Case: Dallah Real Estate and Tourism Holding Company v Government of Pakistan [2010] UKSC 46 Overview:
An ICC tribunal in Paris found in favour of the Claimant (Dallah), against the Government of Pakistan (Government), who was a third party to a Trust it had set up. Dallah applied to enforce the award in the English courts, and the Government applied to have it set aside under s103(2) of the Arbitration Act 1996.
Facts:
The Government and Dallah agreed for Dallah to acquire land in Mecca, Saudi Arabia. The Agreement made reference to a guarantee to be provided by the Government, and a sub-guarantee by the Trust.
1994 – The Government agreed to set up a Trust as a Vehicle for which Dallah would construct housing in Mecca, Saudi Arabia.
January 1996 – The Awami Hajj Trust was created. The Government were not a party within the agreement itself. Furthermore, the agreement did not contain a choice of law clause.
December 1996 – The project did not materialise, and the Trust ceased to exist.
1997 – Dallah commenced arbitration proceedings. The dispute was arbitrated in Paris under the ICC against the Government for breach of contract, stating that the Government was a party to the Agreement.
The Tribunal issued a partial award to Dallah.
Dallah wanted to enforce the award in the English court
The Government applied to have the award set aside as it was not a party to the agreement, nor was there a valid arbitration agreement under s103(2) of the Arbitration Act 1996.
Issues:
NB: It is the application to set aside the award, that was under dispute
Could the award which was issued in Paris, be set aside in the English courts under the Arbitration Act 1996?
Under the agreement, although there was no choice of law clause, was there a common intention between the parties, for the governing law to be that of the current law under the choice of jurisdiction?
Decision:
Application Granted: the award issued to Dallah was set aside on the basis that the Government were not a party to the agreement. This decision was upheld in the Court of Appeal.
Supreme Court:
Dallah appealed the decision to the Supreme Court, under the basis there was a common intention that the choice of law would be the law of the jurisdiction of the arbitration.
The Supreme Court dismissed the appeal, refusing the award to be enforced.
- There was no common intention that the Government would be bound.
- There was no valid agreement under s103(2) of the Arbitration Act 1996.
Case: Republic of Mozambique v Privinvest Shipbuilding SAL (Holding) & Ors [2023] UKSC 32 Overview:
Three corporate special purpose vehicles (SPV) wholly owned by the Republic of Mozambique (RoM), contracted with three Privinvest companies for supply and development. These contracts were part of a larger series of agreements that led to significant loans being obtained by Mozambican state-owned companies: Proindicus SA (Proindicus), Empresa Moçambicana de Atum (Ematum), and Mozambique Asset Management (MAM).
Facts:
January 2013 – SPV 1 entered into the Proindicus Contract with Privinvest Shipbuilding SAL (‘Holding’) for the supply of ships and aircrafts. Choice of Law: Swiss law. Choice of Jurisdiction: ICC arbitration seated in Geneva.
August 2013 – SPV 2 entered into the Ematum Contract with Abu Dhabi Mar Investments LLC (‘ADMI’) for the supply of assets and services for a large fishing fleet. Choice of Law: Swiss law. Choice of Jurisdiction: ICC arbitration seated in Geneva.
May 2014 – SPV 3 entered into the MAM Contract with Privinvest Shipbuilding Investments LLC (‘Shipbuilding’) for the supply of assets and services to create a shipyard. Choice of Law: Swiss Law. Choice of Jurisdiction: ICC arbitration seated in Geneva.
All SPVs entered into financing agreements, with Swiss Bank Credit Suisse. The finance agreements were governed by English law, under the English jurisdiction.
Holding, ADMI, and Shipbuilding had sub-contracts with each other. Aside from the sub-contract entered by Holding which did not contain a choice of law clause, the remaining sub-contracts all detailed English governing law, under the English Jurisdiction.
2018 – US Department of Justice brought criminal proceedings of bribery and corruption against employees of Credit Suisse and the lead negotiator of Privinvest, Jean Boustani.
2019 – Boustani was acquitted. Republic of Mozambique (RoM) issued claims in the Courts of England and Wales, against Credit Suisse. It claimed it was the victim of a conspiracy involving Privinvest allegedly paying bribes to officials within RoM, Credit Suisse, and Boustani. As a result, it was exposed to liabilities exceeding $2bn and future economic losses. Credit Suisse admitted payments were made, insinuating these payments as bribes to officials within the RoM.
2020 – Credit Suisse issued a Part 20 claim/Counterclaim against Privinvest and 10 individuals alleged to have received Bribes. This would bring Privinvest and the 10 individuals into the proceedings.
Privinvest applied to stay the proceedings under s9 of the Arbitration Act 1996, as the claim fell within the Swiss arbitration clauses in the supply contracts. A ‘stay’ would halt the proceedings against Privinvest, in this instance allowing Swiss arbitration to lead the matter.
Issues:
Were the RoM’s claims “matters” under s9 of the Arbitration Act? Could the claims be stayed under the English Arbitration Act 1996?
Decision:
Commercial Court:
RoM succeeded, with the Commercial Court dismissing the application to stay the proceedings. The “matters” did not fall within the arbitration agreements, and therefore proceedings could not be stayed. The claims in respect of bribery and corruption were not connected with the Supply Contracts.
Court of Appeal:
The Court of Appeal overturned this. The “matters” in respect of the proceedings, discussed the validity of the Supply Contracts as commercial contracts, which were within the scope of the arbitration agreements.
Supreme Court:
The following two stage approach was applied:
- 1) What specific issues are being raised?
- 2) Should those issues be solved through arbitration?
They determined the following:
- A “matter” can apply only to parts of the legal case.
- A “matter” needs to be an issue legally relevant to the claim/defence.
- Deciding what counts as a “matter” needs judgement and common sense.
- The context of the claim/defence should be considered when deciding if arbitration is appropriate.
The Supreme Court overturned the Court of Appeal. It accepted in the RoM case that the issues of bribery, conspiracy, and assistance in the claims were not “matters” covered by an arbitration agreement. Furthermore, Privinvest’s defence about the value of the Supply Contracts and how it affects damages wasn’t part of the arbitration agreements either. They will therefore be determined by the English Court, instead of privately before an arbitral tribunal.
Pinewood Technologies Asia Pacific Ltd (PTAP) v Pinewood Technologies Plc (Pinewood) [2023] EWHC 2506 (TCC)
The Defendant has applied for a reverse summary judgement of the Claim brought by the Claimant, alongside a summary judgement on its counterclaim.
Background
The Claimant (PTAP) develops and supplies a dealer management system for the automotive industry. The Claimant often contracts with independent partners known as “resellers” to market and sell Pinewoods bundled management information system – DMS, outside of the UK. The Defendant (Pinewood) was appointed as the exclusive reseller of the Claimants DMS in certain countries.
It Is agreed by both parties that the Reseller Agreements have been terminated, however the parties are in dispute about the circumstances of the termination:
The Claimant argues that clause 10.5 of the contract imposes three obligations on the client, which is described as the Development Obligations. The Development Obligations consists of:
(i) “The Update Obligation” – to “keep [PTAP] advised about all releases and further development of the [Pinewood DMS] which may assist PTAP in the successful operation and promotion and sale of [Pinewood DMS] Services”;
(ii) “The Legal Requirements Obligation” – to “make any necessary changes to ensure that the [Pinewood DMS] meets the legal requirements of the Territory…”; and
(iii) “The Franchise Standards Obligation”- to “use its best endeavours to make any necessary changes to ensure that the [Pinewood DMS] meets the vehicle manufacturer franchise standards of the franchises held by the Contracting Customers”).
The Claimant also states that there was an implied term (“The Localisation Obligation”), which required the Defendant to complete localisation items such as “Development Items necessary to ensure that the Pinewood DMS could operate and be sold in the particular Territory.”
The Claimant argues that these breaches caused significant disruption leading to an overall loss of profits. They calculated their claim at 312.7 million USD.
In Defence to the claim, the Defendant denies that is breached clause 10.5, denies the existence of the Localisation Obligation and even if it exists, denies that it has breached it. The Defendant also states that the claim to loss and damage is “unparticularised” and rejects the notion that the Claimant would be entitled to “reliance costs”. In its defence, the Defendant argues that the Claimant is not entitled to damages due to the exclusion of the Defendants liability under Clause 16.2.
The Defendant submits a Counterclaim in which they claim in debt a total of US$203,197 and THB15,000,613. This has been outstanding invoices since 26 April 2022.
The Claimants draft amended Reply and Defence to Counterclaim argues that the Defendants exclusion/restriction for liability does not align with the Unfair Contract Terms Act 1977 (UCTA).
The Claimant denies that it breached its Development Obligations. The claimant also argues that the Defendants claim to loss and damage is unparticularised and denies that the Defendant would be entitled to reliance costs. The Claimant applied for a summary judgement application.
In terms of the summary judgement, the Defendant requested specific disclosure and argued that it would not be just to enter a summary judgement where there is a real possibility that disclosure could be sufficient for the Defendant to amend its pleaded claims.
Issues:
- Whether there is a real prospect of the Defendant establishing that, in relation specifically to the Reseller Agreements, PTAP was dealing on those standard terms of business hence, incorporating the terms of UCTA.
- Whether the court should order specific disclosure or whether granting the Summary Judgement is just?
Judgement:
Issue 1: The court rejected the Defendant submission that it has a real prospect of success at trial on the UCTA Argument, as both sides had access to legal advice and the draft agreement went back and forth. Therefore, the amendment application, in relation to UCTA, is dismissed.
Issue 2: The court held that the Practice Direction is to encourage and permit disclosure in relation to the issues to be determined by the court at trial. Therefore, to grant a summary judgement would be to undermine the regime of the Practice Direction, both as to its literal terms and its overall purpose. Therefore, a summary judgement was not granted.
For further information, please see: https://www.bailii.org/ew/cases/EWHC/TCC/2023/2506.html
John E. Griggs & Sons Ltd v High Firs Penthouses Ltd [2023] EWHC 2231 (TCC)
This was an application made by the Claimant, John E. Griggs & Sons Limited, for a freezing order over the assets of the Defendant, High Firs Penthouses Limited.
Background
On 10 January 2019, the Claimant (as Contractor) entered a construction contract with the Defendant (as Employer. The Defendant failed to pay the Claimants August 2022 application for an interim payment. The Claimant referred the dispute to adjudication.
The adjudicator issued a decision on 3 November 2022, where he found that payment was due and ordered the Defendant to pay £122,893.80. When the Defendant failed to make payment, the Claimant brought proceedings.
The Claimant brought a summary judgement application and shortly before the hearing, the Defendant consented to the judgement being entered together with further costs of £9,150. A consent order was made on 6 June 2023 and the Defendant was ordered to pay however, they failed to make the payment.
On 20 June 2023, the Defendant issued a letter before action of its intended claim based on snagging and defective works, totalling £443,805.08. First, the Defendant stated that it had no defence to the adjudication enforcement proceedings, now they claim that they had no intention to pay the outstanding sum.
The Defendant indicated that it was looking to sell the property and the defects were delaying their ability to sell the property.
The Claimant’s freezing order was supported with an affidavit which refers to the Defendant’s accounts in December 2021, showing total net assets of £411,822, of that £104,475 was held in cash. He expressed concerns as to whether the Defendant will have sufficient disposable assts to pay the judgement. The Claimant asserts that there is a real risk that the intended sale of penthouse 3 will dissipate the remaining value of the Defendants interests in the development. The Claimant also reminded the court of the Defendants history of breaching court orders and demonstrated a persistent pattern of avoiding making payment.
Arguments:
The Claimant argues that this application is properly made without notice because it is urgent and there is a real risk that if the notice were given, the Defendant would take steps to accelerate the “dissipation of assets”. The Claimant argues that since the receipt of the letter of 20 June, they have had to respond to the letter of claim, investigation the Defednants financial positions and assets and taking legal advice.
Issues:
- Whether there is a good reason for not giving notice?
- Was there a delay in making the freezing order application?
- Whether there is a real risk of an unjustified dissipation of assets?
- Whether it is in all the circumstances just and convenient to grant the relief sought.
Judgement:
Issue 1: The court does not accept that urgency on the facts of this case, is a proper basis for proceeding without notice to the Defendant.
Issue 2: The Claimant received the Defendants letter on 20 June. The Claimant investigated the Defendants assets, sought legal advice, and prepared the application. The court notes that it was possible to obtain a copy of the register of title at HM Land Registry as early as 28 June 2023. Therefore, it is the court’s expectation that the judgement would have been made early July not September. As injunctive relief is a discretionary remedy, the court can decline to give relief where the applicant has delayed in making the application. However, the court held that the application should not be dismissed just based on this ground.
Issue 3: The court held that it seems to be the Defendant’s intention to sell a “long leasehold interest in penthouse 3”. However, if it does not sell the flat, then it could be the case that the Defendant does not have the necessary cash to pay the judgment debt. As there is no evidence that the Claimant has investigated the marketing of the flat, the court assumes in the Defendants favour, that the company is openly marketing the penthouse for sale and that it seeks full value.
Issue 4: The court held that it is not just or convenient for the courts to interfere in the bona fide sale for value of penthouse 3.
Therefore, the court dismiss the application for a freezing order.
For further information, please see: https://www.bailii.org/ew/cases/EWHC/TCC/2023/2231.html
