Xstrata Coal Queensland Pty Ltd and Others v Benxi Iron & Steel (Group) International Economic & Trading Company Ltd
| Jurisdiction | England & Wales |
| Judge | Mr Justice Knowles |
| Judgment Date | 05 August 2016 |
| Neutral Citation | [2016] EWHC 2022 (Comm) |
| Docket Number | Case No: CL-2014-000446 |
| Court | Queen's Bench Division (Commercial Court) |
| Date | 05 August 2016 |
[2016] EWHC 2022 (Comm)
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
COMMERCIAL COURT
Royal Courts of Justice
Strand, London, WC2A 2LL
Mr Justice Knowles CBE
Case No: CL-2014-000446
Mr David Lewis QC and Mr NG Casey (instructed by Clyde and Co LLP) for the Claimants
Mr Alexander Gunning QC (instructed by Gateley LLP) for the Defendant
Hearing dates: 27 and 28 April 2016
Introduction
The Defendant ("the Buyer") agreed to buy a substantial quantity of coking coal. There were four sellers ("the Sellers"): the first three Claimants, together with one other. That other was either the fourth Claimant or another company.
The agreement between the Buyer and the Sellers was known as "the Oaky Contract" and was in writing. The Buyer and the Sellers also agreed, by the Oaky Contract, to arbitration under LCIA Rules in the event of a dispute, and with the seat or legal place of the arbitration to be London.
A dispute arose and was referred to arbitration in London. The Claimants and the Buyer took a full part in the arbitration. On 23 August 2010 the arbitral tribunal issued an award ("the Award") requiring the Buyer to pay to the Claimants US$27,846,000 together with interest and costs.
The Buyer did not pay and the Claimants applied on 16 August 2011 for recognition and enforcement of the Award in the People's Republic of China under the 1958 New York Convention. The Buyer is incorporated in China and conducts business in China.
The Claimants' application was to the Shenyang Intermediate People's Court. The Buyer argued successfully that the application for recognition and enforcement of the Award should be refused. The Buyer's argument was that ICRA OC Pty Limited ("ICRA OC"), the fourth Claimant in the arbitration (and in these proceedings before the Commercial Court), was not a party to the Oaky Contract, including the agreement to arbitration.
The Oaky Contract
The Oaky Contract is signed "for and on behalf of the Seller" by Xstrata Coal Queensland Pty Limited ("XCQ", the first-named Claimant in these proceedings before the Commercial Court).
The Oaky Contract uses these words to describe "the Seller":
"SELLER: Xstrata Coal Queensland Pty Limited (ABN 69098156702) as agent for the Oaky Creek Joint Venturers (being Sumisho Coal Australia Pty Limited, Xstrata Coal Queensland Pty Ltd, Itochu Coal Resources Australia Pty Limited and ICRA NCA Pty Limited) and [sic] Level 38, Gateway, 1 Macquarie Place, Sydney, N.S.W. 2000, Australia (as the Seller)".
It is therefore the fact that the words used in the Oaky Contract are "ICRA NCA Pty Limited" and not "ICRA OC Pty Limited". There is evidence that there do exist two companies, one by each name.
However the description of the Seller in the Oaky Contract also refers to "the Oaky Creek Joint Venturers". By a separate agreement dated 31 December 1997 and restated as at 1 March 2005, and named the Oaky Creek Joint Venture Agreement, four companies agreed and confirmed that they had by that agreement "associat[ed] themselves in an unincorporated joint venture, known as the "Oaky Creek Joint Venture", for the purpose of conducting" defined operations for the exploration and prospecting for, and mining and loading of, coal.
The fourth of the four companies so agreeing by the Oaky Creek Joint Venture Agreement was ICRA OC Pty Limited, not ICRA NCA Pty Limited (the company named as an Oaky Creek Joint Venturer under the Oaky Contract).
The Arbitration and the Award
Thus the four parties who were Claimants in the LCIA arbitration were the four companies who had agreed to associate themselves in a joint venture by the Oaky Creek Joint Venture Agreement, ie including ICRA OC Pty Limited.
These four companies were described as the Claimants in the Award, at paragraph 1. (The Award also made clear in the same paragraph that "Level 38" was the registered address of XCQ and not the name of a fifth company.)
At paragraph 7 of the Award the arbitral tribunal stated:
"The dispute arises under the "Contract for Sale and Purchase of Coking Coal", numbered OCP/BEN/HCC-08/01/01, which is dated 15 August 2008 and was executed by Ben Steel [the Defendant] and XCQ on 4 September 2008 ("Oaky Contract"). XCQ signed as Seller as agent for the Oaky Creek Joint Venturers (being itself, Itochu, ICRA and Sumisho)."
At paragraph 109 of the Award the arbitral tribunal stated:
"The Oaky Contract defines the "Seller" XCQ "as agent for the Oaky Creek Joint Venturers", which jointly comprise all four individual Claimants. The Tribunal determines, in accordance with the Oaky Contract, that Claimants seek an award in favour of all the Claimants jointly."
The Award was in these terms (leaving aside costs):
"(i) Within thirty (30) days of the date of this Award, Respondent Benxi Iron & Steel (Group) International Economic and Trading Co. Ltd, shall pay to Claimants Xstrata Coal Queensland Pty Ltd., Itochu Coal Resources Australia Pty Limited, ICRA OC Pty Limited and Sumisho Coal Australia Pty Limited, jointly, the amount of United States Dollars Twenty Seven Million Eight Hundred Forty-Six Thousand (US$27,846,000), with simple interest thereon at the rate of one and one-half percent (1.5%) from 1 January 2009 until date of payment.
…
(iv) All other claims and counterclaims of the parties are dismissed."
From these paragraphs of the Award it is clear that the arbitral tribunal treated ICRA OC Pty Limited and not ICRA NCA Pty Limited (a) as a party to the Oaky Contract (including the agreement to arbitration), (b) as one of the Oaky Creek Joint Venturers, (c) as a party to the claim before the arbitral tribunal and (d) as a beneficiary of the Award.
However the arbitral tribunal did not explain how it dealt with the fact that the Oaky Contract used the words "ICRA NCA Pty Limited" and not "ICRA OC Pty Limited".
Recognition and Enforcement
As indicated above, before the Shenyang Intermediate People's Court, in resisting recognition and enforcement of the Award the Buyer focussed on the point that the Oaky Contract used the words "ICRA NCA Pty Limited".
In the course of what has been described as an "informal hearing" before the Shenyang Intermediate People's Court on 18 July 2013 the Defendant [the Buyer] observed "There is no explanation about the change of the company in the Award; therefore we believe that there was a critical flaw in the arbitral process".
The Shenyang Intermediate People's Court issued a decision on 25 April 2014. It found and concluded as follows:
"Shenyang Court found that there is no contractual relationship between ICRA OC and the Respondent [the Buyer], therefore, the arbitration agreement (ie the arbitration clause in the Oaky Contract for Sale and Purchase of Coking Coal) does not exist. Therefore, ICRA OC shall not be deemed as one of the claimants under the arbitration request submitted to LCIA, and the arbitration award [the Award] which requires the Respondent [the Buyer] to make payment to the four Claimants, including ICRA OC, is without merit because of a lack of supporting legal argument or factual bases."
These findings and conclusions are of course contrary to those of the arbitral tribunal. The Claimants, including ICRA OC, wish to attempt to address the situation by requesting the arbitral tribunal to use its authority under Article 27 of the applicable LCIA Rules. The Claimants wish to use Article 27.3 to request the arbitral tribunal to make an additional award. Alternatively they wish to use Article 27.1 to request the arbitral tribunal to make corrections to the Award.
Under Article 27 of the LCIA Rules any application for a correction of the Award or an additional award has to be made within 30 days of the publication of the Award. The Claimants approached the arbitral tribunal on 30 May 2014, but on 11 June 2014 the LCIA confirmed that "while sympathetic to the Claimants' position, … absent agreement of the parties or an order from a competent court extending time for the application" the arbitral tribunal was "functus officio".
The Claimants therefore ask the Commercial Court to extend the deadline, using its powers under section 79 of the Arbitration Act 1996. Section 79(1) provides so far as material:
"[U]nless the parties otherwise agree, the court may by order extend any time limit agreed by them in relation to any matter relating to the arbitral proceedings ….".
In the present case the parties did not "otherwise agree".
It is relevant to observe that, realistically, the time limit under Article 27 of the LCIA Rules would almost always expire before the outcome was known of a contested attempt under the New York Convention to obtain recognition and enforcement of an award in another country.
Using Article 27 of the LCIA Rules 1998
The parties are agreed that the applicable LCIA Rules in the present case are the LCIA Rules 1998. Article 27 is in these terms:
"Correction of Awards and Additional Awards
27.1 Within 30 days of receipt of any award, or such lesser period as may be agreed in writing by the parties, a party may by written notice to the Registrar (copied to all other parties) request the Arbitral Tribunal to correct in the award any errors in computation, clerical or typographical errors or any errors of a similar nature. If the Arbitral Tribunal considers the request to be justified, it shall make the corrections within 30 days of the receipt of the request. Any correction shall take the form of a separate memorandum dated and signed by the Arbitral Tribunal or (if...
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