Weissfisch v Julius
| Jurisdiction | England & Wales |
| Judge | Lord Phillips CJ,Sir Anthony Clarke MR,Moses LJ |
| Judgment Date | 08 March 2006 |
| Court | Court of Appeal (Civil Division) |
| Date | 08 March 2006 |
Court of Appeal (Civil Division).
Lord Phillips CJ, Sir Anthony Clarke MR and Moses LJ.
Barbara Dohmann QC and Claire Stanley (instructed by Weil, Gotshal & Manges) for the Claimant
Iain Milligan QC and Paul Stanley (instructed by Allen & Overy) for the first defendant.
Michael Briggs QC, Nicholas Lavender, Toby Landau and Jonathan Adkin (instructed by Lewis Silkin) for the second defendant.
Michael Brindle QC (instructed by Taylor Wessing) for the third defendant.
Arbitration — Arbitration agreements — Arbitrator's jurisdiction — Interim injunctions — Agreement to resolve disputes between parties by arbitration — Agreement governed by Swiss law and seat of arbitration to be in Switzerland — English proceedings against arbitrator and others alleging misrepresentation and fraud — Arbitrator proposed hearing in Switzerland to determine his jurisdiction — Whether claims against arbitrator not subject to arbitration agreement — Whether inappropriate for arbitrator to rule on own jurisdiction when that was being challenged on ground of own breach of duty — English court declined to restrain arbitrator from acting pending hearing of application for stay of English proceedings — Arbitration Act 1996, s. 9.
This was an appeal from an order of David Steel J dismissing the application of the claimant (AW) for an interim injunction to prevent the first defendant (J) from acting as arbitrator.
AW and the second defendant (RW) were wealthy brothers. J was a solicitor and the third defendant (D) was a lawyer practising in the Bahamas. D was the trustee of a discretionary trust established for the benefit of AW and his children. RW was a “nominated protector” of the trust.
The brothers' wealth was derived from metal trading which was conducted through a group of companies, some of which were owned by the trust. J had acted for the group, and occasionally for RW and AW personally. Disputes arose between the brothers and attempts by J to mediate did not resolve them. D, on AW's instructions, then transferred certain assets from the trust to new trusts controlled by AW. D subsequently made a criminal complaint in the Bahamas against AW, alleging that he had falsely stated that the transfer of assets had had the approval of RW as Protector. RW was anxious that the assets should be returned to the trust and AW was anxious that the criminal inquiry should be discontinued. Accordingly an agreement was signed by the parties which was intended to settle their disputes by returning the assets and withdrawing the criminal proceedings and provided for arbitration by J of any remaining disputes. The agreement was governed by Swiss law and provided that the seat of the arbitration would be Geneva.
The agreement did not settle the disputes and AW issued proceedings alleging that the agreement was void or had been avoided by him on the ground that it had been procured by misrepresentations. Amongst the relief sought was a declaration that the arbitration agreement was void and an injunction restraining J from acting as arbitrator. The defendants sought orders that the court should not entertain the claim to that relief, but should stay the proceedings and leave AW to advance that claim in Switzerland. A trial of that issue had been fixed but J intended before then to hold his own hearing on the issue of his jurisdiction. AW sought an injunction to restrain J from so doing. The judge declined to grant an injunction pending the hearing of the application for a stay.
AW appealed arguing that his claims against J personally for breach of duty were not the subject of the arbitration agreement, could not be made the subject of a stay and were only justiciable in England, and that it would be wholly inappropriate for J to rule on his own jurisdiction when that was being challenged on the ground of his own breaches of duty in relation to matters of which he was the primary witness.
Held, dismissing the appeal:
1. There was nothing untoward in J considering the question of his own jurisdiction once it had been put in issue. The principle of Kompetenz-Kompetenz sometimes required and arbitrator to be both judge and witness in his own cause. It was not uncommon for arbitrators to be called upon to consider submissions that they were not competent to act by reason of bias. In such circumstances the decision of the arbitrator would not be final, at least where the seat of the arbitration was in a country such as Switzerland where the courts exercised an appropriate supervisory jurisdiction over arbitration. That would only be a first step in determining that question, whether the subsequent steps take place in Switzerland or in England.
2. There were cogent reasons why J should not be restrained by injunction from holding a hearing to consider his own jurisdiction. AW and RW, each of whom was receiving independent legal advice, had expressly agreed that their disputes should be resolved by J under arbitration which would be governed by Swiss law and have its seat in Switzerland. The natural consequence of that agreement was that any issues as to the validity of the arbitration agreement would fall to be resolved in Switzerland according to Swisslaw. That consequence accorded with principles of the law of international arbitration agreed under the New York Convention and recognised in the Arbitration Act 1996. For the English court to restrain an arbitrator under an agreement providing for arbitration with its seat in a foreign jurisdiction would infringe those principles. Exceptional circumstances might justify the English court in taking such action but no such special circumstances had been shown which justified taking such action on an interim basis, pending the hearing of the stay application.
Lord Phillips CJ:
1. This appeal came before this court as an application for permission to appeal from an order of David Steel J dated 12 January 2006, dismissing the claimant (Amir's) application for an interim injunction against the first defendant, Anthony Julius, with the appeal to follow should permission be granted. This is an unusual case raising important issues of principle and, accordingly, we think it appropriate to give permission to appeal. We shall proceed to deal with the appeal, which was fully argued.
2. The relief that Amir seeks in the action in which these proceedings arise includes a declaration that an arbitration agreement providing for both Swiss law and a Swiss seat of the arbitration is void and an injunction restraining the first defendant, Mr Julius, the arbitrator under that agreement, from acting as such. The first three defendants have all sought orders that have the common theme that this court should not entertain the claim to this relief, but should leave Amir to advance it in Switzerland. The issue is to be resolved in proceedings before Colman J, which have now been fixed for hearing in April with a time estimate of 4 days. Mr Julius has made it plain that...
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