Wael Buheiry v Vistajet Ltd
| Jurisdiction | England & Wales |
| Judge | Mr Justice Jacobs |
| Judgment Date | 25 November 2022 |
| Neutral Citation | [2022] EWHC 2998 (Comm) |
| Docket Number | Case No: CL-2021-000583 |
| Court | Queen's Bench Division (Commercial Court) |
[2022] EWHC 2998 (Comm)
Mr Justice Jacobs
Case No: CL-2021-000583
IN THE HIGH COURT OF JUSTICE
KING'S BENCH DIVISION
BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES
COMMERCIAL COURT
Royal Courts of Justice, Rolls Building
Fetter Lane, London, EC4A 1NL
Timothy Higginson and Ian Chai (instructed by Edwin Coe LLP) for the Claimant
Karen Maxwell (instructed by Clyde & Co LLP) for the Defendant
Hearing dates: 21 November 2022
Approved Judgment
This judgment was handed down remotely at 9:30am on Friday 25 th November 2022 by circulation to the parties or their representatives by e-mail and by release to the National Archives (see eg ).
A: Introduction
The Claimant (“Mr Buheiry”) challenges an LCIA arbitration award dated 9 September 2021 by which the tribunal awarded to the Defendant (“VistaJet”) the sum of € 1,050,653.86 plus interest. Mr Buheiry's challenges are brought under the Arbitration Act 1996 sections 67 and 68.
VistaJet's claims in the arbitration were debt claims for instalments alleged to be due under an agreement signed in April 2014 (“the 2014 Agreement”). That agreement was between Mr Buheiry and a company called VistaJet Luftfarhtunternehman GmbH (“VJLU”). VJLU was a company within the same overall group as the Defendant, VistaJet. VistaJet was an assignee of the rights of VJLU.
Mr Buheiry's principal argument, on his section 67 challenge, concerns the effectiveness of this assignment. The precise relationship between VistaJet and VJLU is relevant to the argument advanced. Mr Buheiry contends that the tribunal lacked jurisdiction because there could be no valid assignment by VJLU to VistaJet because of the limitations in clause 7.7 of Schedule C to the 2014 Agreement. The 2014 Agreement comprised a Term Sheet and Schedules A, B and C. Schedule C contained “Miscellaneous Provisions” including clause 7.7:
“7.7 VistaJet may novate, assign, sub-contract and transfer this Agreement and all or any of its rights and obligations under it to (a) its holding company, (b) any subsidiary of its holding company, and (c) any company purchasing the business and undertaking of VistaJet. The expressions “holding company” and “subsidiary” shall have the meaning given to them in section 1159 of the Companies Act 2006. In the event of such novation, assignment, sub-contracting or transfer, (a) VistaJet shall inform the Member thereof in writing within a reasonable time thereafter and (b) the Member will re-execute a fresh agreement for the unexpired Term of this Agreement with the novatee/assignee/sub-contractor/transferee, if VistaJet requires the Member to do so…”
In relation to this ground of challenge under section 67, Mr Buheiry contends that the assignee from VJLU was not “any subsidiary of its holding company”. The challenge under section 68 raises essentially the same point.
The second ground of challenge, again raised under both sections 67 and 68, concerns a question of whether appropriate notice had been given in respect of the arbitration proceedings commenced by VistaJet. Mr Buheiry's argument was based upon a different provision within Schedule C to the 2014 Agreement, clause 7.11. This provided as follows:
“7.11 All notices hereunder will be in writing, in English, and deemed to have been given on the date of dispatch if faxed (with transmittal confirmation), and 5 days after posting, if sent by registered post (excluding Saturdays, Sundays, and public holidays), in each instance to the address specified on the first page of this Program”.”
Mr Buheiry contended that notice of the commencement of the arbitration was given by e-mail, and that this was ineffective.
The Defendant raised three principal points in response.
First, neither ground of challenge was properly to be regarded as a challenge to the tribunal's substantive jurisdiction within section 67. This is because a section 67 jurisdictional challenge must relate to one of the matters set out in the Arbitration Act 1996 section 30. It did not do so here.
Secondly, even if either ground of challenge did come within section 67, there was no merit in the points advanced.
Thirdly, if the challenge failed under section 67, there was no separate point which arose in relation to section 68. In particular, Mr Buheiry had a full opportunity to argue these two points before the tribunal, and indeed did argue them to some extent and had the opportunity of making additional submissions, for example in response to written questions which the tribunal asked. There was no procedural irregularity, and in any event nothing which caused substantial injustice, so as to come with section 68.
B: The parties' contractual dealings
In April 2014, Mr Buheiry and VJLU entered into the 2014 Agreement. The commercial subject-matter of the agreement was the provision of private aircraft services. VJLU is an Austrian company which operates and provides such services to its customers through a membership program scheme. The material terms of the 2014 Agreement, in the context of the arguments advanced, are the assignment provision (Clause 7.7) and the notice provision (Clause 7.11) quoted above. The 2014 Agreement provided for English law and the jurisdiction of the English courts, rather than arbitration. The start date for the agreement was 1 May 2014. This was set out in a Term Sheet signed by the parties, and this incorporated various other provisions.
The tribunal's award describes certain correspondence between the parties in 2014 and early 2015. In April 2015, a Maltese lawyer, Dr Micallef, put forward a number of complaints on behalf of his client, Mr Buheiry. The complaints concerned the quality of services provided by VJLU. The details of those complaints do not matter for present purposes. However, they led to negotiations for a new agreement, which was signed by Mr Buheiry on 4 August 2015 and by both VJLU and the present Defendant, VistaJet, on 20 August 2015 (“the 2015 Agreement”).
The structure of the 2015 Agreement is broadly similar to that of the 2014 Agreement. It again consists of a Term Sheet and Schedules A to C. The Term Sheet identifies VistaJet and Mr Buheiry at the top of the page, and it then provides that its terms (together with those in the Schedules) “together form the basis on which VistaJet shall provide [Mr Buheiry] with flight services and additional services”. The start date was 1 July 2015. There were 10 “Special Terms” in the Term Sheet. These included the following:
“1. In the event of conflict or inconsistency between these Special Terms and any other terms set out elsewhere in this Program, these Special Terms shall take precedence.
2. VistaJet Luftfahrtunternehmen GmbH (‘VJLU’') and the Member are parties to a Program Partnership Agreement dated April 2014 with a Start Date of 1 May 2014 (the “Old Program”). The parties agree that following the execution of this Program and payment by the Member of (i) EUR 15,653,86 to VJLU and (ii) the first Quarterly Payment of US$ 150,000 to VistaJet, the Old Program terminates and is replaced by this new Program. The security deposit held by VJLU under the Old Program shall then be transferred to VistaJet and held as the Security Deposit payable under this Program.
…
10. Section 9.2 of Schedule C is deleted and substituted by the following wording. Any dispute or claim arising out of or in relation to this Program shall be submitted to the London Court of International Arbitration (LCIA) under and in accordance with the Arbitration Act 1996 and the rules of the LCIA at the date of such submission, which rules are deemed to be incorporated by reference within this Clause. The Tribunal shall consist of three arbitrators and each litigating party shall select one arbitrator. The arbitrators selected by the parties shall select the Chairman from amongst themselves. In the absence of selection by the Parties, the arbitrators including the Chairman shall be appointed by the LCIA. The Parties hereto acknowledge that service of any notices in the course of such arbitration at their addresses as given in this Agreement shall be sufficient and valid. Proceedings shall be held in camera, in the English language and in London.”
At the end of these Special Terms were completed signature blocks for Mr Buheiry, VistaJet and VJLU, preceded by the words:
“IN WITNESS WHEREOF, the parties hereto have executed this Program consisting of this Term Sheet, the Program Fundamentals, the Service Area Rules and the Miscellaneous Provisions on the dates set out below”.
Special Term 2 provided, as set out above, that the previous program (i.e. the subject of the 2014 Agreement) would be terminated and replaced by the new program (i.e. the subject of the 2015 Agreement) following execution of the new agreement and the payment of certain sums to VJLU and VistaJet. There was no dispute that (leaving aside the arbitration clause) the 2015 Agreement did not come into effect, because the payment conditions were not fulfilled. There was also no dispute, either in the arbitration or in Mr Buheiry's case as set out in the Claim Form, that the arbitration agreement contained in Clause 10 of the Special Conditions was nevertheless binding; on the basis that it was separable (see the Arbitration Act 1996, section 7) and therefore survived the invalidity of the “matrix” agreement in which it was contained. There was therefore no argument that the ineffectiveness of the matrix agreement, pursuant to Special Term 2, resulted in the ineffectiveness of the arbitration agreement. Indeed, in correspondence between Mr Micallef and Clyde & Co (“Clydes”) on behalf of VistaJet in September 2020, shortly before the commencement of the arbitration proceedings, Mr Buheiry took the position that any...
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