Terna Bahrain Holding Company WLL v Bin Kamil Al Shamsi and Others [QBD (Comm)]
| Jurisdiction | England & Wales |
| Judge | Popplewell J. |
| Judgment Date | 22 November 2012 |
| Court | Queen's Bench Division (Commercial Court) |
| Date | 22 November 2012 |
Queen's Bench Division (Commercial Court).
Popplewell J.
Simon Salzedo QC and Gerard Rothschild (instructed by Simmons & Simmons) for Terna.
John Tackaberry QC, Karen Gough and Rebecca Drake (instructed by Aventus Law Ltd) for the Bin Kamils.
The following cases were referred to in the judgment:
ABB AG v Hochtief Airport GmbHUNK [2006] 1 All ER (Comm) 529.
Bandwidth Shipping Corporation v Intaari (The Magdalena Oldendorff) [2007] 2 CLC 537.
Broda Agro Trade (Cyprus) Ltd v Alfred C Toepfer International GmbH [2010] 2 CLC 621.
Brown (L) & Sons Ltd v Crosby Homes (North West) LimitedUNK [2008] BLR 366.
C v D [2007] 1 CLC 1038.
Cameroon Airlines v Transnet LtdUNK [2004] EWHC 1829 (Comm).
Interbulk Ltd v Aiden Shipping Co Ltd (The Vimeira)UNK [1984] 2 Ll Rep 66.
Kalmneft JSC v Glencore International AG [2001] CLC 1805.
Lesotho Highlands Development Authority v Impregilo SpA [2005] 2 CLC 1; [2006] 1 AC 221.
London Underground Ltd v Citylink Telecommunications LtdUNK [2007] 2 All ER (Comm) 694.
Masri v Consolidated Contractors International Co SAL [2008] 1 CLC 887; [2009] QB 503.
Minmetals Germany GmbH v Ferco Steel Ltd [1999] CLC 647.
Nagusina Naviera v Allied Maritime Inc [2003] 2 CLC 1.
Nestor Maritime SA v Sea Anchor Shipping Co LtdUNK [2012] EWHC 996 (Comm); [2012] 2 Ll Rep 144.
Secretary of State for the Environment v Euston Centre InvestmentsELR [1995] Ch 200.
Vee Networks Ltd v Econet Wireless International LtdUNK [2005] 1 Ll Rep 192.
Westland Helicopters v Sheik Salah Al-HejailanUNK [2004] 2 Ll Rep 523.
Zermalt Holdings SA v NU-Life Upholstery Repairs LtdUNK [1985] 2 EGLR 14.
Arbitration — Award — Serious irregularity — Extension of time — Anti-suit injunction — Joint venture to build and operate cement plant in Sharjah — Claimant purchased 40 per cent of defendants' company — Share purchase agreement and shareholders' agreement providing for London arbitration — Plant completed but dispute arose and claimant commenced arbitration — Arbitrator found claimant entitled to rescind SPA and ordered retransfer of shareholding and repayment of price and JV contribution — Claimant obtained ex parte order to enforce award as judgment — Defendants brought proceedings in Sharjah and applied to set aside ex parte order and for extension of time to challenge award — Defendants' applications refused — Challenge would fail if time extended — No extension of time because of substantial delay resulting from deliberate choice for perceived tactical advantage — No serious irregularity in arbitrator deciding case on basis of rescission claim and no substantial injustice — Claimant entitled to anti-suit injunction to restrain proceedings in Sharjah challenging award — Arbitration Act 1996, s. 67, 68, 70, 73.
These were three applications relating to the validity and enforcement of a London arbitration award made in favour of the claimant (Terna) against the three individual respondents (the Bin Kamils).
The Bin Kamils owned a company (HCC) which held a lease of land in Sharjah with a permit to build and operate a cement plant. Terna became a joint venture partner and purchased 40 per cent of the share capital of HCC under a share purchase agreement (SPA). The parties also entered into a shareholders' agreement (SHA). The cement plant was completed but the parties were in dispute. The SPA and SHA provided for ICC arbitration in London. Terna commenced arbitration proceedings and obtained an award in its favour. The arbitrator awarded Terna the amount it had paid for the shares in HCC and the amount it had contributed to the joint venture. The award also provided for Terna to retransfer its 40 per cent shareholding in HCC to the Bin Kamils. The arbitrator granted that 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 it. The SHA provided that it terminated automatically on termination of the SPA.
Terna obtained an ex parte order under s. 66 of the Arbitration Act 1996 for leave to enforce the award in the same manner as a judgment. The Bin Kamils brought proceedings in Sharjah challenging the validity of the award.
The Bin Kamils applied to set aside the ex parte order under s. 66 of the Act, and for an extension of time to challenge the award for lack of jurisdiction and serious irregularity under s. 67 and s. 68 of the Arbitration Act 1996. Terna sought an anti-suit injunction restraining the Bin Kamils from challenging the validity of the award outside EU and Lugano Convention states, and in particular requiring them to discontinue the Sharjah proceedings.
The main ground advanced by the Bin Kamils for challenging the award was that Terna's claim was for the enforcement of a call option under the SHA seeking an order for the Bin Kamils to transfer their shares to Terna, alternatively for damages for a series of alleged breaches of the agreements, and that there had been no claim for rescission of the SPA and repayment. The arbitrator therefore was guilty of a serious irregularity and an excess of jurisdiction 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.
Held, dismissing the Bin Kamils' challenges to the award and to the s. 66 order, and granting an anti-suit injunction:
1. The application for an extension of time was made almost 17 weeks after expiry of the 28-day period in s. 70(3) of the 1996 Act. That was a very substantial delay in the context of the statutory period. The Bin Kamils had chosen London as the seat of the arbitration in their agreements, notwithstanding the application of UAE law. The arbitration was conducted in London, in English. Two of the three Bin Kamils gave oral evidence in English in the arbitration. The inference was that they were willing and able to understand and deal with English procedural matters relating to the dispute, with the benefit, if necessary, of legal advice about those matters from those qualified to give it. They had given no explanation as to why proceedings were commenced in Sharjah and not in England. The inference was that they had been correctly advised that any challenge to the award should to be brought in London as the seat of the arbitration within 28 days. It was a case of deliberate and tactical delay. The culpability for the delay was very high. An extension of time was refused because the application would in any event fail if time were extended. However, even if the challenge was a good one which would have succeeded, an extension would have been refused as a matter of discretion in the light of the substantial delay which was a result of a deliberate choice for perceived tactical advantage.
2. The claim for rescission was advanced in Terna's statement of claim. The Bin Kamils recognised that in their subsequent submissions and invited the tribunal to make an award dismissing the claim for rescission. Rescission was claimed as an alternative form of relief, but the Bin Kamils invited the tribunal to deal with the rescission claim on its merits and to reject it. Their complaint was, in reality, that Terna succeeded on a basis which it had raised only briefly, and upon which it had not concentrated any detailed submissions. That was not the same as their having had no opportunity to address the basis on which the arbitrator decided the case against them. They had the opportunity, but chose not to avail themselves of it. That did not amount to a breach of s. 33 of the Act or to a serious irregularity within the meaning of s. 68. They also had the opportunity to develop any arguments they wished to make about the quantum recoverable. Furthermore, there was no proper evidential basis for concluding that the various arguments which they would have addressed to the arbitrator might have made a difference. They therefore failed to establish that the course adopted by the arbitrator had caused them substantial injustice.
3. The Bin Kamils contended that the arbitrator had no jurisdiction to accede to the claim under clause 7.2.1(i), because it was a “new claim”, raised for the first time after the terms of reference were finalised, but their right to object has been lost by reason of s. 73 of the Act, since they continued to take part in the reference without objection.
4. The continued pursuit of the Sharjah proceedings by the Bin Kamils would be a breach of the arbitration agreements, an attempt to impugn the judgment of the English court, and an abuse of process, against which Terna was entitled to be protected by the grant of an injunction.
Popplewell J:
1. 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 s. 67 and s. 68 of the 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 s. 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.
2. Terna is a...
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