Westacre Investments Ltd v Jugoimport-SPDR Holding Company Ltd and Another ; Same v Same and Others
| Jurisdiction | England & Wales |
| Judgment Date | 1998 |
| Date | 1998 |
| Year | 1998 |
| Court | Queen's Bench Division (Commercial Court) |
Arbitration - Award - Enforcement - Consultancy contract relating to sale of military equipment - Contract containing arbitration clause - Plaintiffs' claim under contract referred to arbitration in Switzerland - Defendants claiming contract illegal and enforcement contrary to public policy - Arbitrators' award in plaintiffs' favour upheld by Swiss supervisory court - Proceedings in England to enforce award - Defendants resisting enforcement on grounds of public policy and contending award obtained by perjured evidence - Whether evidence of perjury to be admitted in enforcement proceedings - Whether award to be enforced
By a contract governed by Swiss law the first defendant appointed the plaintiffs as consultants for the procurement of contracts for the sale of military equipment to Kuwait. The contract provided for settlement of disputes in accordance with the Arbitration Rules of the International Chamber of Commerce (“I.C.C.”), which provided that any arbitral award should be final. The plaintiffs claimed moneys due under the contract and the dispute was referred to arbitration in Geneva. At the arbitration the defendants argued that the arrangement with the plaintiff was contrary to public policy because it had been for procuring sales by fraud through bribery or alternatively by illicit personal influence of other kinds, but the arbitrators found in the plaintiffs' favour. The defendants' appeal to the Swiss Federal Tribunal on the ground that the award was contrary to public policy and the consultancy agreement was contrary to Kuwaiti law was dismissed. The plaintiff obtained leave, ex parte, to enforce the award in England and subsequently brought an action on the award. The defendants applied to set aside the leave to enforce and by their points of defence alleged that the enforcement of the award would be contrary to public policy because it had been the intention of the parties that the plaintiffs would exercise personal influence over Kuwaiti officials in order to procure contracts, without disclosing that they had a pecuniary interest in their procurement, bribe Kuwaiti officials, and perform the contract in a manner which violated Kuwaiti law and was contrary to Kuwaiti public policy. Tuckey J. ordered trial of the preliminary issue whether the defendants' pleaded case disclosed no defence to the enforcement of the award. In the course of the hearing the defendants sought leave to re-amend their points of defence to allege that a number of witnesses called by the plaintiffs at the arbitration had given perjured evidence and that since the award had been obtained by fraud and/or manifestly dishonest evidence it would be contrary to public policy to enforce it.
On the application for leave to re-amend the points of defence:—
Held, refusing the application, that on an application in England to enforce a foreign arbitration award under the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards a party would not normally be permitted to adduce evidence that the award had been obtained by perjury unless that evidence was so cogent and weighty as to be likely to have materially influenced the arbitrators' conclusion had it been adduced before them but was not available or reasonably obtainable either at the time of the hearing of the arbitration or in time to have been adduced in the relevant court of supervisory jurisdiction to support an application to reverse the award; that where such evidence had been deployed before the court of supervisory jurisdiction on an unsuccessful application to set aside or remit the award the public policy of finality would normally require the English court to decline to permit it to be adduced at the enforcement stage; and that, since the defendants had not established that the evidence on which they sought to rely could not have been obtained in time for the arbitration or to challenge the award in the Swiss court, they should not be permitted to re-amend their pleadings so as to reopen the issues of fact determined by the arbitrators, notwithstanding the apparent strength of that evidence (post, pp. 809H–810E).
On the trial of the preliminary issue:—
Held, refusing the application to set aside leave to enforce and giving judgment for the plaintiffs, that an arbitration agreement ancillary to an illegal contract could confer jurisdiction on arbitrators to determine both disputes within the scope of the agreement and whether illegality rendered the contract unenforceable, unless the nature of the particular illegality was such that public policy required that disputes about the illegal contract should not be referred to arbitration or, in the case of statutory illegality, the statute impeached the arbitration agreement as well as the contract; that, although for reasons of public policy the court would not enforce an arbitration award for money due under a contract which was palpably and indisputably illegal at common law, where the arbitrators in the exercise of jurisdiction conferred by the arbitration agreement had determined that the contract was not illegal the court would prima facie enforce the resulting award; but that, where enforcement was resisted on the basis that facts not placed before the arbitrators demonstrated that the contract was illegal, the court would consider whether the public policy against the enforcement of illegal contracts outweighed the countervailing public policy in support of finality of awards; that the arbitrators had jurisdiction to determine whether the consultancy agreement was illegal and void by reason of a common or unilateral intention to bribe Kuwaiti officials and, since that issue had been determined by high calibre I.C.C. arbitrators, it was inappropriate that the court should retry that issue; that, in all the circumstances, the public policy of sustaining international arbitration awards outweighed the public policy of discouraging international commercial corruption; that, even if it were shown that the contract was contrary to public policy in Kuwait, enforcement of the award, which was valid under the curial law, would not offend international comity so as to be contrary to English public policy; and that, accordingly, the award was not exempt from enforcement under section 5(3) of the
The following cases are referred to in the judgment:
Abouloff v. Oppenheimer & Co. (
American Safety Equipment Corporation v. J. P. Maguire & Co. (
Bremer Vulkan Schiffbau und Maschinenfabrik v. South India Shipping Corporation Ltd. [
Dalmia Dairy Industries Ltd. v. National Bank of Pakistan [
Harbour Assurance Co. (U.K.) Ltd. v. Kansa General International Insurance Co. Ltd. [
Henderson v. Henderson (
Heyman v. Darwins Ltd. [
House of Spring Gardens Ltd. v. Waite [
Interdesco S.A. v. Nullifire Ltd. [
Israel Discount Bank of New York v. Hadjipateras [
Jet Holdings Inc. v. Patel [
Kaufman v. Gerson [
Kok Hoong v. Leong Cheong Kweng Mines Ltd. [
Lemenda Trading Co. Ltd. v. African Middle East Petroleum Co. Ltd. [
Macartney, In re [
Man (E. D. & F.) (Sugar) Ltd. v. Yani Haryanto (No. 2) [
Mitsubishi Motors Corporation v. Soler Chrysler-Plymouth Inc. (
Montefiore v. Menday Motor Components Co. Ltd. [
Norske Atlas Insurance Co. Ltd. v. London General Insurance Co. Ltd. (
Owens Bank Ltd. v. Bracco [
Owens Bank Ltd. v. Etoile Commerciale S.A. [
Prodexport State Co. for Foreign Trade v. E. D. & F. Man Ltd. [
Royal Boskalis Westminster N.V. v. Mountain [
Société d'Informatique Service Réalisation Organisation (SISRO) v. Ampersand Software B.V. [
Soleimany v. Soleimany (unreported), 21 March 1997, Judge Langan
Smith, Coney & Barrett v. Becker, Gray & Co. [
Taylor (David) & Son Ltd. v. Barnett Trading Co. [
Vadala v. Lawes (
Vervaeke (formerly Messina) v. Smith [
Whiteman v. Newey (
The following additional cases were cited in argument:
Arab Business Consortium International Finance and Investment Co. v. Banque Franco-Tunisienne [
Carl-Zeiss-Stiftung v. Rayner & Keeler Ltd. [
Deutsche Schachtbau- und...
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