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England and Wales High Court (Commercial Court) Decisions
You are here: BAILII >> Databases >> England and Wales High Court (Commercial Court) Decisions >> Excalibur Ventures LLC v Texas Keystone Inc & Ors  EWHC 1624 (Comm) (28 June 2011)
Cite as:  2 Lloyd's Rep 289,  ArbLR 27,  EWHC 1624 (Comm), 138 Con LR 132,  2 CLC 338
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QUEEN'S BENCH DIVISION
Strand, London, WC2A 2LL
B e f o r e :
| Excalibur Ventures LLC
|- and -
|1) Texas Keystone Inc
2) Gulf Keystone Petroleum Limited
3) Gulf Keystone Petroleum International Limited
4) Gulf Keystone Petroleum (UK) Limited
(instructed by Clifford Chance LLP) for the Claimant
Michael Crane Esq, QC and Ms Tamara Oppenheimer
(instructed by Jones Day) for the First Defendant
Jonathan Hirst Esq, QC, Harry Matovu Esq, QC and Richard Eschwege Esq
(instructed by Memery Crystal LLP) for the Second – Fourth Defendants
Hearing dates: 4th and 8th April 2011
Crown Copyright ©
Mrs Justice Gloster, DBE:
i) restraining the Claimant, Excalibur Ventures LLC ("Excalibur"), up to, and including, the final determination of these proceedings or until further order in the meantime, from pursuing or taking any further steps in, or procuring or assisting the pursuit of, arbitration proceedings against the Second, Third and Fourth Defendants (collectively "the Gulf Defendants"), which have been instituted by Excalibur in the International Court of Arbitration of the International Chamber of Commerce ("the ICC") in New York on 17 December 2010 under reference 17599/VRO ("the Arbitration Proceedings");
ii) dismissing Excalibur's application for a stay of the Commercial Court Proceedings, pursuant to CPR 3.1(2)(f) until: (i) final determination of any and all jurisdictional challenges made in respect of the Arbitration Proceedings; and (ii) further order of the court;
iii) directing a trial of a preliminary issue whether the Gulf Defendants are bound by the terms of clause 14.1 of a Collaboration Agreement dated 16 February 2006 in relation to the Arbitration Proceedings; and
iv) making further directions about the trial of the preliminary issue, including giving a short extension of time for service of Excalibur's Particulars of Claim.
"… a very small enterprise, the success of which rests with the energy, commitment and innovation of Rex Wempen, together with the support and expertise of his brother Eric Wempen."
i) share options, which are subject to restrictive performance criteria and have not yet vested in Mr. Kozel;
ii) bonus shares which have not yet vested in Mr. Kozel, and which carry no voting rights until they have vested;
iii) shares which are owned, not by Mr. Kozel, but by a UAE company of which he is not a majority shareholder; and
iv) shares which were gifted to a trust in which Mr. Kozel has no legal or beneficial interest.
For the purposes of the issues which I have to decide on these applications, I regard the question whether Mr. Kozel has a shareholding of less than 1% or less than 10% in Gulf Keystone as irrelevant.
i) Mr. Kozel is the current chairman and CEO of Gulf Keystone. Throughout 2007 he was the Chief Executive Officer of the company, and, in July 2007, he became its Executive Chairman. There are three other executive directors on the board of the company, and two non-executive directors. None of these individuals, apart from Mr. Kozel, is a director of, or involved in, the management of TKI. Furthermore, with the exception of Mr. Kozel, none of the directors and officers of Gulf Keystone throughout 2006 and 2007 was a director or officer of TKI. Nor have Mr. Kozel's brothers or father ever been officers or directors of Gulf Keystone. As a AIM-listed company, Gulf Keystone is regulated by a system involving supervision by a Nominated Advisor (or "Nomad") who is required to meet the eligibility criteria set out in the AIM Rules for Nominated Advisors, and is subject to approval and review by the AIM Regulation Team of the LSE.
ii) In 2007, neither TKI nor Gulf Keystone held any equity interest in the other, and that remains the case today. TKI has therefore never been part of the Gulf Keystone group of companies. The sole link between TKI and Gulf Keystone in 2006 and 2007, and at all relevant times, was, and is, Mr. Kozel.
"Nothing herein shall be constructed so as to require the commission of any act contrary to law in any relevant jurisdiction";
and to clause 14.2.3 which contained a warranty by each party that it had all relevant licences, permits and other government authorisations required in the conduct of its business.
"… compliance with any laws, rules, regulations or orders of national or other governmental agencies or bodies having jurisdiction in or in respect of Iraqi Kurdistan, any Acreage acquired or to be acquired pursuant to this Agreement."
Thus it is the Defendants' case that Excalibur did not, and could not, meet the statutory requirements of the Kurdistan Oil and Gas law for participation in a PSC in Iraqi Kurdistan; and that, as a consequence, it did not and could not comply with its part of the bargain under the Collaboration Agreement. Accordingly, the Defendants say that TKI was not obliged to include Excalibur as a participant in the PSC, or, alternatively, the statutory prohibition against the inclusion of Excalibur in the PSC amounted to a force majeure event.
"(a) New York law
The Claimant's claims arise under the laws of New York and are for: (a) relief to restrain the Defendants, and each of them, from interfering in any way with the Claimant's rights under … 'the Collaboration Agreement' with regard to hydrocarbons in petroleum exploration blocks in Kurdistan; (b) declaratory relief; (c) specific performance of the Collaboration Agreement; and/or (d) other equitable relief; and/or (e) damages, in each case in respect of the Defendants' unlawful conduct under the laws of New York in that they, jointly and severally:
(i) breached the Collaboration Agreement; (ii) perpetrated fraud by concealment; (iii) made fraudulent, alternatively negligent, misrepresentations; (iv) committed constructive fraud; (v) aided and abetted fraud; (vi) conspired to defraud the Claimant of its legitimate interests; (vii) have been unjustly enriched; (viii) are estopped from denying the Claimant's interests; (ix) breached an implied covenant of good faith and fair dealing and/or have unconscionably sought to deny the Claimant's interest; (x) breached fiduciary duties owed to the Claimant, and/or aided and abetted breach(es) of fiduciary duty; (xi) unlawfully interfered in the Collaboration Agreement, and/or in the Claimant's contractual relationship with a third party (the Dabin Group), and/or with the Claimant's prospective interest; and/or (xii) unlawfully converted the Claimant's interests in the hydrocarbons contained in the blocks.
Further or alternatively, under the laws of New York the Claimant has a superior right in replevin to 30% of the hydrocarbons currently in the possession of the Defendants and/or there is a constructive trust in favour of the Claimant, in that the Defendants by fraud, duress, abuse of confidence, and/or other unconscionable conduct have obtained rights to property or assets which in equity and in good conscience they ought not to hold and enjoy.
(b) English law
Further or alternatively, the Claimant's claims arise under English law and are for relief in like terms to that described above in respect of the Defendants' (i) breach and/or breaches of the Collaboration Agreement; (ii) breach and/or breaches of fiduciary duty; (iii) tortiously having induced a breach and/or breaches of the Collaboration Agreement; (iv) tortiously having induced a breach and/or breaches of the Claimant's agreement with the Dabin Group; and/or (v) having committed the tort of conspiracy by unlawful means, and/or having by conspiracy or otherwise caused loss to the Claimant by unlawful means. Further or alternatively, the Claimant claims in restitution and/or unjust enrichment in respect of the benefits received by the Defendants."
i) an order that Excalibur do serve its Particulars of Claim, or, alternatively, that the Gulf Defendants be permitted to file and serve a counterclaim prior to service of the Particulars of Claim; and
ii) an injunction restraining the Arbitration Proceedings ("the Anti-Arbitration Injunction").
i) the final determination of any jurisdictional challenges in respect of the Arbitration Proceedings ("the Stay Application"); or
ii) further order of the court in the meantime;
and a further application to extend time for service of the Particulars of Claim until the determination of the Stay Application ("the Extension Application")
"If the Respondent does not file an Answer, as provided by Article 5, or if any party raises one or more pleas concerning the existence, validity or scope of the arbitration agreement, the [ICC] Court may decide, without prejudice to the admissibility or merits of the plea or pleas, that the arbitration shall proceed if it is prima facie satisfied that an arbitration agreement under the Rules may exist. In such a case, any decision as to the jurisdiction of the Arbitral Tribunal shall be taken by the Arbitral Tribunal itself. If the Court is not so satisfied, the parties shall be notified that the arbitration cannot proceed. In such a case, any party retains the right to ask any court having jurisdiction whether or not there is a binding arbitration agreement."
Principal issues on the application
i) Does the court have jurisdiction to grant an anti-suit injunction in the circumstances of this case, to restrain Excalibur from proceeding with the ICC Arbitration Proceedings against the Gulf Defendants?
ii) Does this court have jurisdiction to determine the issue whether the Gulf Defendants can be compelled to arbitrate the claims which Excalibur has made against them?
iii) If so, should this court, as a matter of discretion,
a) direct the trial of the issue as to whether the Gulf Defendants are bound by the terms of the arbitration agreement in clause 14.1 of the Collaboration Agreement and
b) grant an Anti-Arbitration Injunction restraining further prosecution of the Arbitration Proceedings against the Gulf Defendants?
iv) Should the court exercise its inherent jurisdiction and/or case management powers under CPR 3.1(2)(f) to stay the Commercial Court Proceedings on the application of Excalibur?
v) So far as Gulf UK is concerned, does this court have a discretion as to whether to permit the Commercial Court Proceedings to continue, or is it obliged to do so?
Nature of the Commercial Court Proceedings
"… to protect time and to ensure that there would be an appropriate forum seized [sic] of the Claimant's non-contractual claims, in the event that a Tribunal constituted under the ICC rules concluded that it did not have jurisdiction over one or more of the Defendants and/or claims."
i) There is nothing in the Claim Form to suggest that it is intended to be subsidiary to any arbitration proceedings; it contains no reference whatsoever to any arbitration.
ii) Excalibur has not adequately articulated what the limitation issues are, or in connection with which claims such issues might arise. It is also somewhat surprising that the imminent expiry of an un-articulated limitation period coincided with Excalibur's perceived urgent need for Mareva relief, three years after the alleged acts and conduct on which the claims are based had taken place. In any event, had the purpose of the proceedings simply been to guard against the expiry of particular causes of action, it would have been sufficient simply to issue a claim form without serving it.
iii) Moreover, TKI had never disputed the arbitration agreement and by commencing a reference to arbitration on 17 December 2010, TKI accepts that Excalibur has effectively secured its limitation position as regards all claims falling within the scope of the arbitration clause. Furthermore, had Excalibur merely wished to protect its limitation position as regards TKI in relation to causes of action potentially falling outside the scope of the arbitration clause, it could have issued proceedings in the courts of the seat of the arbitration (New York). As Mr. Crane pertinently submitted, however, that course would not have enabled Excalibur to apply for an order without notice freezing TKI's assets worldwide.
iv) The limitation argument might have some logical basis had the claims brought in the Commercial Court Proceedings been limited to non-contractual claims, which arguably risked falling outside the scope of the arbitration agreement. The Commercial Court Proceedings are not however limited in this way, and they incorporate claims for breach of contract against TKI (both under New York and English law), which clearly fall within the scope of the arbitration agreement.
v) However, instead of taking standard limited steps to protect any possible limitation position:
a) Excalibur made an immediate application for a freezing order in aid of the claim in the Commercial Court Proceedings, against a background where it would not have been possible to obtain such relief in New York;
b) Excalibur made an immediate application for permission to serve the Claim Form on the Gulf Defendants either out of the jurisdiction or by alternative means, on the grounds that the case has "numerous links to England and Wales", and I duly granted permission to do so on 21 December 2010;
c) despite its failure to obtain a freezing order, Excalibur nevertheless ensured that the Claim Form was served as soon as possible – it was served on the Gulf Defendants on 23 December 2010;
d) Excalibur made and pursued an application for specific disclosure against the Gulf Defendants, which is still pending – it was the subject of correspondence by Clifford Chance a day before the Gulf Defendants issued the present application to restrain the Arbitration Proceedings; and
e) Excalibur spent three months preparing Particulars of Claim which Excalibur was apparently on the point of serving before seeking its own stay of proceedings after being served with the Gulf Defendants' anti-suit application.
Issue i): Does the court have jurisdiction to grant an anti-suit injunction in the circumstances of this case, to restrain Excalibur from proceeding with the ICC arbitration against the Gulf Defendants?
Issue ii): Does this court have jurisdiction to determine the issue whether the Gulf Defendants can be compelled to arbitrate the claims which Excalibur has made against them?
"Even today, the competence-competence principle is all too often interpreted as empowering the arbitrators to be the sole judges of their jurisdiction. That would be neither logical nor acceptable. In fact, the real purpose of the rule is in no way to leave the question of the arbitrators' jurisdiction in the hands of the arbitrators alone. Their jurisdiction must instead be reviewed by the courts if an action is brought to set aside or to enforce the award". See Lord Mance JSC at paragraph 22.
Lord Mance went on to say at paragraph 26:
"An arbitral tribunal's decision as to the existence of its own jurisdiction cannot therefore bind a party who has not submitted the question of arbitrability to the tribunal. .. Domestically, there is no doubt that, whether or not a party's challenge to the jurisdiction has been raised, argued and decided before the arbitrator, a party who has not submitted to the arbitrator's jurisdiction is entitled to a full judicial determination on evidence of an issue of jurisdiction before the English court, on an application made in time for that purpose under section 67 of the Arbitration Act 1996, just as he would be entitled under section 72 if he had taken no part before the arbitrator: see e.g. Azov Shipping Co v Baltic Shipping Co  1 All ER 476."
Similarly at paragraph 30:
"The nature of the present exercise is, in my opinion, also unaffected where an arbitral tribunal has either assumed or, after full deliberation, concluded that it had jurisdiction. There is in law no distinction between these situations. The tribunal's own view of its jurisdiction has no legal or evidential value, when the issue is whether the tribunal had any legitimate authority in relation to the Government at all. This is so however full was the evidence before it and however carefully deliberated was its conclusion. It is also so whatever the composition of the tribunal - a comment made in view of Dallah's repeated (but no more attractive for that) submission that weight should be given to the tribunal's 'eminence', 'high standing and great experience'".
"81. This analysis, in my respectful opinion, usefully underscores the wider picture about the autonomy of the parties and the jurisdiction of arbitrators with power to investigate their own jurisdiction: namely that, sooner or later, the question of substantive jurisdiction is likely to come before the court. Where parties differ as to a matter as fundamental as whether they have agreed any contract, or any contract containing an arbitration clause, it is most unlikely that one or other of them will rest content with the decision of arbitrators as to either their jurisdiction or as to the parties' rights. For one or other party is saying that there is simply no agreement that arbitrators can resolve their disputes. In such circumstances, the issue of jurisdiction is likely to come before the courts sooner or later, and when it does, it will have to be decided by the court from first principles and in the light of facts which, whatever the investigation by the arbitrators, are yet to be determined on the evidence by the court. That is the learning of Azov Shipping, approved by the Supreme Court in Dallah, where I said this:
'This was perhaps a case where the parties might well have come to Court, either by agreement or upon the application by one side or the other for the Court to determine the issues of jurisdiction, on the ground that it was likely to produce substantial savings in cost and that there was good reason why the matter should be decided by the Court. With hindsight it seems to me that even if the parties could not agree on that course, the Court would be persuaded to allow such a determination if, of course, the tribunal had given its own permission, which is a sine qua non in the absence of the agreement of the parties. It might be assumed that the arbitrator may have been the more willing to give his agreement inasmuch as the question of jurisdiction in this case involved the prior question of whether Azov had ever become a party to the agreement as a whole
I can quite see that there is an interest in encouraging parties to put their arguments on jurisdiction before the arbitrator himself under s. 30. In many cases, and perhaps in the ordinary and normal case of such a challenge, where, for instance, there is simply an issue as to the width of an arbitration clause and no issue as to whether a party is bound to the relevant contract in the first place, the arbitrator's view may be accepted. If it is not, a challenge to the court is likely to be a limited affair raising, essentially, a point of construction on the clause and thus no problem arises. Where, however, there are substantial issues of fact as to whether a party has made the relevant agreement in the first place, then it seems to me that, even if there has been a full hearing before the arbitrators the Court, upon a challenge under s. 67, should not be placed in a worse position than the arbitrator for the purpose of determining that challenge …"
82. Thus, a question of jurisdiction may come before the court in a number of different situations. It might arise where one party goes to court with a claim and the defendant seeks a stay for arbitration: the claimant may say there is no contract or no arbitration agreement, and the court will have to investigate that question for the purpose of dealing with the application to stay. Or a party may commence an arbitration, and the other party may say there is no agreement or no agreement to arbitrate, in which case the matter is prima facie for the arbitrators to decide in the first instance pursuant to section 30. In a plain case, the arbitrators may proceed to determine their own jurisdiction, but equally the parties may agree to come straight to court to determine the question, or the arbitrators may give permission for the issue to be taken to court and the court may agree to accept the issue at that stage. Or the respondent in the arbitration may stand aloof, and come to court under section 72, or, following an award, under section 67. Or, a party may start proceedings in another country and the defendant there then comes to the English court to ask it to uphold their arbitration agreement by granting an anti-suit injunction. That is the equivalent of a party seeking a stay where an action is begun in England. Where the action in breach or alleged breach of an arbitration agreement is begun in a foreign country, the respondent may or may not seek a stay there, but here he may ask for an anti-suit injunction.
83. There are further variations thrown up by the cases. In some cases, it is reasonably plain that an arbitration agreement has been made, but there may be an issue as to its scope, or as to whether there has been a repudiation of it, or, as here, as to its surviving effectiveness. In other cases, there is a factual dispute as to whether any agreement has ever been made in the first place, or a legal dispute as to whether an arbitration clause has been incorporated into the parties' contract. Moreover in some cases, what is sought from the court is an interim injunction, which is among the subject-matters of section 44, and in other cases what is sought is a final injunction, which is not within section 44 but, subject to contrary agreement by the parties, may be within the powers of an arbitral tribunal in a final award (see section 48 of the AA 1996).
84. Moreover, a distinction may have to be made between a declaration as to the existence or effectiveness of an arbitration agreement about which parties are in dispute, which is a form of final relief as to the parties' legal rights, and an anti-suit injunction which, at any rate in its interim form, is only intended to hold the ring until some tribunal, whether it is the court itself at some later date, or an arbitral tribunal, can grapple with the merits of the parties' dispute.
85. This variety of situations suggests to my mind that it is not possible to be dogmatic about where the principle in section 1(c) of the AA 1996 leads. It is also relevant to observe that the Saville Report has nothing to say about anti-suit injunctions, even though it was written in February 1996, which is comfortably after The Angelic Grace had been decided in this court, and even though the Report's discussion of section 44 (see at para 214) includes a reference to Mareva or Anton Piller relief.
98. Fourthly, it seems to me to be going too far to say that because an arbitral tribunal 'may rule on its own substantive jurisdiction' (emphasis added), therefore the court ought always to regard the position as though there is an obligation on the parties and/or on the arbitrators for the arbitrators to rule on any dispute about their substantive jurisdiction. Anything may happen. The potential dispute may not be pressed. The disputing party may stand aloof and come to court. The parties may join issue in the arbitration, but agree to go to court for a preliminary issue on jurisdiction. The parties may not be able to agree on such a preliminary issue, but an application may be made to the court with the permission of the arbitrators for such a preliminary issue. The court may or may not accept such an application.
99. In such circumstances, I do not with respect agree with an interpretation of Vale do Rio which regards it as laying down a rule of jurisdiction that it is in all circumstances necessary for a party who wishes to raise with the court an issue of the effectiveness of an arbitration clause first to commence an arbitration and go through the procedures and provisions of sections 30-32 and/or section 67 and/or section 72. If, however, that is what Thomas J was saying in Vale do Rio, then I would not with respect agree with that view. In any event, since the alleged party to the charter and the arbitration agreement in that case was not as yet a party to the court proceedings (not having been served) and only a non-party (the brokers) were involved in the court proceedings, I would not regard any view expressed there as other than obiter. Thomas J did not in any event there consider the role of section 37 of the SCA 1981. In my judgment, at any rate in a case where no arbitration has been commenced and none is intended to be commenced, but a party goes to court to ask it to protect its interest in a right to have its disputes settled in accordance with its arbitration agreement, it is open to the court to consider whether, and how best, if at all, to protect such a right to arbitrate. Whether it will assist a claimant at all, and if so, how, is a matter for its discretion: but it would to my mind be an error of principle and good sense for the court to rule that as a matter of jurisdiction, or even as a matter of the principled exercise of its discretion, it has no possible role in the protection and support of arbitration agreements in such a context.
100. Thus I do not consider that section 1(c) of the AA 1996, which in any event is a general principle intended to assist in the construction of the Act (see the opening words of section 1) rather than a legal rule which binds the court even in terms of another statute, assists much in answering the question which is before the court in this case. First, the principle in section 1(c) necessitates the asking of the question: '[S]hould not intervene' in what? In the conduct of an arbitration? That would seem to be the essential purpose of such a principle. In the conduct of litigation, here or abroad, which threatens the safety of an arbitration agreement or any possible arbitration pursuant to it? There seems no reason in principle why the court might not want to intervene in such a case, so as to support arbitration and not to interfere in it. Therefore it seems to me that section 1(c) does not drive the answer to the issue in our case. Secondly, section 1(c) is only one of three principles stated in section 1. The first two principles are (a) that "the object of arbitration is to obtain the fair resolution of disputes by an impartial tribunal without unnecessary delay or expense" and (b) that "the parties should be free to agree how their disputes are resolved, subject only to such safeguards as are necessary in the public interest". As for the first of these (section 1(a)), it is not really concerned with a dispute of substantive jurisdiction which arises from a fundamental disagreement as to whether the parties have ever agreed to arbitrate at all. For if they have not agreed to arbitrate, then the arbitral tribunal can have no proper, and certainly no definitive role in resolving their disputes; and whether they have agreed to arbitrate or not, that issue of substantive jurisdiction can only ultimately (if the issue is alive, and taken and not lost by any procedural bar) be resolved by the court, and not by any arbitral tribunal. Moreover, I have already explored above (at para 81) the issue of 'unnecessary delay and expense' in this context, which may well push in favour of a preliminary issue in the courts even where an arbitration reference is itself up and running. As for the second of these principles (section 1(b)), where parties may have agreed an arbitration agreement but are in dispute as to whether they have done so, the principle of party autonomy suggests that the court should be prepared to assist in finding ways for that dispute to be resolved. Thus a consideration of all three of these principles may well suggest that a balancing exercise has to be performed in which the private and public interests involved, and the purposes of the AA 1996, might well weigh in favour of the court playing a necessary role."
Issue iii): Should the court exercise its inherent jurisdiction to stay the Commercial Court Proceedings on the application of Excalibur?
i) First, there is, on the evidence before me, a strong arguable case that the Gulf Defendants are not party either to the Collaboration Agreement or to the arbitration agreement contained within it. The grounds put forward by Excalibur to assert the contrary are not (at least at this stage) legally or evidentially convincing, although this is, of course, not an issue which I have to decide. It is relevant to note that at the without notice hearing before me, Excalibur's skeleton conceded that "… the claimant may well not have good contractual claims against all of the Respondent/Defendants".
ii) Moreover, none of the Gulf Defendants have any connection with New York, or the ICC. To force them to participate in a jurisdiction dispute before New York arbitrators (which would be the effect of a refusal of the Anti-Arbitration Injunction and the grant of a stay of the Commercial Court Proceedings) would involve, in practical terms, determining the issue against the Gulf Defendants "by the back door", and thus be likely to lead to a "gross injustice"; see per Gross J (as he then was) in Anglia Oils Ltd v Owners of the Vessel "Marie Champion"  EWHC 2407 at paragraph 16; per Clarke LJ (as he then was) in Caparo Group Ltd v Fagor Arrasate Sociedad Cooperative  ADRLJ 254, quoting with approval paragraph 295 of the Departmental Advisory Committee on Arbitration Law in relation to what became s72 of the Act; and paragraph 35 of the judgment of Mann J in Law Debenture Trust Corporation plc v Elektrim Finance BV  2 AER Comm 476.
iii) Excalibur, the party pursuing the arbitration, has unequivocally elected to commence substantive proceedings before this court and it has already made and still has pending substantive applications before the court. By contrast, no substantive applications have been made in the Arbitration Proceedings. In circumstances where Excalibur has: a) previously urged the court to intervene in support of the Commercial Court Proceedings by granting ancillary relief in relation to it; and b) issued and pursued a substantive action in this court, requiring all Defendants to engage with the proceedings, it would be an abuse of process for it now to require the other parties to change course and proceed with the arbitration. That is particularly so in circumstances where all the Defendants, including TKI, have now voluntarily submitted to the jurisdiction.
iv) It is perhaps ironic that, if Excalibur had not commenced the Commercial Court Proceedings, and instead the Gulf Defendants had commenced proceedings in the English court for a declaration of non-liability, and if Excalibur had then applied for a stay pursuant to s9 of the Act, it would have been required to establish that it was "virtually certain" that there was an agreement to arbitrate: see Al-Naimi v Islamic Press (supra) at 525. Otherwise the court would most likely have ordered a trial as to the validity of the arbitration agreement. See also per Mr. Julian Flaux QC (as he then was) in El Nasharty v J Sainsbury plc  1 Lloyd's Rep 309 at paragraph 29:
".. it would require the case to be an exceptional [case] before the Court would leave it to the arbitrator if the Court were uncertain on the material before it whether or not there was an arbitration agreement."
In fact, even when s9 is not in issue (as a matter of jurisdiction) and a stay is sought under the court's inherent jurisdiction, it will only "very exceptionally order such a stay, e.g. if virtually certain that the arbitration agreement was concluded": Albon v Naza Motor Trading (No. 3)  2 Lloyd's Rep 1 at paragraphs 13-14 and 23-24 per Lightman J.
v) It would be vexatious for TKI and the Gulf Defendants to be forced to defend two sets of proceedings involving the same issues in two jurisdictions at the same time. Excalibur's suggestion that, so far as the Gulf Defendants are concerned, this is "self-induced", because they object to the jurisdiction of an arbitral tribunal is not, in my view, well-founded. Apart from the fact that, having been joined as defendants to the Commercial Court Proceedings the Gulf Defendants were prima facie entitled to a judicial determination by this court as to whether they are parties to the arbitration agreement, it would, in my judgment, be oppressive for them (as Excalibur suggests they should) to have to apply to the New York courts, as the putative supervisory court for the ICC arbitration, to determine the question whether they were parties to the Collaboration Agreement. That is because the evidence of New York law shows that, if the Gulf Defendants were forced to apply to the courts in New York for an injunction to restrain Excalibur from pursuing the arbitration against them, there is a risk that they would thereby be taken to have submitted to the jurisdiction of those courts for the purposes of any claim which Excalibur might then make, despite the fact that: a) the Gulf Defendants would otherwise have no connection at all with New York and would not be subject to the jurisdiction of those courts; and b) as Excalibur itself contends, the case has "numerous links with England and Wales".
vi) Similarly, if the Gulf Defendants were to contest jurisdiction before the arbitral tribunal and appeal any adverse award to a court in New York, they would risk a decision that they have submitted to the jurisdiction of the court in relation to the substantive claim. I also accept Mr. Hirst's submission that, in addition, the Gulf Defendants would suffer serious prejudice in terms of wasted time and costs if they were forced by Excalibur's actions to contest the jurisdiction of the arbitral tribunal and then appeal to the courts in a jurisdiction (New York) with which they have no connection. As the Supreme Court held in Dallah (supra), the Gulf Defendants should not be compelled to go before an arbitral tribunal against whose jurisdiction they vigorously protest. This is particularly so where all the parties have voluntarily submitted to the jurisdiction of this court in the substantive Commercial Court Proceedings.
Issue iv) Should the court exercise its inherent jurisdiction and/or case management powers under CPR 3.1(2)(f) to stay the Commercial Court Proceedings on the application of Excalibur?
".. it appears to me that, where a claimant has brought a claim against the same defendants for essentially the same relief arising out of the same facts in two jurisdictions, then, absent special circumstances, it would be wrong for the court to grant a stay of one set of proceedings at the instigation of the claimant, the very person who has brought both sets of proceedings."
".. if a plaintiff has thought fit to commence an action, with all the hardship to the defendant which this involves in terms of expense, worry and disruption, he should in general be made to face up to the situation which he has chosen to create, and should not be permitted to conduct the action to a timetable which corresponds only to his own whimsy. Having put his hand to the plough he should continue to the end of the furrow. This is only fairness and common sense."
i) The court has a wide discretion to stay proceedings, but in circumstances where the claimant itself has voluntarily brought the two sets of proceedings, a stay should only be granted in very rare circumstances.
ii) Even where there are such reasons for a stay, a stay should only be granted if the benefits of doing so clearly outweigh any disadvantage to the other party.
iii) A stay will not generally be appropriate if the other proceedings will not even bind the parties to the action stayed or finally resolve all the issues in the case to be stayed.
iv) A defendant against whom a serious allegation (such as deceit) is made is entitled to an expeditious hearing, and should not be left for years waiting for the outcome of another case over which he (and the court) has no control. An action alleging fraud should come to trial quickly.
i) First, Excalibur commenced proceedings before this court on the stated grounds that it was the "appropriate forum for the resolution of any disputes that may not be arbitrable". The evidence shows that there are many factors which connect this dispute to England, rather than to New York. These factors were relied on by Excalibur itself before me, on the application for a freezing order.
ii) Second, the orderly and swift resolution of Excalibur's claims is likely to be best advanced in the Commercial Court Proceedings, in order to avoid duplication of proceedings and to dispose of the case efficiently. All the parties to the dispute have submitted to the jurisdiction of the English court. By contrast, the arbitral tribunal has yet to be convened and the Gulf Defendants contest its jurisdiction. If the issue of arbitrability were to be resolved in the Arbitration Proceedings, there will be a significant delay while the Gulf Defendants challenge the jurisdiction of the arbitral tribunal. By contrast, there are no jurisdictional objections from any party to the English court.
iii) The English court is just as able as any arbitration tribunal to determine issues of New York law which may govern Excalibur's contractual claims. However, as Excalibur accepted on their application before me, the non-contractual claims may well be governed by English law. The English court is far better qualified to decide issues of English law than a New York arbitral tribunal.
Issue v): So far as Gulf UK is concerned, does this court have a discretion as to whether to permit the Commercial Court Proceedings to continue, or is it obliged to do so?
i) Article 1(2)(d) excludes "arbitration" from the scope of the Judgments Regulation. However, in order to determine whether a dispute falls within the scope of the Judgments Regulation, one must look to the nature of rights which the proceedings in question serve to protect. In particular, a preliminary issue concerning the applicability and validity of an arbitration agreement falls within the scope of the Judgments Regulation: Case C-185/07 West Tankers v Allianz SpA  1 AC 1138 at paragraphs 22-27; see also Kokott A.G.'s opinion at paragraphs 54-58 and 68; Youell v La Réunion Aérienne  EWCA Civ 175 at paragraphs 31-35. In any event, the Commercial Court Proceedings are not about "arbitration": the Claim Form does not mention arbitration.
ii) It follows that both the question whether or not there is an arbitration agreement between Excalibur and Gulf UK and the substantive Commercial Court Proceedings fall within the scope of the Judgments Regulation.
iii) Excalibur, as claimant, has commenced the Commercial Court Proceedings against a defendant in its place of domicile. It is well established that the court has no discretion to stay its proceedings on the grounds that there are parallel proceedings in a non-Member State when the court is afforded jurisdiction by virtue of the defendant's domicile pursuant to Article 2: Case C-281/02 Owusu v Jackson  QB 801. This is so, even if the defendant domiciled in the jurisdiction wants to be sued elsewhere, as was the case in Owusu v Jackson. A fortiori, once a claimant has commenced proceedings against a defendant domiciled in the jurisdiction and the court is seised of those proceedings, the court cannot at the request of the claimant stay the proceedings in favour of proceedings elsewhere, if the defendant in question objects.
iv) Accordingly, in the present case the English court has no discretion to stay the Commercial Court Proceedings against Gulf UK. It is mandatory for the court to exercise its jurisdiction and it cannot defer to the arbitrators. Nor can the court choose not to exercise that mandatory jurisdiction for case management reasons, since this would imperil the effectiveness of the Judgments Regulation: Case C-365/88 Kongress Agentur Hagen GmbH v Zeehage BV  ECR I-1845 at paragraph 20.
v) Given that Gulf UK has a right to a determination by the English court of: a) the arbitrability issue; and b) the substantive case against it in the Commercial Court Proceedings, the court should restrain the Arbitration Proceedings (at least as against Gulf UK) in order to give effect to that right: "the only choice … is between an anti-suit injunction or nothing": Samengo-Turner v J&H Marsh McLennan (Services) Ltd  EWCA Civ 723 at paragraph 39.
vi) Such a result is not surprising. A party which commences proceedings against a defendant domiciled in a Member State should not be able to "warehouse" its claim for its own tactical advantage so as to subvert the certainty of the scheme of the Judgments Regulation and endanger its effectiveness: cf. Katsouris Bros v Haitoglou SA (supra) at paragraphs 59-60.
vii) If that is the case in relation to Gulf UK, Gulf Keystone and Gulf International are clearly necessary and proper parties to the Commercial Court Proceedings and any resolution of these issues. Indeed, Excalibur could hardly resist such a contention: it was on this basis that it sought and obtained permission from me to serve Gulf Keystone and Gulf International outside the jurisdiction or by alternative means.
viii) Accordingly, if injunctive relief is granted in favour of Gulf UK, the court should grant the same relief to all the Gulf Defendants in order to avoid parallel proceedings and as a matter of common sense.
Note 1 A “farm-in” is an agreement whereby a company, not at present a participant in a PSC, can acquire an interest from one of the existing participants. [Back] Note 2 It was common ground that this was not a case in which s9 of the Arbitration Act was engaged, since Excalibur is not “… a party to an arbitration agreement against whom legal proceedings are brought”, and that, accordingly, the Stay Application was brought either under the court’s inherent jurisdiction (the Defendants’ position) or under CPR 3.1(2)(f) (Excalibur’s position). [Back]
Note 1 A “farm-in” is an agreement whereby a company, not at present a participant in a PSC, can acquire an interest from one of the existing participants. [Back]
Note 2 It was common ground that this was not a case in which s9 of the Arbitration Act was engaged, since Excalibur is not “… a party to an arbitration agreement against whom legal proceedings are brought”, and that, accordingly, the Stay Application was brought either under the court’s inherent jurisdiction (the Defendants’ position) or under CPR 3.1(2)(f) (Excalibur’s position). [Back]