Yukos v Tomskneft: Ireland rejects ‘parochial’ jurisdiction in enforcement of arbitral awards

Postscript 26 April 2016: the PCIA Yukos Arbitral award which I refer to below, was later squashed for lack of jurisdiction – that judgment is currently under appeal.

When should a court being asked to apply the Convention on the Recognition and Enforcement of Foreign Arbitral Awards (New York, 1958)  – the ‘New York Convention‘, look mercifully on forum shopping with a view to the smooth enforcement of such award? That, in essence, was the issue in Yukos v Tomskneft at the Irish High Court. Both Yukos Capital and Tomskneft were originally part of the Yukos group – of PCIA Yukos arbitral award fame. Tomskneft was later transferred to Rosneft. Arbitral proceedings had taken place in Switzerland, Yukos’ attempts at enforcement in Russia failed, as they did in France. Singapore attempts are underway.

The Irish courts involvement at first view looks odd. There are no Tomskneft assets in Ireland, neither corporate domicile of any Tomskneft affiliates. As Kelly J noted, the Irish proceedings effectively would serve as a jack for proceedings in other jurisdictions where Tomskneft does hold assets. Waving a successful enforcement order (even if it were in practice nugatory, given the lack of assets) obtained in a ‘respectable’ jurisdiction, would assist with enforcement proceedings elsewhere.

The New York Convention has a pro-enforcement bias however the Irish (and other, especially common law countries’) arbitration act in enforcement of the Convention, runs alongside the application of Irish civil procedure rules ‘out of the jurisdiction’, being against a foreign defendant: Kelly J (at 59): In implementing the Convention as it did, the legislature did not attempt to dispense with the necessity to obtain leave to serve out of the jurisdiction in a case where the respondent is not normally resident within it.’

US law, too, requires that preliminary to recognising and enforcing a foreign award, in personam jurisdiction must be established. Decision on such remains subject to lex fori. A jurisdiction which all too happily entertains such cases is then said to employ ‘parochial’ or ‘exorbitant’ jurisdictional rules.

In the case at issue, after referencing prior case-law both in Ireland and elsewhere, Kelly J rejected applicant’s request (at 141):  It is a case with no connection with Ireland. There are no assets within this jurisdiction. There is no real likelihood of assets coming into this jurisdiction. This is the fourth attempt on the part of the applicant to enforce this award. There is little to demonstrate any “solid practical benefit” to be gained by the applicant. The desire or entitlement to obtain an award from a “respectable” court has already been exercised in the courts of France and is underway in the courts of Singapore.’

Note therefore that the court is not unsympathetic to the attempt at employing successful (even if hollow) enforcement in one jurisdiction as a lever in the real target jurisdiction (the one with the assets). Except, in the case at issue, similar attempts had already been or still were underway elsewhere.

The case is a very good illustration of the attraction (and uncertainty) of forum shopping, in particular at the enforcement stage. As well as a powerful reminder of the in personam jurisdictional rules of the common law.

Geert.

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