Watson, Farley & Williams (“WFW”), a leading international law firm, and Toby Landau QC (Essex Court Chambers) have just secured a unanimous decision of the English Supreme Court in favour of the Government of Pakistan, which has upheld the previous decisions of the Court of Appeal and the Commercial Court (of 2009 and 2008, respectively) in favour of Pakistan in this matter. The WFW team consisted of Andrew Savage, Head International Arbitration in London, and Patrick Angénieux, Senior Associate.
This is a tremendous result for Pakistan. Nine English judges of the highest calibre have now unanimously ruled in its favour in three successive judgments (Aikens J in the High Court, Ward LJ, Rix LJ and Moore-Bick LJ in the Court of Appeal, and Lord Hope, Lord Saville, Lord Mance, Lord Collins and Lord Clarke in the Supreme Court). This appears to be only the third recorded case in which English courts have refused enforcement of an international arbitration award under the New York Convention since its implementation in England 35 years ago.
This judgment of the Supreme Court is likely to attract a lot of attention from international arbitration specialists around the world and may become a seminal decision for a number of reasons, including (amongst others) the following:
1. This seems to be the first judgement of the highest court of England in which the Law Lords have ruled on the New York Convention.
2. In the process, the Supreme Court (in particular Lord Mance) has clarified a number of important questions regarding the workings of this Convention, including the respective roles of the court of the seat and enforcement courts, and the extent of the powers of enforcement courts in respect of the jurisdiction of arbitral tribunals (whether those courts can fully reopen this issue when it has previously been decided by the arbitrators in an award).
The proceedings which were commenced in the Royal Courts of Justice in 2006 concerned the enforcement of a US$20 million ICC award rendered in Paris by a 3 person international arbitration tribunal including Lord Mustill against Pakistan.
The issue at the heart of this case was the extension of an arbitration agreement signed by a state entity to the non-signatory state.
Dallah Al Baraka Group is a holding company, founded in 1969, with interest in financial services, media, agriculture, travel and tourism, logistics and transportation services, construction and maintenance.
The case arose out of a US$345 million agreement between Dallah and the Awami Hajj Trust for the building and lease of housing in Mecca for Hajj pilgrims. The Trust was a body set up by Pakistan’s Ministry of Religious Affairs.
Challenging enforcement of the award in London, the Ministry argued that, as a non-signatory to the agreement, Pakistan was not bound by the arbitration clause.
This case addresses key investment arbitration issues such as the use of state-entities by states in major investment projects and whether the state may become liable in such circumstances.
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