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||Neutral Citation Number:  EWHC 3283 (Comm)
||Case No: 2012 Folio 1225
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
||Royal Courts of Justice
Rolls Building, Fetter Lane
B e f o r e :
THE HON. MR JUSTICE POPPLEWELL
Simon Salzedo QC and Gerard Rothschild (instructed by Simmons & Simmons) for the Claimant in 2012 Folio 713 and the First Defendant in 2012 Folio 1225
John Tackaberry QC, Ms Karen Gough and Ms Rebecca Drake (instructed by Aventus Law Ltd) for the Defendants in 2012 Folio 713 and the Claimants in 2012 Folio 1225
Hearing dates: 13 & 14 November 2012
HTML VERSION OF JUDGMENT
Crown Copyright ©
The Hon. Mr Justice Popplewell:
- There are three applications before the Court relating to the validity and enforcement of a London arbitration award made on 25 April 2012 by which the Arbitrator awarded the Claimant ("Terna") AED 84,285,282, together with interest and costs, against the three individual Respondents ("the Bin Kamils"). By a Claim Form issued on 18 September 2012, the Bin Kamils seek to challenge the Award for lack of jurisdiction and serious irregularity under sections 67 and 68 Arbitration Act 1996, and an extension of time in which to be permitted to do so. By an application notice dated 3 September 2012 the Bin Kamils seek to set aside an ex parte order made on 30 May 2012 by Hamblen J under section 66 of the Act, giving Terna leave to enforce the Award as a judgment. By an application notice dated 18 September 2012, Terna seeks an anti suit injunction restraining the Bin Kamils from challenging the validity of the Award abroad (outside EU and Lugano Convention states), and in particular requiring it to discontinue proceedings commenced by the Bin Kamils in Sharjah, UAE, for that purpose.
- Terna is a company with limited liability constituted under the laws of Bahrain. It is owned by a Cypriot company belonging to Greek interests. The Bin Kamils are residents of Sharjah. They were the founders and owners of all of the shares of Hamriyah Cement Company FZC ("HCC"), a company constituted under the laws of the Hamriyah Free Zone, Sharjah, UAE. HCC held a 25 year lease of land in Hamriyah with a permit to build and operate a fully integrated cement plant with a capacity of up to 1.8 million tons of cement.
- By two agreements in writing dated 19 June 2007 Terna became joint venture partners in the project. Under a Share Purchase Agreement of that date ("the SPA"), Terna purchased 40% of the share capital of HCC. Under a Shareholders Agreement of that date ("the SHA"), Terna and the Bin Kamils set out the detailed terms governing their cooperation as shareholders in HCC and their roles in the management of the company.
- Thereafter, and pursuant to the agreements, Terna and the Bin Kamils jointly financed, managed and completed the construction of the cement plant and commenced its operation. It was envisaged that following completion of the cement plant, a cement import/export terminal would be constructed on a plot of land to be leased within the area of the Hamriyah Port. However permits for construction of the terminal were refused, and the terminal was not built. Terna contended that the Bin Kamils were responsible for procuring the permits to enable the terminal to be built. The parties were also in dispute about other aspects of the discharge of their respective obligations concerning the financing of the development and the management of the cement plant and the affairs of HCC.
- Clause 11 of the SPA provided as follows:
"11.1 This Agreement shall be governed by and construed in accordance with the laws of the Hamriyah Free Zone, the laws of the Emirate of Sharjah and the laws of the United Arab Emirates (i.e. the Law as defined under Clause 1.1 herein above), as applicable.
11.2 Any dispute arising out of or in relation to this Agreement, including but not limited to its construction, validity, performance or breach, shall be finally settled by one arbitrator in accordance with the ICC Arbitration Rules, as in force from time to time, and with the express provisions of this Clause 11.
11.3 The place of arbitration shall be London, United Kingdom, and the proceedings shall be conducted in the English language."
- The SHA contained a materially identical condition.
- Terna commenced the arbitration by a request dated 13 July 2009. On 8 October 2009 the Court of the ICC appointed Dr Nayla Comair-Obeid ("The Arbitrator") as sole arbitrator to determine the parties' disputes. The Arbitrator is recognised as a leading international arbitration practitioner, specialising in international business contracts and Islamic and Middle Eastern legislation and contracts.
- The Bin Kamils were represented throughout the arbitration by Galadari & Associates of the UAE. The main witness hearing took place in London from 9 to 19 December 2010 with a further hearing in February 2011. After lengthy post hearing written submissions, the Award was issued on 25 April 2012. The total amount awarded was made up of (1) AED 19,000,000, which was the amount paid by Terna for its 40% stake in HCC; and (2) AED 65,285,282 which was the amount which the Arbitrator found had been contributed by Terna to HCC pursuant to the SPA and SHA; and (3) US$ 3,691,749.89 in respect of legal and other costs and expenses. The Award also provided for Terna to retransfer its 40% shareholding in HCC to the Bin Kamils. The Arbitrator granted this relief on the grounds that by reason of breaches of representations, warranties and undertakings in the agreements, Terna had validly invoked its right under clause 7.2.1(i) of the SPA to "rescind" the SPA, to reclaim the purchase price of the shares, and to be paid consequent "damage". Clause 10 of the SHA provided that the SHA terminated automatically upon termination of the SPA.
- On 24 May 2012 Terna applied in writing, without notice to the Bin Kamils, under section 66 of the Arbitration Act 1996, for leave to enforce the Award in the same manner as a judgment.
- On 29 May 2012, without notice at the time to Terna, the Bin Kamils filed a claim before the Conciliation and Reconciliation Committee of the First Instance Court in Sharjah, UAE, challenging the validity of the Award. The Committee is not itself a court, but encourages parties to settle disputes, failing which a claim is transferred to and filed before the Court.
- By an order dated 30 May 2012 Hamblen J gave permission to enforce the Award in the same manner as a judgment. Having been made without notice, the order provided in the usual way that the Bin Kamils could apply to set it aside within 22 days after service, and that the Award was not to be enforced until after the expiration of that period, or until after the final disposal of any application made within that period to set aside the order.
- On 21 June 2012 the Conciliation and Reconciliation Committee referred the Bin Kamils' application to the Sharjah Court and it was registered as case number 2403/2012.
- On 9 July 2012 there was the first court hearing in Sharjah at which both parties were represented by their respective local lawyers.
- On 16 July 2012 Galadari & Associates received a copy of the order of Hamblen J.
- By a letter dated 31 July 2012 addressed to the Commercial Court, enclosing a draft application notice, the Bin Kamils applied for an extension of time until 1 September 2012 within which to apply to set aside Hamblen J's order, and such an extension was granted by Gloster J. Gloster J's order also provided that the matter be listed for directions in relation to that application, and to any further applications that the Bin Kamils might wish to make "including pursuant to section 66 to 69 of the Arbitration Act 1996."
- An application notice to set aside Hamblen J's order was issued by the Bin Kamils on the last possible date, namely 3 September 2012 (1 September being a Saturday).
- On 18 September 2012 the Bin Kamils issued an Arbitration Claim Form challenging the award under Sections 67 and 68 of the Act. The Claim Form also seeks an extension of time within which to do so, and permission to serve the Claim Form on Terna outside the jurisdiction.
- On the same day, 18 September 2012, Terna issued an application notice seeking an anti suit injunction restraining the Bin Kamils from pursuing or continuing proceedings to challenge, invalidate or review the Award in any courts other than the courts of England and Wales, the Member States of the European Union or the Contracting States to the Lugano Convention; and ordering the Bin Kamils to discontinue, or to take all steps within their power to discontinue, the Sharjah proceedings within 21 days.
- Pursuant to an order of Walker J made on 20 September 2012 all the applications were heard together.
The issues in outline
- The main ground advanced by the Bin Kamils for challenging the Award is that the Arbitrator was guilty of a serious irregularity in deciding the case against the Bin Kamils on a basis which was never advanced by Terna, and which the Bin Kamils had no opportunity to address, either factually or legally; that Terna's claim was for the enforcement of a call option under the SHA seeking an order for the Bin Kamils to transfer their shares to Terna, alternatively for damages for a series of alleged breaches of the agreements, which gave rise to a claim quantified by Terna at AED73,611,956; that there was no claim advanced for rescission of the SPA pursuant to clause 7.2.1(i), no claim for Terna's shares to be returned to the Bin Kamils, no claim for repayment of the full AED 19,000,000 paid by Terna for the shares, and no claim for AED 65,285,282 or any other sum as damage pursuant to clause 7.2.1(i). The essential complaint is that the Arbitrator decided the case in Terna's favour, and awarded Terna more than it was claiming, on a basis which was not advanced by Terna, was never "live", and was never ventilated throughout the lengthy course of the reference. This was referred to before me as "the rescission point".
- It is argued that this also involved the tribunal exceeding its jurisdiction so as to justify relief under s.67. Reliance on s. 67 in this context was only advanced by a draft amendment to the Particulars of Claim on 6 November 2012, for which the Bin Kamils seek permission to amend.
- By way of further points, the Bin Kamils criticise the Arbitrator's treatment of quantum and costs, both as support for the rescission point and as sufficient in themselves (when taken together) to constitute a serious irregularity. As a subsidiary point, the Bin Kamils criticise the Arbitrator's treatment of an issue in relation to the alleged forgery of a document. By the time of the hearing before me, this was relied on in support of the s.68 challenge on the rescission point, not as a separate independent ground of challenge.
- Terna contended, first, that it was an abuse of process for the Bin Kamils to seek to challenge the Award by proceedings brought at the same time both in the Courts of Sharjah and in this Court; that before this Court made any substantive decision on the issues raised by the Arbitration Claim Form, the Bin Kamils should be put to an election as to which proceedings to pursue; and that if they chose to pursue the challenge in this Court, they should only be allowed to do so upon undertaking to discontinue the Sharjah proceedings. The Bin Kamils resisted the contention that they should be put to an election. This issue resolved itself in the course of the hearing. The question of whether the Bin Kamils should be put to an election was covered in the parties' skeleton arguments served prior to the hearing. At the outset of the hearing it was agreed that counsel would make all their submissions on all issues, but that during the course of Mr Tackaberry QC's submissions, on behalf of the Bin Kamils, he would indicate what election his clients would make if I were to conclude that they should be put to their election. At the conclusion of the hearing, he indicated that their election, if required, would be to continue the Sharjah proceedings and not to pursue their applications before me. On hearing this Mr Salzedo QC indicated that having addressed the Court on the issues which arose on the Bin Kamils' applications, his instructions were that Terna wished the Court to decide those substantive issues, rather than to dismiss the applications on the basis of the Bin Kamils' election. Accordingly he did not ultimately pursue the contention that the Bin Kamils should be put to an election.
- Terna does not resist an order that there be permission to serve out of the jurisdiction, without prejudice to its arguments that there is no good arguable case on the merits. Terna opposes the Bin Kamils' application for an extension of time. Terna argues that the challenge to the Award on all the grounds advanced must fail. Terna opposes the application to amend to seek relief under s. 67 in respect of the rescission point.
- On the Bin Kamils' application to set aside Hamblen J's order under s.66, the parties agreed that the outcome would effectively be determined by the outcome of the issues in relation to the challenges to the Award under s.67 and s. 68. If those challenges fail, Mr Tackaberry QC accepted there are no grounds for interfering with Hamblen J's order; if they succeed, so that the Award is to be set aside or remitted, Mr Salzedo QC accepted that Hamblen J's order can not stand.
- The Bin Kamils resisted the grant of an anti suit injunction on grounds which I will identify when addressing the issue below.
Extension of time
The applicable principles
- The principles regarding extensions of time to challenge an arbitration award have been addressed in a number of recent authorities, most notably in Kalmneft v Glencore  1 Lloyd's Rep 128, Nagusina Naviera v Allied Maritime Inc.  2 CLC 1, L Brown & Sons Limited v Crosby Homes (Northwest) Limited  BLR 366, Broda Agro Trading v Alfred C Toepfer International  1 Lloyd's Rep 243, and Nestor Maritime v Sea Anchor Shipping  2 Lloyd's Rep 144, from which I derive the following principles:
(1) Section 70(3) of the Act requires challenges to an award under sections 67 and 68 to be brought within 28 days. This relatively short period of time reflects the principle of speedy finality which underpins the Act, and which is enshrined in section 1(a). The party seeking an extension must therefore show that the interests of justice require an exceptional departure from the timetable laid down by the Act. Any significant delay beyond 28 days is to be regarded as inimical to the policy of the Act.
(2) The relevant factors are:
(i) the length of the delay;
(ii) whether the party who permitted the time limit to expire and subsequently delayed was acting reasonably in the circumstances in doing so;
(iii) whether the respondent to the application or the arbitrator caused or contributed to the delay;
(iv) whether the respondent to the application would by reason of the delay suffer irremediable prejudice in addition to the mere loss of time if the application were permitted to proceed;
(v) whether the arbitration has continued during the period of delay and, if so, what impact on the progress of the arbitration, or the costs incurred in respect of the arbitration, the determination of the application by the Court might now have;
(vi) the strength of the application;
(vii) whether in the broadest sense it would be unfair to the applicant for him to be denied the opportunity of having the application determined.
(3) Factors (i), (ii), and (iii) are the primary factors.
- I add four observations of my own which are of relevance in the present case. First, the length of delay must be judged against the yardstick of the 28 days provided for in the Act. Therefore a delay measured even in days is significant; a delay measured in many weeks or in months is substantial.
- Secondly, factor (ii) involves an investigation into the reasons for the delay. In seeking relief from the Court, it is normally incumbent upon the applicant to adduce evidence which explains his conduct, unless circumstances make it impossible. In the absence of such explanation, the Court will give little weight to counsel's arguments that the evidence discloses potential reasons for delay and that the applicant "would have assumed" this or "would have thought" that. It will not normally be legitimate, for example, for counsel to argue that an applicant was unaware of the time limit if he has not said so, expressly or by necessary implication, in his evidence. Moreover where the evidence is consistent with laxity, incompetence or honest mistake on the one hand, and a deliberate informed choice on the other, an applicant's failure to adduce evidence that the true explanation is the former can legitimately give rise to the inference that it is the latter.
- Thirdly, factor (ii) is couched in terms of whether the party who has allowed the time to expire has acted reasonably. This encompasses the question whether the party has acted intentionally in making an informed choice to delay making the application. In Rule 3.9(1) of the Civil Procedure Rules, which sets out factors generally applicable to extensions of time resulting in a sanction, the question whether the failure to comply is intentional is identified as a separate factor from the question of whether there is a good explanation for the failure. This is because in cases of intentional non compliance with time limits, a public interest is engaged which is distinct from the private rights of the parties. There is a public interest in litigants before the English Court treating the Court's procedures as rules to be complied with, rather than deliberately ignored for perceived personal advantage.
- Fourthly, the Court's approach to the strength of the challenge application will depend upon the procedural circumstances in which the issue arises. On an application for an extension of time, the Court will not normally conduct a substantial investigation into the merits of the challenge application, since to do so would defeat the purposes of the Act. However if the Court can see on the material before it that the challenge involves an intrinsically weak case, it will count against the application for an extension, whilst an apparently strong case will assist the application. Unless the challenge can be seen to be either strong or intrinsically weak on a brief perusal of the grounds, this will not be a factor which is treated as of weight in either direction on the application for an extension of time. If it can readily be seen to be either strong or weak, that is a relevant factor; but it is not a primary factor, because the Court is only able to form a provisional view of the merits, a view which might not be confirmed by a full investigation of the challenge, with the benefit of the argument which would take place at the hearing of the application itself if an extension of time were granted.
- The position, however, is different where, as has happened in the current case, the application for an extension of time has been listed for hearing at the same time as the challenge application itself, and the Court has heard full argument on the merits of the challenge application. In such circumstances the Court is in a position to decide not merely whether the case is "weak" or "strong", but whether it will or will not succeed if an extension of time were granted. The Court is in a position to decide whether the challenge is a good or a bad one. If the challenge is a bad one, this should be determinative of the application to extend time. Whilst it may not matter in practice whether the extension is allowed and the application dismissed, or whether the extension is simply refused, logical purity suggests that it would be wrong to extend time in those circumstances: there can be no justification for departing from the principle of speedy finality in order to enable a party to advance a challenge which will not succeed.
- Conversely, where the Court can determine that the challenge will succeed, if allowed to proceed by the grant of an extension of time, that may be a powerful factor in favour of the grant of an extension, at least in cases of a challenge pursuant to s.68. In such cases the Court will be satisfied that there has been a serious irregularity giving rise to substantial injustice in relation to the dispute adjudicated upon in the award. Given the high threshold which this involves, the other factors which fall to be weighed in the balance must be seen in the context of the applicant suffering substantial injustice in respect of the underlying dispute by being deprived of the opportunity to make his challenge if an extension of time is refused. Where the delay is due to incompetence, laxity or mistake and measured in weeks or a few months, rather than years, the fact that the Court has concluded that the s.68 challenge will succeed may well be sufficient to justify an extension of time. The position may be otherwise, however, if the delay is the result of a deliberate decision made because of some perceived advantage.
- The greater prominence which the merits of the application may play when the Court is considering the application for extension of time at the same time as the substantive challenge application should not usually be seen as a reason for the two matters to be listed and heard together. On the contrary, in many cases that would itself frustrate the policy of speedy finality underpinning the Act. It is not uncommon for challenges under s.68 to require a lengthy investigation into the issues in the arbitration, and into the detail of the procedural course of the reference, requiring a substantial hearing for that purpose. In such cases it should be the exception, rather than the norm, for the extension of time application to be postponed to a full hearing of the challenge application.
- Bearing those principles in mind I turn to the application for an extension of time in this case. For that purpose it is necessary to set out in detail the procedural history since the Award and the evidence of the parties about their conduct during this period.
Procedural history since the Award
- The Award was published on 25 April 2012. It was promptly sent to Galadari & Associates where it arrived on 28 April. The next working day in UAE was 29 April. The lawyer who had been most heavily involved in conducting the case on behalf of the Bin Kamils in the arbitration was a qualified English solicitor, Mr Shackleton. He had fallen out with Galadari & Associates in the summer of 2011, and by this stage was not available to assist in dealing with the Award and its consequences. He was not, however, the only lawyer who had been involved in the conduct of the arbitration for the Bin Kamils. Mr Abdulla Galadari had also been involved, although to a lesser extent than Mr Shackleton. He remains at the firm.
- On 16 May 2012, Terna's solicitors wrote to Galadari & Associates seeking payment of the sums awarded.
- On 23 May 2012, the statutory 28 day time limit expired.
- On 29 May 2012 the Bin Kamils filed a memorandum before the Conciliation and Reconciliation Committee of the Sharjah Court. The memorandum sought an order invalidating the Award, and cancelling and amending the assessment of costs, on ten separate grounds. One was the forgery point. Another was a point that no rescission had been sought of the SHA. This was a different rescission point to that which has formed the main ground for challenge on the present application, which concerns the Arbitrator's decision based on the rescission of the SPA. The Conciliation and Reconciliation Committee fixed 12 June 2012 as the date for the first hearing. Terna was not notified of this process at the time.
- Meanwhile on 24 May 2012, Terna applied in England, without notice, for leave to enforce the Award as a judgment of the High Court, and the order was made on 30 May 2012 by Hamblen J. The Bin Kamils were unaware of this at the time. The Order granted the Bin Kamils 22 days within which to apply to set aside the Award, with a stay of enforcement in the meantime.
- Although Terna had not been notified of the Sharjah process, or the first hearing date of 12 June 2012, its local lawyer heard shortly beforehand that the hearing was to take place, and sent a representative to attend in order to monitor events. At the hearing on that day, Terna's local lawyer requested a copy of the memorandum, which had not yet been served. Terna was given further time to read the documents and to respond.
- On 19 June 2012 a further meeting took place before the Conciliation and Reconciliation Committee, with both parties represented by their local lawyers. The record of that hearing simply shows that the lawyer for the Bin Kamils requested that the case be referred to Sharjah Court, and that the Committee decided to do so. Terna did not make any submissions at this hearing. There was no serious attempt by the parties to resolve the matter through the process before the Committee. Dr Mualla of Terna's local lawyers has explained that it is not the normal approach in the UAE to clarify points in dispute before proceedings are commenced, and that in not explaining Terna's stance towards the claim at this stage, Terna was acting in accordance with the normal local procedure. The Committee does not have the power to determine whether or not the UAE Court has jurisdiction over a dispute and so Terna could not have challenged the jurisdiction of the Court at this stage before the Committee.
- On 21 June 2012 the Committee referred the case to the Sharjah Court and it was registered as case 2403/2012. A date was set for a hearing to take place on 9 July 2012.
- On 9 July 2012 the first hearing before the Sharjah Court took place, at which both parties were again represented by their local lawyers. At this hearing, the Bin Kamils submitted a new claim memorandum, setting out the basis for the claim and identifying the relief sought. This was in different terms from the first memorandum which had been submitted to the Committee, although there was some overlap. The relief sought was to nullify the award and to cancel and amend the assessment of the arbitration costs. The memorandum set out seven complaints as the basis for that relief, the first of which was the rescission point, in a form which was in substance the same as that advanced to the English Court in due course.
- This memorandum had been filed at the Sharjah Court on 24 June 2012, and is the document which commenced the proceedings before that Court (rather than the Committee), but this was the first occasion on which the memorandum and its attachments had been served. Terna's local lawyers had obtained a copy of the claim memorandum itself on 1 July but the attachments to the claim memorandum were missing. At the 9 July hearing Terna's lawyer requested the missing documents, which the Bin Kamils' lawyer promised to provide. Terna did not make any submissions of substance regarding jurisdiction or the defence of the claim at this hearing, as it had not at this stage been served with all the claim documents. A further hearing was set for 4 September 2012.
- On 16 July 2012 a copy of Hamblen J's order was delivered to, and received by, Galadari & Associates.
- By 18 July 2012, Mr Andrew Noble, an English barrister called to the Bar in 1992, was working on the case for Galadari & Associates, by whom he described himself as being engaged as senior counsel. His evidence is that he has been heavily involved since "mid July" 2012.
- On 23 July 2012 Galadari & Associates sent a letter to the Commercial Court. This was composed by Mr Noble. It sought a 14 day extension of time within which to apply to set aside Hamblen J's order, on the grounds that Terna's Claim Form and any papers before the Court had not been served. The letter continued: "Inter alia it is intended that each of the Defendants will apply to set aside the said Order/resist enforcement of the Arbitrator's Award under s 66 of the Arbitration Act 1996, appeal the said Award under s 69 and apply to set aside the Award under s 68 of the Arbitration Act 1996. It is also our intention to do so out of time (where necessary) given that we have only now received the Court Order." The letter also referred to Ramadan having started, with the attendant reduction in office hours. The evidence on behalf of the Bin Kamils was that in Ramadan Galadari & Associates reduced their working hours by 3 hours per day.
- Simmons & Simmons replied on 26 July 2012, pointing out that the time limit to challenge the Award was 28 days pursuant to section 70(3) of the Act and that the time limit had expired.
- By a letter to the Court dated 31 July 2012, enclosing a draft application notice, the Bin Kamils applied for an extension of time until 1 September 2012 within which to apply to set aside Hamblen J's order. No reference was made to any intention to apply to challenge the Award.
- Following a request from the Court, the Bin Kamils provided a draft order extending time to 1 September 2012 and providing for the matter to be "listed for directions in relation to that application and for any further applications that the Defendants may wish to make including pursuant to section 66 to 69 of the Arbitration Act 1996." An order was made in those terms by Gloster J.
- At the time Gloster J made her order, Terna had not made any submissions in relation to it. Simmons & Simmons wrote to the Court on 9 August 2012, with a copy to Galadari & Associates, making the point that it was too late for any challenge to the Award to be made, and that any such challenge would, in any event, have to be made in separate proceedings. In their reply dated 16 August 2012 Galadari & Associates said in terms "It is accepted that s 70(3) applies", and that applications would have to be made and paid for in the proper form. There was still no application made.
- Simmons & Simmons replied on 17 August 2012, again making the specific point that any proceedings to challenge the Award had to be separately issued and were already out of time.
- An application notice to set aside Hamblen J's order was issued and sent to Terna on the last possible date, namely 3 September 2012 (1 September being a Saturday). The application was signed by Mr Noble and attached grounds which bore the names of leading and junior counsel. The grounds were in substance the same as those which were subsequently advanced in the Arbitration Claim Form issued over two weeks later on 18 September 2012.
- On 4 September 2012 the second hearing took place before the Sharjah Court, attended again by both parties' local lawyers. Terna submitted a formal document headed "Disproving the Case" in which it asked for the claim to be dismissed first on the basis that the documents attached to the claim were photocopies and not, as required by local law, originals; and secondly by reason of a general denial of all allegations. The document asked the Court to dismiss the case. The lawyer for the Bin Kamils requested an adjournment until 14 October in order to reply to these pleas. Terna did not raise any objections to the jurisdiction of the Sharjah Court at this stage. Dr Mualla explains in his first witness statement that challenges to the Court's jurisdiction may be made at any time during the proceedings, and are usually put forward in the main defence, a procedure reflected in Article 85 of the UAE Civil Procedure Code of 1992. He expressed the view that no UAE lawyer would understand Terna's memorandum submitted on this occasion as meaning that Terna would not challenge the jurisdiction of the UAE Courts; and that so far as local law is concerned, Terna had not yet taken any steps to submit to the jurisdiction of the Sharjah Courts or taken any step which would under the rules of the Sharjah Court prevent Terna from challenging the jurisdiction of that Court. That evidence was not challenged.
- On 18 September 2012 Simmons & Simmons wrote seeking confirmation that the Bin Kamils would discontinue the Sharjah proceedings, alleging they were abusive. On the same day Terna issued its application for an anti suit injunction to restrain the further pursuit of those proceedings.
- On the same day, 18 September 2012, the Bin Kamils finally issued their Arbitration Claim Form, challenging the Award pursuant to s.67 and s.68 of the Act.
- On 14 October 2012 the third hearing took place before the Sharjah Court, again attended by the parties' local lawyers. At this hearing the lawyer for the Bin Kamils submitted their memorandum and a docket of documents, this time containing originals. He also requested the joinder of the Arbitrator; the Court required a memorandum to be submitted to justify that course, and accordingly he requested an adjournment in order to prepare one. Dr Mualla on behalf of Terna requested an adjournment in order to be permitted to consider the documents which had newly been submitted. The Court adjourned the proceedings to a further hearing fixed for 25 November 2012. Terna did not lodge any formal submissions challenging the jurisdiction of the Court at this hearing, as the hearing had been requested by the Bin Kamils' lawyer for the purpose of responding to the previous objection about the inadequacy of the documents. During the hearing Dr Mualla explained his client's concerns about the UAE proceedings and informed the Court of Terna's intentions to challenge the proceedings on grounds of jurisdiction in Terna's substantive defence at the hearing on 25 November 2012. By this stage Terna had, of course, issued its anti suit injunction application in England and had served it, together with the evidence in support in Mr Bartlett's first witness statement, which indicated the grounds for challenging the jurisdiction of the UAE Court.
Explanation for the delay
- The explanation for commencing proceedings in Sharjah, and for the delay in making the application in England to challenge the Award is to be found in brief passages in three witness statements served on behalf of the Bin Kamils.
- The first is in paragraphs 8 & 9 of Mr Noble's witness statement dated 1 September 2012 which was served to support the s.66 application. It stated "the [Bin Kamils] took the view that they should seek to resist the award locally, in Sharjah, in the UAE, being the place where [Terna] would, it was supposed, ultimately seek enforcement of the award in relation to a dispute which arose in Sharjah, concerning a cement grinding plant in Sharjah which was subject to UAE and Sharjah law, and concerned Sharjah respondents in the arbitration…. I am told that [Ali Bin Kamil] is the decision maker and was keen to keep things local in Sharjah, where the dispute arose, and where they thought enforcement of the award was likely to be sought."
- In a further witness statement dated 17 September made in support of the application for an extension of time, Mr Noble said "I am told …that [Ali Bin Kamil], who is the major shareholder of the Claimants in HCC, is the decision-maker and was keen to keep things local in Sharjah since on any view it is a Sharjah dispute in all respects and where they thought enforcement of the Awards would be sought. Economically it also made sense."
- Some further evidence on the point is to be found in the third witness statement of Dr Brawn dated 21 October 2012. He said in relation to the Sharjah proceedings: "It is accepted that the seat of the arbitration is London, but good sense, and economy suggested that an application to the local court was the way forward."
- That is the extent of the explanation contained in the evidence for the Bin Kamils' conduct in relation to challenging the Award.
Discussion on extension of time
- I turn to consider the factors relevant to the application to extend time.
(i) Length of delay
- The application was made almost 17 weeks after expiry of the 28 day period. That is a very substantial delay in the context of the statutory period. I would also characterise as substantial the periods of delay from 23 July 2012 when Mr Noble's letter to the Court indicated an awareness of the time limits (over 7 weeks), from 16 August 2012 when his letter specifically referred to s. 70(3) (over a month) and even from 3 September 2012 when all the grounds for challenge had been drafted and attached to the s.66 application (over 2 weeks).
(ii) Explanation for the delay
- Mr Tackaberry QC submitted that the commencement of the Sharjah proceedings, and the delay in making the application in England, are explained by the Bin Kamils being unsophisticated businessmen who assumed that the Award had to be challenged in Sharjah as the natural place to do so. That submission is not supported by the evidence.
- The Bin Kamils had chosen London as the seat of the arbitration in their agreements, notwithstanding the application of UAE law. London was their chosen forum for resolving any disputes. The arbitration was conducted in London, in English, and was to resolve disputes under agreements written in the English language. Two of the three Bin Kamils gave their oral evidence in English in the arbitration. The starting point, therefore, is that by their agreement to resolve their dispute by arbitration in London, and their involvement in the arbitration process in London, the Bin Kamils indicated a willingness and ability to understand and deal with English procedural matters relating to the dispute, with the benefit, if necessary, of legal advice about those matters from those qualified to give it.
- It is reasonable to infer that upon receipt of the Award, Galadari & Associates would have promptly passed a copy to the Bin Kamils, and that the latter would have sought advice as to how to go about challenging the Award. The grounds advanced in support of their substantive challenge necessarily suggest that it would have come as an immediate and unwelcome surprise to them that the Arbitrator had awarded Terna a greater sum than they thought had been being claimed. They are bound to have given thought to how they might be able to challenge the Award, and to have looked to Galadari & Associates, if not others as well, for advice.
- The evidence filed on behalf of the Bin Kamils does not reveal anything about any communications between the Bin Kamils and Galadari & Associates, or indeed any other legal advisers, during the period between receipt of the Award and the commencement of the process in Sharjah. Nor does it identify who was dealing with the matter at Galadari & Associates. But Galadari & Asssociates were well placed to give the Bin Kamils the correct advice that any challenge would have to be brought at the place of the seat of the arbitration in London. On its website Galadari & Associates describes itself as having over 65 lawyers and having the capacity to cover the international needs of its clients. Mr Abdulla Galadari is given as one of the two principal contacts for the firm; he was also the formal contact point with the firm in the arbitration and was named in the Award as the representative of the Bin Kamils; he had at least some involvement in the conduct of the arbitration. He holds an LLB from an English university and describes himself as regularly involved in advising non-UK clients involved in English law disputes, particularly in relation to international arbitrations concerning commercial and corporate matters. The CVs of a number of lawyers on the firm's website profess English law qualification and expertise. For example, Dr Brawn has been a lawyer at Galadari & Associates since at least as long ago as 2011. His details on the firm's website indicate that having worked in the construction industry for many years he gained a law degree at an English university and read for a post graduate diploma in arbitration practice and procedure. He was called to the English Bar in 1999, became a solicitor in 2001 and a Chartered Arbitrator in 2002. I would expect most members of such a firm to be aware that a challenge to an arbitration award would normally have to be brought before the courts of the place of the seat of the arbitration; Mr Abdulla Galadari and anyone else at the firm who might have been advising the Bin Kamils can safely be assumed to have been aware of it. Those with expertise in English law would have known of the 28 day time limit.
- The Bin Kamils have not referred to the advice they were given at the time. Nor have they stated that they were unaware that a challenge should properly be brought before the English Court to challenge a London arbitration award. Nor have they stated that they were unaware of the 28 day time limit for mounting such a challenge. They have given no explanation as to why proceedings were not commenced in England, as opposed to why they were commenced in Sharjah, and their subsequent conduct in seeking to pursue both sets of proceedings in parallel means that their explanation for commencing in Sharjah is not an explanation for not commencing in London. The natural inference to draw is that they were given advice, and that the advice was the correct advice, namely that any challenge to the Award would have to be brought in London as the seat of the arbitration, and brought within 28 days.
- They are likely to have received that advice within the 28 day period, because it was only shortly thereafter that the process was commenced in Sharjah. On any view they must have been given that advice at the latest by about 23 July 2012, when Mr Noble addressed the relevant statutory provisions in his letter to the Commercial Court; and by 26 July 2012 when Simmons & Simmons spelled it out in terms. Yet there is no explanation in the evidence why the s. 67 and s. 68 challenge was not launched at that stage. Mr Tackaberry QC suggested that it was because they thought Terna seemed happy to go along with the Sharjah proceedings and had not objected to them. That is not supported by any evidence to that effect; and it is belied by the fact that proceedings were still not started here when in August 2012 Simmons & Simmons made clear that they would have to be, if a challenge were pursued out of time; or by the failure to do so even after the s. 66 application was issued on 3 September 2012. There is simply no explanation in the evidence for these further delays, even if, contrary to my view, one could explain the initial delay as founded in a naive misconception that Sharjah was the appropriate forum for a challenge. Apart from the reference to Ramadan, which covers only part of the period and is not a total bar to any activity (and none on the part of English legal advisers), no explanation has been provided as to why the Award was not challenged between mid-July and mid-September 2012. There has not even been any explanation of the fact that the application to set aside enforcement was issued on 3 September, but the application to challenge was still not made for a further 15 days (even though the grounds of the two applications were almost identical).
- The overwhelming inference from the evidence which the Bin Kamils have chosen to put before the Court, and from the absence of explanation in the evidence for crucial aspects of their conduct, is that a deliberate tactical decision was taken to challenge the Award in Sharjah rather than in England, notwithstanding advice being given to them by Galadari & Associates that a challenge ought to have been brought in England within 28 days; and that that deliberate choice was maintained until it became apparent that the English proceedings initiated by Terna to enforce the Award would be irresistible unless an application was made in England.
- That deliberate course of conduct must have been chosen because the Bin Kamils perceived an advantage in proceeding in that way. They may have thought that the Sharjah Court would more readily interfere with the Award. They may have hoped that Terna would be unable to prevent the Sharjah Court from deciding the challenge to the validity of the Award, so that they could ignore the need to proceed in England. They might simply have been unwilling to incur the expense of English proceedings (as is perhaps suggested by the references in Mr Noble's and Dr Brawn's statements to economic reasons for proceeding in Sharjah). Since the Bin Kamils have chosen not to state their reasons in evidence, it is impossible to tell what the perceived advantage was. But the overwhelming inference is that a deliberate decision was made not to mount a challenge in England prior to 18 September 2012; and that the reason the Bin Kamils did not do so was that they thought it more advantageous to make their challenge in Sharjah and not in England, notwithstanding advice that the correct procedure was to challenge the Award at the place of its seat, in London, within 28 days.
- This is not in my view a case where unsophisticated foreign businessmen have been lax in meeting a time limit with which they were not, and could not be expected to have been, familiar, of the kind Colman J had in mind in his comments at paragraph  in Kalmneft. It is a case of deliberate and tactical delay. The culpability for the delay is very high.
- Mr Tackaberry QC also sought to explain the delay on the basis of the difficulties in "getting to grips with the paper" in a case with a lengthy Award, complex issues and post hearing briefs totalling over 1000 pages. This was not an explanation put forward by the Bin Kamils or their legal advisers in evidence. Mr Noble's evidence suggested that he was in difficulties in needing translation of the documents into Arabic for the purposes of the Sharjah proceedings. But the documents in the arbitration were in English. Galadari & Associates had English speaking and English qualified lawyers. Two of the three Bin Kamils gave their evidence at the arbitration in English. Grounds for challenge had been identified and formulated in time to put them in the memorandum to the Conciliation and Reconciliation Committee in Sharjah by 29 May 2012. The grounds now relied on had been formulated in time to be set out at length in the memorandum filed in the Sharjah Court on 24 June 2012. This is not a factor which explains a delay beyond 28 days, and is not relied on as such by any evidence form the Bin Kamils.
(iii) Whether the respondent to the application or the arbitrator caused or contributed to the delay
- Mr Tackaberry QC argued that Terna contributed to the delay by appearing to be content for the matter to be dealt with in Sharjah. That is not a fair characterisation of Terna's conduct in the Sharjah proceedings. Terna merely adopted a neutral stance in the early procedural stages, consistently with the normal procedure in that Court. It was not possible to challenge the jurisdiction prior to the first hearing on 12 July 2012 and would have been procedurally unusual to do so at that stage. From 26 July 2012, at the latest, Terna was making clear through its English solicitors that any challenge must be brought in London. Fatally to Mr Tackaberry QC's submission, there is no evidence from the Bin Kamils that anything which Terna did in relation to the proceedings (or indeed at all) played any part in their decision making.
(iv) Whether the respondent to the application would by reason of the delay suffer irremediable prejudice in addition to the mere loss of time if the application were permitted to proceed
- No such prejudice is alleged by Terna.
(v) Effect on the progress of the arbitration
- This is not applicable.
(vi) Strength of the application
- I have reached the conclusion for the reasons set out later in this judgment that the application would fail if I extended time. That is fatal to the application to extend time. But in case I am wrong in that conclusion, I will indicate below how I would have exercised my discretion had I been persuaded that the application would have succeeded.
(vii) Whether in the broadest sense it would be unfair to the applicant for him to be denied the opportunity of having the application determined
- Mr Tackaberry QC argued that the Award is for a very substantial sum and concerns a high profile project in Sharjah. He contends that it would be very unusual, almost unprecedented, for an applicant to be shut out from pursuing a challenge which has ex hypothesi resulted in substantial injustice in relation to a dispute of this nature and scale. Such a course would be manifestly unfair.
- I am unable to accept that submission, even were I persuaded that the challenge were a sound one. I bear in mind what Mance LJ said in relation to factor (vii) in Nagusina at :
"Finally, as to factor (vii), general considerations of fairness, the judge must have had well in mind considerations of overall justice and fairness. They must, however, always be viewed in the particular context that Parliament and the Courts have repeatedly emphasised the importance of finality and time limits for any court intervention in the arbitration process."
- Even where a party has good grounds for challenging an award under s. 68, if he deliberately chooses not to do so timeously, or deliberately delays in doing so, because of some perceived advantage, there is nothing necessarily unfair in precluding him from resorting to the Court when the perceived advantage no longer seems to him sufficiently advantageous. To allow him to do so would undermine the principle of finality, against the background of which questions of fairness fall to be judged. The Court will not be sympathetic to those who ask to be relieved of a strict time limit when the failure to observe it has been deliberate and tactical.
- This is not merely a matter of private rights. It also engages the public interest in two respects. There is a public interest in litigants before the English Court treating the Court's procedures as rules to be complied with, rather than deliberately ignored for perceived personal advantage. Moreover there is a public interest in the promotion and maintenance of London as a centre for international arbitrations. The Parliamentary purpose in the Act, which is drastically to reduce the extent of the intervention of the Courts in interfering with Awards in order to achieve speedy finality, is an aspect of the public interest in the proper functioning of our arbitration system: see Secretary of State for the Environment v Euston Centre Investments  Ch 200 per Steyn LJ and Nagustina at -. To allow an applicant to avoid the finality intended by the expiry of the period laid down in the Act, where the delay has resulted from his own deliberate decision made for perceived tactical advantage, would be to undermine that public interest. This is so even for an applicant who has good grounds for challenging the award.
Conclusion on extension of time
- An extension of time is refused because I have concluded that the application would in any event fail if time were extended. However, even if I had concluded that the challenge was a good one which would have succeeded, I would have exercised my discretion to refuse an extension of time in the light of the substantial delay which was a result of a deliberate choice for perceived tactical advantage.
The applicable principles
- I was referred to a number of authorities. These included Interbulk Limited v Aiden Shipping Co Limited (The "Vimeira")  2 Lloyd's Rep. 66; Zermalt Holdings SA v NU-Life Upholstery Repairs Limited  2 EGLR 14; Minmetals Germany GmbH v Ferco Steel Ltd  1 All ER (Comm) 315; Westland Helicopters v Sheik Salah Al-Hejailan  2 Lloyd's Rep 523; Cameroon Airlines v Transnet Ltd  EWHC 1829 (Comm); Vee Networks Limited v Econet Wireless International Limited  1 Lloyd's Rep.192; ABB AG v Hochtief Airport GmbH  1 All ER (Comm) 529; Lesotho Highlands Development Authority v Impregilo  1 AC 221; London Underground Ltd v Citylink Telecommunications Limited  2 All ER (Comm) 694; and Bandwidth Shipping Corporation v Intaari ("The Magdalena Oldendorff")  1 Lloyd's Rep 7. They establish the following principles so far as relevant to the present application:
(1) In order to make out a case for the Court's intervention under s. 68(2)(a), the applicant must show:
(a) a breach of s. 33 of the Act; i.e. that the tribunal has failed to act fairly and impartially between the parties, giving each a reasonable opportunity of putting his case and dealing with that of his opponent, adopting procedures so as to provide a fair means for the resolution of the matters falling to be determined;
(b) amounting to a serious irregularity;
(c) giving rise to substantial injustice
(2) The test of a serious irregularity giving rise to substantial injustice involves a high threshold. The threshold is deliberately high because a major purpose of the 1996 Act was to reduce drastically the extent of intervention by the courts in the arbitral process.
(3) A balance has to be drawn between the need for finality of the award and the need to protect parties against the unfair conduct of the arbitration. In striking this balance, only an extreme case will justify the Court's intervention. Relief under s. 68 will only be appropriate where the tribunal has gone so wrong in its conduct of the arbitration, and where its conduct is so far removed from what could be reasonably be expected from the arbitral process, that justice calls out for it to be corrected.
(4) There will generally be a breach of s.33 where a tribunal decides the case on the basis of a point which one party has not had a fair opportunity to deal with. If the tribunal thinks that the parties have missed the real point, which has not been raised as an issue, it must warn the parties and give them an opportunity to address the point.
(5) There is, however, an important distinction between, on the one hand, a party having no opportunity to address a point, or his opponent's case, and, on the other hand, a party failing to recognise or take the opportunity which exists. The latter will not involve a breach of s. 33 or a serious irregularity.
(6) The requirement of substantial injustice is additional to that of a serious irregularity, and the applicant must establish both.
(7) In determining whether there has been substantial injustice, the Court is not required to decide for itself what would have happened in the arbitration had there been no irregularity. The applicant does not need to show that the result would necessarily or even probably have been different. What the applicant is required to show is that had he had an opportunity to address the point, the tribunal might well have reached a different view and produced a significantly different outcome.
The course of the reference
- Clause 7.2 of the SPA provides that in the event that, after Completion, Terna becomes aware of a breach of the Bin Kamils' representations, warranties and undertakings, which is not capable of remedy, or is not remedied within 15 days of a notice to remedy, then:
"(i) Terna shall be entitled to rescind this Agreement with immediate effect by notifying the Sellers in writing and claim full restitution of all and any part of the Purchase Price already paid to the Sellers in accordance with this Agreement, ... ; in addition, Terna shall be entitled to claim compensation by the Sellers for any Damage incurred; or
(ii) Terna shall be entitled to uphold this Agreement, but claim a reduction of the Purchase Price already paid and/or still outstanding (including, for the avoidance of doubt, by setting-off any outstanding part of the Purchase Price against sums already paid); in addition, Terna shall be entitled to claim compensation by the Sellers for any Damage incurred. In such case, and until full satisfaction by the Sellers of all Terna's claims under this Paragraph 7.2.1(ii), Terna shall be entitled to manage on its own (through the Directors nominated by it pursuant to the Shareholders' Agreement) all the Company's affairs without the consent or approval of the Sellers. In specific, until full satisfaction by the Sellers of all Terna's claims under this paragraph 7.2.1 (ii), the Sellers shall be deemed to have authorised Terna (and/or any Directors nominated by it) to act and vote on behalf of the Sellers in the Company's corporate bodies and shall be bound by the latter's or Terna's decisions and actions; ..."
- On 3 July 2009 Simmons & Simmons on behalf of Terna sent a notice of breach to the Bin Kamils. It purported to be a Breach Notice, Default Notice and Default Call Option Notice pursuant to clause 9 of the SHA, so as to entitle Terna to purchase the Bin Kamils' shares. The Arbitrator found in due course that it was ineffective under clause 9 to do so, because clause 9 required separate sequential notices. It also purported to be a "Notice of Breach – Pursuant to Clause 7.2 of the SPA". Having set out the various alleged breaches of the Agreements, it sought remedy of the breaches forthwith and in any event within 15 days of the notice. This must have been a reference to clause 7.2, because clause 9 of the SHA did not contain a provision for remedy within 15 days. It expressly reserved all other legal remedies "without limitation and by reason of [the Bin Kamils'] breaches of the agreements." Although that notice referred to clause 7.2 in its heading, it did not identify which of the two alternative forms of relief provided for in the clause would be sought.
- Terna issued its Request for Arbitration on 13 July 2009. The relief sought comprised damages for breaches of the SPA and SHA, and transfer of the Bin Kamils' shares to Terna pursuant to clause 9.2 of the SHA; alternatively a reduction in the price Terna paid for the shares pursuant to clause 7.2.1(ii) of the SPA. The reference to 7.2.1(ii) was a reference to the remedy in clause 7.2 which involved Terna being "entitled to uphold this Agreement" and claim a rebate of the purchase price and compensation. There was no reference in the Request to clause 7.2.1(i), nor any claim for rescission. The Request for Arbitration did not advance a claim for rescission under clause 7.2.1(i), and was positively inconsistent with such a claim, because it sought relief under clause 7.2.1(ii) which was a claim which involved upholding the agreement.
- The ICC Rules of Arbitration provide that once the respondent has served an Answer to the Request for Arbitration, and the tribunal has been constituted, terms of reference are to be drawn up and signed by the parties. By Article 18(1)(c) and (d), the terms of reference are to include "a summary of the parties' respective claims and of the relief sought by each party, with an indication to the extent possible of the amounts claimed or counterclaimed" and "a list of issues to be determined".
- The Terms of Reference were signed by the parties on 14 January 2010. Section 7 contained a summary of the dispute, and section 8 a summary of the parties' positions. Section 8.2.2 identified the relief sought by Terna. Not surprisingly, it did not contain any reference to Terna seeking rescission or any amount by way of damages or compensation consequent upon rescission, pursuant to Clause 7.2.1(i) of the SPA or otherwise. On the contrary, it recorded Terna's claim for relief (put forward in the alternative to the claim pursuant to clause 9.2 of the SHA) by way of reduction in the purchase price in such sum as the arbitrator might determine (in addition to a claim for damages). Although clause 7.2 was not referred to, this can only have been a reference to the alternative claim pursuant to Clause 7.2.1(ii). This was inconsistent with any claim for rescission under Clause 7.2.1(i).
- Section 8 of the Terms of Reference was prefaced by the following passage: "The purpose of the following summaries of the Parties' position is to satisfy the requirements of an efficient and speedy resolution of the arbitration proceedings. The summary is without prejudice to any other or further allegations, arguments, contentions and denials contained in the pleadings or submissions already filed and in such pleadings or submissions, whether written or oral, as will be made further in the course of this arbitration." Section 7 was prefaced by the following passage at section 7.1: "The narrative contained in Sections 7 and 8 of these Terms of Reference is included solely to place the statements of contention and issues in context. By signing these Terms of Reference, neither Party is prevented from completing or amending its factual and legal contentions, claims and counterclaims, subject, however, to Article 19 the ICC Rules."
- Article 19 of the ICC Rules provides: "After the Terms of Reference have been signed or approved by the Court, no party shall make new claims or counterclaims which fall outside the limits of the Terms of Reference unless it has been authorised to do so by the Arbitral Tribunal, which shall consider the nature of such new claims or counterclaims, the stage of the arbitration and other relevant circumstances."
- Accordingly, at this stage of the reference no claim for rescission pursuant to clause 7.2.1(i) of the SPAhad been advanced, and it therefore did not feature amongst the summary of Terna's claim or the issues to be decided, each of which were recorded in the Terms of Reference signed by the parties.
- The position changed, however, in the written submissions which the Arbitrator ordered to be served, sequentially, prior to the oral hearing. On 12 April 2010 Terna served a Statement of Claim in accordance with a procedural timetable for submissions laid down by the Arbitrator. This was a 72 page document. At the end it set out the relief sought from the tribunal. This included at paragraph 20.1.5 relief in the alternative "that the Claimant is entitled to rescind the SPA". This head of relief was linked to a footnote reference, which referred back to the notice of 3 July 2009. That notice had referred in terms to clause 7.2 of the SPA. A reasonable reader of that Statement of Claim in the Bin Kamils' position would therefore have understood it as putting forward a claim, in the alternative, for rescission pursuant to clause 7.2.1(i) of the SPA.
- In the claim for relief, the claim for damages or compensation was not expressly stated to be made pursuant to Clause 7.2.1(i). But the alternative claim for rescission in paragraph 20.1.5 was sought "together with" the relief in paragraph 20.1.6 which was "damages/compensation to the Claimant for such breaches of the Agreements in such sum as the Arbitrator shall determine".
- On this application, Terna chose not to put before me the first 70 pages of the Statement of Claim, from which I infer that they made no express reference to clause 7.2.1(i); and that what was relied on in support of the claim for rescission and monetary compensation/damages was the same material as was relied upon for establishing the claims to enforce the call option and the claim for damages for breaches of the agreements.
- On 25 May 2010 the Bin Kamils submitted their "First Memorial" by way of defence and counterclaim submissions, in response to Terna's Statement of Claim. I was only shown the concluding two pages of this 291 page document. In that concluding section at paragraph 1732, the Bin Kamils requested an award in their favour "(a) declaring the Claimant's notices of Breach… to be invalid and unfounded" and "(b) dismissing all of the Claimant's Claims for rescission and damages".
- Five things follow from this submission by the Bin Kamils:
(1) They had appreciated that Terna was making a claim for rescission. It had not gone unnoticed.
(2) They not only understood the Statement of Claim to be advancing such a claim, they ought to have appreciated that it was being made pursuant to clause 7.2.1(i) relying on the default notice of 3 July 2009. That would have been the natural reading of the footnote reference linking the claim for relief to the notice.
(3) The Bin Kamils were asking the Arbitrator to address such a claim on its merits and to dismiss it.
(4) As part of that determination, the Bin Kamils were asking the Arbitrator to determine whether the 3 July notice was "invalid" for that purpose as well as "unfounded".
(5) The Bin Kamils did not at this stage (or at any stage) object that this was a "new claim" which required to be dealt with under Article 19 of the ICC Rules. This is perhaps not surprising, because even if properly categorised as a "new claim" (which Mr Salzedo QC argued it was not), it is difficult to see what objection there could have been to authorising it to be included in the reference at this relatively early stage of the reference.
- On 21 June 2010 Terna served an accountant's report in support of the quantum of its claims. The report broke down the quantification by reference to the different breaches relied upon. In respect of some of the heads of claim, the author of the report said that he was unable to quantify the claims. The total quantified claim was put forward as being AED 73,611,956. One of the quantified claims was a claim that the Bin Kamils had not contributed their full 60% share to the funding of HCC's operations pursuant to the agreements. This involved quantifying the amount each party had contributed to HCC pursuant to the SHA and SPA, an exercise which ultimately resulted in agreement between the experts as to the amounts contributed by each party.
- On 22 June 2010 Terna served Reply and Defence to Counterclaim submissions. They concluded by inviting the Arbitrator to grant the relief already sought. The Bin Kamils' Rejoinder (dated 6 August 2010) again requested an Award "(a) declaring the Claimant's notices of Breach… to be invalid and unfounded" and "(b) dismissing all of the Claimant's Claims for rescission and damages".
- Paragraph 850 of the Award records that on 6 December 2010 Terna confirmed that the Quantum Claim was AED 73,611,956 as summarised in the table in the expert's second report, which I infer was in the same terms as that in his first report.
- There was a ten day oral hearing of witnesses between 9 and 19 December 2010 and a further two day hearing of technical and quantum experts on 2 and 3 February 2011.
- On 27/28 April 2011 Terna and the Bin Kamils exchanged Post Hearing Submissions pursuant to the timetable laid down by the Arbitrator. These were very substantial documents. The Bin Kamils' Post Hearing Submissions ran to over 900 pages. In conclusion the document again asked for an award "(a) declaring the Claimant's notices of Breach… to be invalid and unfounded" and "(b) dismissing all of the Claimant's Claims for rescission and damages".
- The Arbitrator's Award comprises 433 pages and adopts a full and carefully structured approach to resolving all aspects of the dispute. Having set out the procedural history, she summarises at some length the parties' arguments in their written submissions. In doing so she records the relief sought by Terna in its Statement of Claim, including the claim for rescission, and the requests by the Bin Kamils in their two rounds of submissions before the oral hearing and again in its Post Hearing Submissions for an award "(a) declaring the Claimant's notices of Breach… to be invalid and unfounded" and "(b) dismissing all of the Claimant's Claims for rescission and damages". She then identifies (at paragraph 1029) ten issues which arose in relation to Terna's claim. The first was the validity of the notices served by Terna for the purposes of triggering the call option rights under clause 9 of the SHA. She concludes that all the notices relied on were invalid for that purpose. The second issue she identifies is whether Terna is entitled, in principle, to rescission under clause 7.2.1(i). She concludes that Terna is so entitled pursuant to its notice on 3 July 2009 if it makes good its case that the Bin Kamils were in breach of their representations, warranties or undertakings in relation to the Terminal, or in relation to the supply of water and electricity to the cement plant by the Sharjah Electricity and Water Authority ("SEWA"). She then addresses the question of breach in those two aspects as issues 3 and 4, and concludes that the Bin Kamils were in breach in both respects. She holds at paragraphs 1236-7 and 1288-9 that Terna was accordingly entitled to rescind the SPA; that she will deal with the financial consequences in the Quantum section of the Award; and that she will make an order reassigning Terna's 40% shareholding in HCC to the Bin Kamils. She then addresses the remaining six issues which were concerned with Terna's claims for damages for various breaches of the agreements. When she comes to address quantum issues, she identifies at paragraphs 2191-2195 that clause 7.2.1(i) provided for repayment of the purchase price of the shares, and that it was common ground that Terna had paid AED 19 million as the price; she holds that accordingly Terna is entitled to be paid this sum. At paragraph 2196 she identifies that clause 7.2.1(i) further provided that "Terna shall be entitled to claim compensation by the Sellers for any Damage incurred." She treats such Damage as being the amount necessary to put Terna in the position it was in before entering into the agreements, which she regards as a measure supported by the General Principles of Civil Law and by Article 274 of the UAE Civil Code. She concludes that Terna is therefore entitled to its Cash Fund Flow contribution to HCC for the period from 26 June 2007 to 31 January 2009. It was common ground between the accounting experts that this sum was AED 65,285,282. Accordingly she holds Terna entitled under clause 7.2.1(i) to AED 19,000,000 plus AED 65,285,282 making AED 84,285,242, which is the sum awarded to Terna together with interest and costs.
The rescission point
- Mr Tackaberry QC argued that deciding the case in this way against the Bin Kamils was a serious irregularity because the Arbitrator had done so on a basis which had never been put forward by Terna, relying on an argument which had never been ventilated. It was, he submitted, a plain case of a tribunal deciding the dispute on a point of its own devising, which the losing party had never had any reasonable opportunity to address.
- In considering this submission it is important to keep in mind that whilst s.33 requires a party to be given a reasonable opportunity of addressing his opponent's case, that does not mean that the tribunal is acting unfairly in deciding a case on a point to which the party raising it does not give any great emphasis, or which is not the subject matter of any great exposition. If a point is raised only briefly, that is in accordance with the ideal of speedy resolution which is an objective of the arbitral procedure (whether or not in a given case the objective is achieved). It is none the less so if a host of what turn out to be bad points are also raised and it is on those other points that the party raising the issues concentrates his exposition. Provided the issue is raised, however briefly, the opposing party has an opportunity to address it at whatever length and in whatever detail he chooses. If he chooses to invite the tribunal to reject it without addressing it in detail, that may well be a sensible tactic, in order to avoid the risk of giving it more weight and prominence that the party advancing it has done. But that is not the same as having been deprived of an opportunity of addressing it, still less of an unfair procedure having been adopted.
- Nor is there anything unfair about a point not being specifically addressed during oral argument. In ICC arbitrations, proceedings are often dominated by submissions being made in writing rather than orally. An issue raised in written submissions does not have to be drawn attention to during any hearing, or mentioned or developed orally, in order for the other side to have a fair opportunity of dealing with it.
- In this case the Arbitrator had to determine which party was in breach of the agreements. She determined that the Bin Kamils were in breach and that Terna's claim for breach of contract succeeded. The secondary issue for her to decide was the remedy which flowed from that breach. Following the parties' submissions, the Arbitrator rejected certain other remedies, but held that "rescission", as defined in clause 7.2(i) of the SPA, was available and appropriate as Terna's contractual right in the events which had happened. She calculated the quantum of the payment due on such rescission by following the wording of the clause and adopting undisputed figures from the expert evidence.
- The claim for rescission, which can only reasonably have been understood to be a claim to a contractual right to "rescind" under clause 7.2.1(i) of the SPA, was advanced in Terna's Statement of Claim. The Bin Kamils recognised this in their subsequent submissions and on three occasions invited the tribunal to make an award dismissing this claim for rescission. It is true that the claim for rescission was as an alternative form of relief and that, as I infer, Terna's submissions did not articulate the grounds for such relief separately from the grounds advanced for its claim for the primary relief of a transfer of the Bin Kamils' shares to it. But those grounds were sufficient to support the alternative relief. They addressed the points which the parties were concerned to have decided, namely whether the Bin Kamils were in breach of the agreements. I did not understand Mr Tackaberry QC to argue that the Bin Kamils had not had a reasonable opportunity to address those grounds.
- In this case the Bin Kamils invited the tribunal to deal with the rescission claim on its merits and to reject it. Their complaint is, in reality, that Terna succeeded on a basis which it had raised only very briefly, and upon which it had not concentrated any detailed submissions. That is not the same as their having had no opportunity to address the basis on which the Arbitrator decided the case against them. They had the opportunity, but chose not to avail themselves of it. That does not amount to a breach of s. 33 of the Act or to a serious irregularity within the meaning of s. 68.
- Mr Tackaberry QC argued that because the Arbitrator awarded Terna more than the quantum it was seeking, that itself demonstrated that there must have been a serious irregularity. This argument does not involve comparing like with like. The consequence of rescission was not only the monetary award from the Bin Kamils to Terna, but also that Terna had to return its shares in HCC. By contrast, that part of Terna's damages claim which was quantified was advanced in the reference by Terna on the footing that Terna would retain its own 40% shareholding and acquire the Bin Kamils' 60% shareholding. There is therefore nothing inherently surprising about the monetary consequence of rescission being a larger sum than the damages claim quantified by Terna.
- Terna did not put any figure on its financial claim in the event that rescission of the agreements was awarded under clause 7.2.1(i) of the SPA. The relief sought was for such sum as the Arbitrator might determine, and Terna left it to the Arbitrator to decide the appropriate amount. Given that the claim for rescission and damages pursuant to clause 7.2.1(i) was raised as an issue, and that the amount sought was such sum as the Arbitrator might determine, the Bin Kamils had the opportunity to address this aspect of the claim. They had the opportunity to develop any arguments they wished to make about the quantum recoverable pursuant to the clause. There was no breach of s.33 or serious irregularity in this respect.
- Mr Tackaberry QC also argued that the Arbitrator's decision to award Terna 53.34% of its costs illustrated that she had changed her mind about the rescission point at a late stage of drafting the Award, and so assisted the challenge on the rescission point. There is no merit in this submission. The structure of the award is clear and logical, and shows no signs of a late change of approach.
- Mr Tackaberry QC further argued that the Arbitrator's decision to award Terna 53.34% of its costs proceeded from a false premise as to which of the individual damages claims had been successful. This was not said to be a serious irregularity in itself, but to be one when taken together with the fact that the Arbitrator had awarded more than Terna was claiming. I did not understand the logic of this submission, but in any event am satisfied that the Arbitrator's treatment of costs can not support an argument that there was a serious irregularity. Although the Arbitrators' reasoning at paragraphs 2228-2289 is compressed, and for that reason not easy to follow, it is far from clear that it involves any error of principle, still less that the result is not a reasonable exercise of her discretion. There is no basis for treating it as involving any procedural unfairness.
The forgery issue
- The most prominent argument for challenging the Award advanced in the Sharjah proceedings, in the grounds of challenge attached to the Bin Kamils' s.66 challenge of 3 September 2012, and in the Arbitration Claim Form and Particulars of Claim, related to the Arbitrator's treatment of a dispute over whether a document was forged. By the conclusion of the oral argument before me, it was very much at the tail end of the Bin Kamils' points. Mr Tackaberry QC conceded that it could not found a challenge under s. 67 but maintained an argument that it founded a s. 68 challenge, not as an independent ground, but in support of the rescission point.
- The document giving rise to this issue is an email of 12 October 2008 headed "internal memo" from Mr Minas of HCC, the joint venture company. The copy before the Arbitrator was the email sent to Mr Nastis of Terna. It set out details of three shipments of clinker which had been confirmed. The potential significance of the document was in relation to Issue 6, which the arbitrator dealt with in paragraph 1450 to 1506 of the Award. One of Terna's complaints was that the Bin Kamils had failed to provide their proportionate share of the financing to HCC. In response the Bin Kamils contended that the amounts paid for the three clinker purchases by Terna could not be taken into account as a valid contribution by Terna to HCC because they were unauthorised and had been contracted by Terna's parent company without informing the Bin Kamils.
- The document in issue might have assisted Terna in this respect, not because of the copy which was sent by HCC to Terna, but because the body of the document said that it was also addressed to Mr Mohammed Bin Kamil and because it bore a mark which was said to be that of Mr Ibrahim Rafia on behalf of the Bin Kamils.
- It is clear that the Arbitrator placed no reliance on this document in deciding this issue in favour of Terna. At paragraph 1475 of the Award she held that the Bin Kamils were informed of the three clinker shipments in advance by various items of contemporaneous correspondence and that they were discussed expressly in the HCC board meetings of September, October and November 2008. In her chronological recital of the evidence leading her to that conclusion, following paragraph 1475, she did not refer to the 12 October 2008 email. Nor did she refer to it at any stage in that section of the Award, in which she identified her conclusions on the issue and her reasons for them.
- In a separate section of the Award, when dealing with the counterclaims brought by the Bin Kamils, at paragraph 2185 to 2188, the Arbitrator identified that she did not find the allegation of forgery substantiated. It is said that in doing so she failed to consider the expert evidence despite the parties' agreement that she should do so on the written evidence (the Bin Kamils having proposed that cross-examination was not needed). The Arbitrator correctly recorded that the experts were not called to give oral evidence. Since the issue did not matter to any relevant question in the Arbitration, it is neither surprising nor inappropriate that the Arbitrator did not spend more time on it than simply concluding that the allegation of forgery "was not substantiated".
- In these circumstances it is difficult to see how anything the Arbitrator said about the forgery issue could amount to a serious irregularity giving rise to substantial injustice. Mr Tackaberry QC argued that it went to the credibility of Terna. When pressed to identify any natural person whose credibility it might affect, and whose credibility was relevant to the basis on which Terna succeeded, he was unable to identify anyone. Nevertheless, he argued, it went to the credibility of Terna's claim. That is a meaningless concept in this context.
- There is a further obstacle to the Bin Kamils' challenge under s. 68, which is that they have not established that the course adopted by the Arbitrator has caused them substantial injustice. Mr Tackaberry QC identified various arguments which would have been addressed to the Arbitrator, which, he submitted, might well have made a difference. The first was that the notice of 3 July 2009 was insufficient to trigger the clause 7.2.1(i) rights because the clause required two sequential notices, the first to remedy any breach within 15 days, followed by a further notice of exercise of the right of rescission; and even if the breaches upon which Terna was relying were incapable of remedy, the notice of 3 July 2009 did not purport to be notice of an exercise of the 7.2.1(i) rescission option; it merely called for remedy of breaches within 15 days. However there is no reason to think that the Statement of Claim could not fulfil the requirement of the clause that there be notice of exercise of the rights conferred in it. The question would be governed by UAE Law. Mr Tackaberry QC was hampered by the fact that no evidence was served on behalf of the Bin Kamils to support the submission that this point was arguable in UAE Law. In the absence of evidence, I would not be prepared to conclude that advancing this argument might well have made a difference.
- The same is true of a number of the other arguments which Mr Tackaberry QC submitted would have been advanced. He submitted that putting forward a claim under clause 7.2.1(ii) in the Request for Arbitration, involving as it did a claim which depended on upholding the agreement, amounted to an election which precluded a claim for rescission pursuant to clause 7.2.1(i). I would see force in the argument if it were governed by English law, but it is not. It is a question of UAE law, and without evidence about how that law would approach the question, I can not conclude that if the argument were advanced it might well make a difference to the outcome. Similarly Mr Tackaberry QC submitted that the Arbitrator's conclusion was inconsistent with UAE law because it was not possible to put the Bin Kamils in the same position as they were in prior to the agreements. Without embarking on the question whether transfer of the shares does that, whatever might be the change in their value, the short answer is that the Bin Kamils did not adduce any evidence of UAE law.
- Mr Tackaberry QC also submitted that Terna received a benefit from the agreements, so that the amount of compensation due under clause 7.2.1(i) was less than Terna's full contribution to HCC. This was mere assertion, again unsupported by any evidence. The submission was that Terna had gained from being a contractor to HCC in carrying out some of the project work. This was not borne out by any evidence Mr Tackaberry QC was able to show me, and Mr Salzedo QC told me, on instructions, that neither Terna nor any entity associated with it was involved as a contractor with HCC. There is again no proper evidential basis for concluding that this argument might have made a difference.
- Therefore had I concluded that a serious irregularity had occurred, I would not have been persuaded that it gave rise to substantial injustice.
- Mr Tackaberry QC submitted that the Arbitrator had no jurisdiction to accede to the claim under clause 7.2.1(i), because it was a "new claim", raised for the first time after the Terms of Reference were finalised, for which Terna had not obtained authorisation under Article 19 of the ICC Rules. This argument required permission to amend the Arbitration Claim Form and Particulars of Claim. Had I been prepared to extend time for advancing a challenge to the Award under s. 68 until 3 September 2012, I would have exercised my discretion to allow an amendment to be made to advance this basis for the challenge under s. 67, which raises no new facts, notwithstanding that it involves, in effect, a further delay outside the statutory 28 day period.
- But the Bin Kamils' right to object has been lost by reason of s. 73 of the Act. They continued to take part in the reference without objection. The Bin Kamils requested on at least three occasions, formally and in writing, an award dismissing the claim for rescission on its merits. This was inconsistent with objecting to the tribunal's jurisdiction over that claim.
- This case affords a good example of why a party should lose its right to object under s. 73. If the Bin Kamils had raised this issue when rescission was first pleaded, then Terna could have asked for a ruling as to whether rescission was or was not a "new claim ... outside the limits of the Terms of Reference" and, if it was, as to whether it should be admitted in the Arbitrator's discretion under ICC Rules Art 19. At the relevant time, shortly after 12 April 2010, there does not appear to have been any significant discretionary factor which would have told against admitting the claim, even if it was a "new claim".
Conclusion on challenge to the Award
- For these reasons I would have dismissed the challenge to the Award had I granted an extension of time.
Anti Suit Injunction
- Terna's application for an anti suit injunction was advanced on three alternative bases:
(1) that the pursuit by the Bin Kamils of parallel proceedings to challenge the Award in both Sharjah and England constituted an abuse of process;
(2) that the pursuit of proceedings to challenge the Award otherwise than in the English Courts was a breach of the arbitration agreements in the SHA and SPA;
(3) that once this Court has dismissed the Bin Kamils' challenge to the Award, that decision provides a further basis for the anti suit injunction, since the Court will restrain the subsequent pursuit of foreign proceedings brought to impugn a judgment obtained in this Court: Masri v Consolidated Contractors  QB 503.
- As to the first, this basis disappeared with the withdrawal of Terna's request that the Bin Kamils be put to an election. I have, at Terna's request, considered and rejected the challenge to the Award before this Court. There will no longer, therefore, be duplicative parallel proceedings.
- As to the second basis, Terna invokes the principles conveniently set out in the judgment of Cooke J in C v D  2 Lloyd's Rep. 367 at :
"Whilst a challenge to the award in accordance with the terms of the arbitration agreement ... or in accordance with the law of the agreed supervisory jurisdiction ... does not constitute a breach of contract, the attempt to invoke the jurisdiction of another court is such a breach, of the contract to arbitrate, the agreement to refer and the agreement to the curial law. Such a challenge usurps the function of the English Court which has power to grant injunctions to protect its own jurisdiction and the integrity of the arbitration process. In such a case there is an infringement of the legal rights of C (both contractual and statutory rights) under English law and an abuse of the process of this Court in the usurpation of its exclusive jurisdiction to supervise arbitrations with their seat in this country.
In a succession of cases commencing with The Eleftheria  1 Lloyd's Rep. 237 and flowing through The El Amria  2 Lloyd's Rep. 119 to Donohue v Armco Inc  1 Lloyd's Rep. 524, the Courts have stated that the parties should be kept to their bargain unless 'strong cause', 'good reason' or 'strong reason' is shown for not doing so. Damages are plainly an inadequate remedy if a party is compelled to litigate with all the trouble and inconvenience involved in that exercise, when there is agreement that this should not be the case. Time and again the English Courts have granted an injunction to restrain a clear breach of an exclusive jurisdiction agreement or a breach of an arbitration agreement where the rights of the parties are clear. In my judgment the position is even stronger where an award has already been issued and the breach of the agreement to London arbitration consists of an unlawful attempt to invalidate the award."
- If the UAE proceedings are not discontinued, in practice Terna will have to prepare and file a full defence addressing all the arguments raised in the claim as well as a challenge to the jurisdiction of the Court. Defending the proceedings in the UAE will be costly to Terna because the documents relating to the arbitration are extensive and mostly in the English language: a large number of documents would need to be translated into Arabic and the Arabic speaking local lawyers would need to spend a good deal of time working with the English and Greek lawyers involved in the arbitration and reviewing translations of documents from the arbitration. Moreover in general, parties to legal proceedings in the UAE tend not to recover the costs of their lawyers from the losing party if they win; and even if any amounts are awarded, they tend to be much less than the actual legal fees incurred.
- Terna therefore has a strong case for the protection of its rights by the grant of the injunction which it seeks. No grounds were advanced on behalf of the Bin Kamils directly to meet these arguments. The principal objection taken on behalf of the Bin Kamils was that this Court should not make any decision on Terna's application until it had heard and determined the Bin Kamils' challenge to the validity of the Award; and that the Court's decision on the substance of the challenge would in practice resolve the issues on all the applications. Once the possibility of the Bin Kamils being put to an election disappeared, and it was agreed that I should determine the challenge before addressing the application for an anti suit injunction, this objection fell away.
- However in the course of his submissions Mr Tackaberry QC argued that Terna had lost the right to object to the Sharjah proceedings because of its conduct in relation to those proceedings. I am unpersuaded by this point. In what have been the early procedural stages of the proceedings in Sharjah, Terna has adopted an understandable and conventional approach. Nothing it did would have been regarded as inconsistent with a right to challenge the jurisdiction of the Sharjah Court. There is no suggestion of any significant prejudice to the Bin Kamils as a result of Terna's conduct of the Sharjah proceedings. There has been no undue delay, and certainly none which would justify subjecting Terna to the injustice of having to continue to contest the Sharjah proceedings.
- The continued pursuit of those proceedings by the Bin Kamils would be a breach of the arbitration agreements, an attempt to impugn the judgment of this Court, and an abuse of process, against which Terna is entitled to be protected by a grant of the injunction sought.
- For these reasons the challenges by the Bin Kamils to the Award and to Hamblen J's order fail, and I will grant an anti suit injunction against the Bin Kamils in the terms sought.
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