AES Ust-Kamenogorsk Hydropower Plant LLP v Ust-Kamenogorsk Hydropower Plant JSC

This has been the hearing of an application by the Defendant Ust-Kamenogorsk Hydropower Plant JSC (“JSC”) to challenge the jurisdiction of this Court to entertain the proceedings brought against it by the Claimant AES Ust-Kamenogorsk Hydropower Plant LLP (“AESUK”), and to consider the continuation of the anti-suit injunction given in favour of AESUK by Andrew Smith J on 31 July 2009, and continued by Teare J on 21 August 2009, and the grant of final relief on its Arbitration Claim Form. Mr White QC, on behalf of JSC, has made it plain that JSC has only appeared for the purpose of challenging the jurisdiction, and, although it has consented to the simultaneous hearing of AESUK’s substantive claim, he is not taking any part in it, although plainly all the submissions he has made in support of JSC’s jurisdictional challenge would fall to be considered by the Court, in the event of such challenge failing, in the course of its consequential consideration of the grant of substantive relief in favour of AESUK.

JSC and AESUK, which are both companies incorporated and carrying on business in the Republic of Kazakhstan, are effectively the owners and grantors (JSC) of a 20-year concession, and the grantees and lessees (AESUK) of such concession, to operate hydroelectric plant and equipment and produce hydroelectric energy in Kazakhstan. The precise contractual arrangements, though considerably canvassed in lengthy evidence, have not in the event been material at the hearing. In summary, JSC has become entitled to the rights of the Republic of Kazakhstan (RK) pursuant to the Concession Agreement dated 23 July 1997, made between RK and AES Suntree Power Ltd (“Suntree”) (which immediately assigned its rights to an associated company Tau Power BV (a Dutch Company) (“Tau”)), as a result of a Deed of Adherence and an Amended Concession Agreement, both dated 2 October 1997: and AESUK has become entitled to the rights of its parent or affiliate Tau as a result of a Transfer Agreement between RK, JSC and AESUK dated 1 October 2007.

The dispute before this Court has revolved around an arbitration clause contained in the Concession Agreement: it is common ground that the same clause was incorporated into the Amended Concession Agreement, and in this judgment I shall make no further differentiation between the two agreements, referring only, where appropriate, to them as the Concession Agreement. Although by Clause 31 it was provided that “this Agreement shall be subject to and governed in accordance with Kazakhstan legislation”, there is no dispute that the arbitration clause contained in Clause 32 is to be governed by, and to be construed in accordance with, English law. It reads as follows:

“32.

Dispute Resolution

32.1

Subject to the provisions contained in Clauses 17.8 and 17.9, should any dispute or difference arise out of or in connection with any matter or thing in relation to the provisions of this Agreement and the transactions contemplated by the parties, then the Party or Parties shall issue a Notice to the other Party or Parties, and shall supply full details of the dispute or difference.

32.2

In the event of any such dispute or difference being notified pursuant to Clause 32.1, the Authorised Persons of each of the Parties shall promptly meet together and negotiate in good faith and take all practicable steps in order to try and resolve the same as quickly and economically as possible.

32.3

Should the Parties not have resolved the dispute or difference at the expiry of a period of one (1) month (unless otherwise extended by agreement of the Parties in writing) from the date of any Notice issued in accordance with Clause 32.1 such dispute or difference shall be settled by arbitration in accordance with the Rules of Conciliation and Arbitration of the International Chamber of Commerce [“ICC”] in force at the relevant time.

32.4

In accordance with the Rules of Conciliation and Arbitration of the [ICC] (“Rules”), the Parties have agreed that there shall only be one (1) arbitrator who shall be appointed by mutual agreement between the Parties. If the Parties fail to reach agreement as to the identity of the arbitrator to be appointed within thirty (30) Days of the expiry of the one (1) month period referred to in Clause 32, the arbitrator shall be appointed upon the application of any party to the dispute or difference by the President or Vice-President for the time being of the [ICC] of London and the arbitration shall be commenced and carried out as soon as is possible.

32.5

The arbitration shall be carried out and conducted in London, England and shall be in the English language.

32.6

The finding of the arbitration shall be final and binding on the Parties and by way of appeal or otherwise no dispute or difference shall be referred to the courts or to arbitration (other than in compliance with the requirements of this Clause 32 in the case of arbitration) ….

32.7

Each of the Parties hereby represents and warrants that it can validly and unconditionally consent under Kazakstan Legislation to the referral of the matters as set out in this Agreement to an Expert, to the arbitration agreement contained in this Clause 32, as well as the other dispute resolution mechanisms referred to in this Agreement.

32.8

The Parties hereto agree to exclude any right of application or appeal to any court which would otherwise have jurisdiction in the matter in connection with any question of law arising in the course of the Expert or arbitration reference or out of the award. However the Parties may make an application to any court for enforcement of any Expert decision or arbitral award (including execution of such judgment), including enforcement of any such decision or award granting interlocutory relief against a Party, and for the obtaining of any evidence (whether by discovery of documents, interrogatories, affidavits or testimony of witnesses or whatsoever) which the Expert or arbitrators direct shall be admitted in the Expert or arbitral proceedings.”

The reference in subclause 32.1 to Clauses 17.8 and 17.9 and to an Expert and an Expert decision in subclauses 32.7 and 32.8 is to the fact that separate provision was made by Clause 17 for the determination of tariffs, with disputes resolved by an independent expert as there provided.

Although it did not in the event become material during the hearing, it should be recorded that there was also a provision, Clause 9, in the Transfer Agreement above referred to whereby:

“The [Concession Agreement’s] provisions regarding governing law and dispute resolution through arbitration shall be deemed to be incorporated in this Transfer Agreement.”

Clause 4 of the Deed of Adherence also incorporated Clause 32 by reference.

AESUK still continues to operate the concession, but it is apparent that matters have become progressively more fraught between the various parties, and there has been a number of proceedings in the courts of Kazakhstan, culminating in that brought by JSC against AESUK in the Specialist Inter-District Economic Court of East Kazakhstan Oblast (“the Economic Court”) by a Statement of Claim dated 12 June 2009. Those proceedings, to which I shall refer further below, prompted, after the failure on 28 July 2009 of AESUK’s motion to dismiss the proceedings by reference to Clause 32, the bringing of these proceedings in the Commercial Court, and the application for, and grant of, the anti-suit injunction referred to above.

I should as briefly as I can summarise the previous proceedings:

The proceedings referred to in paragraph 5 above, brought by JSC against AESUK on 12 June 2009 before the Economic Court, arose because of AESUK’s failure to comply, after doing so in 2008, with a repeated Request for Information by JSC on 2 April 2009 about the value of the concession assets. AESUK brought, on 24 June 2009, an application to dismiss such claim, based upon Clause 32 and the requirement for arbitration. The Economic Court on 28 July 2009 rejected AESUK’s motion to dismiss the claim, upon the ground that “[JSC’s] requirements consist of providing information about [JSC’s] property …and they are based on Articles 188, 264 [of the RK Civil Code], and references to the [Concession] Agreement are made to explain the reasons for transferring the right of property use from [JSC] to [AESUK]”. Further the Court relied on the judgment of the Supreme Court, in the proceedings between RK and Suntree and Tau, that Clause 32 was void.

The Economic Court thus proceeded to consider JSC’s claim pursuant to the Request for Information. AESUK then took three steps, more or less simultaneously:

An appeal by AESUK to the Regional Court, again relying upon Clause 32, seeking that the Economic Court’s judgment be quashed and seeking substitution of a ruling leaving JSC’s claim unconsidered by the Court (as opposed to in arbitration), was dismissed on 11 September 2009. The Regional Court held that JSC was entitled to the information requested in accordance with Article 188 of the RK Civil Code “since such an action is not restricted by the law or contract” and rejected AESUK’s reliance upon Clause 32, because it had been declared invalid by the Supreme Court on 8 January 2004.

Since September 2009, a considerable mass of evidence, including expert evidence as to Kazakhstan law, has been prepared for the purpose of the application and cross-application before me. The parties have agreed that the existing Request for Information by JSC, which had been the subject of the Kazakhstan proceedings, would be withdrawn, but no undertaking has been given, despite a request by AESUK’s solicitors dated 18 December 2009, either that a Request for Information would not be resubmitted, or that other proceedings would not be commenced in Kazakhstan, notwithstanding Clause 32. By letter dated 10 August 2009, Allen & Overy, on their various clients’ behalf, wrote to the Prime Minister of RK reserving its right to pursue claims in arbitration at the International Centre for the Settlement of Investment Disputes (ICSID), and I understand there has been some contact between the parties, but there has been no resolution, and no application for ICSID arbitration, and it has been necessary for this hearing to take place.

Mr Eder QC, who has appeared for AESUK with Ms Jessica Wells, relied before Andrew Smith J, and before me, on a Claim Form seeking the following:

Andrew Smith J granted an interlocutory injunction, in effectively the form sought, until a return date on 21 August 2009. On that date the injunctive relief was continued by Teare J by consent until after the termination of JSC’s application to challenge the jurisdiction of the Court, in a form whereby JSC was “restrained and/or prohibited from taking any steps to enforce and/or seek to satisfy the judgment of the … Regional Court dated 5 August 2009 (“the Judgment”) and will not request from the Claimant reimbursement of the state duty and/or provision of the information the subject of the Judgment and will, within seven days … withdraw the existing Request for Information … subject to [AESUK] not relying on the fact of withdrawal of the Request in any appeal of the Judgment”.

The hearing today so far as AESUK’s claim is concerned, by agreement between the parties (without prejudice to JSC’s case on jurisdiction), is for the grant of such declarations or further or other relief and the grant of a final order: alternatively the continuation of the interlocutory injunctive relief.

Necessarily prior to my decision in that regard has been the resolution of the Defendant’s jurisdictional challenge, which was of course opened first by Mr White, and responded to by Mr Eder, who necessarily combined his response to such challenge with his case for the relief he seeks. Mr White, in order properly to preserve the jurisdictional position, made no express response to Mr Eder’s submissions in the latter aspect, but inevitably I have taken account of all the submissions made by both sides in the course of my determinations.

Mr Eder sought to muster two fallback arguments, in case they should be necessary. One of them involved a proposed amendment to the Claim Form, relating to reliance, further or in the alternative, on Clause 9 of the Transfer Agreement, referred to in paragraph 4 above, and the other involved reliance in the alternative on a further jurisdictional “gateway”, pursuant to CPR 6.36 and Practice Direction B paragraph 3.1, which was not relied upon before Andrew Smith J.

I have not addressed either of these two arguments in the course of my determination of the present jurisdictional challenge. So far as the former is concerned, it became speedily clear that if Mr Eder could not succeed by reference to Clause 32, Clause 9 would not, at any rate at this stage, assist him in justifying the order he has obtained, and that in any event the existence of Clause 9 adds nothing to his jurisdictional case in respect of Clause 32. With regard to the latter case, I am satisfied that, although hereafter AESUK might, if unsuccessful at this stage, be able to rely on an alternative gateway, the well-established principles in Parker v Schuller [1901] 17 TLR 299 CA, reiterated as recently as 2007 in ED & F Man Sugar Ltd v Lendoudis [2007] 2 Lloyd’s Rep 579 would prevent that course: and that the case relied upon by Mr Eder of The Ikarian Reefer (No 2) [1999] 2 Lloyd’s Rep 621, in which retrospective permission to serve out was given where no permission had originally been sought (but the ground for it was not in doubt), but in which neither Parker v Schuller,nor subsequent cases recited in Lendoudis such as Metall und Rohstoff AG v Donaldson Luftkin & Jenrette Inc [1991] QB 391 CA, were cited, would not assist Mr Eder in justifying the order of Andrew Smith J.

Mr White’s jurisdictional challenge to the grant of the injunction by Andrew Smith J, to the intent that his order and consequently service of the proceedings on JSC should be set aside, were made on the following eight bases, although, as will be seen, some of them coalesced or ran in tandem:

For reasons which will become apparent, I take these together. Mr White’s case is as follows:

Mr Eder’s submissions in response are as follows:

I conclude, as Mr Eder must have anticipated, that he is unable to rely on s44, for the reasons plainly set out by Mr White. Consequently the gateway within CPR 62.5(1)(b) is not available. However, for the reasons given by Mr Eder set out sequentially above, I am entirely satisfied that there is jurisdiction for the Court to entertain a claim for a declaration, and therefore an anti-suit injunction, even where there is no actual or intended arbitration proceedings, where the relief is sought and, because, as Lord Hobhouse put it in Turner at paragraph 27, this Claimant is “relying upon a contractual right not to be sued in the foreign country … because of … an arbitration clause [and thus] he has by reason of his contract a legitimate interest in enforcing that right against the other party to the contract”.

I am however concerned to underline the submission of Mr White, which Mr Eder fully accepted, and which lay behind the judgment of Thomas J in Vale do Rio, namely that there should not be usurpation or ouster of the very arbitration jurisdiction which AESUK is anxious to enforce and engage. It is that to which, in my judgment, s1(c) of the 1996 Act is primarily directed, together with such provisions as s30 and s32. I bear in mind particularly the warning of Clarke LJ in Cetelem at paragraph 71 that the court “must take great care not to usurp the arbitral process”.The declaration to which AESUK’s claim should be limited, and which chimes with its intention, is that there be a declaration that JSC cannot bring the claim, the subject matter of the present Kazakhstan proceedings, or any other claim arising out of or in connection with any matter or thing in relation to the provisions of the Concession Agreement (as amended), otherwise than by commencing arbitration proceedings in the International Chamber of Commerce in London, and pursuant to its Rules: and that the injunction should be similarly directed to enjoining the present proceedings and the bringing of any other claims, as above described, otherwise than in ICC Arbitration. I conclude that this falls squarely within the permission that was given by Andrew Smith J, save that the relief is in a slightly different form, if necessary to be construed as falling within the provision for “further or other relief” expressly included in the Arbitration Claim Form.

As can be seen, I have been in respectful disagreement with Thomas J’s view as to the construction of CPR 65.2 in paragraph 59 of his judgment. I do not consider that that passage was necessary to his conclusion in relation to the facts of that case, and, for that reason, am in any event unpersuaded by Mr White’s submission that subsequent draftsmen have been concurring in his construction. However, that apart, I do not conclude, nor need to conclude, that I disagree with Thomas J’s conclusion, or with the practice that he thereby sanctioned and approved, albeit that it may cause the delay to which Mr Raphael referred in his book that, where a party wishes to make a claim in an arbitration, he should, or ought ordinarily to, commence that arbitration before seeking any substantive declaratory relief, particularly as he can, in the meantime, during what Morison J in Econet (at paragraph 14) described as the “crack between the moment of the application and the time when the arbitral tribunal can be formed” be protected by interlocutory orders. However, particularly, given Thomas J’s approach in paragraphs 51 and 52 to non-mandatory interpretation of s(1)(c), I conclude that a party which wishes, if to be sued at all, only to be sued in arbitration, does not need to follow that course, and can take the course followed by AESUK.

Accordingly, I have no doubt that there is at least a good arguable case both that AESUK had and has an arbitration claim, and that there is an available gateway. As to the gateway, I accept Mr Eder’s submissions as to the availability of 62.5(c) (while, for the reasons above, rejecting reliance on 62.5(b)).

If necessary I would conclude that he is also entitled to rely on the gateway in CPR 6 Practice Direction B (para 3.1(20), which provides that there may be service out of the jurisdiction where:

“20.

A claim is made -

(a)

under an enactment which allows proceedings to be brought and those proceedings are not covered by any of the other grounds referred to in this paragraph.”

Mr White submitted that this could not be the catch-all that it otherwise appears to be. He submitted that it must be in replacement for the old subclauses under RSC Rule 11(1)(o) to (s) and (u), which listed a large number of specific statutes under which claims could be made. But I do not see any connection between this obvious catch-all clause and the earlier, and now overtaken, method of listing a number of specific statutes (not to speak of the fact that the subparagraphs containing those specific statutes were interrupted by 11(1)(t), being a claim for money had and received). The claim for which this gateway is sought is the claim for an injunction under s37. This is an enactment otherwise falling within subparagraph (20)(a), and there is plainly a connection with the jurisdiction by virtue of the fact that the injunctive relief is sought in order to enforce a contract which is governed by English law. I see no reason why that gateway should not be available, so that, if I am wrong to conclude that the gateway at 62.5(c) is available for both the declaratory relief and the injunctive relief under s37, then permission should, in any event, have been granted in respect of the s37 claim, which would be sufficient for Mr Eder’s purposes. I conclude that there is at least a good arguable case for both gateways.

In those circumstances Mr Eder does not need his fallback gateway by reference to paragraph 3.1(6)(c) in Practice Direction B in respect of “a claim … made in respect of a contract where the contract … is governed by English law”. This argument, namely one that, even if he cannot fit within a gateway to enforce his claims in respect of an arbitration clause governed by English law, he can rely on the same clause simply as a matter of a contract governed by English law would seem to me more likely to be successfully met by Mr White’s Latin maxim referred to in paragraph 18(ii) above. However, in any event, I have concluded that I am not entitled to consider that issue at this stage, by virtue of the authority of Parker v Schuller and subsequent cases referred to in paragraph 16 above, preventing the judge reconsidering the original grant of service out of the jurisdiction from granting permission under a different paragraph from that under which permission was originally granted.

Mr White’s case on behalf of JSC was and is that AESUK is not party to Clause 32 or the Concession Agreement. This was conceded by Mr Eder in paragraph 8.2 of his skeleton for this hearing as follows:

“While AESUK is not a party to the ... Amended Concession Agreement, it is entitled to rely on the arbitration agreement in clause 32 by virtue of clause 23.10 of the ... Amended Concession Agreement, which provides: “All and any rights of [Tau] under this Agreement shall automatically extend also to ... [AESUK].”

This concession is now matched by a concession made in the course of the hearing by Mr White that, as a matter of Kazakhstan law, there is a good arguable case that Clause 32 confers a benefit on AESUK: indeed his expert Professor Maggs, in his second report, could be said to go further when he says (at paragraph 2(2)) that he now agrees with Professor Suleimenov (AESUK’s expert) that “substantive rights ... do extend to [AESUK] under Clause 23.10 of the Amended Concession Agreement”. There is therefore no need for any detailed analysis of the contractual arrangements for the purposes of my decision on this issue, or indeed any of the issues before me. What however Professor Maggs retains is his disagreement that this meant that, at Kazakhstan law, any procedural right to compel arbitration extended to AESUK.

However, Mr White conceded in the course of the hearing that the proper analysis is that, once it be the case that, at Kazakhstan law, AESUK is entitled to the benefit of Clause 32, it is then a question of English law as to whether AESUK can enforce its terms. This must be an issue which substantive English law governs, as being the law of the arbitration clause, and, insofar as any procedural matters arise, also English law as the lex curiae of the arbitration there specified. There was in the event no dispute between Counsel that the answer fell to be found, as a matter of English law, in the Contracts (Rights of Third Parties) Act 1999. The dispute was thus limited to one as to the effect of that Act.

Mr White referred to Through Transport, in which an injunction was refused (although a declaration was granted), where the insurer, New India, was not a party to the arbitration agreement, and wanted to seek to enforce and (unlike the present case) make a claim in, arbitration, but, (i) the 1999 Act was not referred to in that case, and indeed was not in play, because (ii) New India was not a party for whose benefit the relevant arbitration contract was entered into, nor became entitled to that benefit. But the issue here revolved and revolves wholly around sections 8 and 1 of the 1999 Act, as both Counsel accepted.

S8, to which Mr White referred, reads as follows:

“8.

Arbitration provisions

(1)

Where –

(a)

a right under section 1 to enforce a term (“the substantive term”) is subject to a term providing for the submission of disputes to arbitration (“the arbitration agreement”), and

(b)

the arbitration agreement is an agreement in writing for the purposes of Part 1 of the Arbitration Act 1996,

the third party shall be treated for the purposes of that Act as a party to the arbitration agreement as regards disputes between himself and the promisor relating to the enforcement of the substantive term by the third party.

(2)

Where –

(a)

a third party has a right under section 1 to enforce a term providing for one or more descriptions of dispute between the third party and the promisor to be submitted to arbitration (“the arbitration agreement”),

(b)

the arbitration agreement is an agreement in writing for the purposes of Part 1 of the Arbitration Act 1996, and

(c)

the third party does not fall to be treated under subsection (1) as a party to the arbitration agreement,

the third party shall, if he exercises the right, be treated for the purposes of that Act as a party to the arbitration agreement in relation to the matter with respect to which the right is exercised, and be treated as having been so immediately before the exercise of the right.”

Mr White submitted that this section simply dealt with how the third party should be treated “for the purposes of” the Arbitration Act 1996, such that it does not assist directly in relation to the question before me as to the bringing of an arbitration claim. But that, in my judgment, is plainly too blinkered a view of s8. S8 is certainly dealing with, and making entirely clear the position in relation to, arbitration. But the starting point is that there is a “right under s1 to enforce a term”. So the real issue can only relate to whether AESUK, as a matter of English law, has a right under s1 to enforce a term. S1 reads, in material part:

“Right of third party to enforce contractual term

(1)

Subject to the provisions of this Act, a person who is not a party to a contract (a “third party”) may in his own right enforce a term of the contract if –

(a)

the contract expressly provides that he may, or

(b)

subject to subsection (2), the term purports to confer a benefit on him.

(2)

Subsection (1)(b) does not apply if on a proper construction of the contract it appears that the parties did not intend the term to be enforceable by the third party.

(3)

The third party must be expressly identified in the contract by name, as a member of a class or as answering a particular description but need not be in existence when the contract is entered into.

(4)

This section does not confer a right on a third party to enforce a term of a contract otherwise than subject to and in accordance with any other relevant terms of the contract.

(5)

For the purpose of exercising his right to enforce a term of the contract, there shall be available to the third party any remedy that would have been available to him in an action for breach of contract if he had been a party to the contract (and the rules relating to damages, injunctions, specific performance and other relief shall apply accordingly).”

There is in my judgment no doubt whatever that, at English law, AESUK, being entitled to the benefit of Clause 32, is entitled to the benefit of, and consequently entitled to enforce, by way of declaratory and injunctive relief, its right to arbitration, pursuant to s1, and, in due course, s8, of the 1999 Act.

It is in this context that the “Hot and Cold Issue” arises, because it is only in relation to the inconsistent statements made in various Kazakhstan proceedings as to whether or not AESUK is a party to Clause 32 that the argument is sought to be made by Mr White. He relies on the decision of Sir Nicholas Browne-Wilkinson V-C in Express Newspapers plc v News UK Ltd [1990] 1 WLR 1320, in which he concluded that Express Newspapers could not blow hot and cold by taking inconsistent positions in two sets of English proceedings, so that it was not entitled to rely on an otherwise available defence in the second proceedings. He also relies on a statement by Mr Raphael in his book, at paragraph 8.13, when he says “If the injunction claimant behaves in a way which is inconsistent with the contractual forum being the sole forum for dispute resolution, such as himself starting proceedings in the non-contractual foreign court, this can be a powerful factor against enforcing an exclusive forum clause.” Such kind of “inconsistent behaviour” would be of course behaviour of an entirely different character to that alleged in this case. What is said is that Suntree and Tau, AESUK’s parents, made statements in the proceedings referred to in paragraph 6(iii), when dealing with the fact that AESUK had brought the proceedings referred to in paragraph 6(ii) above, in two of its pleadings that AESUK was not a party to the Concession Agreement and had “never assumed any rights or obligations under the Agreement and [does] not possess such”. JSC itself averred the contrary, namely that AESUK is such a party – of course in its turn entirely inconsistently with what it is arguing now, in one of its (responsive) pleadings. As to all this:

I am entirely satisfied that on the fourth and seventh issues JSC fails.

Again the starting point is that English law governs the Clause. As set out in paragraph 17(v) above, at English law an arbitration clause falls to be construed very widely in this regard. Mr White says that the claim in the Kazakhstan proceedings is a proprietary claim under Articles 188 and 264 (as referred to in paragraph 7 above), and that JSC is not relying on the Concession Agreement and that no dispute arises out of, or in connection with, it. However, JSC’s case is set out in the papers before me:

AESUK put this in issue (see paragraph 8(ii) above). On any analysis at English law there must be at least a good arguable case that the claim made in the Kazakh proceedings by JSC (and denied by AESUK) necessarily involves a dispute in connection with the Concession Agreement and whether the ‘proprietary’ claim is trammelled by, or arises notwithstanding, the Agreement: and thus falls within the scope of Clause 32.

Mr White accepts that Clause 32 must be construed at English law, by which it is governed. He did not raise any argument to counter the fact that at English law the construction of Clause 32 is clear:

If the English courts were applying a policy similar to that of the Kazakhstan Court, whereby there cannot be any arbitral inhibition upon a decision about tariffs, then this Clause would not therefore fall foul of it. Mr White submits however that, notwithstanding, the English Court must respect the conclusion of the Kazakhstan Supreme Court that Clause 32 offended against its public policy. Mr White recognises that the starting point must be s32 of the Civil Jurisdiction and Judgments Act 1982, which reads in material part as follows:

“32(1) Subject to the following provisions of this section, a judgment given by a court of an overseas country in any proceedings shall not be recognised or enforced in the United Kingdom if –

(a)

the bringing of those proceedings in that court was contrary to an agreement under which the dispute in question was to be settled otherwise than by proceedings in the courts of that country …

(2)

Subsection (1) does not apply where the agreement referred to in paragraph (a) of that subsection was illegal, void or unenforceable or was incapable of being performed for reasons not attributable to the fault of the party bringing the proceedings in which the judgment was given.

(3)

In determining whether a judgment given by a court of an overseas country should be recognised or enforced in the United Kingdom, a court in the United Kingdom shall not be bound by any decision of the overseas court relating to any of the matters mentioned in subsection (1) or (2).”

He accepts therefore that the decision of the Kazakhstan Court prima facie falls within s32(1)(a), so that the English Court must not recognise or enforce it. He submits however that the provisions of subsections (2) and (3) entitle this Court to recognise the Kazakhstan Court decision, and submits that this Court should do so. He submits that the decision, particularly that at first instance by Waller J, in Philip Alexander Securities and Futures Ltd v Bamberger [1997] I.L.Pr 73, should be followed. In that case a German court had refused to recognise an arbitration agreement because such arbitration was overridden by local consumer legislation. Waller J distinguished such anti-suit injunction cases as The Angelic Grace [1995] 1 Lloyd’s Rep 96, because, unlike in that case where it was not “contemplated that the Italian judge … would be offended by the grant of an injunction or regard it as an interference”, the “German courts were apparently taking the view that their citizens have the right, as consumers, to come to their courts on the basis that under German law arbitration agreements were invalid” (paragraphs 82-83). Mr White recognised that the same conclusion was not reached in Akai Pty Ltd v People’s Insurance Co Ltd [1998] 1 Lloyd’s Rep 90, in relation to Australian insurance law (at p100) or by the Court of Appeal in OT Africa, in relation to a Canadian consumer statute, but in this case there has been a clear finding, specifically dedicated towards this clause, by the Supreme Court of Kazakhstan in the exercise of its own public policy, and the English court should exercise the same caution, and reach the same conclusion, as in the case of Philip Alexander Securities.

Mr Eder sought to explain the Philip Alexander caseas affected by the particular care being taken by the English court not to exercise a jurisdiction inconsistent with that of a court of another member of the European Community, as was suggested by Aikens J in The Ivan Zagubaski [2002] 1 Lloyd’s Rep 106, and points to the subsequent development, which now makes it impossible for an English court to grant an anti-suit injunction in such a case, since TheFront Comor [2009] 1 Lloyd’s Rep 413 (ECJ) – not of course applicable here. He also points out that Leggatt LJ’s reasons in the Court of Appeal at paragraph 47-48 for upholding the refusal of an anti-suit injunction were not quite the same as those of Waller J. But in any event, Mr Eder returns to s32. He submits that s32(1) is the beginning and end in this case. The contract was governed by English law, which provided for a binding arbitration clause, and the UK court should not recognise the Kazakhstan court’s decision to the contrary. He refers to the decision on very similar facts by Cooke J in Tamil Nadu Electricity Board v ST-CMS Electric Co [2008] 1 Lloyd’s Rep 93, a case in which Akai and OT Africa were cited, although Philip Alexander Securities was not. In Tamil Nadu, Cooke J was not deciding the grant or otherwise of an anti-suit injunction, but the setting was almost identical, in the sense that one party was asserting that it was not bound by the terms of an arbitration clause, which was governed by English law. It was asserted by that party that Indian law relating to determination of tariffs rendered the arbitration agreement unenforceable. Although there was no decision of an Indian court, there was no doubt about the effect of the Indian statutory legislation, and Cooke J concluded (at paragraph 40) that:

“Whatever the changes in the substantive law of India, which constitutes the proper law of the [main agreement], and whatever Indian issues of policy inform those changes, that cannot affect the proper construction of the separate arbitration agreement, which is governed by English law and which will take no account of such changes unless matters of English public policy so require.”

This applies all the more in this case where, although there is a decision of the foreign court, the decision of that court, which concluded that the clause offended against Kazakhstan public policy, was arrived at as a result of a misconstruction of the clause governed by English law.

I am entirely satisfied that there is at least a good arguable case that the Kazakhstan court decision has no effect on this English law arbitration clause, and consequently that it is valid and enforceable:

The relevant events are set out in paragraph 8 above. AESUK’s motion to dismiss by reference to Clause 32 failed on 28 July in the Economic Court. It is common ground that there is only an opportunity to appeal once in the Kazakhstan court, i.e. there is nothing similar to our system of bringing an interlocutory appeal, or appealing on preliminary points. AESUK’s expert, Professor Suleimenov, at corrected paragraph 99 of his report explains that:

“a ruling of the court to dismiss a petition on lack of jurisdiction (ruling to dismiss an application to stay the statement of claim by virtue of the existence of an arbitration agreement) is classified as a ruling that may not be appealed in a court appeal separately from the decision of court on the substance of the dispute ... In accordance with Article 344 ... objections with respect to this court ruling may only be included in an appeal from a final court decision on the substance of the dispute.”

The Economic Court went straight on to deal with the merits at the hearing on 5 August (which AESUK, armed with the benefit of Andrew Smith J’s Order referred to in paragraph 11(ii) above, sought unsuccessfully to adjourn). At the same time as presenting its application to this Court, AESUK put in under protest (as set out in paragraph 8(ii) above) a defence on the merits. It is also common ground that at Kazakhstan law there is no such thing as a protest to the jurisdiction. The court will take no notice of it. JSC’s second expert, Dr Mukhamedshin said in his report as follows:

“96.

... Kazakh law simply does not allow a defendant to not submit to the jurisdiction of a Kazakh court once the court finds that it has the jurisdiction to adjudge the case.

97.

It is the cornerstone principle of Kazakh law that a court judgment that comes into force must be complied with by all. The concept of reserving the right to arbitrate and thereby to disobey or disregard the judgment which declares the arbitration clause invalid is simply alien and non-existent in Kazakh law. The law in Kazakhstan does not allow parties to reserve the right to arbitrate a dispute regardless of the outcome of the court case.”

After losing on the merits (after the unsuccessful attempt to adjourn), AESUK then appealed on both grounds, as it was entitled to do, and lost (paragraph 9 above). There has, at any rate as yet, been no further appeal to the Supreme Court. The conclusion of JSC’s expert Dr Mukhamedshin is (at paragraph 97):

“It must be clearly understood therefore that for Kazakh law purposes, AES submitted to the jurisdiction of the Kazakh Court.”

The conclusion of Professor Suleimenov, is:

“98.

In my view, the actions of AESUK described above clearly demonstrate that AESUK did all it could to contest the jurisdiction of the Kazakhstani court with respect to this case at each case of the judicial proceedings.

and then in corrected paragraph 99

Mr White naturally starts his case that there has been submission by reference to s33 of the Civil Jurisdiction and Judgments Act 1982, which reads in material part:

“Certain steps not to amount to submission to jurisdiction of overseas court

(1)

For the purposes of determining whether a judgment given by a court of an overseas country should be recognised or enforced in England ..., the person against whom the judgment was given shall not be regarded as having submitted to the jurisdiction of the court by reason only of the fact that he appeared (conditionally or otherwise) in the proceedings for all or any one or more of the following purposes, namely –

(a)

to contest the jurisdiction of the court;

(b)

to ask the court to dismiss or stay the proceedings on the ground that the dispute in question should be submitted to arbitration or to the determination of the courts of another country;

(c)

to protect, or obtain the release of, property seized or threatened with seizure in the proceedings.”

He submits that AESUK engaged in the merits, and consequently submitted to the jurisdiction of the Kazakhstan courts, albeit doing so under protest and at the same time as bringing their proceedings before this Court. He relies on passages in Dicey, Morris & Collins on the Conflict of Laws (14^th Ed) at 14-063 to 14-066. At 14-063 the authors state “If his challenge to the jurisdiction of the foreign court is successful, no question of submission arises. If it is unsuccessful and he goes on to contest the case on the merits, he will have submitted to the jurisdiction of the foreign court.” The same appears in paragraph 14-064: “If the defendant in the foreign court fails on any of these issues, but nevertheless goes on to defend the case on the merits, he will be regarded as having submitted.” In paragraph 14-066 it is stated: “Some systems of law require or allow a defendant to plead to the merits at the same time as, and as an alternative to, an objection to the jurisdiction ... [A plea on the merits put forward in this way] ... should not ... be ... regarded [as a submission], provided at least that, having lost on the issue of jurisdiction, the defendant does not put forward his case on the merits.”

Mr White referred to Akai at 96-97, where Thomas J states: “… the question for the court, in determining whether the steps taken by a party in an overseas court amounts to a submission ... is whether the step was only necessary or useful if the party was not objecting to the jurisdiction. A step that is not consistent with or relevant to the challenge to the jurisdiction, or obtaining a stay, will usually be a submission to that jurisdiction. The Court must consider the matter objectively: it must have regard to the general framework of its own procedural rules, but also to the domestic law of the Court where the steps were taken.” Then, by reference to s32(3), set out in paragraph 38 above, Thomas J states that that section “makes it clear that the English Court is not bound by the decision of the foreign Court or that a person has submitted; it must follow that an English Court is not bound by the characterisation of the step as a submission merely because the law of the foreign Court would regard it as a submission.”

Although there is no Kazakh law put in expressly on the point, Mr White suggests that AESUK could have taken the course of not appearing at the merits hearing, instead of doing what they did do (paragraph 8(iii) above), and still have been able thereafter to appeal, if not the merits case then in any event the jurisdiction case. I have already set out above in paragraph 45 Professor Suleimenov’s opinion that AESUK had de facto no other choice than to take the course it did. Mr White, while accepting that, in a passage relied on by Mr Eder in the Atlantic Emperor No 2 [1992] 1 Lloyd’s Rep 624 at 633, the Court of Appeal per Neill LJ stated that it was important that s33 should not be construed too narrowly, nevertheless pointed out that in that case the defendant was found to have submitted.

Mr Eder points out that in Akai Thomas J concluded that what was in fact an unconditional entry of an appearance did not amount to a submission, and he submits that the taking of such a step is more significant than the course taken by AESUK in this case, and that the assessment must be one of fact in each case:

It is clear that even if Dr Mukhamedshin rather than Professor Suleimanov is right as to the effect in Kazakh law of what occurred, I am not bound by the characterisation by a Kazakh court (per Thomas J, quoted in paragraph 48 above). In my judgment the significant fact is the simultaneity and combination of the three steps referred to in paragraph 8(i), (ii) and (iii) above, coupled with the fact that even the appearance at the merits hearing under cover of the purportive protest was accompanied by production of, and reliance upon, Andrew Smith J’s order. The purpose of all this was in my judgment still to continue to protest the jurisdiction, notwithstanding the defeat at what was then a first instance court. Mr White understandably described what occurred as AESUK trying to ‘have their cake and eat it’, but in my judgment when they took the steps in question they were still pursuing arbitration, and the three passages referred to in paragraph 47 above from Dicey, Morris and Collins can be simply distinguished by reference to the fact that in this case AESUK did not fail and then “go on[my underlining] to defend the case on the merits”. During the period 28 July to 4 August 2009 it was at all times still endeavouring to contest the jurisdiction, and its revelation of its case on the merits in the course of that, and prior to its unsuccessful appeal, did not in my judgment amount to a submission.

For the purposes of Mr White’s challenge to the jurisdiction, there is the issue whether the relevant test is, as he submits, a good arguable case, or a serious issue to be tried (see paragraph 17(vi) above). Without resolving that issue, I am satisfied that Mr Eder has at least a good arguable case that there was no submission or waiver, and that AESUK is still entitled to pursue its arbitration claim.

Mr White originally submitted that AESUK did not lay before Andrew Smith J the fact that there might be facts such as to suggest that there had been a submission because of a reliance in the Kazakhstan courts by AESUK on the merits. In the course of the hearing however he accepted that he was wrong in that regard. All that he is left with is his case that the allegedly inconsistent statements of Suntree and Tau as to whether AESUK was a party to and/or entitled to the benefit of the Concession Agreement was not brought to the judge’s attention (relevant to the Hot and Cold Issue). In the circumstances, I am entirely satisfied that the omission of such matter was not material.

I therefore dismiss the jurisdiction challenge, but I have done so on the basis that the declaratory and injunctive relief should be limited as set out in paragraph 21 above. To obtain an anti-suit injunction it is sometimes said that a claimant must show that the conduct of the defendant has been vexatious. I do not myself consider that it is necessary so to find if by that is meant more than (in the case, for example, of parallel proceedings), the claimant has been ‘vexed’ by this in the sense of the old Latin tag ‘nemo debet bis vexari’. In this case it is simply that I am to be satisfied that AESUK is entitled to rely on the arbitration clause, and consequently entitled to relief to restrain a breach of it. I am satisfied that there is, as I have said, at least a good arguable case that it is in an ICC arbitration (and if necessary by further reference, whether under s32 or s67) that any remaining issues can and should be canvassed, including any question going to the jurisdiction of the arbitrators.

It is in that context that I turn to consider the substantive claim, now in the notional absence of Mr White. I have given careful consideration to each of the issues, and am satisfied that for the reasons I have given none of them stand in the way of or amount to an arguable defence to the grant of the (limited) final declaratory and injunctive relief to which I conclude the Claimant is entitled. It may be that no arbitration will take place, and that JSC will conclude that it will not further pursue its claim under the Request for Information. However it has become entirely clear to me in the course of these proceedings that the reality of the dispute between these parties does not relate to the present Kazakhstan proceedings, but relates to the forum in which any other outstanding disputes may fall to be resolved arising in respect of this 20-year concession. I am satisfied that any dispute prima facie falling within Clause 32 ought to be pursued by JSC in ICC Arbitration, and, as I have said, in and during such arbitration there will be the opportunity, if so advised, for any proper challenge to be made to the jurisdiction of the arbitrators or the applicability of the arbitration clause. I am satisfied however that, on the facts before me, the relief should be granted, and on a final basis.

I shall hear Mr Eder on the precise form of the relief, and also in relation to his wish to seek an amendment in respect of Clause 9, a matter which presumably will have to be considered before the order is finally drawn up.