High Court

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Mr Justice Hacon finds that procedures for applying for permission to appeal are not altered by the COVID-19 Protocol.

 By Oliver E. Browne

In Claydon v. Mzuri,[1] Mr Justice Hacon of the High Court has found that the COVID-19 Protocol does not alter the procedure for appeal applications if a decision is handed down remotely and the parties do not attend. Notably, the Judge clarified that the remote nature of the relevant hearings and the handing down of the trial judgment had no bearing on the proper approach to be followed in the context of seeking permission to appeal.

Decision confirms parties’ statutory right to challenge awards under s.67 and s.68.

By Oliver E. Browne

The Court of Appeal has overturned a High Court decision which granted a stay of an application challenging an award pending the determination of related further arbitrations (the Second Arbitration Proceedings), pursuant to s.67 and s.68 of the Arbitration Act 1997 (the Arbitration Act).

The Court’s decision in Minister of Finance (Inc) v International Petroleum Investment Co [2019] EWCA Civ 2080 is a helpful reminder that parties agreeing to an arbitration with a London seat cannot circumvent the mandatory provisions of the Arbitration Act. Parties have a statutory right to challenge an award under s.67 for lack of substantive jurisdiction and s.68 for serious irregularity and cannot contract out of these provisions, notwithstanding any written agreement to the contrary.

The Court recognised that challenges under the mandatory provisions often “lack merit and are nothing more than an attempt by the losing party to put off the day of reckoning”. In such cases, the courts have “adequate powers to bring the challenge to a prompt end”. Indeed, the requirement of proving serious irregularity and substantial injustice is a high hurdle to overcome.

Ruling confirms majority noteholder should not be disenfranchised from voting

By Simon J. Baskerville, Sophie J. Lamb QC, Bradley J. Weyland, and Eleanor M. Scogings

The English High Court held that it had jurisdiction in a cross-border dispute involving the Norske Skog group (Norske Skog), and confirmed that a majority noteholder did not “control” the debtor companies and was therefore not excluded from being part of the “instructing group”. The case also confirms the ability of the English courts to rule in relation to issues of both New York law and English law. These rulings reassured observers active in European leveraged finance transactions, who have long believed that courts should interpret and approach this suite of contracts in exactly this way.

Case Background

In 2015, Norske Skog, a large Norwegian group of manufacturing companies engaged in the paper industry, issued senior secured notes (the Notes) pursuant to a New York law governed indenture. As is typical with leveraged finance structures, the company also entered into an intercreditor agreement (ICA) governed by English law. The ICA allows the flexibility for multiple secured creditor classes under various instruments to benefit from the security. Further, the ICA governs the relative priority of such creditors and other liabilities, as well as the ability to instruct the security agent in case of a default scenario.

New “range of factors” test suggests broad use in future civil matters and fairer, more nuanced outcomes.

By Daniel Smith and Alanna Andrew

The High Court has applied the new fact-sensitive “range of factors” test in Harb v Aziz[i] to determine whether a defendant to a civil claim can rely on the claimant’s wrongdoing to defeat the claim. The Supreme Court adopted this new “range of factors” test in the 2016 case of Patel v Mirza[ii], which replaced the “reliance test” identified in Tinsley v Milligan (widely criticised as being too formal). See Latham’s related blog, UK Supreme Court Adopts New “Range of Factors” Approach to Defence of Illegality.

The principles of the illegality defence are that a person should not be able to benefit from their own wrongdoing, and the court should not enforce claims that harm the integrity of the legal system. The defence is potentially far reaching, particularly under the new “range of factors” test, and so its recent application will be of interest to many litigants — especially if there is evidence of a claimant’s wrongdoing.

High Court decision provides practical lessons for companies conducting investigations.

By Stuart Alford QC, Daniel Smith and Clare Nida

The English High Court has reconfirmed that litigation privilege can apply to information gathering in internal investigations. Specifically, lawyers must have engaged in the information gathering for the dominant purpose of conducting litigation, and this can include prospective claims by tax authorities.

Case Background and previous decisions

Bilta UK Ltd. is an English company that was compulsorily wound up in November 2009 pursuant to a petition presented by HM Revenue and Customs (HMRC). In Bilta (UK) Ltd v Royal Bank Of Scotland Plc & Anor [2017] EWHC 3535 (Ch), the liquidators of Bilta sought disclosure and inspection of documents, including interview transcripts that the Royal Bank of Scotland (RBS) had created during an HMRC tax investigation.

By Daniel Harrison

The High Court recently held that a party was not free to disclose an arbitral award even though that award had already entered the public domain. Notably, the ruling may have significant implications for parties considering whether or not to resolve disputes through arbitration.

Background: UMS Holdings Limited v Great Station Properties S.A.

UMS Holdings Limited challenged an arbitral award on the ground of serious irregularity under section 68 of the Arbitration Act 1996 before the High Court. Because the judge had quoted parts of the arbitral award in the judgment refusing the application,[1] UMS claimed that the award was a public document and that UMS could therefore use the award as it wished. The defendant, Great Station Properties, rejected this position and argued that the parties were still bound to keep the award confidential pursuant to Article 30 of the London Court of International Arbitration Rules (LCIA Rules), which provides:

“The parties undertake as a general principle to keep confidential all awards in the arbitration, together with all materials in the arbitration created for the purpose of the arbitration and all other documents produced by another party in the proceedings not otherwise in the public domain, save and to the extent that disclosure may be required of a party by legal duty, to protect or pursue a legal right, or to enforce or challenge an award in legal proceedings before a state court or other legal authority.”[2]

Great Station applied to the High Court for an order preventing UMS from using the award for any purpose other than the court proceedings or from disclosing the award to any third parties. In response, UMS claimed that the court should not issue an order for confidentiality because the award had entered the public domain by virtue of references, as well as quotation at the hearing and in the judgment in the court proceedings — thereby nullifying Article 30’s confidentiality obligations.

By Oliver Browne and Robert Price

On 6 June 2017, the High Court held that there was sufficient evidence that an award of over US$500 million in damages against the Republic of Kazakhstan may be tainted by fraud and that this should be examined at trial (Stati v Kazakhstan [2017] EWHC 1348 (Comm)).

This bold, first instance decision indicates that, despite a reluctance to prevent the enforcement of awards under the New York Convention, the English courts are willing thoroughly to investigate claims under section 103 of the Arbitration Act 1996 and not enforce awards deemed contrary to public policy.

Background

Anatolie Stati, Gabriel Stati, the Ascom Group S.A., and Terra Raf Trans Traiding Ltd (the Claimants) commenced the initial arbitration, instituted pursuant to the Energy Charter Treaty, against Kazakhstan (the State) in Sweden. In December 2013, the arbitral tribunal found in favour of the Claimants, and in February 2014, the tribunal granted initial permission for the Claimants to enforce their award in England. Parallel enforcement proceedings were also commenced by the Claimants in the US courts.

By Oliver Browne and Daniel Smith

Following Three Rivers (No 5) [2003] EWCA Civ 474, the High Court has held that notes of interviews of employees, prepared as part of certain internal investigations by a bank’s solicitors, for the purpose of enabling the bank to seek and receive legal advice are not protected by legal advice privilege. Central to the ruling was the finding that relevant employees did not fall within the definition of the “client” for legal advice privilege purposes. The Court also confirmed that English privilege rules should be applied in cases before the English court so that, even though the interview notes were likely to have been privileged as a matter of US law, they were not privileged in English proceedings.

The decision follows the recent judgment in Astex Therapeutics Ltd v Astrazeneca AB [2016] EWHC 2759 (Ch) in which Chief Master Marsh held that certain employees were not part of the “client” for legal advice privilege purposes, but with only a brief analysis on the point. In the present decision, Mr Justice Hildyard considered the question in much greater detail.

By Robert Price

A recent High Court decision provides a timely reminder that parties to an arbitration agreement must take care to ensure that arbitration proceedings are properly served to avoid an award being set aside or refused enforcement due to defective service.

In Sino Channel Asia Ltd v Dana Shipping and Trading PTE Singapore & Anor [1], the English High Court set aside the award under section 72 of the Arbitration Act 1996 (the Act) and ruled that the award was made without jurisdiction because the claimant served its notice of arbitration on an agent of the respondent who was not authorised to accept service.

Service Under the Act

Section 76(1) of the Act allows the parties to “agree on the manner of service of any notice or other document required or authorised to be given or served in pursuance of the arbitration agreement…” Parties can therefore select institutional rules which set out requirements for commencing arbitration and properly notifying the other party.

By Daniel Harrison

Appealing High Court decisions under the Arbitration Act 1996 (the Act) may be restricted following a recent ruling by the Court of Appeal. In Integral Petroleum SA v Melars Group Limited (2016 EWCA Civ 108), the Court of Appeal confirmed the High Court’s wide discretion in relation to the way in which it chooses to deal with challenges to arbitral awards and confirmed the strict limitations on granting permission to appeal challenge decisions.

The claimant, a Swiss oil and petroleum trading company, originally challenged an arbitral award on the basis of the lack of jurisdiction of the tribunal (s67 of the Act). Although the High Court judge found that the tribunal had incorrectly declined jurisdiction, the judge nonetheless, as matter of discretion, refused to make an order for relief and, in turn, refused permission for the claimant to appeal the High Court’s decision.