In Eastern European Engineering Ltd v Vijay Construction (Proprietary) Ltd [2018] EWHC 2713 (Comm) the English Commercial Court provided useful confirmation of the high bar to be met in an application to set aside enforcement of an international arbitration award where the award had already been unsuccessfully challenged at the seat of the arbitration.

Background

Both the claimant, Eastern European Engineering Ltd (EEEL), and the defendant, Vijay Construction (Proprietary) Ltd (VCL), are incorporated in the Seychelles. Disputes arose under six materially identical contracts between the two parties, and the contracts were eventually terminated by EEEL.

EEEL referred the disputes to an ICC arbitration seated in Paris. A sole arbitrator made an award in EEEL’s favour in November 2014 (the Award).

On 18 August 2015, Cooke J granted permission to EEEL to enforce the Award and to enter judgment against VCL (the August 2015 Order). In October 2015, VCL applied under s.103 Arbitration Act 1996 to set aside the August 2015 Order, but that application was stayed while French and Seychellois proceedings were pending (see below).

French and Seychellois proceedings

VCL sought to have the Award set aside by the French courts (the arbitration having been seated in Paris) on the basis of three main grounds: that EEEL failed to observe the requirements of the arbitration clause in the parties’ contract, meaning the tribunal lacked jurisdiction; that there had been procedural unfairness resulting in VCL’s inability to present its case; and that there had been interference with a witness rendering enforcement of the Award contrary to public policy. 

The Cour d’Appel dismissed VCL’s challenge. VCL initially appealed against that decision to the Cour de Cassation, but it abandoned that process and the appeal was subsequently dismissed in May 2017.

To prevent enforcement, VCL also initiated protective proceedings in the Seychelles in January 2015, seeking to set aside the Award on essentially the same grounds as those on which the challenges were based in the arbitration and in the French proceedings. In April 2017, the Seychellois court dismissed all of VCL’s challenges and held that the Award was enforceable.

The Seychelles Court of Appeal allowed VCL’s appeal to refuse recognition and enforcement on the basis the Seychelles had repudiated the New York Convention, but the substantive grounds were not considered by the Court of Appeal.

High Court decision

As mentioned above, back in 2015 VCL applied under s.103 Arbitration Act 1996 to set aside the August 2015 Order which had granted EEEL permission to enforce the Award. EEEL submitted that the court should reject the grounds put forward by VCL for two preliminary reasons: issue estoppel and public policy on finality.

EEEL put forward several authorities which, it argued, supported its position that the first decision of the French Cour d’Appel was a final merits decision in a court of competent jurisdiction between the same parties, that being sufficient to amount to issue estoppel.

Cockerill J agreed that, in relation to VCL’s challenge based on jurisdiction, the argument in play appeared to be exactly the same as that before the Cour d’Appel. However, the same could not be said of VCL’s challenge on the ground of procedural unfairness which Cockerill J found was “slightly different” in the English proceedings. Cockerill J held that it would be wrong to “short circuit” the argument and felt that she should consider the merits of the challenges.

On the merits, each of VCL’s challenges failed. That meant that the question of public policy on finality raised by EEEL did not arise. Nevertheless, Cockerill J noted that if there had been some apparent (albeit not compelling) merits in the argument, she would have concluded that the balance came down in favour of upholding the public policy on finality. Cockerill J explained that this was a case where VCL had sought twice to raise substantially the same challenges to the Award in other courts, one of which (the Seychellois proceedings) had formed part of a full evidential hearing. Cockerill J found that those are circumstances which would way very heavily against allowing VCL a third challenge.

Comment

Although made obiter, Cockerill J’s comments on the application of public policy on finality to these proceedings confirm that such considerations would have swung the balance towards upholding the Award. The judgment therefore serves to emphasise that the test to meet when applying to set aside enforcement of an award is particularly high where the award has already been the subject of an unsuccessful challenge on substantially the same grounds in another international forum.

Sadie Buls

Managing PSL
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Gráinne Hawkes

Associate
+442074565943
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