Posts Tagged Arbitration

Anti-suit and arbitration. Enka Insaat ve Sanayi v OOO “Insurance Company Chubb” et al.

[2019] EWHC 3568 (Comm) Enka Insaat ve Sanayi v OOO “Insurance Company Chubb” et al. is the very swift follow-up to [2019] EWHC 2729 (Comm) which I review here. I flag the case mostly for:

  • at 8, Baker J siding with Males J (and myself) per Nori Holding, that West Tankers is still good authority following Brussels Ia despite Wathelet AG’s suggestions in Gazprom;
  • the brief reference at 9, as to whether under Rome I injunctive relief for threat of contractual breach is covered by lex fori or lex contractus. Baker J concludes that issue simply by reminding us that Rome I does not apply to arbitration agreements;
  • At 47 ff the discussion of choice of law in spite of no express clause having been included to that effect. Specifically, with reference to Sulamerica, whether choice of seat may imply choice of law.

Geert.

(Handbook of) EU private international law, 2nd ed. 2016, Chapter 2, Heading 2.2.1. 

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A v OOO “Insurance Company Chubb” et al. Anti-suit pro arbitration does have its limits.

In A v OOO “Insurance Company Chubb” [2019] EWHC 2729 (Comm), Carr J refused an ex parte application for interim relief seeking (i.a.) anti-suit and discontinuation of Russian proceedings, pro agreed arbitration in London. Defendants are domiciled at Russia, France and Switserland. At 33 ff Carr J lists five reasons for refusal, despite as readers will know the English courts’ general willingness to assist arbitration. Three of her reasons jump out: the lack of full and frank disclosure (ia relating to contractual provisions); the lack of immediate urgency requiring ex parte application; and some of the measures sought being more than just interim measures (assessment of that nature required evidence by a Russian law expert on the further continuation, if any, of Russian proceedings following anti-suit).

A good reminder that these applications are neither straightforward nor should be taken for granted.

Geert.

(Handbook of) EU private international law, 2nd ed. 2016, Chapter 2, Heading 2.2.1.

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Hiscox v Weyerhaeuser. The High Court is not easily impressed by pending foreign proceedings in anti-suit application (pro arbitration).

A quick note on Hiscox v Weyerhaeuser [2019] EWHC 2671 (Comm), in which Knowles J was asked to continue an anti-suit injunction restraining Weyerhaeuser from continuing proceedings in the US courts and ordering parties to turn to arbitration. He obliged.

In April 2018 Weyerhaeuser filed proceedings in the US District Court (Western District of Washington at Seattle)for a declaratory judgment in respect of certain of its insurance excess policies in the tower of excess liability. Weyerhaeuser sought, among other things, a declaration that there is no valid arbitration agreement applicable to any coverage disputes between itself and various defendant insurers and that the US District Court is the appropriate forum for any such disputes.

Knowles J lists the various proceedings pending in the US however particularly in the light of all parties being established businesses, is not impressed by arguments of comity or fairness to restrain the English courts from further involvement in the matter. He expresses the hope and expectation that the US courts will come to the same conclusion as himself, in light of the contractual provisions.

Geert.

(Handbook of) EU private international law, 2nd ed. 2016, Chapter 2, Heading 2.2.1.

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Sterling v Rand. The High Court emphasises the implications for arbitral tribunal’s powers resulting from choice of curial law in favour of Beth Din arbitration and choice of law pro Jewish law.

[2019] EWHC 2560 (Ch) Sterling v Rand concerns not so much the relationship between a Beth Din (a Jewish court) and the courts in ordinary, rather the implications for a Beth Din arbitral tribunal’s powers (here: power to transfer title in property) as a result of choice of curial law and choice of lex causae. On the various laws to be decided re arbitration, see here.

Ambrose DJ found Claimant was correct to argue that by agreeing to the application of Jewish law to the procedure of the arbitration (Jewish law as curial law), the Beth Din has power to order the transfer of the Property because Jewish law, which  gives the Beth Din power to make such an order. She dismissed the route taken by the claimant to come to this conclusion (he had suggested application of S48 of the 1996 Arbitration Act, a provision regarding remedies available in an arbitration governed by the Act), rather consequentially applying parties’ arbitration agreement. Parties had referred to the Judicial Division of the London Beth Din (Court of the Chief Rabbi) for a binding arbitration under the Arbitration Act 1996, as follows: 

“Re: Dispute over ownership of 4 Dunsmure Road N16 5PW I agree to the submission of this matter, including all claims and counterclaims arising in respect of it, to the Beth Din for a binding arbitration under the Arbitration Acts for the time being in force and under the following terms:

(1) The Beth Din will consist of three dayanim unless the parties agree to the substitute of a single dayan.

(2) The Beth Din’s rules of procedures are those of Jewish law.

(3) Each party to this matter shall have, by signing this document, indicated his assent to an arbitration under these terms. The Beth Din may continue the arbitration and conclude it ex parte if any party fails after receiving reasonable notice to attend any hearing.

(4) In the event that a vacancy arises in the Beth Din on account of the inability or refusal of any of its members to determine the arbitration, the Beth Din may appoint one or more of its own members to fill the vacancy, and may at its own discretion determine how the arbitration shall continue to be conducted. The Beth Din may determine that a single dayan may hear and receive evidence on behalf of the full Beth Din.

(6) The Beth Din has the power to make both inter partes and ex parte orders from the day upon which all parties are sent the terms of this agreement until such time as the Beth Din is functus officio under Jewish law. The Beth Din has the power to make orders under Jewish law both as to its own costs, and as to the costs incurred by any party in participating, bringing or defending any claim or counterclaim. The Beth Din may make orders as to security for costs, and in respect of claims.

(9) The Beth Din shall decide the matter under Jewish law incorporating such other laws as Jewish law deems appropriate.”

Under Jewish law, the Beth Din ordinarily has the power to order transfer of title.

Enforcement of the order was nevertheless dismissed for ordre public, following new evidence which had not been laid out to the Beth Din. At 83: ‘an order for specific performance would not be in the interests of justice, it could be contrary to public policy and it could damage the integrity (and reputation) of the Beth Din system.’

Geert.

 

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Bitcoin online resolution award refused recognition and enforcement at Amsterdam (ordre public exception of New York Convention).

I tweeted it earlier yet was asked to put a review up on the blog (which also suits my archiving purposes) of ECLI:NL:GHAMS:2019:192 X v Y (I know that does not help much) at the Amsterdam Court of Appeal, 29 January 2019. The case came to me courtesy of Freshields who have review here.

The case illustrates some of the issues involving online alternative dispute resolution, including those manned by artificial intelligence (albeit the latter was not directly at stake here).

Using an online trading platform, X provided three loans to Y, all in bitcoins at an interest rate of 5% per month. To borrow these bitcoins, Y had to agree on the conditions of the online bitcoin-trading platform applicable to the loans. These conditions included the following dispute resolution mechanism clause:

If you fail to pay principal and/or interest on the date on which the loan falls due, you will be considered in default of the Registration Agreement… Should your loan become 90 days past due (“Defaulted”) the loan will be sent to Dhami Law Firm (“Arbitrator”), an independent, international arbitration firm whose awards are recognized internationally under The United Convention on the Recognition and Enforcement of Foreign Arbitral Awards.

I understand that in the event that I want to appear in the arbitration by email to contest the potential issuance of an award in favor of the lenders, I must send a written request to support@btcjam.com and pay a $ 99.00 fee. Such request must be within 7 calendar days from the date of the Notice of Default. The Arbitrator’s decision shall be final and legally binding. In the event that the Arbitrator issues an award in favor of the investor, an investor may enforce that judgment in a court of competent jurisdiction.

The conditions further contained the following arbitration clause:

All claims and disputes arising under or relating to this agreement are to be settled by binding arbitration in the state of California or another location mutually agreeable to the parties. An award of arbitration may be confirmed in a court of competent jurisdiction.

Default ensued, as did ADR, and Y sought enforcement in The Netherlands. The Courts have now refused proprio motu (Y had signalled he had no objection), for the following reasons summarised by Freshfields: First, the court took issue with the circumstance that – in its view – online arbitral proceedings automatically become pending after 90 days. Second, a defendant wishing to defend itself in these arbitral proceedings had been required to write an email within seven days from receiving a notice of default. Third, the arbitral tribunal had failed to inform Y that a dispute was pending against him or of the legal grounds of the action.

At 3.5 is it is clear that the principle of audi alteram partem is the main stumbling block for the Dutch Courts. Ordre public violated. A clear flashpoint for ADR, including of the algorithmic variety.

Geert.

 

 

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Arcelor Mittal v Essar. The High Court races ahead in its support for arbitration. On comity, fraud, and worldwide freezing orders.

 

[2019] EWHC 724 (Comm) ArcelorMittal USA LLC v Essar Steel Limited and others is quite the highlight in worldwide regulatory competition for championing arbitration.

As 20 Essex Street note, Jacobs J refused to vary an earlier worldwide freezing order (WFO), despite the award being foreign, Claimant and Defendant companies being foreign, there being no significant assets within the jurisdiction, and the courts at Mauritius (defendant is Mauritius-incorporated, defendant to the Arbitration Claim, and the debtor under the ICC award) potentially feeling gazumped by their English colleagues.

Of note over and above Essex Street’s analysis is

  • the defendants urging the Court on the grounds of comity (no need for the English courts to act at policeman for assets located abroad: at 72, referring to Popplewell J. in Conocophillips China Inc v Greka Energy (International) BV. [2013] EWHC 2733) to resist the call for a WFO. This was rejected (at 81) with the argument ‘I consider that I am entitled to proceed on the basis of the evidence that the Mauritian courts would not regard the WFO as offensive in some way.’; and ‘The WFO does not presently conflict with any order of the Mauritian courts, and this is not a case where the Mauritian courts have refused equivalent relief or where there is evidence that those courts would be likely to do so.’ Jacobs J therefore does consider comity quite carefully.

 

  • the Court’s sense of urgency in what it sees as a case of fraus: At 45:

‘There is no precise definition of what is meant by the phrase “international fraud” found in the case-law, but I do not consider that it is confined to cases where the underlying cause of action is a claim in deceit or a proprietary claim relating to the theft of assets. If there is a strong case of serious wrongdoing comprising conduct on a large or repeated scale whereby a company, or the group of which it is a member, is acting in a manner prejudicial to its creditors, and in bad faith, then I see no reason why the English court should not be willing to intervene rather than to stand by and allow the conduct to continue and, to put the matter colloquially, to let the wrongdoer get away with it. In the present case, I would regard the attempted dissipation of Essar Steel’s US$ 1.5 billion asset, in the face of the commencement of arbitration proceedings, as sufficient in itself potentially to warrant intervention under the “international fraud” exception, or as constituting “exceptional circumstances”.’

 

  • and the rejection at 73 of a CJEU C-391/95 Van Uden type of restraint, requiring a real connecting link between the subject matter of the measures sought and the territorial jurisdiction of the English court.

 

Geert.

 

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OHADA law and arbitration at the Paris Court of appeal. A tale of overriding mandatory laws /lois de police and ordres publics.

Thank you Thomas Kendra and Thibaud Roujou de Boubée for signalling 16/25484 Cameroon v Projet Pilote Garoubé at the Paris Court of Appeal end of December 2018. The essence of the case is the Court confirming an arbitral award applying OHADA law. OHADA stands for ‘Organisation pour l’harmonisation en Afrique du droit des affaires’ – ie the Organisation for the Harmonization of Corporate Law in Africa.

Thomas and Thibaud analyse excellently – of note for this blog are the issue of non-State law as lex contractus (compare with Rome I), the recognition of same as trumping Cameronese law essentially as overriding mandatory law, and the rejection of the Cameronese argument that its wildlife laws qualify themselves as lois de police /overriding mandatory law and that the lack of recognition of same violates ordre public.

Interesting arbitration /conflicts material.

Geert.

 

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