RSM Production Corporation v Gaz du Cameroun SA

Before considering GdC’s grounds for resisting the continuation of the ASI order, it is convenient to set out certain matters which are or have become clear.

First, I am in no doubt, on the material before me, that the arbitration agreement in the SA was binding on the parties, including GdC. I did not understand GdC to dispute this.

In the second place, I regard it as clear that the seat of an arbitration under the SA would be London. The SA dispute resolution clause provided that, subject to specific provisions of the same clause, Article 16 of the PA should apply. Article 16.5 of the PA provides that the arbitration ‘shall take place in London, United Kingdom’.

Third, there was a debate between the parties as to whether the order granted by HHJ Pelling KC had restrained GdC from commencing arbitration proceedings under the JOA. During the hearing before me, it was made clear on behalf of RSM that it did not contend that the order had that effect. While it did not accept that GdC was entitled to commence ICC arbitration proceedings in Texas under the JOA in respect of its claim for the sum it contended to be due under Article 7.5 of the JOA, RSM stated that the injunction had been intended to preclude court proceedings, and in particular the Cameroonian proceedings, and not arbitration. Given this stance, an order was made by consent, immediately following the hearing, which made this point clear.

I now turn to consider GdC’s grounds for resisting the continuation of the order.

The first ground is that the claim which RSM seeks to enjoin is not subject to the arbitration agreement in the SA, or at least that RSM cannot show a high degree of probability that it is.

To understand this argument it is necessary to say rather more about the parties’ positions on the merits of the claim which GdC has initiated. RSM’s case is that it had, in the UNCITRAL arbitration, been claiming that the remediation operations relating to LA-108 had been conducted by GdC on a Sole Risk basis; but that in the SA it had settled that claim, and had agreed to pay, and had, by netting, paid, its proportion of the relevant costs; and that there was therefore no possibility of a claim for an Article 7.5 penalty. That was a matter which had been concluded and settled by the terms of the SA. GdC on the other hand, contends that its claim is made under the terms of the JOA, and that it was not settled by the SA. The JOA had remained in full force and effect; and the provisions of the SA on which RSM particularly relied were not a settlement of the issue as to whether the remediation works on well LA-108 had been conducted by GdC on a Sole Risk basis but had been intended only as a means of holding the ring.

The merits of that dispute are not a matter for the court. I consider, however, that the issue of whether GdC has a valid claim or is a claim which has been settled is a dispute arising out of the SA. Given that that is, and has from the first intimation of the relevant claim been, RSM’s primary response to that claim, it was (subject to GdC’s argument as to the proceedings being for the purposes of obtaining security, which is considered below) a breach of the arbitration agreement in the SA to commence court proceedings in Cameroon, or elsewhere, on the claim. Such proceedings would have involved the subject matter of the dispute being litigated and potentially adjudicated in a forum other than that agreed by the parties.

I accept that there is a stronger argument that it would not, as a matter of the construction of the SA, have been a breach of the arbitration provision therein for GdC to have commenced an ICC arbitration under the JOA in relation its claim for the premium it says is due in respect of well LA-108. However, GdC did not commence such an arbitration. Furthermore, the dispute resolution clause of the SA seeks to make express provision for cases in which a claim may be made under the JOA or PA and there is also a dispute under the SA. As I have set out above, it says ‘… the parties agree that any dispute under this [SA] may be consolidated with any dispute that arises under the JOA and/or the [PA] in a single arbitration under the UNCITRAL Rules (or, where applicable, the ICSID).’ In my view the intention and effect of this provision is that where there is simultaneously both a dispute which arises under the JOA (or PA) and also a dispute arising from the SA, then both are treated as one dispute which may be arbitrated under the UNCITRAL or ICSID Rules and subject to the arbitration provisions of Article 16 of the PA. I should clarify that in ‘arbitration provisions’ I do not include Article 16.3, which would apply only to any matters arising under the PA, and not under the JOA or SA, which have their own choice of law provisions.

The provision from the SA’s dispute resolution clause which I have cited is not, in my judgment, simply one which provides that arbitrations commenced under the JOA and under the SA can be consolidated. The clause states that it is the disputes which may be consolidated in a single arbitration. Furthermore, if there were an arbitration under the JOA (ICC Rules) and also under the SA (UNCITRAL or ICSID Rules) consolidation of the arbitrations could not reliably be assured. Instead, the construction of the clause which I consider to be correct allows a party to refer to arbitration under this provision any dispute which arises under the JOA, where a dispute also arises under the SA. This is consistent with what may be assumed to be the intention of the parties, to seek to have a ‘one stop shop’, rather than having simultaneous disputes dealt with in separate arbitrations.

The language of the provision is that the dispute under the JOA or the PA ‘may’ be consolidated with a dispute under the SA in a single arbitration. In my view, this provides for an option to invoke the clause and have a consolidated dispute in a single arbitration. Such option could be exercised by the commencement of such an arbitration, or by requiring the other party to submit the dispute to such an arbitration by making an unequivocal request to that effect and/or by applying for a corresponding stay of any relevant proceedings. This is in line with the approach of the courts to clauses which provide that one or both parties ‘may’ submit a dispute to arbitration: see Aiteo Eastern E&P Co Ltd v Shell Western Supply [2022] EWHC 2912 (Comm), at [17]-[18]. The statement in Mr Escobar’s witness statement to the effect that RSM intended to invoke the provision was, I think, itself sufficient to exercise the option; but in any event, RSM has issued a Notice of Arbitration dated 2 November 2023 said to be in accordance with Article 3 of the UNCITRAL Arbitration Rules, commencing such an arbitration. That Notice provides, in part (in para. 37):

Given these matters, I am satisfied to a high degree of probability that the arbitration provision in the SA is binding on GdC and applicable to its substantive claims made before the Cameroonian courts.

GdC contends that the Cameroonian proceedings were not, in any event, a breach of any arbitration provision because they were intended only to provide security for a claim which would be pursued in ICC arbitration.

In my judgment, the evidence of what happened is not consistent with GdC’s case that the Cameroonian proceedings were to obtain security in support of an arbitration claim. Specifically, GdC did not commence any arbitration. It could have done so, certainly up to the date of HHJ Pelling KC’s order. There was certainly nothing to have prevented it from doing even as late as the point at which it commenced the substantive proceedings in Cameroon on 27 September 2023, and yet it did not do so. Moreover, in its Sommation de Payer, and in the proceedings which it brought no mention was made of the claim being sought as security for a sum intended to be pursued in arbitration. Equally, when, after the grant by HHJ Pelling KC of the ASI on 4 October 2023, GdC’s solicitors sought certain variations of the order on 10 October 2023, none was designed to permit (or clarify) that GdC could commence an arbitration.

I therefore conclude that the Cameroonian proceedings were not begun for the purpose, and certainly not for the sole purpose, of obtaining security or interim relief in relation to a claim to be brought in arbitration.

Mr Leabeater KC submitted, however, that whatever the position when the proceedings began, it had now been made clear by GdC that the Cameroonian Proceedings are only intended henceforward to provide security or an interim attachment measure; and that, in accordance with this, it had said that it intended to stay the substantive Cameroonian proceedings. For that reason, there was no justification in the continuation of the injunction.

I did not consider that this provided a sufficient reason why the order should not be continued, for the following reasons:

Given these matters, the current stance of GdC does not provide a reason why the ASI should not be continued.

GdC’s third ground for resisting the continuation of the injunction is that this court has no jurisdiction over it.

I can deal with this point briefly. I have already set out the Governing Law and Dispute Resolution Clause of the SA. It provides that the parties agree that service of ‘any claim form, notice or other document upon GdC for the purpose of any proceedings or disputes begun in England and/or Wales shall be duly served upon it’ if delivered to VOG’s stated address. This is a contractually agreed method of service within CPR r. 6.11. The Arbitration Claim Form was served in accordance with that agreement, within the jurisdiction.

Further, and although it is unnecessary to consider in detail because of the applicability of CPR r. 6.11, RSM was entitled to serve GdC out of the jurisdiction without permission, by reason of CPR r. 62.5(2A), as the seat of the arbitration pursuant to the SA ‘is or will be in England’.

Accordingly I consider it clear that the English court has jurisdiction over GdC in respect of the claim in the Arbitration Claim Form.

GdC’s fourth ground is that RSM failed to make a full and frank presentation of the case on the ex parte application to HHJ Pelling KC. There are two points relied upon. It is said, first, that there was a failure to draw the court’s attention to the argument that by seeking interim measures before the Cameroonian courts there was no breach of any arbitration agreement; and second, that there was a failure to identify that the injunction prevents GdC from commencing arbitration proceedings in Texas. These failures are said to be grounds for refusing RSM the relief it now seeks.

I do not consider that there is any substance in these points. As to the first, had there been an indication that the Cameroonian proceedings were being pursued for the purpose of obtaining security or interim relief in relation to an anticipated arbitration, then RSM should have referred to that, and doubtless should also have drawn attention to the line of authority which indicates that the obtaining of an arrest or other analogous relief in support of a claim in arbitration is not a breach of an arbitration clause. But, as I have said, there was no such indication. Furthermore, reference to this line of authority would have made no difference, in the absence of any reason for considering it applicable.

As to the second, I do not consider that it was incumbent on RSM to inform the judge that, on one interpretation, the order had the effect of preventing GdC commencing an ICC arbitration, in circumstances where GdC had had the opportunity to commence such an arbitration, but had neither done so nor said that it was going to do so.

In any event, had this been a concern, I would have expected GdC promptly to have sought clarification of this point. That was not done. I am left with the impression that this point is an afterthought. Moreover, as I have said, it has now been clarified that the ASI does not prevent the commencement of such an arbitration, and this point does not, in my view, tell against the continuation of the injunction as now clarified.

Having considered all the points made by GdC, I am of the view that the ASI should be continued. Specifically, and to repeat, I am satisfied to a high degree of probability that there is an arbitration agreement which governs the dispute in question. I do not consider that there are strong reasons not to grant an injunction restraining its breach.

I can see no good reason why the relief granted should not now be final. There does not seem to be a real prospect of evidence hereafter coming to light that would make a significant difference to the issues to be decided.

I also consider that it is appropriate to make a mandatory order requiring the discontinuance of the substantive Cameroonian proceedings. That would do little more than express what is expected and assumed to occur when final injunctive relief is granted preventing a defendant from prosecuting, pursuing or otherwise continuing proceedings brought in breach of an arbitration provision. Such a mandatory order will give proper effect to the contractual position, and protect against any risk of an adverse judgment in Cameroon even without further positive steps taken by GdC in the Cameroonian proceedings.

I will receive further submissions, if necessary, as to what should be the precise form of the order, to reflect the decisions which I have reached and expressed above.