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England and Wales High Court (Commercial Court) Decisions
You are here: BAILII >> Databases >> England and Wales High Court (Commercial Court) Decisions >> Xstrata Coal Queensland P Ltd (Company Number 098156702) (aka Rolleston Coal Holding PTY Ltd) & Anor v Benxi Iron & Steel (Group) International Economic & Trading Co Ltd  EWHC 324 (Comm) (21 January 2020)
Cite as:  WLR(D) 114,  EWHC 324 (Comm),  Bus LR 954
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BUSINESS AND PROPERTY COURTS OF
ENGLAND AND WALES
QUEEN'S BENCH DIVISION
B e f o r e :
|(1) XSTRATA COAL QUEENSLAND PTY LTD (COMPANY NUMBER 098156702) NOW KNOWN AS ROLLESTON COAL HOLDING PTY LIMITED AND FORMERLY KNOWN AS GLENCORE COAL QUEENSLAND PTY LIMITED (2) SUMISHO COAL AUSTRALIA PTY LIMITED (3) ITOCHU COAL RESOURCES AUSTRALIA PTY LIMITED (4) ICRA OC PTY LIMITED||Claimants|
|- and -|
|BENXI IRON & STEEL (GROUP) INTERNATIONAL ECONOMIC & TRADING CO LTD||Defendant|
MR A GUNNING QC appeared on behalf of the Respondent
Crown Copyright ©
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This Transcript is Crown Copyright. It may not be reproduced in whole or in part other than in accordance with relevant licence or with the express consent of the Authority. All rights are reserved.
MR JUSTICE BUTCHER:
"6. The Oaky Contract is signed "for and on behalf of the Seller" by Xstrata Coal Queensland Pty Limited ("XCQ", the first named Claimant in these proceedings before the Commercial Court).
- The Oaky Contract uses these words to describe "the Seller":
"SELLER: Xstrata Coal Queensland Pty Limited (ABN 69098156702) as agent for the Oaky Creek Joint Venturers (being Sumisho Coal Australia Pty Limited, Xstrata Coal Queensland Pty Ltd, Itochu Coal Resources Australia Pty Limited and ICRA NCA Pty Limited) and [sic] Level 38, Gateway, 1 Macquarie Place, Sydney, N.S.W. 2000, Australia (as the Seller)".
- It is therefore the fact that the words used in the Oaky Contract are "ICRA NCA Pty Limited" and not "ICRA OC Pty Limited". There is evidence that there do exist two companies, one by each name.
- However the description of the Seller in the Oaky Contract also refers to "the Oaky Creek Joint Venturers". By a separate agreement dated 31 December 1997 and restated as at 1 March 2005, and named the Oaky Creek Joint Venture Agreement, four companies agreed and confirmed that they had by that agreement "associat[ed] themselves in an unincorporated joint venture, known as the "Oaky Creek Joint Venture", for the purpose of conducting" defined operations for the exploration and prospecting for, and mining and loading of, coal.
- The fourth of the four companies so agreeing by the Oaky Creek Joint Venture Agreement was ICRA OC Pty Limited, not ICRA NCA Pty Limited (the company named as an Oaky Creek Joint Venturer under the Oaky Contract)."
"1. The claimants are Xstrata Coal Queensland Pty Limited ("XCQ" or "Xstrata"), Itochu Coal Resources Australia Pty Ltd ("Itochu"), ICRA OC Pty Limited ("ICRA") and Sumisho Coal Australia Pty Limited ("Sumisho") (collectively, the "Claimants"). The Claimants are companies incorporated in Australia. XCQ's registered address is at Level 38, 1 Macquarie Place, Sydney, NSW 2000 Australia."
"7. The dispute arises under the "Contract for Sale and Purchase of Coking Coal", numbered OCP/BEN/HCC-08/01/01, which is dated 15 August 2008 and was executed by Ben Steel and XCQ on 4 September 2008 ("Oaky Contract"). XCQ signed as the Seller as agent for the Oaky Creek Joint Venturers (being itself Itochu, ICRA and Sumisho)."
And paragraph 109, which was to this effect:
"The Oaky Contract defines the "Seller" XCQ "as agent for the Oaky Creek Joint Venturers", which jointly comprise all four individual claimants. The Tribunal determines, in accordance with the Oaky Contract, that Claimants seek an award in favour of all the Claimants jointly."
"The arbitral tribunal renders its Final Award as follows:
(i) Within thirty (30) days of the date of this Award, Respondent Benxi Iron & Steel (Group) International Economic and Trading Co. Limited, shall pay to Claimants Xstrata Coal Queensland Pty Limited, Itochu Coal Resources Australia Pty Ltd, ICRA OC Pty Limited and Sumisho Coal Australia Pty Limited, jointly, the amount of United States Dollars Twenty Seven Million Eight Hundred Forty-Six Thousand (US$27,846,000), with simple interest thereon at the rate of one and one-half per cent (1.5%) from 1 January 2009 until date of payment."
Attempted enforcement of the Award
"The parties subject to the arbitration clause were Bensteel and four Companies, including NCA; however the Arbitral Award was rendered to Bensteel and different Companies, three of which were the same while the fourth one turned out to be OC, but not NCA. There is no explanation about the change of the company in the Award; therefore we believe that there was a critical flaw in the arbitral process. We was shown this evidence today that NCA stated it didn't sign the contract, while in fact the contract parties included NCA since Article 1 of the contract demonstrated that the contract was signed between the Joint Venture consisted of four companies and Bensteel.
If this evidence is authentic then we highly doubt the effectiveness of the contract itself. Not only has the evidence itself failed to support the Claimants' allegation, it furthered deepen our concerns and questions about the parties to contract. The correction of the parties to the contract and the arbitration clause, under the circumstances that the Award has been rendered, should not be made by the Court which determines whether or not to recognized and enforce the Award, but should be made by the Arbitral Tribunal in advance. It is not proper that the Claimants intend to correct such material mistake through the procedure of enforcement."
"OC is a distinct company, rather than the party to the contract or the arbitration clause. The arbitral procedure was not conducted properly, there was no explanation or statement whatsoever, just the result that the other three parties, including OC, were joined as co-claimants."
"The Joint Venture under the Contract for Sale and Purchase of Coking Coal was established by Sumisho, Xstrata, Itochu and ICRA OC. The evidence provided by the Respondent demonstrated that ICRA OC and ICRA NCA are two different companies since the Australian company registration number of ICRA OC is 106 260 593, and that of ICRA NCA is 106 260 584. The statement of ICRA NCA submitted by the Claimants, which represents that "ICRA NCA is never aware of, nor involved in the Contract for Sale and Purchase of Coking Coal executed with Benxi Iron & Steel (Group) International Economic & Trading Co. Ltd independently or as a party to any joint venture, ICRA NCA is not a party to and has no legal relationship with Oaky Creek Joint Venture". However, ICRA NCA cannot, solely by its subsequent statement, deny the fact that it is one of the parties to the Contract for Sale and Purchase of Coking Coal, or prove that ICRA OC is one of the parties of the Contract for Sale and Purchase of Coking Coal. Shenyang Court found that there is no contractual relationship between ICRA OC and the Respondent, therefore, the arbitration agreement (i.e. the arbitration clause in the Contract for Sale and Purchase of Coking Coal) does not exist. Therefore, ICRA OC shall not be deemed as one of the claimants under the arbitration request submitted to LCIA, and the arbitration award, which requires the Respondent to make payment to the four Claimants, including ICRA OC, is without merit because of a lack of supporting legal argument or factual basis."
Application under article 27 of the LCIA rules
"Correction of Awards and Additional Awards.
- 1. Within 30 days of receipt of any award, or such lesser period as may be agreed in writing by the parties, a party may by written notice to the registrar (copied to all other parties), request the Arbitral Tribunal to correct in the award any errors in computation, clerical or typographical errors or any errors of a similar nature. If the Arbitral Tribunal considers the request to be justified, it shall make the corrections within 30 days of receipt of the request. Any correction shall take the form of a separate memorandum dated and signed by the Arbitral Tribunal or (if three arbitrators) those of its members assenting to it; and such memorandum shall become part of the award for all purposes.
- 2. The Arbitral Tribunal may likewise correct any error of the nature described in article 27.1 on its own initiative within 30 days of the date of the award to the same effect.
Within 30 days of receipt of the final award, a party may by written notice to the Registrar (copied to all other parties) request the Arbitral Tribunal to make an additional award as to claims or counterclaims presented in the arbitration not determined in any award. If the Arbitral Tribunal considers the request to be justified, it shall make the additional award within 60 days of receipt of the request. The provisions of Article 26 shall apply to any additional award."
"(1) The parties are free to agree on the powers of the tribunal to correct an award or make an additional award.
(2) If or to the extent there is no such agreement, the following provisions apply.
(3) The tribunal may on its own initiative or on the application of a party
(a)correct an award so as to remove any clerical mistake or error arising from an accidental slip or omission or clarify or remove any ambiguity in the award, or
(b)make an additional award in respect of any claim (including a claim for interest or costs) which was presented to the tribunal but was not dealt with in the award.
These powers shall not be exercised without first affording the other parties a reasonable opportunity to make representations to the tribunal "
"30. It was the words "clarify or remove any ambiguity" that were the focus of Cooke J's observations cited above. Mr Alexander Gunning QC, for the Defendant, submitted that the omission in the LCIA Rules 1998 of reference to a power to clarify or remove ambiguity was deliberate Mr Gunning QC drew attention to the fact that in the LCIA Rules 2014 Article 27.1 does now contain reference to "ambiguity". He uses that point to reinforce his submission that there is significance in those words being absent in the LCIA Rules 1998.
- I do not see, with respect, that the article relied on bears out the submission. Indeed in my view it tends against the submission. The article references a choice by the LCIA to take a different course from the UNCITRAL draft Model Law, by omitting provision for the parties to request "interpretations" of awards. That is one thing. However the article says something quite different of the authority that is given by Article 17 in the LCIA Rules 1985 (the forerunner of Article 27 in the LCIA Rules 1998): "If such an authority did not exist, there might be a problem if arbitrators having rendered an award were considered functus officio and therefore without jurisdiction to correct the clerical mistakes and omissions which occasionally may be made". And more generally the article describes the "guiding principles" for the LCIA Rules 1981 and 1985 as "party autonomy, on the one hand, and giving the tribunal maximum discretion and powers, on the other hand".
- In my judgment clarifying or removing ambiguity would fall within the words "any errors of a similar nature" in Article 27.1 of the LCIA Rules 1998. I regard the amendment to the LCIA Rules 2014 as stating expressly what was previously implicit.
- In a memorandum of 30 September 2010 the arbitral tribunal expressed the view when denying a (separate) request by the Buyer for clarifications of the Award that under Article 27 "the grounds for granting corrections are narrow in scope [t]here are no provisions in LCIA Article 27 for "clarification" or insertion of additional language". I express no view either way on his decision to deny that particular request by the Buyer, but respectfully consider that Article 27 does allow clarification through the use of a memorandum which then becomes part of the Award.
- The present case is not a case of "interpretation". Following Cooke J, it is not a case of a claim that has been presented to the arbitral tribunal but has not been dealt with. But it does involve an "omission which may occasionally be made", to use the language of Hunter and Paulsson. In these circumstances I am satisfied that, if time were extended by this Court, the Claimants would be entitled to request the arbitral tribunal to make corrections to the Award that would clarify a matter that omission had left unclear or ambiguous."
"39. I take into account everything I have summarised above. Neither the parties to the arbitration nor the Shenyang Intermediate People's Court have the benefit of an explanation from the arbitral tribunal of how it dealt with the fact that the Oaky Contract used the words "ICRA NCA Pty Limited" and not "ICRA OC Pty Limited".
- The absence of an explanation from the arbitral tribunal thus leaves uncertainty about the Award, and that impedes the arbitral process. Justice requires that that uncertainty be resolved one way or another, and that the Claimants have the opportunity to seek that resolution. The Claimants wish to attempt that resolution by enabling the arbitral tribunal to add the explanation that is presently missing.
- Enabling the arbitral tribunal to add an explanation that is present missing, so as to provide clarity or remove ambiguity, is in my judgment (as I have sought to explain above) a permissible approach under the applicable rules. It is also a just and reasonable approach. In the context of this case it is an approach that is designed to serve the objectives of holding parties to their agreement if they have agreed to arbitrate, and then of assisting the process of arbitration.
- The arbitral tribunal will carefully control the process of receiving, considering and responding to the request. If the arbitral tribunal accedes to the request then the explanation will be available to the Courts of the People's Republic of China and it may be of assistance."
"As to the question whether the Commercial Court should exercise the power to extend time in circumstances where the Commercial Court is entitled to exercise the power, I am quite sure that the power should be exercised. I have had regard to the guidance in Gold Coast Ltd v Naval Gijon SA  EWHC 1044 (Comm);  Lloyd's Rep 400 (Gloster J). The matters to which I have referred in this judgment militate strongly in favour of the exercise of the power."
"(1) The time for the Claimants to make a request to the Tribunal under Article 27.1 of the LCIA Arbitration Rules 1998 to explain how the Tribunal dealt with the fact that the Oaky Contract used the words "ICRA NCA Pty Limited" and not "ICRA OC Pty Limited" is extended until 16 September 2016."
"12. With the benefit of [the extension granted by Mr Justice Robin Knowles], the Claimants hereby apply under Article 27.1 of the Rules for the tribunal to explain how it dealt with the fact that the Oaky Sale Contract used the words "ICRA NCA Pty Limited", and not "ICRA OC Pty Limited".
- The way in which the Tribunal dealt with this fact should clarify how, as the Claimant understands and as the Judgment held, the Tribunal proceeded on the basis that ICRA OC was a party to the Oaky Sale Contract and therefore to an arbitration agreement with the Respondent, despite the description of the Joint Venturers in the Oaky Sale Contract referring to ICRA NCA.
- Pursuant to Article 27.1 of the Rules, the Claimants request a "separate memorandum dated and signed by the Arbitral Tribunal", which will supplement and thereby "become part of the award for all purposes". Given the passage of time, the Claimants will now remind the tribunal of the relevant evidence and events in the Arbitration."
"While it is ultimately for the Tribunal, the Claimants respectfully submit that the matters below may assist to explain how the Tribunal dealt with the fact that the Oaky Contract used the words "ICRA NCA Pty Limited" and not "ICRA OC Pty Limited":
(1) In terms of the facts, the identity of the parties to a contract is a question of fact pursuant to English law. English law was the governing law of the Oaky Sale Contract and the arbitration agreement, as well as the curial law of the Arbitration. The Oaky Sale Contract stated in terms that the Respondent was contracting with the Oaky Creek Joint Venturers. As a matter of fact, the relevant background evidence clearly showed that ICRA OC was one of those Oaky Creek joint venturers (whereas ICRA NCA was not) - each of the Oaky JV Contract and the Oaky SAA showed that it was ICRA OC (and not ICRA NCA) who was the relevant Oaky Creek Joint Venturer.
(2) In light of that background evidence, the identification of ICRA NCA in the Oaky Sale Contract was a mistake - the identification of ICRA NCA in parenthesis as one of the joint venturers in the Oaky Sale Contract was plainly a typographical error given the other evidence before the Tribunal as to the identity of the Oaky Creek Joint Venturers. It was clear what mistake had been made in the Oaky Sale Contract (namely listing ICRA NCA), and clear what correction needed to be made (instead identify ICRA OC as the relevant Oaky Creek Joint Venturer). ICRA OC (and not ICRA NCA) was, as a matter of fact, party to the Oaky Creek Sale Contract and to the arbitration agreement, and accordingly was a proper party to the Arbitration, despite the reference to ICRA NCA in the Oaky Sale Contract.
(3) In terms of the procedure, during the Arbitration, the Respondent did not challenge ICRA OC as a proper party to the Arbitration or as a party to the Oaky Sale Contract and to the arbitration agreement. In view of that fact, it is hardly surprising that the Tribunal did not explain how it dealt with the fact that the Oaky Sale Contract used the words "ICRA NCA Pty Limited" and not "ICRA OC Pty Limited". The Tribunal did not need to - and so omitted to - clarify its findings that the Oaky Creek Joint Venturers included ICRA OC and that the Oaky Sale Contract and the arbitration agreement were concluded by Xstrata as agent for the four claimants in the arbitration, including ICRA OC."
"17. What Claimants seek, by way of "explanation", is a correction to the Award, stating that "the identification of ICRA NCA in the Oaky Sale Contract was a mistake and plainly a typographical error ." Claimants assert that ICRA OC is a proper party claimant because it is listed in a separate agreement as one of the four Oaky Creek Joint Venturers, whom the Contract states Xstrata represents as agent on behalf of the Seller. The fact that the Contract lists ICRA NCA as a joint venturer instead of ICRA OC is claimed to be a mistake. The question before the tribunal, therefore, is whether Claimants' requested relief falls within the scope of Article 27.1.
- During the arbitration, neither the Parties nor the Tribunal ever directly dealt with the fact that the Contract identified ICRA NCA and not ICRA OC as a contracting seller. The original 2009 arbitration request specifically named only the two actual signatories to the Contract, that is, Xstrata Coal Queensland Pty Limited as Claimant and Benxi Iron & Steel (Group) International Economic & Trading Co Ltd as Respondent.
- On 20 April 2010, the Tribunal granted the application of Xstrata to join the three additional co-claimants, i.e., Itochu Coal Resources Australia Pty Limited, ICRA OC Pty Limited, and Sumisho Coal Australia Pty Limited. The LCIA changed the case caption to include the newly joined co-claimants, including ICRA OC. At no time during the arbitration did the Parties raise the issue of the two different names.
- The Tribunal is sympathetic to the situation in which the Claimants now find themselves, in that a jurisdictional objection not raised during the arbitration was the basis for an attack on the Award during post-Award proceedings. Respondent had the right under the LCIA rules to raise a jurisdictional plea based upon ICRA OC's alleged non-party status but did not do so. Whether the Tribunal can now remedy the situation is a different matter.
- Claimants acknowledge that "the identity of the parties to a contract is a question of fact " However the question of whether ICRA NCA was mistakenly identified as a party in the Contract was, put simply, never addressed or considered by either the Parties or the Tribunal during the arbitration. Consequently, the Tribunal made no finding in the Award concerning that question.
- Article 27.1 is limited to correction of computational, clerical and typographical errors or errors of similar nature. Dealing with the allegedly mistaken reference to ICRA NCA in the Contract involves more than correcting a simple "typographical" mistake. A finding as to the proper identity of a contracting party would be an addition to the Award, not a mere correction. As Respondent notes, the Tribunal found in the 2010 Memorandum that Article 27.1 of the LCIA Rules has no provision for clarification or insertion of additional language, and it, furthermore, denied request by Respondent on that basis. 23. Claimants point out in their Reply that Justice Knowles took a broad view under which Article 27.1 allows corrections to the Award that would clarify a matter than an omission had left unclear or ambiguous. Even assuming, respectfully, that such were the case, the problem remains that the "clarification" sought by Claimants would, in this instance, require evidentiary fact-finding by the Tribunal concerning the relationship of ICRA OC and ICRA NCA. The Tribunal cannot grant the relief sought by Claimants on the existing record. However broadly the scope of Article 27.1 is construed, it does not contemplate additional evidentiary proceedings.
- With regret, Claimants' Application is, therefore, DENIED."
The application under section 68 of the Arbitration Act
"4. The Claimants rely upon section 68(2)(f) and/or section 68(2)(c) of the Act, in circumstances where (1) there is uncertainty or ambiguity as to the effect of the Award as reflected in the refusal of the Courts of the PRC to recognise and enforce the Award; and/or (2) the Tribunal failed to conduct the proceedings in accordance with the procedure agreed by the parties because the Tribunal failed to deal with the application pursuant to Article 27.1 in accordance with the LCIA rules.
- There was and is substantial injustice to the Claimants in that recognition and enforcement of the Award has been refused, whereas if the Award and/or Decision is remitted for reconsideration and a fresh award is issued thereafter the Courts of the PRC may reconsider that decision and/or obstacles to enforcement in other jurisdictions may be removed.
- This application is within time under section 70(3) of the Act as it has been brought within 28 days of the outcome of the arbitral process of review pursuant to Art 27.1 of the LCIA Rules, which process resulted in the Decision.
- The Claimants claim orders that the Award be remitted to the Tribunal to reconsider the identity of the parties to the Oaky Contract."
"(1) A party to arbitral proceedings may (upon notice to the other parties and to the tribunal) apply to the court challenging an award in the proceedings on the ground of serious irregularity affecting the tribunal, the proceedings or the award. A party may lose the right to object (see section 73) and the right to apply is subject to the restrictions in section 70(2) and (3).
(2) Serious irregularity means an irregularity of one or more of the following kinds which the court considers has caused or will cause substantial injustice to the applicant
(c) failure by the tribunal to conduct the proceedings in accordance with the procedure agreed by the parties
(f) uncertainty or ambiguity as to the effect of the award "
"Any application or appeal must be brought within 28 days of the date of the award or, if there has been any arbitral process of appeal or review, of the date when the applicant or appellant was notified of the result of that process."
Section 80(5) can also be referred to at this juncture; it provides:
"Where any provision of this Part requires an application or appeal to be made to the court within a specified time, the rules of court relating to the reckoning of periods, the extending or abridging of periods, and the consequences of not taking a step within the period prescribed by the rules, apply in relation to that requirement."
Is the application out of time?
(1) By section 70(3) of the Arbitration Act, an application under section 68 should have been made within 28 days of the Award or, if there has been any arbitral process of appeal or review, within 28 days of the date when the applicant was notified to the result of that process.
(2) An application under Article 27 of the LCIA rules is not an arbitral process of appeal or review.
(3) The Defendant accepts that, had that application been successful and the Award corrected, the Award would be treated as having been made insofar as materially corrected on the date of the corrected award.
(4) Here, however, the Article 27 application was not successful, and the Award was not corrected. Accordingly, the date of the Award was 23 August 2010.
(5) The Defendant recognises that the Claimants could make an application to the court to extend time under the power recognised in section 80(5) of the Arbitration Act, but point out that no such application has been brought before the court, and say that no such extension should be permitted were such an application made.
" the mere fact that there had been an application for a correction pursuant to section 57 [or an agreed equivalent does not of itself] mean that the 28 day period ran from the date of the corrected award; otherwise a party could simply extend the time for challenging the award by finding some slip in the award which had no connection with the proposed challenge and issuing an application for a correction."
Is section 68(2)(f) engaged?
Section 68 is not, however, confined exclusively to cases in which the tribunal has gone wrong in its conduct of the arbitration, if that is understood to mean that the tribunal has done something which it should not have done in the circumstances which were presented to it. Thus, for example, an application could potentially be made under section 68(2)(g) if the award had been procured by fraud of the parties, without the tribunal having gone wrong in the sense that I have described.
"I do not think that is a necessary or appropriate requirement. In the present case any English lawyer looking at the award would understand that Prince Hussam was required to make payment. If the matter had been tested before the English court, the court would likely have concluded that what was said was not objectively ambiguous and that everyone looking at it should understand what it meant. But subsequent events have shown that the language is capable of being misunderstood, and in those circumstances a correction to make sure that infelicitous language is corrected is appropriate."
The application to amend the Claim Form
We hereby certify that the above is an accurate and complete record of the proceedings or part thereof.