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England and Wales Court of Appeal (Civil Division) Decisions |
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You are here: BAILII >> Databases >> England and Wales Court of Appeal (Civil Division) Decisions >> ETI Euro Telecom International NV v Republic of Bolivia & Anor [2008] EWCA Civ 880 (28 July 2008) URL: http://www.bailii.org/ew/cases/EWCA/Civ/2008/880.html Cite as: [2008] EWCA Civ 880, [2008] 2 Lloyd's Rep 421, [2008] 2 CLC 153, [2008] CP Rep 41, [2009] WLR 665, [2009] Bus LR 310, [2009] 1 WLR 665 |
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COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION COMMERCIAL COURT
MR JUSTICE ANDREW SMITH
Nos 468 of 2008 and 469 of 2008
Strand, London, WC2A 2LL |
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B e f o r e :
LORD JUSTICE LAWRENCE COLLINS
and
LORD JUSTICE STANLEY BURNTON
____________________
E.T.I. EURO TELECOM INTERNATIONAL N.V. |
Appellant/ Claimant |
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- and - |
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(1) REPUBLIC OF BOLIVIA |
First Respondent/First Defendant |
|
(2) EMPRESA NACIONAL DE TELECOMUNICACIONES ENTEL S.A. |
Second Respondent/Second Defendant |
____________________
Mr Joe Smouha QC and Mr Paul McGrath (instructed by Stephenson Harwood) for the First Respondent/First Defendant
Mr Jeffrey Gruder QC (instructed by Reed Smith) for the Second Respondent/Second Defendant
Hearing date : July 22, 2008
____________________
Crown Copyright ©
Lord Justice Lawrence Collins :
I Introduction
The World Bank Convention and the Bilateral Investment Treaty
ICSID Convention and Arbitration Rules
"Consent of the parties to arbitration under this Convention shall, unless otherwise stated, be deemed consent to such arbitration to the exclusion of any other remedy. A Contracting State may require the exhaustion of local administrative or judicial remedies as a condition of its consent to arbitration under this Convention."
"Except as the parties otherwise agree, the tribunal may, if it considers the circumstances so require, recommend any provisional measures which should be taken to preserve the respective rights of either party."
"(1) At any time after the institution of the proceeding, a party may request that provisional measures for the preservation of its rights be recommended by the Tribunal. The request shall specify the rights to be preserved, the measures the recommendation of which is requested, and the circumstances that require such measures.
(2) The Tribunal shall give priority to the consideration of a request made pursuant to paragraph (1).
(3) The Tribunal may also recommend provisional measures on its own initiative or recommend measures other than those specified in a request. It may at any time modify or revoke its recommendations.
…
(5) If a party makes a request pursuant to paragraph (1) before the constitution of the Tribunal, the Secretary-General shall, on the application of either party, fix time limits for the parties to present observations on the request, so that the request and observations may be considered by the Tribunal promptly upon its constitution.
(6) Nothing in this Rule shall prevent the parties, provided that they have so stipulated in the agreement recording their consent, from requesting any judicial or other authority to order provisional measures, prior to or after the institution of the proceeding, for the preservation of their respective rights and interests."
The ICSID Convention and United Kingdom law
"3(1) The Lord Chancellor may by order direct that any of the provisions contained in sections 36 and 38 to 44 of the Arbitration Act 1966 (provisions concerning the conduct of arbitral proceedings, & c.) shall apply to such proceedings pursuant to the Convention as are specified in the order with or without any modifications or exceptions specified in the order.
(2) Subject to subsection (1), the Arbitration Act 1996 shall not apply to proceedings pursuant to the Convention, but this subsection shall not be taken as affecting section 9 of that Act (stay of legal proceedings in respect of matter subject to arbitration).
(3) An order made under this section –
(a) may be varied or revoked by a subsequent order so made, and
(b) shall be contained in a statutory instrument."
II ETI's 1995 investment in Entel, and Bolivian 2007 decrees
III The ICSID arbitration proceedings and the nationalisation of Entel
"The stock of the capitalising company ETI EUROTELECOM INTERNATIONAL NV is hereby nationalised in its entirety and said company is transformed into Entel SAM; all the shares of this capitalising company shall be transferred to the Bolivian state, being temporarily held by the Ministry of Public Works, Utilities and Housing...."
IV Proceedings in New York
V The English proceedings and the judge's judgment
25.— Interim relief in England and Wales and Northern Ireland in the absence of substantive proceedings
(1) The High Court in England …shall have power to grant interim relief where—
(a) proceedings have been or are to be commenced in a Brussels or Lugano Contracting State or a Regulation State other than the United Kingdom or in a part of the United Kingdom other than that in which the High Court in question exercises jurisdiction; and
(b) they are or will be proceedings whose subject-matter is within the scope of the Regulation as determined by Article 1 of the Regulation (whether or not the Regulation has effect in relation to the proceedings).
(2) On an application for any interim relief under subsection (1) the court may refuse to grant that relief if, in the opinion of the court, the fact that the court has no jurisdiction apart from this section in relation to the subject-matter of the proceedings in question makes it inexpedient for the court to grant it.
(3) Her Majesty may by Order in Council extend the power to grant interim relief conferred by subsection (1) so as to make it exercisable in relation to proceedings of any of the following descriptions, namely—
(a) proceedings commenced or to be commenced otherwise than in a Brussels or Lugano Contracting State or Regulation State;
(b) proceedings whose subject-matter is not within the scope of the Regulation as determined by Article 1 of the Regulation.
4) An Order in Council under subsection (3)—
(a) may confer power to grant only specified descriptions of interim relief;
(b) may make different provision for different classes of proceedings, for proceedings pending in different countries or courts outside the United Kingdom or in different parts of the United Kingdom, and for other different circumstances; and
(c) may impose conditions or restrictions on the exercise of any power conferred by the Order.
…"
"The High Court in England and Wales or Northern Ireland shall have power to grant interim relief under section 25(1) of the Civil Jurisdiction and Judgments Act 1982 in relation to proceedings of the following descriptions, namely -
(a) proceedings commenced or to be commenced otherwise than in a Brussels or Lugano Contracting State or Regulation State;
(b) proceedings whose subject-matter is not within the scope of the Regulation as determined by Article 1 thereof".
VI ETI's appeal
1. Procedural irregularity
2. Section 25 of the 1982 Act and the New York proceedings
Judge's decision
ETI's argument
3. Section 25 of the 1982 Act and the ICSID arbitration
Judge's decision
ETI's appeal
4. Expediency
Judge's decision
ETI's appeal
5. State Immunity
ETI's argument
VII Conclusions
Section 25 and the New York proceedings
"Application may be made to the courts of a Contracting State for such provisional, including protective, measures as may be available under the law of that State, even if, under this Convention, the courts of another Contracting State have jurisdiction as to the substance of the matter".
"(1) The High Court in England and Wales or Northern Ireland shall have power to grant interim relief where -
(a) proceedings have been or are to be commenced in a Contracting State other than the United Kingdom or in a part of the United Kingdom other than that in which the High Court in question exercises jurisdiction; and
(b) they are or will be proceedings whose subject-matter is within scope of the 1968 Convention as determined by Article 1 (whether or not the Convention has effect in relation to the proceedings).
(2) On an application for any interim relief under subsection (1) the court may refuse to grant that relief if, in the opinion of the court, the fact that the court has no jurisdiction apart from this section in relation to the subject-matter of the proceedings in question makes it inexpedient for the court to grant it.
(3) Her Majesty may by Order in Council extend the power to grant interim relief inferred by subsection (1) so as to make it exercisable in relation to proceedings of any of the following descriptions, namely -
(a) proceedings commenced, or to be commenced, otherwise than in a Contracting State;
(b) proceedings whose subject-matter is not within the scope of the 1968 Convention as determined by Article 1;
(c) arbitration proceedings.
…
(5) An Order in Council under subsection (3) which confers power to grant interim relief in relation to arbitration proceedings may provide for the repeal of any provision of section 12(6) of the Arbitration Act 1950 … to the extent that it is superseded by the provisions of the Order."
"The High Court in England … shall have power to grant interim relief under section 25(1) of the Civil Jurisdiction and Judgments Act 1982 in relation to proceedings of the following descriptions, namely -
(a) proceedings commenced or to be commenced otherwise than in a Brussels or Lugano Contracting State or Regulation State;
(b) proceedings whose subject-matter is not within the scope of the Regulation as determined by Article 1 thereof".
Section 25 of the 1982 Act and arbitration
"The Brussels Convention ... does not apply for the purpose of determining the jurisdiction of courts and tribunals in respect of litigation relating to arbitrations – for example, proceedings to set aside an arbitral award; and, finally, it does not apply to the recognition of judgments given in such proceedings." ([1979] OJ C59, p 14).
"It follows that, by excluding arbitration from the scope of the Convention on the ground that it was already covered by International Conventions, the Contracting Parties intended to exclude arbitration in its entirety, including proceedings brought before national courts."
Expediency
"(6) Nothing in this Rule shall prevent the parties, provided that they have so stipulated in the agreement recording their consent, from requesting any judicial or other authority to order provisional measures, prior to or after the institution of the proceeding, for the preservation of their respective rights and interests."
"Recourse to ICSID arbitration should be considered as an implied waiver of all other means of settlement….the state should not be exposed to other means of pressure or to other remedies".
State immunity
"(1) Where a State has agreed in writing to submit a dispute which has arisen, or may arise, to arbitration, the State is not immune as respects proceedings in the courts of the United Kingdom which relate to the arbitration.
(2) This section has effect subject to any contrary provision in the arbitration agreement and does not apply to any arbitration agreement between States".
"(2) Subject to subsections (3) and (4) below—
Relief shall not be given against a State by way of injunction or order for specific performance or for the recovery of land or other property; and
The property of a State shall not be subject to any process for the enforcement of a judgment or arbitration award or, in an action in rem, for its arrest, detention or sale.
(3) Subsection (2) (b) above does not prevent the giving of any relief or the issue of any process with the written consent of the State concerned: and any such consent (which may be contained in a prior agreement) may be expressed so as to apply to a limited extent or generally; but a provision merely submitting to the jurisdiction of the courts is not to be regarded as a consent for the purposes of this subsection.
(4) Subsection (2)(b) above does not prevent the issue of any process in respect of property which is for the time being in use or intended for use for commercial purposes; …"
"Although the usual rule is that an injunction will only be granted against a party to an action or arbitration there is jurisdiction to make a freezing injunction against a third party where the there is good reason to suppose as against the third party that the assets of the third party would be susceptible to enforcement of a judgment against the defendant. Accordingly, if the defendant is a shareholder in a private company and were left free to deprive the company of assets to which it may be entitled, this could affect the value of the shareholding and so an injunction could be granted against the third party to preserve those assets: Gee, Commercial Injunctions (5th ed.) para 13.007."
Disposition
Lord Justice Stanley Burnton:
"In brief, in the light of the plaintiff's evidence and the absence of any detailed evidence on the part of the defendants, I am of the view that there is a good arguable case that there are assets, apparently vested in the company, which may be beneficially the property of Mr. Chabra and therefore available to satisfy the plaintiff's claims against him if established at trial. I am also of the view that it is arguable that the company was, in fact, at relevant times the alter ego of Mr. Chabra and that its assets, or at least some of its assets, may be available to meet the plaintiff's claims against him if established."