUDGMENT

Sir Michael Burton

(14.01 pm)

Tuesday, 29th January 2019

Sir Michael Burton
1

This has been the hearing of an application by the Applicant, State A (Respondent in the arbitration) for an extension of time pursuant to ss.70(3) and 80(5) of the Arbitration Act 1996 (“the Act”) of the 28-day limit for an application pursuant to s.67 of the Act to challenge the jurisdiction of the Arbitral Tribunal […].

2

The Arbitrators concluded, by a Partial Award on jurisdiction dated […] 2015, that they had jurisdiction under the […] (“the BIT”), […], so that the arbitration was validly commenced under […] the BIT.

3

There was no s.67 challenge at the time, and the parties, the Applicant and the Respondents (Claimants in the arbitration) […], proceeded to prepare for and conduct a hearing over 12 days in […] 2017 and 2018, from which the final award is still awaited. The Applicant's application for an extension of the 28-day time limit was issued 959 days late, […], and it is vigorously resisted by the Respondents.

4

The jurisdiction hearing which led to the Partial Award took place [in early] 2015. It was preceded by an application by State D who had, as the Applicant and the Arbitrators appreciated (see the Arbitrators' ruling dated […]), been contacted by the Respondents after State D's position was put at issue by the Applicant. The Arbitrators granted the application [in late] 2014 in the following terms:-

[…]

5

State D's Submissions […] included the following:-

“6. In order to determine its position with respect to the issue […], State D has undertaken a thorough review of its records, including any communications with State A in that respect.” […]

6

These Submissions were accompanied by a substantial number of specially declassified documents. There was only a short period before the hearing, but the Applicant put in a Response in which it said:-

“State D's ‘findings and conclusions’, even if they were supported by the materials relied upon in the […] Submissions … could not be conclusive as to the question […]. That question cannot be determined by the subjective view of one party, State D, given in 2014 in the […] Submissions, which was first adopted in the course of the present proceedings and after access to the parties' pleadings. This is particularly the case since State D's ‘findings and conclusions’ are based largely on its own selection of internal records, records which may or may not be complete and which in any event were not previously known or available to State A. Moreover, in reaching its ‘findings and conclusions’, State D does not simply let the records speak for themselves, but interprets them in advocacy fashion in an effort to support the conclusion that it (and the Claimants) desire.”

7

In post-hearing submissions the Applicant further submitted:-

“In any event, we have no way of knowing whether the documents supplied by State D are all that it has.”

8

The Arbitrators addressed the State D Submissions in their Partial Award as follows:-

233. Respondent sharply criticized State D's submission, finding it ‘based largely on [State D's] own selection of unpublished memoranda and materials,’ internal documents […] Notwithstanding Claimants' assertions, State D's supposedly ‘thorough review’ of its record is not ‘an objective exposition of the record.’”

Then at paragraph 264:

“The Tribunal has carefully reviewed the thirty-three documents drawn from State D's official files that accompanied the submission. Most are internal State D Government communications or, in one case, a letter from a State D official to a State D professor. While these documents were not communicated to Respondent at the time they were created, some provide useful context for exchanges that did take place between the two states. Others indicate or clarify State D officials' understandings or intentions […]. In this regard, State D's non-disputing party submission has made a useful contribution to the proceedings.

265. However, State D's legal analysis, in particular its legal conclusion […], goes to matters that the Tribunal must itself decide on the basis of its own independent appraisal of all relevant facts and legal principles.”

9

The Partial Award is lengthy, and draws fully on the submissions made to the Arbitrators, and the documents put before them. They note that:-

10

[…]

11

[…]

12

[…]

13

[…]

14

[…]

15

[…]

16

[…]

17

[…]

18

[…]

19

There was no challenge to the Award within 28 days or at all. Preparations for the hearing on merits and quantum continued and the parties have expended some $[X] million each on costs. There were 10 pleadings consisting of over 2,100 pages, 13 witness statements and 15 expert reports, and 17 witnesses were cross-examined during the 12 days of hearing […].

20

Meanwhile another arbitration claim under the BIT was brought against the Applicant (the Party E arbitration) […]. The Applicant was represented by different solicitors. Party E filed a 166-page statement of claim in February 2017. It was accompanied by some 190 documents and the total number of pages apparently associated with the filing runs to 22,576.

21

One such exhibit, referred to in two footnotes relating to merits not jurisdiction, was a letter dated […], written to Mr F, the State D Minister […] at the time, by the claimant in that arbitration (“the Company G Letter”) and it concluded:-

[…]

22

Those advising the Applicant in that arbitration did not pick up the relevance of this letter until after an order was made in that arbitration […], refusing to bifurcate the arbitration to hear the issue of jurisdiction as a preliminary matter.

23

They identified its potential relevance [3 months later], and decided to seek any response to the letter by an application under the State D freedom of information legislation (“FOI”) [the following month].

24

State D responded to the FOI request [4 months later] by producing a redacted copy of a letter of response from Mr F […], with parts of the third paragraph redacted (“the Mr F Letter”). The Applicant's representatives emailed a representative of the State D Government on 30 April, asking for the passages to be unredacted because of their potential relevance in this arbitration, but this was refused […].

25

The unredacted copy was then sought by way of the disclosure process in the Party E arbitration, and an unredacted copy was produced [in] 2018. The paragraph which had in part been redacted was revealed as being as follows:-

“[…].”

26

This application was then speedily issued […]. Evidence was then served by both parties and there was also a letter sent to the State A ambassador in State D by the State D […] addressing the Mr F Letter (“the Mr H Letter”). While recording that “at no point has State A directly requested that State D provide the Letter to it, and at no point has State D ever refused to provide State A with the Letter” (as opposed to the making and refusing of the FOI request, which it explains) it continues as follows:-

“Counsel for State A's allegations regarding the incompleteness and inaccuracy of State D's position […] are similarly misplaced. As has been conveyed to State A several times, State D's position on this question […] is based on all of the documents and facts available […]. As discussed in State D's Submissions, State D conducted a thorough review of its records to determine its position […]. The Letter came up in State D's search, and was carefully considered. It was determined that the Letter was not relevant or useful in determining State D's position […] for several reasons. […]. In the light of the […], State D determined that the Letter did not add anything to its analysis and did not rely on it in its Submission. Indeed, State D viewed and continues to view the Letter as a limited and perfunctory reference to the issue […].”

27

The Applicant, for whom Mr Christopher Harris and Sir Michael Wood, with Mr Cameron Miles, have made able and persuasive submissions, makes its application for an extension, which it accepts is made after an exceptional passage of time, by reference to the receipt of the unredacted Mr F Letter only in […] 2018, and its timeous steps thereafter.

28

They submit that they now have an arguable challenge under s.67 to the Arbitrators' Partial Award of […]. They rely on the principles first enunciated in relation to the grant or refusal of an application for an extension of time by reference to s.80(5) of the Act by Colman J in Aoot Kalmneft v Glencore International AG, [2002] 1 All ER 76 (“ Kalmneft”), approved by the Court of Appeal in Nagusina Naviera v Allied Maritime Inc, [2003] 2 CLC 1 (“ Nagusina”) and recently re-enunciated by Popplewell J in Terna Bahrain Holding Co WLL v Al Shamsi, [2013] 1 All ER (Comm) 580, (“ Terna”). If necessary, which they say it is not, but in response to the Respondents' submissions, they contend that the evidence supplied by the Mr F Letter is a ‘game-changer’, by reference to the cases where fresh evidence is sought to be admitted on an appeal — per Earl Cairns LC in Phosphate Sewage Co Limited v Molleson, (1879) 4 App Cas 801, at 814, namely new evidence which “entirely changes the aspect of the case”.

29

The Respondents, ably and powerfully represented by Mr...

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2 cases
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    ...specific factors identified within Colman J's judgment are in play. 150 There is some debate in the authorities (see for example State A v Party B [2019] EWHC 799 (Comm) at [33]) whether the first three factors are generally to be taken as the most important ones. However in this case it i......
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    ...from the strength of the case for an extension, but otherwise the substantive merits should be regarded as of marginal relevance. In State A v Party B [2019] EWHC 799 (Comm), Sir Michael Burton, sitting as a High Court judge, took the view that where there had been a very long delay, the a......

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