BUSINESS AND PROPERTY COURTS OF ENGLAND
AND WALES
COMMERCIAL COURT (KBD)
Strand, London, WC2A 2LL |
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B e f o r e :
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NATIONAL IRANIAN OIL COMPANY |
Claimant |
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- and – |
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(1) CRESCENT PETROLEUM COMPANY INTERNATIONAL LIMITED (2) CRESCENT GAS CORPORATION LIMITED |
Defendants |
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Ricky Diwan KC and Tariq A Baloch (instructed by McDermott Will & Emery UK LLP) for the Defendants
Hearing dates: 27-28 September 2022
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Crown Copyright ©
Mr Justice Butcher:
Background
'Any dispute, controversy or claim arising out of or relating to this Contract, or the breach, termination or validity or invalidity thereof shall be finally settled by arbitration [in accordance with the Procedures for Arbitration contained in Annex 2]'.
Arbitration after the Liability Award
(1) CGC's loss of profits arising from the sale of gas to CNGC under its gas supply agreement with CNGC.
(2) CGC's damages in respect of CGC's liability to CNGC in respect of CNGC's loss of profits on contracts with end-user customers.
(3) A declaration of an entitlement to indemnification in respect of future claims made against it by SEWA or CNGC in respect of any claims by third parties.
The Partial Remedies Award and NIOC's s. 67 Application
(1) CGC was awarded US$1,334.70 million in respect of its loss of profits from the on-sale of gas to CNGC. This may be termed 'CGC's loss of profits'.
(2) CGC was awarded US$1,085.27 million in respect of CGC's liability to CNGC for CNGC's lost profits on the sales to customers of gas and liquid products. This may be termed 'CGC Liability to CNGC Losses'.
(3) The Tribunal deferred for further consideration CGC's claims for declarations of an entitlement to indemnification in respect of future liabilities to third parties arising out of the non-supply of gas, on the basis that it did not have sufficient information to determine those claims. This may be termed the 'Indemnity claim'.
Crescent's Application and Directions given
The Preliminary Issue
'73 Loss of right to object.(1) If a party to arbitral proceedings takes part, or continues to take part, in the proceedings without making, either forthwith or within such time as is allowed by the arbitration agreement or the tribunal or by any provision of this Part, any objection—(a) that the tribunal lacks substantive jurisdiction,(b) that the proceedings have been improperly conducted,
(c) that there has been a failure to comply with the arbitration agreement or with any provision of this Part, or
(d) that there has been any other irregularity affecting the tribunal or the proceedings,
he may not raise that objection later, before the tribunal or the court, unless he shows that, at the time he took part or continued to take part in the proceedings, he did not know and could not with reasonable diligence have discovered the grounds for the objection.'
NIOC's Jurisdictional Objection before the Tribunal
'[30] In reality, by asking this Tribunal to award damages to CGC for its liability to CNGC for CNGC's lost profits, the Claimants would have the Tribunal assert jurisdiction over a lost profits claim by a company who is not a party to the arbitration clause in the GSPC. In fact, CNGC is a party to a different contract, containing a different arbitration clause and a different governing law clause.[31] [NIOC] submits, therefore, that the Tribunal cannot properly hear any claims relating to CNGC's alleged lost profits. To do so would be to trespass on the jurisdiction of another tribunal, which CGC and CNGC have contractually agreed should determine any disputes between them. This Tribunal should therefore dismiss this part of the claim in limine for lack of jurisdiction.
…
2. The Tribunal's jurisdiction ratione personae
[113] The Tribunal's jurisdiction in this Case is derived from the arbitration agreement contained in Article 22 and Annex 2 of the GSPC.
[114] CNGC is not a party to the GSPC, and it has never been alleged by the Claimants that it is a party…
[115] … as the Claimants appear to have understood, any claim with respect to lost profits allegedly suffered by CNGC must be framed as a claim by a party to the GSPC. [NIOC] surmises that it is for this reason that the Claimants have not put forward a claim for CNGC's lost profits as such, but rather a claim for CGC's damages resulting from its alleged liability to CNGC for such lost profits.
[116] Consequently, if this Tribunal were to consider such a claim, it would first be necessary for it to determine whether, and to what extent, CGC is indeed liable to CNGC. This is in essence what the Claimants have asked the Tribunal to do.
3. The Tribunal's jurisdiction ratione materiae
[117] Under Article 22 of the GSPC, the Tribunal has jurisdiction to rule upon any dispute, controversy or claim arising out of or relating to the GSPC itself. On the other hand, the Tribunal's jurisdiction does not extend to making any determination whatsoever as to whether and, if so, to what extent CGC may be liable to CNGC in the context of their own contractual relationship.
[118] On the contrary, CGC and CNGC are parties to a different gas sales and purchase contract dated 8 June 2005. [The Memorial then quoted the Governing Law and Arbitration provision of that agreement].
[119] As a result, the only body having jurisdiction to determine whether and, if so, to what extent CGC is liable to CNGC for CNGC's alleged lost profits is an arbitral tribunal sitting in Sharjah in accordance with the LCIA Rules, and applying the law of the United Arab Emirates.
[120] That is clearly not this Tribunal. Yet by seeking from this Tribunal a holding that [NIOC] is liable for an amount of almost US$10.5 billion, and by arguing CNGC's lost profits claim before this Tribunal, the Claimants are in essence asking this Tribunal to go beyond the limits of its own jurisdiction and to trespass on the jurisdiction of the only tribunal that would be competent to determine such a claim.
4. Conclusion: the claim relating to lost profits of CNGC must be rejected for lack of jurisdiction
[121] In conclusion, therefore, the portion of the claim relating to CGC's alleged liability for lost profits allegedly suffered by CNGC, in the amount of US$ 9.482 billion plus US$ 968 million in interest, must be dismissed for lack of jurisdiction.
[122] In sum, the Tribunal lacks jurisdiction both ratione personae, since CNGC is not a party to the arbitration agreement under the GSPC, and ratione materiae, since a different tribunal, with a different seat, acting under different procedural rules and applying a different governing law, has jurisdiction with respect to any claim arising out of the contract between CGC and CNGC.
[123] Finally, the Claimants fail to explain why CGC's claim for damages for its alleged liability to CNGC should be treated any differently from its claim for an indemnity for liabilities to other third parties…
…
[202] … Indeed, there appears to be no reason for CGC's claim for damages for its alleged liability to CNGC to be treated any differently from its claim for an indemnity for liabilities to other third parties.'
'… This Tribunal, having its seat in England, is perfectly entitled to determine CGC's loss under the GSPC by reference to another contract (in this case the agreement between CGC and CNGC). That is part of the Tribunal's mandate to determine the dispute between the Parties present before it, and does not entail any assertion of jurisdiction over a third party.'
'The position is, we suggest, similar to that which does from time to time arise in practice, where in order to resolve a dispute between A and B an arbitrator has to decide an issue arising under a contract between B and C. There is nothing inarbitrable about such an issue, and the arbitrator commits no impropriety by deciding it, although his award will have no effect at all on C. Nor does he exceed his jurisdiction in doing so, for he is not purporting to act as arbitrator in relation to the contract between B and C, in relation to which he was not appointed, but instead he is deciding under the contract between A and B an issue which, albeit involving C, does properly arise under that contract.'
'[195] Moreover, and in any event, the Tribunal simply cannot determine the existence and/or the amount of this alleged liability, because it would require the Tribunal to make legal and factual determinations under a different contract, the CGC-CNGC Contract, which is not a contract within the jurisdiction of this Tribunal (and which has different terms to the GSPC, is subject to a different dispute resolution mechanism and is governed by a different applicable law).[196] The Claimants do not dispute this jurisdictional problem.
[197] Rather, they seek to sidestep it, by now reframing the claim, arguing instead that the Tribunal is somehow authorised to "determine CGC's loss under the GSPC by reference to another contract (in this case the agreement between CGC and CNGC)".
[198] The Claimants refer (bizarrely) to English law as authority for this proposition … [NIOC then responded to Re Hall and Pim and the passage from Mustill and Boyd which Crescent had cited]
…
[201] … In the present case, however, the Claimants are asking the Tribunal to give a decision that would have an effect on C – CNGC in this case – since it would be determining issues of whether and, if so, to what extent, CNGC is entitled to recover against CGC.
[202] Further, it must be borne in mind that, in the present case, the Parties have in no way "mandated" the Tribunal to decide issues arising under the contract between CGC and CNGC and that therefore, applying Mustill and Boyd's reasoning, such issues are both inarbitrable and outside the scope of the Tribunal's jurisdiction in these proceedings….'
'[551] NIOC has advanced a number of objections of principle in answer to Crescent's claim for an indemnity:…
(2) The Tribunal has no jurisdiction to resolve issues between CGC and CNGC ….
…
4. Jurisdiction
[555] [NIOC] raised a jurisdictional argument to the effect that this Tribunal has no capacity to resolve any dispute between CGC and CNGC. The CGC-CNGC GSA contains an arbitration clause which, so far as the evidence shows, has never been invoked and is materially different from the arbitration clause applicable to the dispute between NIOC and Crescent. However, CGC is not inviting the Tribunal to resolve any dispute between CGC and CNGC. In the context of a dispute between CGC and NIOC, CGC is inviting the Tribunal to reach a conclusion that CGC is liable to CNGC in a certain amount, and to award damages against NIOC to compensate CGC for that liability. The argument advanced by NIOC is misconceived.'
NIOC's Jurisdictional Objection in its s. 67 challenge
'[53]…[a] The Tribunal did not have substantive jurisdiction (within the meaning in section 30(1)(c) of the Act), to determine the existence and/or amount of CGC's alleged liability to CNGC under the separate gas supply agreement between CGC and CNGC (the CGC-CNGC GSA) dated 8 June 2005. In particular:i. The Tribunal's jurisdiction is derived from the Arbitration Agreement contained in Article 22 of the GSPC between NIOC and CGC.ii. CNGC was not a party to the GSPC or to the Arbitration Agreement in Article 22 of the GSPC between NIOC and CGC.
iii. The alleged liability of CGC to CNGC arose out of a separate contract, the CGC-CNGC GSA …
iv. The CGC-CNGC GSA contained a different dispute resolution mechanism …
v. The determination of the existence and/or extent of CGC's liability to CNGC were matters that fell within the scope of the arbitration agreement in Article 21 of the CGC-CNGC GSA. The Tribunal to be appointed under Article 21 of the CGC-CNGC GSA had, and has, jurisdiction to determine those matters.
vi. In light of the foregoing, on the proper construction of the Arbitration Agreement (contained in Article 22 of the GSPC), as a matter of applicable Iranian law, the determination of the existence and/or extent of CGC's liability to CNGC under the terms of the CGC-CNGC GSA were not matters within the scope of the Arbitration Agreement. Whether and to what extent CGC was liable to CNGC were controversies that arose out of and related to a separate contract between separate parties and, on the true construction of the Arbitration Agreement in accordance with Iranian law, they were not matters that arose out of or related to the GSPC. They were not therefore matters which could be submitted to the Arbitration in accordance with the Arbitration Agreement within the meaning of Section 30(1)(c) of the Act. As a matter of Iranian law, the Tribunal exceeded its substantive jurisdiction, and its determinations as to the existence and/or amount of CGC's alleged liability to CNGC under the CGC-CNGC GSA are void and/or of no effect. In this regard NIOC relies upon the Expert Report on Iranian law of Dr Ali Mohammad Mokarrami dated 25 October 2021.'
Analysis
'[25] … It is self evident, as par. 138 of the DAC Report makes clear, that an arbitral tribunal cannot be the final arbitrator of the question of jurisdiction; as is pointed out in the DAC Report, this would provide a classic case of "pulling oneself up by one's own boot straps". However, giving a tribunal power to rule on its own jurisdiction means that the parties cannot delay valid arbitration proceedings indefinitely by making spurious challenges to the jurisdiction of the arbitral tribunal. Nonetheless the protection of the party objecting to the jurisdiction of the tribunal is its right to apply to the Court. That is an unfettered right and in any such application the party challenging the jurisdiction of the arbitrator is entitled to adduce such evidence as it considers necessary to show that the arbitrator had no jurisdiction. The Court is not in any way bound or limited to the findings made in the award or to the evidence adduced before the arbitrator; it does not review the decision of the arbitrator but makes its own decision on the evidence before it; I entirely agree … that the Court's duty is to rehear the matter and in doing so the Court is not limited to the evidence before the arbitral tribunal…'
'[A party] is not entitled to allow the proceedings to continue without alerting the tribunal or the other party to a flaw which in his view renders the whole arbitral process invalid. That could often result in a considerable waste of time and expense which is no doubt something which the legislation seeks to avoid. There is, however, a more fundamental objection of principle to a party's continuing to take part in proceedings while at the same time keeping up his sleeve the right to challenge the award if he is dissatisfied with the outcome. The unfairness inherent in doing so is, of course, magnified if the defect is one which could have been remedied if a proper objection had been made at the time.'
'The principle of openness and fair dealing between the parties to an arbitration demands not merely that if jurisdiction is to be challenged under s. 67 the issue as to jurisdiction must normally have been raised at least on some grounds before the arbitrator but that each ground of challenge to his jurisdiction must previously have been raised before the arbitrator if it is to be raised under a s. 67 application challenging the award. This was conceded by counsel and accepted by Mr Richard Field QC then sitting as a Deputy High Court Judge in Athletic Union of Constantinople v National Basketball Association [2002] 1 Lloyd's Rep 305 at page 311. That concession was, in my judgment, clearly correct. Were it otherwise, the policy of the sub-section could be frustrated by introducing at the last minute grounds of challenge not hitherto raised and thereby potential causes of delay and disruption of the application to the prejudice of the opposite party.'
"[110] In my judgment the relevant legislation and authorities support the following principles and approach relevant to the present case:(1) The fundamental principle, or policy, is fairness, and justice, in the sense of openness and fair dealing between the parties: see Moore-Bick J in Rustal at 19-20, Colman J in Zestafoni at [64], Cooke J in Thyssen at [18], Aikens J in Primetrade at [59]-[61] and Carr J in C v D1 at [150].(2) There is also a concern to seek to avoid waste of time and expense: see Moore-Bick J in Rustal at 19-20 and Cooke J in Thyssen at [18].
(3) The issue as to jurisdiction must normally have been raised at least on some grounds before the arbitrator: see Colman J in Zestafoni at [64].
(4) In addition, each ground of challenge to jurisdiction or of objection to jurisdiction must have been raised if it is to be raised; by this is meant the irregularity that the party considers renders the whole arbitral process invalid: see Colman J in Zestafoni at [64], Cooke J in Thyssen at [18] and Aikens J in Primetrade at [59]-[61].
(5) It is wrong to be prescriptive or try to lay down precise limits in the abstract for the meaning of the phrase "ground of objection", but it is usually easy to recognise (or obvious) in particular cases whether a party is attempting to raise a new ground of objection to jurisdiction on an appeal: see Aikens J in Primetrade at [59]-[61].
(6) The 'grounds of objection' should not be examined closely as if a pleading, but broadly, or adopting a broad approach. The fact that different and broader arguments are raised or new evidence is put forward does not mean that there is a new ground: see Aikens J in Primetrade at [59]-[61] and [112] and Hamblen J in Ases at [36]-[37] and Habas Sinai at [86]-[87].
(7) This is not to suggest a relaxed approach, especially bearing in mind (1) above. The other party (and the arbitral tribunal) must know the specific grounds which are to be advanced in challenge to an arbitration award not only because they must know the case to be met but also because they should know the extent to which what would otherwise be a valid award is challenged: see Field J in Konkola at [18].
(8) It would be unfair if a party took part in arbitration yet kept an objection up his sleeve and only attempted to deploy it later: see Moore-Bick J in Rustal at 10-20 and Carr J in C v D1 at [150].
(9) Different and broader arguments may be raised, and evidence and argument relied upon may be expanded, provided these are within the same existing "ground of objection" to the jurisdiction of the arbitrator: the fact that it raises different and broader arguments or new evidence does not mean that it is a new ground: see Aikens J in Primetrade at [61]-[62] and 112 and Hamblen J in Habas.
(10) It is not enough that the party mention an issue; the issue must be properly put to the arbitral tribunal as denying jurisdiction.
[111] I accept point (10) from Lord Goldsmith QC's argument summarised above. Although the authorities may not quite reach this tenth point in terms, they lead to it and are not fully given effect without it. In the words of the statute, the objection must be "ma[d]e" or "raise[d]".
(1) That sub-paragraph (9) duplicates sub-paragraph (6).
(2) That sub-paragraph (4) was potentially misleading, and in particular the reference to an irregularity rendering the whole arbitral process invalid was out of place in the context of a s. 67 challenge and was language referable instead to a challenge under s. 68, which was what the Thyssen case had been concerned with.
(3) That sub-paragraph (7) was wrong, and was inconsistent with the broad approach referred to in sub-paragraph (6), and was not properly supported by Konkola which was a case involving amendment to an Arbitration Claim Form and not a case in relation to s. 73 of the 1996 Act.
(4) That sub-paragraph (10), in its reference to a matter being 'properly put' to the tribunal, was potentially misleading. Mr Bailey KC contended that the sub-paragraph should make clear that the point being made is that a party cannot simply mention an issue in passing, but must express it as an objection to jurisdiction.
(5) That the references to 'fairness' in sub-paragraphs (1) and (8) have to be qualified by, or seen in the context of, the principle that a party's objections to jurisdiction as taken before the tribunal are not to be narrowly construed; and that a party should not too readily be held to be precluded from coming to Court and having the Court determine what was the extent of the tribunal's jurisdiction.
(1) The fundamental principle, or policy, is fairness, and justice, in the sense of openness and fair dealing between the parties: see Moore-Bick J in Rustal at 19-20, Colman J in Zestafoni at [64], Aikens J in Primetrade at [59]-[61] and Carr J in C v D1 at [150].
(2) There is also a concern to seek to avoid waste of time and expense: see Moore-Bick J in Rustal at paras. [19-20].
(3) The issue as to jurisdiction must normally have been raised at least on some grounds before the arbitrator: see Colman J in Zestafoni at [64].
(4) In addition, each ground of challenge to jurisdiction or of objection to jurisdiction must have been raised if it is to be raised; by this is meant the jurisdictional objection that the party considers renders the whole or the relevant part of the arbitral process invalid: see Colman J in Zestafoni at [64], and Aikens J in Primetrade at [59]-[61].
(5) It is wrong to be prescriptive or try to lay down precise limits in the abstract for the meaning of the phrase "ground of objection", but it is usually easy to recognise (or obvious) in particular cases whether a party is attempting to raise a new ground of objection to jurisdiction on an appeal: see Aikens J in Primetrade at [59]-[61].
(6) The 'grounds of objection' should not be examined closely as if a pleading, but broadly, or adopting a broad approach. The fact that different and broader arguments are raised or new evidence is put forward does not mean that there is a new ground: see Aikens J in Primetrade at [59]-[61] and [112] and Hamblen J in Ases at [36]-[37] and Habas Sinai at [86]-[87].
(7) This is not to suggest an unduly relaxed approach, especially bearing in mind sub-para. (1) above. The substance of each ground of objection relied upon should have been communicated to the other party (and the arbitral tribunal).
(8) It would be unfair if a party took part in arbitration yet kept an objection up his sleeve and only attempted to deploy it later: see Moore-Bick J in Rustal at 10-20 and Carr J in C v D1 at [150].
(9) It is not enough that the party mention an issue; the issue must be distinctly put to the arbitral tribunal as denying jurisdiction.
(1) There is no doubt that NIOC was taking a point as to the Tribunal's lack of substantive jurisdiction over the relevant claim.
(2) That objection was being put on the basis that a jurisdiction which was founded on the arbitration clause in the GSPC did not embrace a claim which was founded on an assertion of a liability of CGC to CNGC under another contract.
(3) The objection was said to be one both 'ratione personae' and 'ratione materiae'. In relation to the latter, what was said in paragraph 117 of NIOC's Counter-Memorial on Remedies was that the Tribunal's jurisdiction was to rule upon 'any dispute, controversy or claim arising out of or relating to the GSPC itself', but that '[o]n the other hand, the Tribunal's jurisdiction does not extend to making any determination whatsoever as to whether and, if so, to what extent CGC may be liable to CNGC in the context of their own contractual relationship'. That paragraph does, at least implicitly, put forward the case that a claim as to whether and if so to what extent CGC may be liable to CNGC is not one which arises out of or relates to the GSPC itself.
(4) No specific contention was put forward as to the proper construction of the arbitration provision being a matter which had to be determined by reference to Iranian law. Nevertheless it was apparent that NIOC was contending that English law was irrelevant to the question of the jurisdiction of the Tribunal to decide the claim for CGC Liability to CNGC Losses: hence the reference, in paragraph 198 of NIOC's Reply Counter-Memorial on Remedies, to Crescent's reference to English law being 'bizarre'. That NIOC was contending that English law was not relevant will have come as no surprise to Crescent, given that, as Darowski 2, served on Crescent's behalf, states (at [30]:) 'Throughout the First Arbitration the law of the GSPC's arbitration agreement has never been controversial and the Parties have proceeded on the basis that it is governed by Iranian law, the governing law of the underlying contract.'
(5) In these circumstances, and applying a broad approach, I think NIOC had raised the ground of objection it now seeks to rely upon. Or, to put the matter another way, it had raised the substance of its present point. What it had not raised were the stages in the argument upon which it now relies, nor the facets of Iranian law which it now contends to be relevant. But these points, as indicated by Habas Sinai and Arsanovia, are not sufficient to mean that the ground of objection had not been made to the Tribunal.
(6) I do not consider that the principle of openness and fair dealing between the parties is contravened by recognising that NIOC is not precluded by s. 73 from now raising its s. 67 challenge. NIOC was not guilty of having kept a jurisdictional objection 'up its sleeve'. It had raised such an objection. It is true that it had not put that point in the way in which it now seeks to do, but I do not consider that there is any significant unfairness in Crescent now having to deal with that point which would outweigh an unfairness to NIOC if it were precluded from raising before the court a point which went to the arbitrators' jurisdiction by reason only of its not having properly elaborated that point before the Tribunal.
Crescent's Application for Summary Judgment
'The CPR allow for summary judgment to be given against either a claimant or a defendant. If there is no real prospect of a party's case succeeding at trial, then it is generally appropriate to determine the issue summarily regardless of whether that party is the claimant or defendant or, in this context, the party seeking to enforce or the party resisting enforcement of the award.'
The Applicable Principles
33. In The LCD Appeals [2018] EWCA Civ 220, the Court of Appeal quoted with approval the following considerations applicable to summary judgment applications, taken from passages in Easyair Ltd v Opal Telecom Ltd [2009] EWHC 339 (Ch) and Swain v Hillman [2001] 1 All ER 91 at 94:
i) the court must consider whether the claimant has a "realistic" as opposed to a "fanciful" prospect of success: Swain v Hillman [2001] 1 All ER 91;
ii) a "realistic" claim is one that carries some degree of conviction. This means a claim that is more than merely arguable: ED & F Man Liquid Products v Patel [2003] EWCA Civ 472 § 8;
iii) in reaching its conclusion the court must not conduct a "mini-trial": Swain v Hillman;
iv) this does not mean that the court must take at face value and without analysis everything that a claimant says in his statements before the court. In some cases it may be clear that there is no real substance in factual assertions made, particularly if contradicted by contemporaneous documents: ED & F Man Liquid Products v Patel § 10;
v) however, in reaching its conclusion the court must take into account not only the evidence actually placed before it on the application for summary judgment, but also the evidence that can reasonably be expected to be available at trial: Royal Brompton Hospital NHS Trust v Hammond (No 5) [2001] EWCA Civ 550;
vi) although a case may turn out at trial not to be really complicated, it does not follow that it should be decided without the fuller investigation into the facts at trial than is possible or permissible on summary judgment. Thus the court should hesitate about making a final decision without a trial, even where there is no obvious conflict of fact at the time of the application, where reasonable grounds exist for believing that a fuller investigation into the facts of the case would add to or alter the evidence available to a trial judge and so affect the outcome of the case: Doncaster Pharmaceuticals Group Ltd v Bolton Pharmaceutical Co 100 Ltd [2007] FSR 3;
vii) on the other hand, it is not uncommon for an application under Part 24 to give rise to a short point of law or construction and, if the court is satisfied that it has before it all the evidence necessary for the proper determination of the question and that the parties have had an adequate opportunity to address it in argument, it should grasp the nettle and decide it. If it is possible to show by evidence that although material in the form of documents or oral evidence that would put the documents in another light is not currently before the court, such material is likely to exist and can be expected to be available at trial, it would be wrong to give summary judgment because there would be a real, as opposed to a fanciful, prospect of success. However, it is not enough simply to argue that the case should be allowed to go to trial because something may turn up which would have a bearing on the question of construction: ICI Chemicals & Polymers Ltd v TTE Training Ltd [2007] EWCA Civ 725; and
viii) a judge in appropriate cases should make use of the powers contained in Part 24. In doing so, he or she gives effect to the overriding objective as contained in Part 1. It saves expense; it achieves expedition; it avoids the court's resources being used up on cases where this serves no purpose; and it is in the interests of justice. If the claimant has a case which is bound to fail, then it is in the claimant's interest to know as soon as possible that that is the position: Swain v Hillman [2001] 1 All ER 91 § 94.
34. If an applicant for summary judgment adduces credible evidence in support of the application, the respondent then comes under an evidential burden to prove some real prospect of success or other reason for having a trial: Sainsbury's v Condek [2014] EWHC 2016 (TCC) § 13.
35. A respondent to a summary judgment application who claims that further evidence will be available at trial must serve evidence substantiating that claim: Korea National Insurance Corp v Allianz [2007] 2 CLC 748 (CA):
"It is incumbent on a party responding to an application for summary judgment to put forward sufficient evidence to satisfy the court that it has a real prospect of succeeding at trial. If it wishes to rely on the likelihood that further evidence will be available at that stage, it must substantiate that assertion by describing, at least in general terms, the nature of the evidence, its source and its relevance to the issues before the court. The court may then be able to see that there is some substance in the point and that the party in question is not simply playing for time in the hope that something will turn up. It is not sufficient, therefore, for a party simply to say that further evidence will or may be available, especially when that evidence is, or can be expected to be, already within its possession, as is the case here. …" (§ 14 per Moore-Bick LJ)
'… (a) The court must consider whether the claimant has a 'realistic' as opposed to a 'fanciful' prospect of success: Swain v Hillman [2001] 1 All ER 91. A realistic claim is one that carries some degree of conviction: ED&F Man Liquid Products Ltd v Patel [2003] EWCA Civ 472, [2003] 24 LS Gaz R 37, [2003] All ER (D) 75 (Apr). But that should not be carried too far: in essence the court is determining whether or not the claim is 'bound to fail': AK Investment CJSC v Kyrgyz Mobil Tel Ltd [2011] UKPC 7, [2012] 1 All ER (Comm) 319, [2012] 1 WLR 1804 (at [80] and [82]).'
This is a helpful elucidation of what is involved in deciding whether a claim or defence stands a realistic prospect of success.
The Grounds of the Application
(1) In the first place, Crescent submitted that NIOC's case that the CGC Liability to CNGC Losses claim fell outside the scope of the arbitration clause in the GSPC was inconsistent with findings made by the Tribunal, which had res judicata effect, that CGC's liability to CNGC was the natural and ordinary consequence of non-delivery, and would have been 'certain, direct and foreseeable', and that the liability of CGC was harm directly resulting from NIOC's breach.
(2) Secondly, and in any event, if Dr Mokarrami's evidence was confined to what was admissible, it did not establish that NIOC's case had any realistic prospect of success, and it could be seen that NIOC's objection based on the limited scope of the arbitration clause is bound to fail.
I will consider these two grounds in turn.
Crescent's First Ground
'[33] Westland, although not formally admitting that the arbitrator had, as he concluded, jurisdiction to resolve the dispute as to quantum by reference to an annual retainer never applied to set aside the Second Award on the grounds that he had no such jurisdiction. It is said that this was a decision taken "for commercial reasons". However, the consequence of that decision is that, in as much as the Second Award determined that such jurisdiction existed, there is a decision binding on the parties to that effect. Moreover, it is now too late either to apply to set aside the award under s. 67 or to appeal it by applying for leave to appeal under s. 69.
[34] It follows that it is not open to Westland to deploy as a basis for their case that the arbitrator had no jurisdiction to award interest the submission that there was no jurisdiction to award the capital sum by reference to which such interest was awarded. This is because there is an issue estoppel in respect of the award as to the capital sum. …
[37] … where issues A and B have been determined by an arbitrator who has issued an interim award and the losing party wishes to use a procedure under the 1996 Act for challenging the arbitrator's conclusion on issue B but not on issue A, it is not open to him to challenge the conclusion on issue B by arguing that the arbitrator should have reached a different conclusion on issue A.'
'[83] I cannot accept that it is open to C now to seek to challenge the Tribunal's reasoning and finding at paragraph 241(2), even if only for jurisdictional purposes.
[84] The settled position for all purposes between the parties is that, pursuant to paragraph 241(2) of the Award, Clause 11.1 [i.e. the indemnity clause in the SPA] extends to claims arising out of breaches of the PSC. In the absence of a challenge to that finding, the finding is final and binding, enforceable under s. 66 of the 1996 Act and under the New York Convention internationally. Any challenge under s. 67 of the 1996 Act has to be to a finding on jurisdiction. Here there is no challenge to the Tribunal's jurisdiction for the purposes of paragraph 241(2) of the Award.
[85] This position is consistent with the decision of Colman J in Westland Helicopters Ltd v Sheikh Salah Al-Hejailan …'
Crescent's Second Ground
45. "The role of foreign law experts in relation to issues of contractual interpretation is a limited one. It is confined to identifying what the rules of interpretation are.
46. It is not the role of such experts to express opinions as to what the contract means. That is the task of the English court, having regard to the foreign law rules of interpretation.
47. This is well established law and is clearly set out and summarised by Lord Collins in Vizcaya Partners Ltd v Picord [2016] UKPC 5, [2016] 1 CLC 806 at [60]:
"60. …Where the applicable law of the contract is foreign law, questions of interpretation are governed by the applicable law. In such a case the role of the expert is not to give evidence as to what the contract means. The role is "to prove the rules of construction of the foreign law, and it is then for the court to interpret the contract in accordance with those rules": King v Brandywine [2005] EWCA Civ 235, [2005] 1 CLC 238, para 68; Dicey, paras 9-019 and 32-144 ("the expert proves the foreign rules of construction, and the court, in the light of these rules, determines the meaning of the contract")."
48. To similar effect is the judgment of Longmore LJ in Savona at [15]:
"15. …In a case in which the main, let alone the only, issue is as to the construction of a foreign jurisdiction clause as opposed to an English jurisdiction clause, the only relevance of evidence of foreign law is to inform the court of any difference of law in relation to the principles of construction, see King v Brandywine [2005] 1 CLC 238, para 68 per Waller LJ and Vizcaya Partners Ltd v Picord [2016] 1 CLC 806 para 60 per Lord Collins. It is not to have competing arguments as to how the highest court in the foreign jurisdiction would decide the question whether a claim brought in England would (or would not or would also) fall within the foreign jurisdiction clause. The task of the English court is merely to inform itself of any relevant different principles of construction there might be in the foreign law and, armed with such information, look at both jurisdiction clauses and decide whether the English claim falls within the English clause. That should be a comparatively straightforward exercise."
49. TRM's Italian law expert did express views as to how an Italian court would interpret the IJC and what she considered the IJC to mean. That is inadmissible and irrelevant evidence.'
(1) That Iranian law looks to the words of the arbitration agreement itself. 'This is because the words of the arbitration agreement are paramount in conveying the mutual intention and consent of the parties thereto to submit their disputes (as defined in the relevant arbitration agreement) to arbitration.' (paragraph 22) '[A]n arbitration agreement, like any other contract, is only subject to interpretation under the relevant principles of applicable law where there is an ambiguity in the text of the agreement. If there is no ambiguity, the text is strictly interpreted.' (paragraph 29)
(2) That Iranian law applies a restrictive approach in interpreting the scope of arbitration provisions, whereby 'there is a presumption that jurisdiction is only conferred on to arbitrators to resolve those specific claims, disputes or controversies that the parties have expressly agreed and articulated in the arbitration agreement to be within the competence of the arbitrators.' (paragraph 23)
(3) Iranian law does not recognise an equivalent of what may be called the Fiona Trust presumption that arbitration clauses are to be interpreted widely such that any dispute arising out of the relationship between the parties should be decided by the same tribunal and that distinctions in the wording of arbitration clauses should not normally result in significant differences in scope. (paragraph 32)
(1) As has been set out above, the question is whether there is a realistic prospect that the court, itself construing the words of the arbitration provision in the light of the relevant principles of construction, will hold that it did not extend to the claim in issue.
(2) The words of the clause refer to arbitration 'any dispute, controversy or claim arising out of or relating to this Contract, or the breach, termination or validity or invalidity thereof'. Without adopting any 'pro-arbitration' construction, or a 'Fiona Trust' presumption, and indeed taking a literalistic approach to them, the words used are wide. In particular the words 'relating to' are wide, and the category of disputes, controversies or claims which may at least 'relate to' the GSPC or to its breach is broad.
(3) The proper interpretation of an arbitration clause must necessarily be considered 'at the time that the … agreement is made', and be 'forward looking'. That is how it was put in BNP Paribas v Trattamento at [56]-[57]). There is no reason for considering that Iranian law, if it is relevant in this regard, is to any different effect, given that Dr Mokarrami states that the starting point of the enquiry as to the scope of the clause is the words used because they convey 'the mutual intention and consent of the parties'. What is accordingly involved here is to ask whether the clause, in referring to arbitration all claims arising out of or relating to the GSPC or its breach, extended to a claim which might in the future be brought by one of the parties to the GSPC for damages which that party alleged that it had sustained by reason of its liability to a third party as a direct result of the other contracting party's breach of contract. I do not consider that there is a realistic prospect of that question being answered in the negative.
(1) NIOC has had the opportunity to put before the court what Iranian law it contends is applicable. NIOC is very familiar with dealing with issues of Iranian law. A very great deal of consideration was given to Iranian law during the course of the arbitration, and NIOC adduced extensive expert evidence in relation to Iranian law. It has now put forward the evidence of Dr Mokarrami.
(2) There is no reason for thinking that, if there were to be a trial, the principles of construction as a matter of Iranian law would be shown to be more favourable to NIOC's argument than Dr Mokarrami's report suggests them to be. Mr Bailey KC accepted that NIOC was not contending that there was something which Dr Mokarrami wished to add which was not in his report.
(3) There is, however, clearly at least a possibility that the procedures which would be adopted at a trial, and in particular the introduction of expert evidence on behalf of Crescent, would result in the position as to the relevant principles of construction as a matter of Iranian law appearing as less favourable to NIOC's current argument than that presented by Dr Mokarrami's report.
(4) This is not a case in which there is any question of disclosure being given which might add to or alter the evidence now available.
(5) I do not consider that there are reasonable grounds for considering that if the matter were to proceed to trial the position which would emerge would be materially different, in a way which favoured NIOC, from what emerges from Dr Mokarrami's report.
Conclusion