Terna Bahrain Holding Company Wll v Ali Marzook Ali Bin Kamil Al Shamsi and Others
| Jurisdiction | England & Wales |
| Judge | The Hon. Mr Justice Popplewell |
| Judgment Date | 22 November 2012 |
| Neutral Citation | [2012] EWHC 3283 (Comm) |
| Docket Number | Case No: 2012 Folio 713 |
| Court | Queen's Bench Division (Commercial Court) |
| Date | 22 November 2012 |
[2012] EWHC 3283 (Comm)
The Hon. Mr Justice Popplewell
Case No: 2012 Folio 713
Case No: 2012 Folio 1225
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
COMMERCIAL COURT
Royal Courts of Justice
Rolls Building, Fetter Lane
EC4A 1NL
Simon Salzedo QC and Gerard Rothschild (instructed by Simmons & Simmons) for the Claimant in 2012 Folio 713 and the First Defendant in 2012 Folio 1225
John Tackaberry QC, Ms Karen Gough and Ms Rebecca Drake (instructed by Aventus Law Ltd) for the Defendants in 2012 Folio 713 and the Claimants in 2012 Folio 1225
Hearing dates: 13 & 14 November 2012
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.
Introduction
There are three applications before the Court relating to the validity and enforcement of a London arbitration award made on 25 April 2012 by which the Arbitrator awarded the Claimant ("Terna") AED 84,285,282, together with interest and costs, against the three individual Respondents ("the Bin Kamils"). By a Claim Form issued on 18 September 2012, the Bin Kamils seek to challenge the Award for lack of jurisdiction and serious irregularity under sections 67 and 68 Arbitration Act 1996, and an extension of time in which to be permitted to do so. By an application notice dated 3 September 2012 the Bin Kamils seek to set aside an ex parte order made on 30 May 2012 by Hamblen J under section 66 of the Act, giving Terna leave to enforce the Award as a judgment. By an application notice dated 18 September 2012, Terna seeks an anti suit injunction restraining the Bin Kamils from challenging the validity of the Award abroad (outside EU and Lugano Convention states), and in particular requiring it to discontinue proceedings commenced by the Bin Kamils in Sharjah, UAE, for that purpose.
Terna is a company with limited liability constituted under the laws of Bahrain. It is owned by a Cypriot company belonging to Greek interests. The Bin Kamils are residents of Sharjah. They were the founders and owners of all of the shares of Hamriyah Cement Company FZC ("HCC"), a company constituted under the laws of the Hamriyah Free Zone, Sharjah, UAE. HCC held a 25 year lease of land in Hamriyah with a permit to build and operate a fully integrated cement plant with a capacity of up to 1.8 million tons of cement.
By two agreements in writing dated 19 June 2007 Terna became joint venture partners in the project. Under a Share Purchase Agreement of that date ("the SPA"), Terna purchased 40% of the share capital of HCC. Under a Shareholders Agreement of that date ("the SHA"), Terna and the Bin Kamils set out the detailed terms governing their cooperation as shareholders in HCC and their roles in the management of the company.
Thereafter, and pursuant to the agreements, Terna and the Bin Kamils jointly financed, managed and completed the construction of the cement plant and commenced its operation. It was envisaged that following completion of the cement plant, a cement import/export terminal would be constructed on a plot of land to be leased within the area of the Hamriyah Port. However permits for construction of the terminal were refused, and the terminal was not built. Terna contended that the Bin Kamils were responsible for procuring the permits to enable the terminal to be built. The parties were also in dispute about other aspects of the discharge of their respective obligations concerning the financing of the development and the management of the cement plant and the affairs of HCC.
Clause 11 of the SPA provided as follows:
" 11.1 This Agreement shall be governed by and construed in accordance with the laws of the Hamriyah Free Zone, the laws of the Emirate of Sharjah and the laws of the United ArabEmirates (i.e. the Law as defined under Clause 1.1 herein above), as applicable.
11.2 Any dispute arising out of or in relation to this Agreement, including but not limited to its construction, validity, performance or breach, shall be finally settled by one arbitrator in accordance with the ICC Arbitration Rules, as in force from time to time, and with the express provisions of this Clause 11.
11.3 The place of arbitration shall be London, United Kingdom, and the proceedings shall be conducted in the English language."
The SHA contained a materially identical condition.
Terna commenced the arbitration by a request dated 13 July 2009. On 8 October 2009 the Court of the ICC appointed Dr Nayla Comair-Obeid ("The Arbitrator") as sole arbitrator to determine the parties' disputes. The Arbitrator is recognised as a leading international arbitration practitioner, specialising in international business contracts and Islamic and Middle Eastern legislation and contracts.
The Bin Kamils were represented throughout the arbitration by Galadari & Associates of the UAE. The main witness hearing took place in London from 9 to 19 December 2010 with a further hearing in February 2011. After lengthy post hearing written submissions, the Award was issued on 25 April 2012. The total amount awarded was made up of (1) AED 19,000,000, which was the amount paid by Terna for its 40% stake in HCC; and (2) AED 65,285,282 which was the amount which the Arbitrator found had been contributed by Terna to HCC pursuant to the SPA and SHA; and (3) US$ 3,691,749.89 in respect of legal and other costs and expenses. The Award also provided for Terna to retransfer its 40% shareholding in HCC to the Bin Kamils. The Arbitrator granted this relief on the grounds that by reason of breaches of representations, warranties and undertakings in the agreements, Terna had validly invoked its right under clause 7.2.1(i) of the SPA to "rescind" the SPA, to reclaim the purchase price of the shares, and to be paid consequent "damage". Clause 10 of the SHA provided that the SHA terminated automatically upon termination of the SPA.
On 24 May 2012 Terna applied in writing, without notice to the Bin Kamils, under section 66 of the Arbitration Act 1996, for leave to enforce the Award in the same manner as a judgment.
On 29 May 2012, without notice at the time to Terna, the Bin Kamils filed a claim before the Conciliation and Reconciliation Committee of the First Instance Court in Sharjah, UAE, challenging the validity of the Award. The Committee is not itself a court, but encourages parties to settle disputes, failing which a claim is transferred to and filed before the Court.
By an order dated 30 May 2012 Hamblen J gave permission to enforce the Award in the same manner as a judgment. Having been made without notice, the order provided in the usual way that the Bin Kamils could apply to set it aside within 22 days after service, and that the Award was not to be enforced until after the expiration of that period, or until after the final disposal of any application made within that period to set aside the order.
On 21 June 2012 the Conciliation and Reconciliation Committee referred the Bin Kamils' application to the Sharjah Court and it was registered as case number 2403/2012.
On 9 July 2012 there was the first court hearing in Sharjah at which both parties were represented by their respective local lawyers.
On 16 July 2012 Galadari & Associates received a copy of the order of Hamblen J.
By a letter dated 31 July 2012 addressed to the Commercial Court, enclosing a draft application notice, the Bin Kamils applied for an extension of time until 1 September 2012 within which to apply to set aside Hamblen J's order, and such an extension was granted by Gloster J. Gloster J's order also provided that the matter be listed for directions in relation to that application, and to any further applications that the Bin Kamils might wish to make "including pursuant to section 66 to 69 of the Arbitration Act 1996."
An application notice to set aside Hamblen J's order was issued by the Bin Kamils on the last possible date, namely 3 September 2012 (1 September being a Saturday).
On 18 September 2012 the Bin Kamils issued an Arbitration Claim Form challenging the award under Sections 67 and 68 of the Act. The Claim Form also seeks an extension of time within which to do so, and permission to serve the Claim Form on Terna outside the jurisdiction.
On the same day, 18 September 2012, Terna issued an application notice seeking an anti suit injunction restraining the Bin Kamils from pursuing or continuing proceedings to challenge, invalidate or review the Award in any courts other than the courts of England and Wales, the Member States of the European Union or the Contracting States to the Lugano Convention; and ordering the Bin Kamils to discontinue, or to take all steps within their power to discontinue, the Sharjah proceedings within 21 days.
Pursuant to an order of Walker J made on 20 September 2012 all the applications were heard together.
The issues in outline
The main ground advanced by the Bin Kamils for challenging the Award is that the Arbitrator was guilty of a serious irregularity in deciding the case against the Bin Kamils on a basis which was never advanced by Terna, and which the Bin Kamils had no opportunity to address, either factually or legally; that Terna's claim was for the...
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