Svenska Petroleum Exploration AB v Government of the Republic of Lithuania and another (No. 2)
Jurisdiction | England & Wales |
Judge | Lord Justice Moore-Bick |
Judgment Date | 13 November 2006 |
Neutral Citation | [2006] EWCA Civ 1529 |
Docket Number | Case No: B6/2005/2737 |
Court | Court of Appeal (Civil Division) |
Date | 13 November 2006 |
[2006] EWCA Civ 1529
Sir Anthony Clarke Mr
Lord Justice Scott Baker and
Lord Justice Moore-Bick
Case No: B6/2005/2737
IN THE SUPREME COURT OF JUDICAT
COURT OF APPEAL (CIVIL DIVISI
ON APPEAL FROM THE HIGH COURT OF JUST
QUEEN'S BENCH DIVISION (COMMERCIAL COU
(Mrs Justice Gloster D
2004 Folio 272
Royal Courts of Justice
Strand, London, WC2A 2LL
Mr. Stewart Shackleton (Solicitor Advocate) and Mr. David Holloway (instructed by Eversheds) for the appellant, the Government of the Republic of Lithuania
Mr. Michael Bools (instructed by Norton Rose) for the respondent
This is the judgment of the court.
1. Introduction
This appeal arises out of an attempt by the respondent, Svenska Petroleum Exploration AB ("Svenska") , to enforce as a judgment in this country an arbitration award made in Denmark by a panel of arbitrators acting under the rules of the International Chamber of Commerce ("the ICC") . The award was made in favour of Svenska against the appellant, the Government of the Republic of Lithuania ("the Government") , and AB Geonafta, which, until it was privatised on 16 th June 2000, was an organisation owned and controlled by the state of Lithuania but which enjoyed separate legal personality.
(a) The dispute
The dispute between the parties arose out of a Joint Venture Agreement ("the Agreement") signed at a ceremony in Vilnius on 28 th April 1993 under which Svenska and Geonafta, then known as Gargzdai State Oil Geology Enterprise or "EPG", agreed to establish a joint stock company to exploit the oil reserves within the area of Lithuania identified in the annex to the Agreement which was known to contain the Genciai oilfield.
The Government itself was not expressed to be a party to the Agreement, but several of its articles contained not only terms dealing with the rights and obligations of Svenska and EPG but also terms dealing expressly with the rights and obligations of the Government. It was signed on behalf of EPG by one of its directors, Mr. Ricardas Vaitiekunas, and on behalf of the Government by the Minister of Energy, Mr. Algimantas Stasiukynas, and Dr. Gediminas Motuza, the Director of the Geological Service at the Ministry of Construction and Urban Development. Over the signatures of Mr. Stasiukynas and Dr. Motuza there appeared a rubric in the following terms:
"The Government of the Republic of Lithuania hereby approves the above agreement and acknowledges itself to be legally and contractually bound as if the Government were a signatory to the Agreement."
The meaning and effect of this rubric, and thus the significance of the Government's signature of the Agreement, later came to play an important part in the dispute with Svenska.
The Agreement provided that Svenska would carry out a feasibility study as soon as practicable in relation to two other oilfields lying within the area covered by it, the Kretinga and Nausodis fields, and contemplated that, if it were economically feasible to do so, Svenska and EPG would also develop those fields under a separate agreement. The Agreement also provided that Svenska should have a preferred position in relation to the exploration and development of a second area of the country identified in another annex. In the event, however, Svenska complained that it was not allowed to take part in the development of either the Kretinga or Nausodis oilfields and was not given the preferred status to which it was entitled in relation to the exploration and development of the additional area. Thus a dispute arose, principally between Svenska and the Government, but also between Svenska and Geonafta, which led to Svenska's pursuing a claim against both of them for relief of various kinds.
(b) The arbitration proceedings
Apart from the rubric attached to the Government's signature to which we have already referred, the Agreement contained two articles which were of primary significance in relation to Svenska's pursuit of its claim. The first is Article 9 which provides as follows:
"SETTLEMENT OF DISPU
9.1 Disputes between the Founders concerning the performance or interpretation of this Agreement are settled through negotiations between the Founders.
9.2 In the event that disputes cannot be settled through negotiations within 90 days of the receipt of the written notice by either Founder about the existence of such disagreement the disputable matter shall be submitted upon agreement of the Founders for consideration to:
a) the Court of the Republic of Lithuania or
b) independent arbitration in Denmark, Copenhagen to be conducted in accordance with International Chamber of Commerce Rules of Arbitration in the English language.
In case the Founders do not reach an agreement on the institution where the dispute is to be settled, the disputable matter shall be submitted for consideration to an independent arbitration provided in subparagraph b) of this paragraph."
The second is Article 35 which provides as follows:
"GOVERNING LAW AND SOVEREIGN IMMUN
35.1 GOVERNMENT and EPG hereby irrevocably waives [sic] all rights to sovereign immunity.
35.2 This Agreement shall be governed by the laws of Lithuania supplemented, where required, by rules of international business activities generally accepted in the petroleum industry if they do not contradict the laws of the Republic of Lithuania."
Svenska sought to pursue its claim against the Government by arbitration under the terms of Article 9. It maintained that the Government had agreed to be bound as if it were a party to the Agreement, that Article 9 contained the only provision for resolving any disputes that might arise under the Agreement and that it was obviously intended that any disputes that might arise between itself and the Government, as well as between itself and EPG, should be resolved in that way. On 12 th June 2000 Svenska filed a request for arbitration with the secretariat of the ICC and on 21 st July the Government filed its answer protesting the jurisdiction of the ICC and of any tribunal appointed by it. That led to a hearing before a panel of arbitrators in October 2001 for the sole purpose of determining the issue of jurisdiction and on 21 st December the panel published an interim award in which it held that the Government had agreed to refer disputes to arbitration and that the tribunal therefore had jurisdiction to hear and determine Svenska's claim. We shall refer to this as "the first award".
Svenska then proceeded with the substance of its claim. Following a hearing in Copenhagen in June 2002 the tribunal eventually published its final award on 30 th October 2003 holding the Government and Geonafta liable to Svenska in damages in the sum of US$12,579,000. We shall refer to this as "the second award". Although the Government took part in the proceedings which led to that award, it did so under protest, reserving its position as to the tribunal's jurisdiction.
(c) The enforcement proceedings
Following the publication of the second award Svenska began proceedings in this country seeking permission to enforce the award as a judgment of the court under section 101 of the Arbitration Act 1996. The application was made without notice in accordance with the provisions of CPR Part 62. On 7 th April 2004 Morison J. made an order giving Svenska permission to enforce the award, but stayed its effect for a period of 2 months and 21 days from the date of service on the Government to enable it, if it thought fit, to file an acknowledgment of service and to apply to set aside the order. On 31 st August 2004 the Government filed an acknowledgment of service and applied under CPR Part 11 to have the order giving permission to enforce the award set aside on the grounds that it was entitled to immunity from process of any kind.
Svenska took the view that the first award provided a short answer to the Government's claim to state immunity. It therefore issued an application under CPR Part 24 seeking to have the Government's application struck out and judgment entered in terms of the second award. In our view that was an inappropriate course to take and one which has since given rise to some difficulty and confusion, as we shall explain later. Nonetheless, that was the course it took and it was that limited application which on 24 th November 2004 came on for hearing before Mr. Nigel Teare Q.C. sitting as a Deputy Judge of the High Court. On 11 th January 2005 Mr. Teare delivered a judgment dismissing Svenska's application on the grounds that although the first award should be recognised, it did not inevitably, as Svenska had contended, finally determine the question whether the Government had agreed to submit disputes under the Agreement to arbitration.
The Deputy Judge's decision paved the way for the hearing of the Government's application to set aside the order of Morison J. Immediately following the delivery of the judgment the parties agreed certain directions for the hearing of that application, including directions for the service of evidence of fact and expert evidence of Lithuanian law, but they were later superseded by further directions given by Cresswell J. on 13 th April 2005. In due course the application came before Gloster J. for hearing on 4 th July 2005, the Government being represented by Mr. Shackleton and Mr. Holloway and Svenska by Mr. Bools, as they were before us.
The hearing before Gloster J. occupied six days. There were three main issues: whether the Government had submitted to the...
To continue reading
Request your trial-
NML Capital Ltd v Republic of Argentina [QBD (Comm)]
...AB v Government of the Republic of Lithuania [2006] 1 Lloyd's Rep 181 at [50] per Gloster J, upheld by the Court of Appeal in [2007] QB 886 at [134]-[137] per Moore-Bick LJ. The subject matter of the present proceedings is the New York judgment—the Fiscal Agency Agreement and the bonds ar......
- Accc v P.T. Garuda Indonesia Ltd
-
Dynasty Company for Oil and Gas Trading Ltd v The Kurdistan Regional Government of Iraq
...resources. The issue was considered, albeit briefly, and without a concluded view being expressed, in Svenska Petroleum Exploration AB v Government of the Republic of Lithuania (No. 2) [2007] QB 886. At [133] Moore-Bick LJ said: ‘… As the judge pointed out, the agreement contains many of t......
-
London Steam-Ship Owners' Mutual Insurance Association Ltd v Spain and Another [QBD (Comm)]
...jurisdiction of the courts, to ensure that the arbitration is effective. As explained by Moore-Bick LJ in Svenska Petroleum Exploration AB v Government of the Republic of Lithuania [2008] QB 886 at [17]: "the principle underlying section 9 is that, if a state has agreed to submit to arbitra......
-
Three Part Series: UK Freezing Orders Against A Foreign State
...of Colombia [1984] AC 580, at p 600F. 5. Svenska Petroleum Exploration AB v Government of the Republic of Lithuania and another (No 2) [2006] EWCA Civ 1529, at [117]. That decision was subsequently approved by the same court in the context of ICSID Convention arbitration, in ETI Euro Teleco......
-
IFI Update London, August/October 2008 - Part 2
...effect to the New York Convention of 1958 (see, further, Svenska Petroleum Exploration AB v. Government of the Republic of Lithuania [2006] EWCA Civ 1529, [2006] QB Property in use or intended for use for commercial purposes In relation to the second of the exceptions mentioned above, his L......
-
International Comparative Legal Guide to International Arbitration 2019 - Chapter Thirty Two: England & Wales
...in the English courts which relate to the arbitration (see Svenska Petroleum Exploration AB v Government of the Republic of Lithuania [2006] EWCA Civ 1529). A state would therefore not be immune from the adjudicative jurisdiction of the English courts with respect to court proceedings that ......
-
INTRODUCTORY ESSAY
...GT Payment Pte Ltd[2014] SGHCR 12 at [13], per Shaun Leong Li Shiong AR. 42[1990] 1 AC 295 at 310 (CA) (reversed on other grounds). 43[2006] EWCA Civ 1529; [2007] QB 886. 44 Gary Born, “The Law Governing International Arbitration Agreements: An International Perspective”(2014) 26 SAcLJ 814.......
-
Kuwait Airways Corp. c. Irak, 2010 CSC 40.
...Voir aussi Svenska Petroleum Exploitation AB v Lithuania (no 2), [2005] EWHC 2437 (Comm), [2006] 1 Al] ER 731 au para 50 : en appel : [2006] EWCA Civ 1529, [2007] 2 WLR 876 ; AIC Ltd v Nigeria, [2003] EWHC 1357 (QB) aux para 18, 19, 24-28, 34, 41 (disponible sur BAILII) ; FG Hemisphere Asso......