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Parties seeking to rely on video-link evidence should plan ahead and, where necessary, obtain local and foreign court approval.

By Dan Smith

The COVID-19 pandemic has (albeit by necessity) ushered in a move towards remote justice. The vaccine rollout continues, and as lockdown restrictions begin to ease, English courts are now considering to what extent that move towards remote justice should continue. Most likely, remote hearings will continue in appropriate cases.

Against this background, the High Court has, in a number of recent decisions, provided some timely reminders for practitioners as to (i) proper arrangements for giving video-link evidence, and (ii) the need, in some cases, to obtain foreign court permission in respect of giving video-link evidence abroad.

By Eleanor M. Scogings

English High Court stays litigation pending mediation.

In Ohpen Operations UK Limited v. Invesco Fund Managers Limited,[i] the English court held that mediation was a condition precedent to the commencement of litigation and, accordingly, stayed the proceedings to enable mediation to take place. The decision confirms that an alternative dispute resolution provision can be an enforceable condition precedent to formal proceedings.

Background

Invesco Fund Managers Limited (Invesco) entered into an agreement with Ohpen Operations UK Limited (Ohpen), under which Ohpen was to develop and implement a digital online platform through which Invesco’s customers could buy and sell investments (the Agreement). Pursuant to the Agreement, between the effective date of the Agreement and the launch of the platform, the parties would enter into a development and implementation phase. Post launch, Ohpen would operate the platform.

Parties should avoid uncertainties by stipulating the applicable law to the arbitration agreement.

By Eleanor M. Scogings and Robert Price

The decision in J (Lebanon) v. K (Kuwait)[i] provides a useful analysis of which law (i.e., the law of the arbitration agreement or the law of the seat) governs the issue of whether a non-party has become party to the arbitration agreement and, more broadly, how to determine which law governs the arbitration agreement if there is no express choice. While in this case there was an express choice, the judgment highlights the uncertainties that arise if the parties have made no express provision regarding the law of the arbitration agreement. Moreover, the case demonstrates the jurisdictional difficulties that arise when arbitration proceedings are brought against a non-party to an arbitration agreement.

The English High Court adjourned the claimant’s (J’s) application to enforce an arbitral award against a non-party to an arbitration agreement (K), pending the outcome of set aside proceedings at the seat of the arbitration in Paris. The Court overturned the tribunal’s decision that the law of the seat (French law) should determine whether K was bound by the arbitration agreement contained in a franchise development agreement (FDA). Rather, the court held that the question was one of English law, as the law governing the arbitration agreement. Applying English law, the Court held that K had not become party to the arbitration agreement in the FDA by novation or joinder, and accordingly adjourned the enforcement of the award pending the decision of the Paris Court of Appeal.

The English High Court held the tribunal lacked jurisdiction as the defendant ceased to exist.

By Eleanor M. Scogings

In Ga-Hyun Chung v. Silver Dry Bulk Co Ltd,[i] the English High Court upheld a challenge to an award under Section 67 of the Arbitration Act (the Act). The award was made in favour of Silver Dry Bulk Co Ltd (SDBC) against Homer Hulbert Maritime Co Ltd (HH). The claimant, Mr Chung (trustee of HH), successfully challenged the jurisdiction of the tribunal on the grounds that there was not a valid arbitration agreement, and the tribunal had therefore not been properly constituted, because HH had ceased to exist at the time the notice of arbitration was filed.

This case serves as a useful reminder of the importance of carrying out due diligence on defendants prior to commencing arbitration proceedings, especially if they are incorporated in a foreign jurisdiction. If one of the parties to an arbitration agreement has ceased to exist, then a tribunal cannot be properly constituted and the arbitration proceedings cannot produce a valid and enforceable award.

English Supreme Court rules that there is no reasonable diligence requirement barring a fresh action to set aside a judgment obtained by fraud.

Oliver E. Browne and Alex Cox

Introduction

In Takhar v Gracefield Developments Limited and others [2019] UKSC 13, the English Supreme Court considered whether a party applying to set aside an earlier judgment on the basis of fraud is required to show that it could not have discovered the fraud by the exercise of reasonable diligence. The court unanimously ruled that there is no reasonable diligence requirement barring fresh actions based on fraud, and allowed the appeal.

Background

The appellant, Mrs. Takhar, acquired a number of properties in Coventry as part of a separation from her husband in 1999. She subsequently suffered personal and financial problems, largely as a result of the poor condition of the properties. In 2004, she became reacquainted with her cousin, Mrs. Krishan, whom she had not seen for many years. Mrs. Krishan and her husband, Dr. Krishan, agreed to provide financial help and practical assistance to Mrs. Takhar.

A rare example of the English High Court varying an arbitral award.

By Oliver E. Browne and Eleanor M. Scogings

In Dakshu Patel v. Kesha Patel [2019] EWHC 298 (Ch), the English High Court upheld an appeal under section 69 of the Arbitration Act 1996 (the Act) against an arbitral award. The court concluded that the tribunal had erred in law in finding that there had been a variation of the profit-sharing provisions of two partnership agreements. The court also indicated that a related section 68 challenge would have succeeded (had it been necessary to decide the point). The court varied the award and held that the parties were entitled to share the profits and losses equally under the partnership agreements.

The case highlights the very high threshold for permission to appeal an award, and is a rare example of an appeal under section 69 succeeding in the English courts. On the facts, there was no conduct or agreement that could be interpreted as a variation. While courts do not usually interfere in the arbitration process, the tribunal had reached what the court described as a “very surprising conclusion” that warranted intervention.

The court offers guidance on reversing lawful dividend payments and when directors need to take into account creditors’ interests.

By Simon J. Baskerville, Daniel Smith, Anna Hyde, Lisa Stevens, and Vanessa Morrison

On 6 February 2019, the UK Court of Appeal published a judgment in BTI v. Sequana that will impact both creditors and directors of English companies.

The court decided that the payment of a dividend — despite its lawfulness under the Companies Act 2006…

The decision clarifies how lawyer-client privilege applies in the context of transactions.

By Daniel Smith and James Fagan

The recent English High Court decision Raiffeisen Bank International AG v Asia Coal Energy Ventures Limited and Ashurst provides guidance on the application of legal advice privilege in a transaction context, confirming that confidential client instructions can be privileged even if the legal adviser has been instructed to provide a third party with confirmations based on those instructions.

This case offers a useful overview of the application of privilege to communications between lawyers and clients during transactions. The decision sets out a number of useful principles regarding privilege and client instructions:

  • For lawyer-client communications to benefit from privilege they must take place in a legal context.
  • Confidentiality is necessary for privilege to apply to communications, but it is not determinative.
  • Communications that do not contain legal advice can still be covered by legal advice privilege provided they form part of a continuum of communications between lawyer and client.
  • When instructing a legal adviser to disclose confidential information to third parties, clients must take care to ensure that underlying communications remain privileged.

Arbitral tribunal had jurisdiction despite the lack of an express arbitration clause.

By Eleanor M. Scogings and Robert Price

In Sonact Group Limited v Premuda Spa [2018] EWHC 3820, the English High Court confirmed that an arbitral tribunal had jurisdiction over a dispute arising from an informal settlement agreement — despite the fact that the agreement did not contain an arbitration clause. The court held that the arbitration clause in the charterparty applied to the settlement agreement. On the facts, the settlement agreement was no more than an informal routine arrangement to settle sums under the charterparty. The parties clearly intended the arbitration clause to apply to claims relating to the settlement agreement and, therefore, the challenge to jurisdiction was rejected.

The case highlights the English court’s pragmatic and pro-arbitration approach, but also serves as a reminder of the importance of always including express dispute settlement provisions in settlement agreements and other ancillary contractual documents.

The English Court has set aside permission to bring proceedings against foreign defendants based on non-disclosures and subsequent conduct.

By Dan Smith and Duncan Graves

The recent decision in Punjab National Bank (International) Limited v Ravi Srinivasan and others [2019] EWHC 89 (Ch) provides guidance on the proper conduct of an application for service out of the jurisdiction and highlights the potential pitfalls an applicant may encounter. In particular, the decision demonstrates that a party must:

  • Make full and frank disclosure on a without notice application, in particular if there are related foreign proceedings or new material facts arise
  • Renew its application for permission for any substantive changes to its pleadings
  • Plead fraud with care, precision, and particularity

Failure to follow these guidelines may result in the court setting aside permission for service, thereby bringing the claim to an end.