Posts Tagged Public order
I reported earlier on complex enforcement issues concerning SAS Institute v World Programming. In  EWCA Civ 599 SAS Institute Inc v World Programming Ltd Flaux J gives an overview of the various proceedings at 4:
The dispute between the parties has a long history. It includes an action brought by SAS against WPL in this country in which SAS’s claims were dismissed; a decision by WPL, following an unsuccessful challenge on forum non conveniens grounds, to submit to the jurisdiction of the North Carolina court and to fight the action there on the merits; a judgment in favour of SAS from the North Carolina court for some US $79 million; an attempt by SAS to enforce the North Carolina judgment in this jurisdiction which failed on the grounds that enforcement here would be (a) an abuse of process, (b) contrary to public policy and (c) prohibited by section 5 of the Protection of Trading Interests Act 1980 (“the PTIA”); and a judgment from the English court in favour of WPL for over US $5.4 million, which SAS has chosen to ignore.’
A good case to use therefore at the start of a conflicts course to show students the spaghetti bowl of litigation that may occur in civil litigation. There are in essence English liability proceedings, decided in the end following referral to the CJEU (Case C-406/10); North Carolina liability proceedings, in which WPL submitted to jurisdiction after an earlier win on forum non grounds was reversed on appeal and the NC courts came to the same conclusions as the English ones despite a finding they were not (clearly) under an obligation to apply EU law; next, an SAS enforcement attempt in England which failed (with permission to appeal refused): my earlier post reviews it; next, enforcement proceedings of the NC judgment in California. That CAL procedure includes an assignment order and WPL sought an anti-suit injunction to restrain SAS from seeking assignment orders as regards “customers, licensees, bank accounts, financial information, receivables and dealings in England”: it was not given the injunction for there was at the time no CAL assignment order pending which could be covered by anti-suit. Currently, it seems, there is, and it is an anti-suit against these new assignment orders which is the object of the current proceedings.
At 59 ff follows a discussion of the situs of a debt; at 64 ff the same for jurisdiction re enforcement judgments, holding at 72
Applying these internationally recognised principles to the present case, the North Carolina and California courts have personal jurisdiction over WPL but do not have subject matter jurisdiction over debts owed to WPL which are situated in England. That is so notwithstanding that the losses for which the North Carolina court has given judgment were incurred by SAS in the United States. Nevertheless the effect of the proposed Assignment Order would be to require WPL to assign debts situated in England to SAS which would at least purport to discharge its customers from any obligation owed to WPL, while the effect of the proposed Turnover Order would be to require WPL to give instructions to its banks in England which would discharge the debts situated in England currently owed by the banks to WPL. In substance, therefore, the proposed orders are exorbitant in that they affect property situated in this country over which the California court does not have subject matter jurisdiction, thereby infringing the sovereignty of the United Kingdom.
Which is later confirmed at 83. Consequently the earlier order is overturned: at 89: ‘it follows also that the judge’s conclusion that the Assignment and Turnover Orders were not “markedly exorbitant” was based upon a mistaken premise.’
The anti-suit and anti-enforcement applications are dealt with in particular with reference to comity, and largely granted with some collateral notices of intention by SAS not to seek a particular kind of enforcement.
Someone somewhere must have made partner on this litigation.
Akhter v Khan. Nikah (Islamic Marriage) in the Court of Appeal, reversing earlier finding of nullity (as opposed to absence of marriage).
 EWCA Civ 122 deals upon appeal with the judgment of Williams J in  EWFC 54 Akhter v Khan which I reviewed at the time here – readers may want to read that post before considering current one. Of note is that applicable law is firmly English law, the judgment is not really one in the conflict of laws.
Williams J had declared the marriage at issue void under the Matrimonial Causes Act 1973, the wife was granted a decree of nullity. This has extremely relevant consequences in terms of ‘matrimonial’ property, and maintenance obligations, including those vis-a-vis the children: non-marriage creates no separate legal rights while a decree of nullity entitles a party to apply for financial remedy orders under the 1973 Act.
Williams J’s judgment was reversed: at 106, following review of ECHR authority: ‘i) Whilst the Petitioner’s Article 8 right to respect to family life is undoubtedly engaged, the failure of the state to recognise the Nikah as a legal marriage is not in breach of those rights; ii) The right or otherwise to the grant of a decree of nullity does not in itself engage Article 8; the fact that at the time of the Nikah ceremony both parties knew that in order to contract a legal marriage they had to go through a civil ceremony, and intended to do so, does not undermine either of those conclusions or permit reliance on Article 8 as a means to allow a flexible interpretation of s. 11 of the 1973 Act.’
With respect to the impact of the children’s interests on this finding, at 111: ‘In our view the decision before the court cannot properly be described as an action concerning children and we cannot see how it can be said that the best interests of a child can turn what was neither a void nor valid marriage, into a void or valid marriage. In our judgment, the action in question relates solely to the status of the adult applicant.’
The Court of Appeal found therefore that the interests of children can play no part in a determination as to whether a ceremony is a non-qualifying ceremony or is a void marriage, and that neither ECHR or UNCHR can make a difference in this respect (at 119); whilst there is inevitably a tangential impact upon a child dependent upon the status of his or her parents’ relationship, an application brought before the court made in order to establish the status of that relationship cannot properly be regarded as an “action concerning children” (at 118).
Lenkor Energy: Textbook application of the (common law of) recognition and assessment of ordre public. (Re: Dubai judgment).
In  EWHC 75 (QB) Lenkor Energy Trading v Irfan Iqbal Puri, Davison M rejected the ordre public arguments made by claimant against recognition of a money judgment of the Dubai First Instance Court.
Reflecting global understanding of ordre public, it is the judgment and not the underlying transaction upon which the judgment is based which must offend (here: English) public policy. That English law would or might have arrived at a different conclusion is not the point (Walker J in Omnium De Traitement Et De Valorisation v Hilmarton  2 Lloyd’s Rep 222).
The ordre public arguments made, were (1) illegality, (2) impermissible piercing of the corporate veil and (3) penalty.
Re (1), the argument is that the underlying transaction is illegal. Master Davison acknowledged there are circumstances where an English court might enquire into the underlying transactions which gave rise to the judgment. However such court must do so with extreme caution and in the case at issue, defendant’s familiarity with Dubai and its laws argued against much intervention by the English courts.
On (2), the veil issue, submission was that defendant was being made personally liable for the debts of IPC Dubai, which was the relevant party (as guarantor) to the Tripartite Agreement and the holder of the account upon which the cheques were drawn. The cheques had not been presented or had been presented out of time – or there was at least an issue about that. The combination of these matters was, it was suggested, to impose an exorbitant liability on Mr Puri for sums which he had not agreed to guarantee – in contravention of established principles of English law.
Here, too, Davison M emphasised defendant’s familiarity with Dubai law. The case against Mr Puri in Dubai was resolved according to the rules which the laws of Dubai apply to Dubai companies and to individuals who write cheques on Dubai accounts. Dubai law may be different than English law on this point, but not repugnantly so.
Finally on (3) the sums in particular the interest charged were suggested to be exorbitant hence a form of unenforceable punitive damages. However, 9% interest is only 1% higher than the judgment debt rate in England and only ¼% higher than the current rate under the Late Payment of Commercial Debts (Interest) Act 1998. (At 31) ‘In the light of this, to characterise the interest rate of 9% as amounting to a penalty is unrealistic.’
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 firstname.lastname@example.org 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.
SAS Institute v World Programming. Ordre Public, res judicata, fraus and (European) statute conspire against enforcement.
SAS Institute Inc v World Programming Limited  EWHC 3452 (Comm) is a rare example of refusal by an English court of enforcement of a US judgment. 20 Essex Street have excellent analysis here and I am happy generally to refer.
The outcome of English Proceedings was that WPL defeated SAS’ claims regarding software licence and copyright infringements, with an important role played by the European software Directive as applied by the CJEU in Case C-406/10 upon preliminary reference in the very case.
Meanwhile SAS had commenced concurrent proceedings in the US. WPL initially objected to the US Proceedings on forum non conveniens and other jurisdictional grounds. These objections were later withdrawn and WPL submitted to the jurisdiction of the US District Court and participated in the process before it. Judgment was awarded against it. SAS curtailed its claim of enforcement to as to increase chances of success: it only seeks to enforce the US Judgment in England insofar as it is for compensatory damages based on WPL’s fraud (an issue which was litigated in the US but not in the UK); it does not seek to enforce the breach of contract claim or that part of the US Judgment which awarded multiple damages.
At 35-36 Cockerill J summarises the law: ‘There are three strands of potential preclusion: cause of action estoppel (not live here) issue estoppel and Henderson v Henderson abuse of process. As Lord Sumption observed in Virgin Atlantic Airways Ltd v Zodiac Seats UK Ltd  UKSC 46,  AC 160 at p.180H at :
“…the policy underlying all of the…[res judicata] principles…” is “…the more general procedural rule against abusive proceedings…”.
The different doctrines therefore have different requirements, but they shoot at the same target – that of ensuring that nobody should be vexed twice in respect of one and the same cause: “nemo debet bis vexari pro una et eadem causa“: as it was put by Lord Diplock in Vervaeke v Smith  AC 145 at p.160A-B, G. A more modern version was given by Lord Bingham in Johnson v Gore Wood  2 AC 1 at p.31A-B in the context of the Henderson doctrine:
“Henderson v Henderson abuse of process, as now understood, although separate and distinct from cause of action estoppel and issue estoppel, has much in common with them. The underlying public interest is the same: that there should be finality in litigation and that a party should not be twice vexed in the same matter. This public interest is reinforced by the current emphasis on efficiency and economy in the conduct of litigation, in the interests of the parties and the public as a whole.” ‘
Issue estoppel per Dicey (referred to by Cockerill J) at paragraph 14-156 means that a “foreign judgment will not be recognised if it is inconsistent with a previous decision of a competent English court in proceedings between the same parties“. Akin therefore in residual English private international law (EU law is not engaged, the judgment having been issued ex-EU) to Brussels I Recast’s Article 45(1)c ‘s rule.
The fundamental point is that issue estoppel bars relitigation not of all issues, but only of issues determined as an essential part of the cause of action (at 40). The Henderson principle is concerned with protecting the integrity of the cause of action and issue estoppel defences and preventing them from being deliberately or inadvertently circumvented by a party which did not advance an argument in England which would otherwise have created such an estoppel (at 47).
This is the core of the abuse investigation and this formulated one can see why it is a difficult test to apply.
At 55: ‘There are two issues: was the Fraud claim “parasitic” on the breach of contract claim and the related question of whether the Fraud claim was a separate, distinct and independent cause of action. Both of these really go to the question of whether there is sufficient identity of issue.’ At 73 Cockerill J concludes that there was such abuse: ‘Ultimately, I have come to the conclusion that the existence of the terms of the contract was a fundamental building block for the Fraud Claim and that without it that claim – as it was formulated in the US – could not have been run. The essence of the case in the US Proceedings related to alleged fraudulent representations concerning its “present intention to comply with those terms”. It was fundamental to the claim that WPL “had no intention of abiding by those terms“. It was inherent in that case that those terms did exist; and yet the courts of this country had already held that those terms did not exist.’
Obiter, at 156 ff, Cockerill J adds that enforcement would also have been refused for reasons of the public policy embodied in the Software Directive. Authority in the arbitration context was referred to to pro inspiratio, including CJEU authority C-168/05 Mostaza Claro and C-126/97 Eco Swiss (at 163). At 179: ‘The fundamental problem for SAS is that the Directive plainly envisages the rendering null and void of provisions such as those on which SAS wants to rely, indeed that is explicitly the policy enunciated in the case-law and yet SAS’s fraud case is dependent upon those terms’ existence. The effect of the Directive is, as I have indicated above, to make SAS’s fraud claim (as formulated) impossible to express. It is therefore unrealistic to analyse the matter as the Directive “authorising frauds“.’ And at 184: ‘It is clear that the Software Directive gives expression to two important public policy objectives of preventing the monopolisation of ideas and promoting competition and consumer welfare.’
A very lengthy judgment which merits full reading.
As Williams J notes at 5,  EWFC 54 Akhter v Khan is not about
‘whether an Islamic marriage ceremony (a Nikah) should be treated as creating a valid marriage in English law. In fact, the main issue as it has emerged is almost diametrically the opposite of that question; namely whether a Nikah marriage ceremony creates an invalid or void marriage in English law. To the average non-lawyer in 2018, it may appear an easy question to answer. Surely a marriage which is not a valid marriage is a void marriage and thus can be annulled? Regrettably it is not that simple.‘
The Guardian explain here why it is not that simple, and Ralf Michaels has analysis here. In essence (the remainder of this para is largely based on Ralf’s text), many muslims in the UK only perform Nikah and not a civil ceremony. The latter is firmly required under English law (indeed under the law of many European countries; where unlike in the English example, a religious ceremony must not even double up as a civil one, and the latter must always precede the religious one). Nikah hitherto had been considered a non-marriage which the law could ignore, because it did not even purport to comply with the requirements of English law. The High Court was unwilling to presume the lived marriage as valid.
Williams J however declared the marriage at issue void under the Matrimonial Causes Act 1973. The wife was granted a decree of nullity. This has extremely relevant consequences in terms of ‘matrimonial’ property, and maintenance obligations, including those vis-a-vis the children. The Court’s analysis of human rights law is extensive, including of course with the ECHR gateway (via the Human Rights Act 1998) and the UNRC: the UN Convention on the Right of the Child. In this respect Williams J’s analysis is not unlike that of classic ordre public considerations: which are always case-specific and take into account the hardship caused to the individuals involved, were a foreign legal concept not recognised in the forum.
The Court has set an important precedent – but like all precedent of course there is case-specificity (the length of the lived marriage, the children,…
Of note is that applicable law in the case was firmly English law. Recognition of the marriage as such in the UAE did play a role in the judge’s assessment.
All in all an important case viz the discussion on multiculturality and family law in Europe.
Update 17 November 2017 For discussions in Dutch case-law (including re contractual waiver) with respect to SHAPE, see here.
‘In 2007, Crescent Petroleum, the oldest privately-owned oil and gas company in the Middle East, agreed with Dana Gas, one the leading publicly-listed natural gas companies in the region, to create a joint venture called Pearl Petroleum (together, “the Consortium”). The Consortium entered into an agreement with the Kurdistan Regional Government (“KRG”) for the development of the Khor Mor and Chemchemal petrochemical fields in the Kurdistan region of Iraq. The KRG were and remain engaged in a political dispute with the Federal Government of Iraq, meaning that the Consortium were unable to export gas produced by the developed fields. As a result, the KRG became liable under its contract with the Consortium to pay a minimum guaranteed price, but it failed to make the required payments in full.’
Arbitration in London under LCIA rules ensued. The contract between the Consortium and the KRG was governed by English law and provided explicitly that “the KRG waives on its own behalf and that of [The Kurdistan Region of Iraq] any claim to immunity for itself and its assets”.
Cooke J held that whilst the UAE’s recognition of other states was a matter of foreign policy which the DIFC Courts could not rule on, construing the KRG’s waiver of immunity was a question of law and not public policy. In agreeing to arbitrate, a party agrees that the arbitration shall be effective in determining the rights of the parties (at 26). The waiver of any claim to immunity for itself and its assets must mean waiver of immunity from execution (at 28): any argument on that is blocked by issue estoppel (at 36).
Sovereign immunity therefore was not a trump which could be played at the time of enforcement: whatever immunity there might or might not have been had been contractually signed away.
An interesting and well argued judgment.