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You are here: BAILII >> Databases >> England and Wales High Court (Family Division) Decisions >> T v T [2012] EWHC 3462 (Fam) (29 November 2012) URL: http://www.bailii.org/ew/cases/EWHC/Fam/2012/3462.html Cite as: [2012] EWHC 3462 (Fam) |
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FAMILY DIVISION
Strand, London, WC2A 2LL |
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B e f o r e :
Sitting as a deputy High Court Judge
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T |
Applicant |
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- and - |
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T |
Respondent |
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Timothy Scott QC, Thomas Roe and Michael Glaser (instructed by Helen Pidgeon Solicitors) for the Respondent
Hearing date: 21st November 2012
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Crown Copyright ©
Nicholas Francis QC:
The application
Background
"The parties agree to submit to binding arbitration any dispute or controversy regarding the validity, interpretation, or enforceability of this Agreement, as well as all issues involving its enforcement in connection with a dissolution proceeding between the Parties. Each party expressly waives any right to trial by a court or trial by a jury on such issues. The Parties further agree that any arbitration that should be required under this Article shall be conducted in [State A]."
(a) he filed a motion in State A to stay his own suit (he says that this was to enable the arbitration proceedings to take place); and
(b) he filed a separate petition in the X County Superior Court, State A, seeking an order compelling the Wife to engage in arbitration. It is accepted by the Wife that the courts in State A have jurisdiction to consider this particular issue. The State A Revised Statutes Annotated provides (2012):
The party aggrieved by the alleged failure, neglect, or refusal of another to perform under such a written agreement for arbitration may petition the Superior Court for an order directing that such arbitration proceed in the manner provided for in such agreement. If the making of the arbitration agreement or the failure, neglect, or refusal to perform the same be in issue, the court shall proceed to the trial thereof...
The Wife's case
The Husband's case
"Daniel's counsel prepared the first draft of the Agreement. Thereafter, meetings, conversations, discussions and negotiations occurred between counsel for [W] and counsel for [H] culminating in this Agreement, as executed by the Parties. [W] and [H] represent that the Agreement is the product of their joint efforts and the effort of their respective counsel."
"The Parties expressly stipulate and agree that this Agreement shall be interpreted and construed under the laws of [State A]. The Parties further stipulate and agree that they are entering into this Agreement with the full intent to be bound by the terms and provisions set out herein."
a) that full financial disclosure was given in Schedules to the PMA;
b) that Article 2 of the PMA required him to set up the AT Trust which he was to fund over a period of time with sums totalling $3m, and that he has been complying with his obligations under this article;
c) that Article 5 set out the provision in the event of divorce;
d) that child support is left to the court, save that the Husband agrees to pay for the cost of schooling provided that he has agreed to the choice of school and that he can afford it. He also agrees (subject to a certain discretion) to finance college education entirely; and
e) that Article 10 is headed "Representations and Warranties". The Wife, he points out, represented and warranted in the fullest terms that she had read the agreement; she had been fully advised by her attorney about the law; she was entering into the agreement voluntarily after receiving independent advice; she fully understood the agreement, and that it was not procured by fraud, duress or overreaching; she was satisfied by the Husband's disclosure; she was not relying on any advice or representations provided by the Husband or anyone on his behalf; she would be estopped from making any claim to Husband's separate property, save as provided for; she was permanently surrendering rights to alimony, spousal support, income, property division; and property she would or might otherwise be entitled to under applicable law (some of these passages are capitalised within the PMA).
The Law applicable to this application
"[49]... the fundamental if unarticulated premise underlining the decision in Hemain is that, where there are parallel proceedings in two different courts, fairness requires that neither party should be permitted to litigate the substantive issues in either court until such time as both courts, having disclosed of any preliminary issues as to jurisdiction, are ready to embark upon a consideration of the substantive issues..."
and later:
"[55]... what in principle justifies the grant of such an injunction is not so much the assertion that England is the natural forum, but rather the forensic advantage that the other spouse unfairly seeks to gain by disputing that England is the appropriate forum (and thus holding up the English proceedings), whilst at the same time treating himself as free nonetheless to pursue his own proceedings abroad. The purpose of a Hemain injunction is to prevent one spouse stealing a march on the other by manipulating the two sets of proceedings to his own forensic advantage. Whether or not that is in truth what he is doing, and whether or not the case for the grant of a Hemain injunction is thus made out, turns in the final analysis not on questions of forum (non) conveniens, nor on the question of whether or not England is the natural forum, but on whether, at a time when typically those questions have still to be resolved, the spouse who it is sought to injunct is conducting the litigation – the two sets of proceedings – to his own forensic advantage and, more particularly, in a manner that can properly be characterised as vexatious, oppressive or unconscionable."
"The power to make the order is dependent upon there being wrongful conduct of the party to be restrained of which the applicant is entitled to complain and has a legitimate interest in seeking to prevent. In British Airways v Laker Airways [1985] AC 58, [1984] 3 All ER 39 at 81 of the former report, Lord Diplock said that it was necessary that the conduct of the party being restrained should fit "the generic description of conduct that is 'unconscionable' in the eye of English law". The use of the word "unconscionable" derives from English equity law. It was the courts of equity that had the power to grant injunctions and the equity jurisdiction was personal and related to matters which should affect a person's conscience. But the point being made by the use of the word is that the remedy is a personal remedy for the wrongful conduct of an individual. It is essentially a 'fault' based remedial concept. Other phrases have from time to time been used to describe the criticism of the relevant person's conduct, for example, "vexatious" and "oppressive", but these are not to be taken as limiting definitions; it derives from "the basic principle of justice" (per Lord Goff, SNI Aerospatiale v Lee, at 893)."
Arbitration
"The court also has power to grant an injunction restraining foreign arbitral proceedings, although it is a power that is only exercised in exceptional cases and with caution."
The footnote to that passage in Dicey cites a number of cases and continues:-
"Thus an injunction may be granted, e.g. (a) where the arbitral tribunal's determination of its jurisdiction has already been reviewed by the court of the seat, and that court has decided that the tribunal lacked jurisdiction, yet one party is still claiming the right to pursue the arbitration; and (b) where the essence of the challenge to the arbitral tribunal's jurisdiction is that the arbitration agreement is a forgery and it has been agreed that the English court may determine that question. In these cases the essential claim was that there was no arbitration agreement at all, and the English court either had determined, or was entitled to determine, that point. Such cases are likely to be very rare."
"If a maintenance agreement includes a provision purporting to restrict any right to apply to a court for an order containing financial arrangements, then-
(a) that provision shall be void."
A "maintenance agreement" is defined as "any agreement in writing made….between the parties to a marriage, being (a) an agreement containing financial arrangements…..". Alternatively, says Mr Pointer, the rule in Hyman v. Hyman [1929] AC 601 (that a party may not covenant to oust the jurisdiction of the court) means that the arbitration clause is void.
"Separability of arbitration agreement
Unless otherwise agreed by the parties, an arbitration agreement which forms or was intended to form part of another agreement (whether or not in writing) shall not be regarded as invalid, non-existent or ineffective because that other agreement is invalid, or did not come into existence or has become ineffective, and it shall for that purpose be treated as a distinct agreement."
"The principle of separability enacted in section 7 means that the invalidity or rescission of the main contract does not necessarily entail the invalidity or rescission of the arbitration agreement. The arbitration agreement must be treated as a "distinct agreement" and can be void or voidable only on grounds which relate directly to the arbitration agreement. Of course there may be cases in which the ground upon which the main agreement is invalid is identical with the ground upon which the arbitration agreement is invalid. For example, if the main agreement and the arbitration agreement are contained in the same document and one of the parties claims that he never agreed to anything in the document and that his signature was forged, that will be an attack on the validity of the arbitration agreement. But the ground of attack is not that the main agreement was invalid. It is that the signature to the arbitration agreement, as a "distinct agreement", was forged. … ."
"Section 7 of the Arbitration Act 1996 reproduces in English law the principle that was laid down by section 4 of the United States Arbitration Act 1925. That section provides that, on being satisfied that the making of the agreement for arbitration or the failure to comply therewith is not in issue, the court shall make an order directing the parties to proceed to arbitration. Section 7 uses slightly different language, but it is to the same effect. The validity, existence or effectiveness of the arbitration agreement is not dependent upon the effectiveness, existence or validity of the underlying substantive contract unless the parties have agreed to this. The purpose of these provisions, as the United States Supreme Court observed in Prima Paint Corp. v Flood & Conklin Manufacturing Co (1967) 388 US 395, 404 is that the arbitration procedure, when selected by the parties to a contract, should be speedy and not subject to delay and obstruction in the courts. The statutory language, it said, did not permit the court to consider claims of fraud in the inducement of the contract generally. It could consider only issues relating to the making and performance of the agreement to arbitrate."
My decision
a) Can it be shown that England is the natural forum and that pursuit of the foreign proceedings (here, arbitration) would be vexatious or oppressive? In my judgment, the answer to this question must be in the negative. The parties entered into a PMA which the parties recorded as desiring, with the benefit of full advice. Of course, the Wife may show that there are good reasons not to be held to it, but that is an issue which she can raise with the arbitrator appointed in accordance with the PMA. I take fully into account the fact that, as Baker J said in S v S, when seeking an Hemain injunction, in contrast to a permanent anti-suit injunction, there is no need to show that England is the natural forum. As Mr Pointer succinctly put it, the question is not whether it is unconscionable for the Husband to take proceedings in the US, but whether it is unconscionable for him to issue an application for a stay of the English proceedings and at the same time press ahead with the proceedings in State A. I do not find, in the particular circumstances of this case, that the Husband is acting to his own forensic advantage and, more particularly, in a manner that can properly be characterised as vexatious, oppressive or unconscionable.
b) The burden being on the Wife to show that England is the natural forum, has she discharged this burden? Whilst it is possible that the Wife may, in due course succeed in showing that she should not be held to the PMA, I am unable to determine that issue in her favour at this stage. The fact is, that given the terms of their PMA, and the express clause providing that issues as to its validity are themselves to be the subject of arbitration, the Wife has not yet satisfied the court, on the balance of probabilities, that England is the natural forum to determine the financial issues arising on the divorce of this American family who made a PMA with express provision that those issues be determined by arbitration in State A. However, I recognise that, in the case of an interim injunction, this question is substantially subsumed into the wider question addressed at a) above and c) below.
c) Is The Husband behaving vexatiously or oppressively by seeking arbitration in State A? In my judgment it is hard to see how the Husband can properly be accused of such behaviour when what he seeks to do is to invoke the arbitration clause contained within the PMA which the parties signed, with the benefit of legal advice. That is not to pre-determine the issue which the Wife raises in relation to the pressure that she says she was under when she signed the PMA. Indeed, as I have set out above, I am assuming for the purposes of this Judgment that she has an arguable case in that regard. It was made clear by Baker J in S v S that it is not sufficient simply to demonstrate that the Respondent is seeking a stay of proceedings in this country whilst continuing in the meantime to litigate abroad. It all depends on the facts. The facts of the instant case are unusual, indeed I have been directed to no reported case of an Hemain injunction where a spouse is seeking to rely on an arbitration clause. In my judgment, it is that arbitration clause which makes this case different. An American couple took American advice and entered into an American PMA which contained an arbitration clause. That clause also provided a means of resolving any issue as to the validity of the PMA itself. This means that the Wife would appear to have a proper forum for airing her case that she was pressurised into signing the PMA. I do not find that the Husband is behaving vexatiously or oppressively by invoking the arbitration clause in the PMA.
d) Does the fact that what the Wife seeks is only a temporary injunction tip the balance of convenience in her favour? Munby J made it clear, at paragraphs 88 to 90 of Bloch, that, even though there is no need for the Wife at this stage to go so far as showing that England is the natural forum, she does still have to show that the conduct which she seeks to restrain is vexatious or oppressive. I have already stated that in my judgment the conduct complained of is not vexatious or oppressive.