England and Wales High Court (Commercial Court) Decisions

IN THE HIGH COURT OF JUSTICE
BUSINESS AND PROPERTY COURTS
FOR ENGLAND & WALES
QUEEN'S BENCH DIVISION
COMMERCIAL COURT

		Rolls Building Fetter Lane London EC4A 1NL
		18 May 2018

MR JUSTICE ANDREW BAKER:

1. This is now an application for final judgment by way of summary judgment under CPR Part 24 in a claim for relief by way of antisuit injunction to enforce and give effect to an arbitration agreement by the parties and its consequences. It is the subject of existing interim relief granted by Males J on 1 May 2018 and by me earlier this week on 14 May 2018. We each gave short judgments now perfected as [2018] EWHC 1190 (Comm) and [2018] EWHC 1172 (Comm). The primary and written underlying contract between the parties was a written loan agreement dated 23 June 2010. In an arbitration governed by and conducted in accordance with the LCIA Rules with London seat the claimant claimed a principal sum of US$527, 208,529 plus other relief.
2. So far as relevant, that arbitration resulted in two significant awards in the claimant's favour. The first dated 1 October 2013 was a decision by the arbitrators not to stay the arbitral process before them in light of the principal line of defence adopted by the defendant to the arbitration claim and what the defendant said was its implications in relation to the appropriateness of the arbitration proceeding. The second substantial award in the claimant's favour dated 23 December 2015 was the arbitrators' final award on the merits as to almost all issues, reserving to themselves in substance only matters of costs and what was described as the default commission said to be payable under the loan agreement. By that second main award the arbitrators determined and finally held that insofar as it remained in issue the arbitration had been commenced by the claimant against the defendant, the 2010 loan agreement had been concluded also between the claimant and the defendant and the arbitrators had jurisdiction to determine the substantive claim.
3. It further determined and by an appendix to the award in substance gave final declaratory relief as to a series of individual main issues between the parties which had been agreed between them. I should perhaps have emphasised that the defendant participated fully in the arbitral process, including as regards both the refusal of stay and as regards the final substantive hearing, through solicitors and leading counsel. The main award finally determined and held that the claimant's claim succeeded and, therefore, awarded that the claimant was entitled to payment of the very large sum I have mentioned already, US$527,280,529.
4. Reflecting the relevant sections of the arbitrators' reasons set out in their award, which Mr Raphael QC for the claimant has taken me through, the declaratory award as to specific issues includes the following specific declaratory final relief, namely that:

(1) What had been called the first alleged oral agreement had never been entered into.

(2) What had been called the second alleged oral agreement had likewise never been concluded.

(3) As a result the second alleged oral agreement had no impact on the defendant's liability under the 2010 loan agreement.

It also recorded that one issue that had appeared to remain live at the time of the finalisation of the list of issues for the final hearing, concerning the arbitrators' jurisdiction, namely whether the arbitration agreement in the 2010 loan agreement was of no effect or unenforceable, had not in the event been pursued by the defendant.

5. The references to a first alleged oral agreement and second alleged oral agreement are explained in the award. The first alleged oral agreement was said to have been concluded at about the time of an original written consortium agreement in relation to the underlying lending in February 2004 and was said to be an agreement by which the defendant had effectually limited his liability. The second alleged oral agreement was said to have been concluded in July 2006 relating to the business venture in respect of which the underlying lending was occurring or was to occur. The second alleged oral agreement was said to involve or comprise three overlapping elements – first, that the defendant's liability was limited to or by reference to part, although not the entirety, of his shareholding in the underlying venture; second, that sufficient shares would be sold to redeem the bank lending procured to finance the purchase of his shares; and, third, that there would be no personal liability on his part.
6. The Saudi proceedings which are the subject matter of the claim now before the court are founded upon, and seek to enforce, an alleged 'Investment Agreement', as it is described in the Saudi statement of claim. It is perfectly apparent from that statement of claim in translation as provided to me that the Investment Agreement there so-called is the self-same second alleged oral agreement as the defendant had asserted in the arbitration. By the Saudi proceedings the defendant seeks judgment declaring the investment agreement to have been made, a judgment obliging the claimant to perform its supposed terms and, indeed, a judgment ordering the suspension of the arbitration proceedings in this jurisdiction until issuance of final judgment in the Saudi proceedings. As that plea for relief indicates, the Saudi proceedings were in fact commenced now some years ago, in November 2012. It was upon the basis that the Investment Agreement, as there described, or second alleged oral agreement, as it came to be called in the arbitration, or disputes as to its existence or effect, would be outside the scope of the arbitration agreement in the 2010 loan agreement that the defendant sought from the arbitrators a stay of the arbitration. That stay having been declined, as I indicated, by the arbitrators' award in October 2013, the defendant procured that the Saudi proceedings were stayed or discontinued, and they thus proceeded no further as he, for his part, participated fully in the remaining course of the arbitration.
7. As Mr Raphael QC is at pains, fairly, to draw to my attention, it is not quite the case that the defendant abandoned any suggestion within the arbitral process that there may be question marks over the arbitrators' jurisdiction. However, as I indicated by reference to my description of the final substantive award, the nature and scope of any suggestion that the arbitrators lacked jurisdiction gradually narrowed. One very narrow point was for a time left in play, but ultimately even that was not pursued at the final hearing.
8. The defendant made no challenge to the award in this court under s.67 of the Arbitration Act 1996 asserting that there was any deficiency in the substantive jurisdiction of the arbitrators to reach any or all of the determinations they reached or to grant any of the relief that they granted in favour of the claimant, nor was there any challenge for error of law if that had been open to the defendant (although as the LCIA Rules were un-amended in this case that would have been ruled out by those rules in any event). There was, however, a challenge to the award under s.68 of the 1996 Act by reference to the fact that between the conclusion of the final hearing in September 2015 and the publication of the award three months later Linklaters, who have conducted the arbitration on the claimant's part, came into possession of certain further documents but were still in the process of considering them when the award was published, such that they did not in fact come to be disclosed in the arbitration before the arbitrators concluded their consideration of the matter and issued their award. The challenge to the award asserting on that basis that a serious irregularity had occurred was dismissed by Knowles J following a fully contested oral hearing in this court in November 2016.
9. The foundation ultimately for everything the claimant says to the court in support of its claim for antisuit injunctive relief is the following arbitration agreement in the 2010 loan agreement. It was clause 17 in the following terms:

"17.1 Any dispute arising out of, or in connection with, this agreement, including any question regarding its existence, validity or termination shall be referred to, and finally resolved by, arbitration under LCIA Rules, which rules are deemed to be incorporated by reference into this clause.

17.2 The number of arbitrators shall be three.

17.3 The seat or legal place of arbitration shall be London, England.

17.4 The language to be used in the arbitral proceedings shall be English".

10. As a logically prior point Mr Raphael QC submits that since the main award was not the subject of any challenge under s.67 the conclusions of the arbitrators that they had jurisdiction and that the second alleged oral agreement had never been entered into have become in effect issue estoppels between these parties by operation of s.73 of the 1996 Act. In my judgment, he is right about that, a recent authority confirming that being Emirates Trading v Sociedade de Fomento Industrial [2015] EWHC 1452 (Comm); that is to say, the award having not been challenged it is not now open to the defendant in this court to make any claim that the matters dealt with by the arbitrators in their award went beyond their substantive jurisdiction. On that ground alone, in my judgment, Mr Raphael is correct to submit that so far as this court is concerned it is now established in a way that cannot be challenged by the defendant that the matters he raises in the Saudi proceedings fell within the scope of the arbitration agreement. It is, therefore, and this court must proceed on the basis that it always has been, in breach of that agreement for the defendant to have commenced those proceedings and to continue them, to the extent that he is now doing, as I shall come on to.
11. However and in any event, in my judgment, Mr Raphael QC is also plainly correct upon the proper construction of the arbitration agreement I have quoted from the 2010 loan agreement, and in the absence of any suggestion or any suggestion with colour or merit that the second alleged oral agreement itself provided for some contrary jurisdiction, that the question whether there was any such oral agreement having any and, if so, what impact upon the parties' rights and obligations under the 2010 agreement is a matter arising out of or in connection with that agreement, construing the arbitration agreement in accordance with the now very well-known principles stated by the House of Lords in Fiona Trust v Privalov [2008] 1 Lloyd's Rep 254. In those circumstances, the law in this court is well established that relief by way of antisuit injunction ought to be granted to enforce the arbitral bargain unless there be strong reason shown why the proceedings elsewhere ought to be allowed to continue even though their pursuit by, in this case, the defendant is in breach of that arbitration agreement.
12. If he needed to, Mr Raphael QC relied also upon the normal implied obligation in any arbitration agreement that the parties will perform and honour the award, in this case made express by Article 27.9 of the LCIA Rules and/or an argument of the type articulated in the Arbitration Law Looseleaf edited by Merkin at para.4.7 that even if the relevant matters the defendant now seeks to litigate in Saudi Arabia had not originally been within the scope of the arbitration agreement the conduct on his part that I have described, participating and leaving the matter to be dealt with in the arbitration, would have created an ad hoc extension of scope to the existing arbitration such that again he became contractually obliged to pursue his case as to the second alleged oral agreement in, and only in, the arbitration. Had Mr Raphael needed either of those further bases for justifying the claimant's claim in this case, in my judgment, those further justifications would have been made out.
13. Mr Raphael QC, fourthly, says, and this remains relevant in any event when it comes to discretion, that this is a plain case of illegitimate re-litigation, having participated on the merits and lost in one forum (in this case the arbitration) in the hope that a friendly different forum (here the Saudi court) will come to a different decision and ignore the ruling which this court must regard as binding on the defendant, namely the ruling of the arbitrators. In that way, he says, as indeed was the position in what many still cite as a leading case, namely The Angelic Grace [1995] 1 Lloyd's Rep 87 at first instance, of vexatious and oppressive non-contractual proceedings. In my judgment, that submission also is entirely made out on the facts and circumstances of this case. Following his failure in the arbitration – that is to say following the claimant's substantive success by the main award and then the failure of his s.68 application – the evidence makes it quite plain that the defendant, rather than honouring the award, as has since then been his obligation, assuming he is in a position to do so, has sought to avoid doing so by resurrecting the Saudi proceedings. When that was first done the proceedings were in fact dismissed by the Saudi court for reasons that do not now matter, but that explains why it is only now in May 2018 that the matter has come back before the court.
14. The claimant, on the evidence I have, became aware only in the early part of this year that notwithstanding that dismissal the defendant had again obtained the resumption of the Saudi proceedings. A hearing in the Saudi proceedings on 6 May 2018 was the particular urgent prospect which then led the claimant to apply for and obtain, as I have mentioned already, a first urgent interim injunction from Males J. In the intervening period I am quite satisfied that the claimant has both acted efficiently in bringing the matter to this court without any material delay and also participated as minimally as it can, whilst lodging and maintaining its objections to the Saudi jurisdiction by reference to the arbitration agreement and the award.
15. As things now stand, it is thought possible that in the Saudi proceedings there will be a ruling on 30 May 2018 at least as to those objections on the claimant's part. It may also be as to the merits. That is the upshot of a further short hearing in the Saudi proceedings on Wednesday of this week which took place notwithstanding that the specific and targeted subject matter of the further interim injunction I granted on Monday was that very hearing. I was persuaded by that order to require that the defendant ensure that that hearing be adjourned for a period of at least seven days. Thus, although it can be said that the Saudi proceedings in the particular and rather unusual circumstances of this case have recently and rather rapidly gone from entirely dormant and all but abandoned to possibly nearly concluded on the merits, in my judgment, that does not constitute a good reason to refuse injunctive relief. In particular in that regard they have, as I have indicated, only reached that particular stage now as a result of the defendant's at the very least failure to honour the spirit of Males J's order (the claimant reserves its right to argue in due course as may be appropriate that he has breached the letter of that order), and on any view on the material before me his failure to honour either the letter or the spirit of the order I granted on Monday.
16. The burden in any event would be on the defendant to make some showing of strong or good reason why an antisuit injunction should not be issued. Mr Raphael QC in that regard, although no longer proceeding on an ex parte basis, has taken great care to draw to my attention possibilities that he can conceive might at least be raised. I agree with his concluding submission as to all of those that none gives rise to anything remotely like strong reason to justify or explain the stance the defendant has taken. The defendant's conduct throughout since resuming the Saudi proceedings merely, in my judgment, reinforces the conclusion that he is determined, unless restrained by order of this court, to seek to avoid his obligations under the arbitration agreement and the resulting award by reference to the proceedings he brings in Saudi in breach of that agreement and of the obligations arising out of that award.
17. There are elements of the evidence which Mr Raphael QC does not shrink from saying give rise even to concern that the defendant may have been involved in some degree of manipulation or abuse of the Saudi proceedings in order to procure their acceleration in the way I have described. It seems to me that there is, indeed, room to consider it possible that that may have happened or may be happening, but I make no determination about that. Were that to have happened or to be happening, it would, of course, even further reinforce the conclusion that injunctive relief is justified, but I do not need to make any final determination of that sort in order to say, as I do, that in this case the defendant's pursuit now of the Saudi proceedings is vexatious and oppressive.
18. In all those circumstances, and since I am clear on the materials that I have been provided for the purposes of today that the defendant had been duly served in accordance with the orders in that regard that have already been made and must be well aware of what is happening in this jurisdiction, but is choosing to take no part here, and that there is no real prospect that the case will look any different as to substance or as to detail in the future, it is appropriate to deal with the matter by way of summary judgment and not merely continue the injunction on an interim basis and require the claimant to come back for a further hearing by way of final trial which, in reality, would simply be a repeat of the argument this afternoon. There is no real prospect, indeed no prospect whatever, of there being a defence to the claim for final injunctive relief and judgment will, therefore, be granted finally in the terms of the injunction sought, subject to any particular points that I shall discuss with Mr Raphael QC in a moment.
19. Finally, for the purposes of this judgment, I deal with one particular aspect of the wording which Mr Raphael reviewed with me at the end of his submissions and that is the proposed para.6 ordering in mandatory form that the defendant must now discontinue or otherwise withdraw or procure the dismissal of the Saudi proceedings. He will be ordered to do that as soon as reasonably practicable, but in any event before the earlier of any further hearing in Saudi Arabia or the end of next week, 5 p.m. Gulf time on Friday 25 May 2018. As with my short judgment on Monday, I say that that specific provision, mandatory in form, in truth does no more than express in words what ordinarily is required and, indeed, is expected and assumed to occur when final injunctive relief is granted preventing a defendant from prosecuting, pursuing or otherwise further continuing proceedings that have been brought in breach of contract or otherwise vexatiously or oppressively, and is plainly appropriate in circumstances where that relief has now been granted on a final basis and on the evidence of the events of the last few weeks it is apparent that it is necessary for the defendant to take an active step in order to prevent the Saudi proceedings from going any further. So in my judgment, it is entirely correct to express that in terms in a specific mandatory form of order in the injunction to be granted today.
20. By way of postscript, in this approved final version of the judgment I gave orally on 18 May 2018, I should note that following the hearing the claimant's solicitors drew to my attention that I was inadvertently misinformed that the arbitrators had not yet responded to requests that had been made to them to indicate whether they consented or did not object to the claimant pursuing antisuit injunctive relief in this court. In fact, before the hearing on 18 May they had done so, indicating they had no objection. For completeness, I make clear that this detail had no bearing on the merits of the claimant's claim as it succeeded before me at the hearing; but I am grateful to the claimant's solicitors for drawing the point to my attention in case it mattered.
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