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England and Wales Court of Appeal (Civil Division) Decisions
You are here: BAILII >> Databases >> England and Wales Court of Appeal (Civil Division) Decisions >> The Republic of Kazakhstan v Istil Group Ltd.  EWCA Civ 471 (25 April 2007)
Cite as:  Bus LR 878,  2 Lloyd's Rep 548,  EWCA Civ 471,  ArbLR 36
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COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM QUEEN'S BENCH DIVISION
(MR JUSTICE DAVID STEEL)
Strand, London, WC2A 2LL
B e f o r e :
LORD JUSTICE LONGMORE
LORD JUSTICE TOULSON
| THE REPUBLIC OF KAZAKHSTAN
|- and -
ISTIL GROUP LTD
WordWave International Limited
A Merrill Communications Company
190 Fleet Street, London EC4A 2AG
Tel No: 020 7404 1400 Fax No: 020 7831 8838
Official Shorthand Writers to the Court)
MR A MALEK QC and MR M PARKER (instructed by Messrs Reed Smith Richards Butler LLP) appeared on behalf of the Respondent.
Crown Copyright ©
Lord Justice Longmore:
1) Any contention by Istil that the tribunal had exceeded its powers in setting aside its partial award should have been pursued under section 68 of the Act but that it had not been.
2) The parties were therefore now bound by the decision that the partial award was a nullity.
3) Obiter, that the partial award was not in fact a nullity since Istil had succeeded to Metals Russia's right to arbitrate under British Virgin Island law and that, although English law required notice of Istil's succession to be given, once it was given the arbitration could continue and any orders or awards already made would be effective.
4) ROK never made any ad hoc agreement to the effect that the tribunal could finally decide the question of jurisdiction.
5) Karmet and ROK were separate legal entities so that ROK could not be liable just because Karmet was.
6) None of the contracts was made by Sauda or Oltex as agents of ROK but only, if at all, as agents for Karmet.
7) ROK never became a party to any arbitration clause.
8) The claim before the arbitrators was essentially the same as that made before the Paris Commercial Court, which had decided that the claim did not fall within the arbitration clause, and Istil were now estopped from arguing the contrary.
"What one is looking for is not merely an error of law, but such a substantial defect in the fairness of the process as to invalidate the decision."
He continued in paragraph 80:
"For these purposes, it is clear that perversity in itself, a decision that no reasonable decision-maker could make, is not enough. It might be enough in judicial review: but in this context, perversity is an error of law like any other."
"The position it seems to me is perfectly plain. The arbitrators if and to the extent they exceeded their powers in setting aside the partial award were responsible for an irregularity which if either party had objected to they could and should challenge. The Metals Russia group, if I may call them that, did not do so and the time for that has expired, so I confidently feel that the submission that the Metals Russia group's objection to ROK's attempt to set aside the final award because there was in existence an earlier award is not made out and thus there is no reasonable prospect of success on any appeal."
"It is important to underline what was also said in North Range about the dangers of this residual jurisdiction being misused. There may be a temptation, even an unconscious one, to present an unfavourable decision as one which is not only wrong but arrived at unfairly. But in the nature of things it is likely to be an exceptionally rare case where the submission of unfairness is justifiably advanced. The courts will not permit the residual jurisdiction, which exists to ensure that injustice is avoided, to become itself an unfair instrument for subverting statute and undermining the process of arbitration."
Lord Justice Toulson:
Lady Justice Arden:
Order: Appeal dismissed.