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You are here: BAILII >> Databases >> United Kingdom Supreme Court >> Ust -Kamenogorsk Hydropower Plant JSC v AES Ust-Kamenogorsk Hydropower Plant LLP [2013] UKSC 35 (12 June 2013) URL: https://www.bailii.org/uk/cases/UKSC/2013/35.html Cite as: [2013] Bus LR 1357, [2013] 2 Lloyd's Rep 281, [2013] UKSC 35, [2013] 1 CLC 1069, [2013] 1 WLR 1889, [2014] 1 All ER (Comm) 1, [2014] 1 All ER 335, [2013] WLR(D) 232 |
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Trinty Term
[2013] UKSC 35
On appeal from: [2011] EWCA Civ 647
JUDGMENT
Ust-Kamenogorsk Hydropower Plant JSC (Appellant) v AES Ust-Kamenogorsk Hydropower Plant LLP (Respondent)
before
Lord Neuberger, President
Lord Mance
Lord Clarke
Lord Sumption
Lord Toulson
JUDGMENT GIVEN ON
12 June 2013
Heard on 1 and 2 May 2013
Appellant Lord Goldsmith QC Sophie Lamb (Instructed by Debevoise & Plimpton LLP) |
Respondent Toby Landau QC Jessica Wells (Instructed by Allen & Overy LLP) |
LORD MANCE (with whom Lord Neuberger, Lord Clarke, Lord Sumption and Lord Toulson agree)
Introduction
Background
Burton J's order
The issue
"The High Court may by order (whether interlocutory or final) grant an injunction or appoint a receiver in all cases in which it appears to the court to be just and convenient to do so".
The negative aspect of an arbitration agreement and exclusive choice of court clause
"25 …. Under English law, a person has no right not to be sued in a particular forum, domestic or foreign, unless there is some specific factor which gives him that right. A contractual arbitration or exclusive jurisdiction clause will provide such a ground for seeking to invoke the right to enforce the clause. The applicant does not have to show that the contractual forum is more appropriate than any other; the parties' contractual agreement does that for him. …..
…..
27 The applicant for a restraining order must have a legitimate interest in making his application and the protection of that interest must make it necessary to make the order. Where the applicant is relying upon a contractual right not to be sued in the foreign country (say because of an exclusive jurisdiction clause or an arbitration clause), then, absent some special circumstance, he has by reason of his contract a legitimate interest in enforcing that right against the other party to the contract."
"By section 37(1) of the Supreme Court Act 1981 the High Court has jurisdiction to grant an injunction (whether interlocutory or final) 'in all cases in which it appears to the court to be just and convenient to do so'. The English courts have regularly exercised this power to grant injunctions to restrain parties to an arbitration agreement from instituting or continuing proceedings in the courts of other countries: see The Angelic Grace [1995] 1 Lloyd's Rep 87."
He went on to refer to the court's power to grant an interim injunction under section 44, to which I revert below. The interpretation subsequently given to the Brussels Regulation by the Court of Justice in West Tankers (Case C-185/07) now means that an English court can no longer enforce contractual rights (or prevent oppression of the sort found to exist in Turner v Grovit) by injuncting a party within its jurisdiction from commencing or continuing proceedings in a foreign court within the Brussels/Lugano regime. But that limitation is irrelevant in this case.
The scheme of the Arbitration Act 1996
"1. General principles.
The provisions of this Part are founded on the following principles, and shall be construed accordingly—
(a) the object of arbitration is to obtain the fair resolution of disputes by an impartial tribunal without unnecessary delay or expense;
(b) the parties should be free to agree how their disputes are resolved, subject only to such safeguards as are necessary in the public interest;
(c) in matters governed by this Part the court should not intervene except as provided by this Part."
"Nothing in this Part shall be construed as excluding the operation of any rule of law consistent with the provisions of this Part in particular, any rule of law as to—
(a) matters which are not capable of settlement by arbitration;
(b) the effect of an oral arbitration agreement; or
(c) the refusal of recognition or enforcement of an arbitral award on grounds of public policy".
The DAC Report instances confidentiality as another subject deliberately left outside the scope of the Act.
Sections 30, 32 and 72 and Kompetenz-Kompetenz
"30 Competence of tribunal to rule on its own jurisdiction.
(1) Unless otherwise agreed by the parties, the arbitral tribunal may rule on its own substantive jurisdiction, that is, as to—
(a) whether there is a valid arbitration agreement,
(b) whether the tribunal is properly constituted, and
(c) what matters have been submitted to arbitration in accordance with the arbitration agreement.
(2) Any such ruling may be challenged by any available arbitral process of appeal or review or in accordance with the provisions of this Part."
Section 30 reflects the principle of "Kompetenz-Kompetenz", discussed in Dallah Real Estate and Tourism Holding Co v Ministry of Religious Affairs of the Government of Pakistan [2010] UKSC 46, [2011] 1 AC 763. In short, any tribunal convoked to determine a dispute may, as a preliminary, consider and rule upon the question whether the dispute is within its substantive jurisdiction, without such ruling being binding on any subsequent review of its determination by the court under sections 32, 67 or 72 of the 1996 Act. However, a tribunal cannot by its preliminary ruling that it has substantive jurisdiction to determine a dispute confer upon itself a substantive jurisdiction which it does not have. Absent a submission specifically tailored to embrace them (as to which there is no suggestion here), jurisdictional issues stand necessarily on a different footing to the substantive issues on which an award made within the tribunal's jurisdiction will be binding.
"…. Arbitrators (like many other decision-making bodies) may from time to time find themselves faced with challenges to their role or powers, and have in that event to consider the existence and extent of their authority to decide particular issues involving particular persons. But, absent specific authority to do this, they cannot by their own decision on such matters create or extend the authority conferred upon them."
Lord Collins said (para 84) that it does not follow, from the general principle that a tribunal has power to consider its own jurisdiction:
"that the tribunal has the exclusive power to determine its own jurisdiction, nor does it follow that the court of the seat may not determine whether the tribunal has jurisdiction before the tribunal has ruled on it. Nor does it follow that the question of jurisdiction may not be re-examined by the supervisory court of the seat in a challenge to the tribunal's ruling on jurisdiction. Still less does it mean that when the award comes to be enforced in another country, the foreign court may not re-examine the jurisdiction of the tribunal."
Section 44
"Court powers exercisable in support of arbitral proceedings.E++N.I.
(1) Unless otherwise agreed by the parties, the court has for the purposes of and in relation to arbitral proceedings the same power of making orders about the matters listed below as it has for the purposes of and in relation to legal proceedings.
(2) Those matters are—
(a) the taking of the evidence of witnesses;
(b) the preservation of evidence;
(c) making orders relating to property which is the subject of the proceedings or as to which any question arises in
the proceedings—
(i) for the inspection, photographing, preservation, custody or detention of the property, or
(ii) ordering that samples be taken from, or any observation be made of or experiment conducted upon, the property;
and for that purpose authorising any person to enter any premises in the possession or control of a party to the arbitration;
(d) the sale of any goods the subject of the proceedings;
(e) the granting of an interim injunction or the appointment of a receiver.
(3) If the case is one of urgency, the court may, on the application of a party or proposed party to the arbitral proceedings, make such orders as it thinks necessary for the purpose of preserving evidence or assets.
(4) If the case is not one of urgency, the court shall act only on the application of a party to the arbitral proceedings (upon notice to the other parties and to the tribunal) made with the permission of the tribunal or the agreement in writing of the other parties.
(5) In any case the court shall act only if or to the extent that the arbitral tribunal, and any arbitral or other institution or person vested by the parties with power in that regard, has no power or is unable for the time being to act effectively.
(6) If the court so orders, an order made by it under this section shall cease to have effect in whole or in part on the order of the tribunal or of any such arbitral or other institution or person having power to act in relation to the subject-matter of the order.
(7) The leave of the court is required for any appeal from a decision of the court under this section."
"(1) In this Section of this Part 'arbitration claim' means –
(a) any application to the court under the 1996 Act;
(b) a claim to determine –
(i) whether there is a valid arbitration agreement;
(ii) whether an arbitration tribunal is properly constituted; or
what matters have been submitted to arbitration in accordance with an arbitration agreement;
(c) a claim to declare that an award by an arbitral tribunal is not binding on a party; and
(d) any other application affecting –
(i) arbitration proceedings (whether started or not); or
(ii) an arbitration agreement."
Under CPR62.5, governing service out of the jurisdiction, the court may give permission to serve an arbitration claim form out of the jurisdiction if
"(b) the claim is for an order under section 44 of the 1996 Act; or
(c) the claimant –
(i) seeks some other remedy or requires a question to be decided by the court affecting an arbitration (whether started or not), an arbitration agreement or an arbitration award; and
(ii) the seat of the arbitration is or will be within the jurisdiction or the conditions in section 2(4) of the 1996 Act are satisfied."
Section 9
"II.3. The court of a Contracting State, when seized of an action in a matter in respect of which the parties have made an agreement within the meaning of this article, shall, at the request of one of the parties, refer the parties to arbitration, unless it finds that the said agreement is null and void, inoperative or incapable of being performed."
Nothing in the New York Convention requires Contracting States to have in their law any equivalent power to that which section 37 includes in respect of foreign proceedings in breach of an arbitration agreement. The silence in Part 1 is in this respect unremarkable.
Section 37 of the Senior Courts Act 1981
"Under section 37(1) by contrast the arbitration clause is not the source of the power to grant an injunction but is merely a part of the facts in the light of which the court decides whether or not to exercise a power which exists independently of it."
The court may as a result need to be very cautious:
"in the exercise of its general powers under section 37 so as not to conflict with any restraint which the legislature may have imposed on the exercise of the new and specialised powers." (p 364B-C).
However, it is, in my opinion, entirely understandable that Parliament should not have thought to carve out from section 37 of the Senior Courts Act or to reproduce in the 1996 Act one aspect of a general power conferred by section 37. It cannot be deduced from the fact that it did not do so that it intended that the general power should never be exercised in any context associated with arbitration.
Conclusion