Mordchai Ganz v Petronz FZE & Anor

This is an arbitration claim brought by the Claimant, Mr Mordchai Ganz (“Mr Ganz”) against the First Defendant, Petronz FZE (“Petronz”) and the Second Defendant, Mr Abraham Goren (“Mr Goren”). Mr Ganz brings this arbitration claim against Petronz and Mr Goren under both Section 67 (challenge to substantive jurisdiction) and Section 68 (serious irregularity causing substantial injustice) of the Arbitration Act 1996 (“the Act”).

Mr Ganz is a citizen of and ordinarily resident in Israel.

Petronz is a Dubai Airport Free Zone Enterprise in the United Arab Emirates.

Mr Goren is also a citizen of and ordinarily resident in Israel.

Mr Goren and Mr Ganz owned shares in Gi3 Holdings Limited (“Gi3”), a company registered in the Republic of Cyprus. (There was an issue as to whether the shares of Mr Goren which were held by Mrs Goren were owned beneficially by Mrs Goren but nothing turns on this).

Gi3 in turn held (convertible preference) shares in a Chennai-registered company, Seder Housing Private Limited (“Seder”), which, through subsidiaries, owned land in India, and which it was believed would be capable of development for housing (the “Project”). Parrot Grove Private Ltd (“Parrot Grove”) held the ordinary shares.

The dispute centres on a share purchase agreement in writing dated “as of” 20 May 2015 (“the SPA”) pursuant to which it is alleged that Mr Ganz and Mr Goren agreed to sell their shares in Gi3 to Petronz for the US$ equivalent of 420 million Indian Rupees, completion to take place on 30 July 2015 (or earlier by agreement). The SPA also provided for an advance of the US$ equivalent of 130 million Indian Rupees to be paid by 30 June 2015.

The substantive law of the SPA is English law.

The SPA also makes express provision for the final and binding resolution of future disputes in respect of it by arbitration pursuant to the rules of the London Court of International Arbitration (“LCIA”) (“the Arbitration Agreement”).

Petronz did not pay the purchase price for the shares pursuant to the SPA and by a request for arbitration made initially on 21 December 2017, Mr Ganz referred the dispute with Petronz to arbitration pursuant to the Arbitration Agreement.

On 6 February 2018, the LCIA Court appointed Ms Marie Berard as sole arbitrator in the arbitration (“the Tribunal”).

On 21 June 2018, in her Procedural Order No.2, the Tribunal, amongst other things, joined Mr Goren to the arbitration.

In a letter to the LCIA of 24 January 2018 and its letter to the Tribunal of 15 February 2018, Petronz challenged the Tribunal’s substantive jurisdiction. It did so on the basis that it had not signed an agreement with Mr Ganz or anyone else concerning the shares of a Cypriot company, the signature was not its and the SPA was a forgery. Save for also challenging Mr Goren’s joinder, thereafter Petronz took no part in the arbitration.

Following a procedural hearing by telephone on 4 September 2018, attended by representatives on behalf of Mr Ganz and Mr Goren, the Tribunal gave directions for a preliminary issue on substantive jurisdiction described as follows:

Following statements of case limited to the preliminary issue, requests for documents, witness statements and expert evidence (as to the authenticity of the attachment to an email), and following exchange of opening notes/skeleton arguments, there was an evidentiary hearing of the preliminary issue between 5 and 7 November 2019 at which Mr Ganz and Mr Goren were represented and both Mr Ganz and Mr Goren gave evidence and were cross examined. Mr Swirsky, a Chartered Accountant, who was retained initially to assist Mr Ganz’s company Motiganz in the resolution of its indebtedness with Standard Chartered (referred to below) and subsequently to conduct a review of the Project, also gave evidence.

Thereafter the two parties submitted written closing submissions and submissions in reply.

On 31 March 2020, the Tribunal published her final award on substantive jurisdiction (“the Award”).

In the Award, the Tribunal declared that:

Mr Ganz requested an Additional Award as against Mr Goren alone on 28 April 2020, the same date that he issued these proceedings. Mr Ganz invited the Tribunal to uphold the Arbitration Agreement in the SPA as between Mr Ganz and Mr Goren only.

The Tribunal responded to the request for an Additional Award on 8 July 2020 in Procedural Order No.5. The Tribunal stated that that the Additional Award requested had already been expressly determined in the Award of 31 March 2020, referring to paragraphs 247 and 248 of the Award, in particular.

On 28 April 2020 the arbitration claim form was issued.

By an order of 23 June 2022 I refused on paper the Claimant’s application for an extension of time to serve Petronz and extend the validity of the claim form.

By application notice dated 18 January 2024 Mr Goren applied for the arbitration claim to be dismissed without a hearing and for the hearing listed for 27-29 February 2024 to be vacated.

Foxton J responded through the Court Listing office in the following terms:

Mr Ganz’s primary challenge to the Award is made under Section 67(1)(a) of the Act, in that he challenges the Tribunal’s conclusions as to her substantive jurisdiction and seeks from the Court, following a re-hearing of the question of substantive jurisdiction, variation of the Award or the setting aside of the Award in whole or in part, pursuant to Section 67(3)(b) and (c).

Mr Ganz also challenges the Award under Section 68(2)(a) of the Act i.e. that the Tribunal failed to comply with her general duty under Section 33 of the Act to act fairly and impartially as between the parties and/or adopt procedures suitable to the circumstances of the particular case so as to provide a fair means for the resolution of matters referred to her.

Originally Mr Ganz sought a finding that the SPA is a valid and binding agreement on all three parties to it; and/or the Arbitration Agreement is a valid and binding agreement on all three parties to it. Mr Ganz not having been successful in serving Petronz with these proceedings prior to the expiry of the validity of the claim form on 29 April 2021, nor in extending its validity thereafter, by consent order 12 February 2024, his claim is now limited to the relief he seeks in paragraphs 48 (ii) (c) and (e) of his claim form, namely: a) the Arbitration Agreement is a valid and binding agreement between Mr Ganz and Mr Goren; b) the Tribunal has substantive jurisdiction over Mr Ganz and Mr Goren.

I deal first with Mr Goren’s application to dismiss the claim. The application was supported by the second witness statement dated 17 January 2024 of Mr Elliot Lister, a Partner of Asserson Law Offices acting for Mr Goren.

Mr Ganz responded to the application with a witness statement dated 24 January 2024 from Ms Beatrice Bass of DMH Stallard LLP acting for Mr Ganz, and Mr Lister made a third witness statement dated 30 January 2024 in response.

In his written submissions Mr Lister for Mr Goren acknowledged that the application to strike out was “somewhat superseded by the hearing in respect of which this skeleton is prepared”. However, he submitted that he remained of the view that Mr Ganz’s case does not have real prospects of success. Mr Goren relied on the two witness statements filed in support of his application to show the delays and referred in particular to my order refusing Mr Ganz’s application for an extension of time to serve Petronz and extend the validity of the claim form. It was submitted that Mr Ganz then took a further three months to do anything about arranging a hearing in respect of Mr Goren.

In his oral submissions Mr Lister submitted that the Court, in accordance with the Commercial Court Guide, can dismiss the claim where the challenge leads the Court to consider that the claim has no real prospect of success and, even though this is supposed to be a rehearing, the Court can dismiss this claim as summary matter and look at this “in the round”.

It was further submitted that the issue of delay was relevant in “the wider context” and should be relevant to the Court’s unwillingness to intervene.

In response Mr Goold for Mr Ganz submitted that:

In my view the approach contended for by Mr Goren must be rejected.

The procedure under the Commercial Court Guide was not intended to operate once the stage of a hearing had been reached and the evidence put before the Court. Further it is a procedure which allows for dismissal of an arbitration challenge without a hearing but subject to the right to challenge such a dismissal and seek a hearing. The relevant provisions state:

An application under Section 67 proceeds as a rehearing and having now had that rehearing with the evidence adduced and submissions made, it would be inappropriate to determine the issues on any form of summary basis.

As to delay there was delay in failing to progress the case but I do not accept that (absent any abuse of process which has not been advanced or shown) the issue of delay in the proceedings is relevant to the determination of this application under Section 67 and Section 68.

As referred to above, the parties agreed that the hearing would be conducted on the basis of the documents already put before the Tribunal. In the case of the Section 67 challenge those documents were agreed to be the following:

In relation to the challenge pursuant to Section 68 of the Act, the parties agreed that it would be determined in addition together with:

Additionally, the parties agreed (in relation to both the re-hearing and the challenge) that the issues should be determined by reference to the parties’ witness statements in these proceedings: the first witness statement of Mr Timothy Ashdown, partner in DMH Stallard LLP acting for Mr Ganz, dated 28 April 2020 and the first witness statement of Mr Lister dated 16 October 2020.

It was further agreed in relation to the re-hearing under Section 67 of the Act, the Court would not entertain any new grounds of objection, or any new evidence on the substantive issues, and the parties’ witness evidence would not be re-heard. The evidence contained in the parties’ witness statements of fact, together with the transcripts of the evidence given at the evidentiary hearing, would be the parties’ evidence on those substantive issues and the hearing before the Court would take place by way of argument and submission based on the above.

Given the volume of evidence referred to above, the Court made it clear at the outset of the hearing that it was for the parties’ representatives to take the Court to the relevant evidence in the course of their submissions.

Section 67 of the Act provides (so far as relevant):

Section 68 provides so far as relevant:

Section 33 provides that:

The approach of the Court on a Section 67 challenge is as set out by the Supreme Court in Dallah Real Estate and Tourism Holding Company v The Ministry of Religious Affairs, Government of Pakistan by Lord Mance at [26]:

The same approach was stated by Lord Collins at [96]:

It was submitted for Mr Ganz (skeleton 41) that the test, both as to whether the SPA was an authentic agreement made between the parties or whether there was a valid agreement to arbitrate, is an objective test depending on what was communicated between the parties by words or conduct and not upon their subject state of mind: Lord Clarke, giving the judgment of the court, in RTS Flexible Systems Ltd v Molkerei Alois Muller [2010] UKSC 14 at paragraphs [45] to [50]:

Mr Goold for Mr Ganz relied on the following underlined statements in a passage from the judgment at [50]:

Mr Ganz also relied on Dresdner Kleinwort Ltd & another v Attrill & others [2013] EWCA Civ 394 at [61] to [64] where Elias LJ set out the analysis of the judge at first instance:

It was submitted for Mr Ganz (skeleton 43) relying on this authority that:

However this authority has to be read in context and in light of the broader proposition as to the burden of proof to establish one’s case.

It was submitted for Mr Ganz (skeleton 46) that:

It was further submitted for Mr Ganz (skeleton 47) that:

It seems to me that there is a risk that these submissions do not properly reflect the test as set out in Phipson on Evidence (20^th edition) at 6-06 which states that:

The relevant passage in Phipson is as follows:

Thus it is clear that where a given allegation, whether affirmative or negative, forms an essential part of a party's case, the proof of such allegations rests on that party. It is Mr Ganz who asserts that the SPA and the Arbitration Agreement (at least as between Mr Ganz and Mr Goren) is authentic and binding and it is therefore Mr Ganz who bears the burden of establishing on the balance of probabilities the existence of an authentic and legally binding SPA (or at least a valid Arbitration Agreement).

I am not entirely clear whether Mr Goren maintained his position as set out in the Rejoinder that “the line of cases cited by the Claimant on intention to create legal relations and setting out an objective test of establishing such intention, are irrelevant. In circumstances where the document is purported not to be genuine, the test is different as established in Snook v London and West Riding Investments Ltd. [1967] 2 QB 786 at p.802.”

In that passage, Diplock LJ said this:

It was submitted for Mr Ganz (skeleton 58) that the dispute between the parties is not about whether the SPA/Arbitration Agreement was intended by them to create one set of rights and obligations but give third parties the appearance of creating different rights and obligations but whether any rights and obligations were created at all. Further it was submitted that there is no evidence of common subjective intention and Mr Ganz’s evidence challenged the idea that the SPA or Arbitration Agreement was not intended to be binding and was only ever a draft.

In my view I do not need to resolve this issue in circumstances where the evidence was that there was no “common intention” that the acts or documents were not to create the legal rights and obligations which they give the appearance of creating. The test which I propose to apply is the test in RTS Flexible Systems referred to above.

It was submitted for Mr Ganz (skeleton 14) that Mr Ganz not having been able to serve Petronz with these proceedings, Mr Ganz has had to accept that their outcome will not be binding on it. Accordingly the relief he now seeks is limited to an order that the arbitration agreement is valid and binding as between Mr Ganz and Mr Goren and the arbitrator has substantive jurisdiction over Mr Ganz and Mr Goren.

It was submitted however that the Court will also have to consider, if not reach conclusions on, the validity of the SPA and the adherence of Petronz to the SPA.

It was submitted for Mr Ganz that applying the principles of separability in Section 7 of the Act, it is enough to prove that the Arbitration Agreement was valid: in Premium Nafta Products Ltd v Fili Shipping Company [2007] UKHL40 (the 'Fiona Trust' case), Lord Hoffman made clear, at paragraphs [17] & [18] that:

The relevant passages of the judgment in Fiona Trust relied on by Mr Ganz are as follows:

Counsel for Mr Ganz stated (skeleton 61) that Mr Ganz does not challenge the Tribunal’s findings of fact but challenges her application to them of the relevant legal principles and the conclusions she reached from them as a result. In its written submissions Counsel for Mr Ganz devotes a substantial part of his submissions (paragraphs 124-154) to “The Arbitrator’s reasoning and why it was wrong.”

As noted above, the authorities are clear:

I do not therefore propose to address directly Mr Ganz’s submissions in this regard but to adopt the approach stated by Lord Collins in Dallah, referred to above:

There are 3 versions before the Court:

Mr Ganz’s case as set out in the statement of case for the arbitration was that the SPA “has been, on the face of it, signed by all three parties to it, including himself, is authentic and an executed and concluded agreement that is binding on all three of them.”

It was accepted for Mr Ganz (skeleton 44) that extrinsic evidence is admissible to show that what appears to be a valid and binding contract is in fact no contract at all: Chitty on Contracts 35th Edition Volume 1 paragraph 16-033. It was also accepted for Mr Ganz that the admissible extrinsic evidence includes conduct after the event said to constitute the contract, in order to see whether an agreement was, in fact, made: Bottrill v Harling [2015] EWCA Civ 564, per Longmore LJ at paragraphs [12] and [14].

It was submitted for Mr Ganz (skeleton 53) that “such burden as there is on him” as to the status of the arbitration agreement if not the SPA, is discharged by the following:

It was submitted for Mr Goren that:

Before considering the evidence I have to deal with the weight to be given to the evidence of Mr Goren in light of the issue of the Procurement Agreement, an agreement in writing dated 25 May 2015, pursuant to which Mr Goren, on behalf of Gi3 had, ostensibly, entered into an agreement with a Siraj Marakkar on behalf of Petropas Middle East FZE (“Petropas”), for Gi3 to procure corn/maize on Petropas’ behalf in return for a commission (“the Procurement Agreement”).

Ostensibly pursuant to the Procurement Agreement, Gi3 invoiced Petropas on 4 June 2015 for an advance payment of US$500,000. Mr Goren accepted in his evidence that there would have been a second such invoice.

When being cross-examined, Mr Goren said of the Procurement Agreement, (Day 2 p244-247):

It was submitted for Mr Goren that it would be wrong as a matter of law to reject all the evidence of Mr Goren by reason of his evidence in relation to the Procurement Agreement. Mr Goren relied on the authority of Slocom Trading Ltd v Tatik Inc [2012] EWHC 3464 (Ch) at [21]-[26].

I note in particular the following from the judgment in Slocom Trading:

It was submitted for Mr Ganz (skeleton 68-70) that:

It was submitted for Mr Goren (by reference to his closing submissions to the Tribunal) that:

I did not have the opportunity to see Mr Goren giving his evidence before the Tribunal and I note the submission that English is not his first language. I therefore hesitate to form any adverse view of his evidence from the manner in which some of his answers were given, in circumstances where my view is necessarily derived solely from the written transcript. On occasions however during the cross examination he does appear to have been evasive in his responses although ultimately in relation to the Procurement Agreement Mr Goren admitted to the Tribunal that it was “not intended to be performed the way it's written”.

It is clear therefore that the Procurement Agreement was a sham transaction. Mr Goren said that the banks knew that, but whether or not that was the case, he admitted it was to deceive the UAE authorities. Thus whilst this is not a witness who has been shown to have lied to the Tribunal, he has acted in a way which was dishonest.

Even if I accept that Mr Goren was seeking to help Mr Ganz through the Procurement Agreement (and there is no evidence to suggest that he stood to benefit personally by the Procurement Agreement and the payments under it), his actions in creating and implementing a false transaction raise significant questions as to the weight which I should give to his evidence in relation to the SPA where the key issue before this Court is whether the SPA is genuine and binding or whether despite its appearance, it is not what it appears on its face.

In line with the authorities such as Slocom Trading, I do not reject Mr Goren’s evidence in its entirety but in relation to the various points raised, evaluate his evidence having regard to the extent to which it is consistent with the contemporaneous documents and other evidence directed to the relevant issues, as well as the inherent plausibility and consistency of his answers. Where in my view his evidence is consistent with the other evidence and/or inherently plausible, I accept his evidence can properly be given weight.

Firstly I accept that on its face there is evidence of an agreement which is signed.

It was submitted for Mr Ganz that the SPA on its face was binding and unqualified, not expressed to be draft and was signed on its face.

I note that there were errors in the SPA (such as its description of Gi3 as an Indian rather than a Cyprus company) and the Tribunal was of the view that they were indicative of its “rushed genesis” and that no great care was taken in its creation and the Tribunal was of the view that they were “another clue” to the fact that it was not intended to be a true and binding document by its author (paragraphs 210 to 211 of the Award). However in my view these errors are of little weight to the issue of whether it was a binding agreement.

It was submitted for Mr Ganz (skeleton 62-64) that the fact that the document contains Mr Goren’s electronic signature does not suggest it was a draft and is consistent with being a binding agreement.

I agree that on its face the fact that the SPA had the electronic signature of Mr Goren does not suggest it was a draft.

However the presence of the electronic signature on the SPA has to be considered in the light of the evidence of Mr Goren. Mr Goren’s evidence was that he routinely used an electronic signature to sign documents when there was a document that he was producing and needed to sign it and send it immediately and that sometimes he signed manually. In cross examination Mr Goren's evidence was that he should probably have put draft and should not have put his electronic signature but that Mr Ganz told him that he needed to show something to the bank and he wanted to help in any way he could:

Given the issues going to Mr Goren’s credibility I give little weight to this evidence of Mr Goren. However having regard to the absence of any other evidence concerning the electronic signature, in my view it seems to me that objectively the presence of the electronic signature is equally consistent with being carried over from a previous document or with the creation of a binding agreement.

As to the manual signature it was submitted for Mr Ganz (skeleton 90 and 91) that Mr Goren was unwilling to accept that signature was his hand-written signature, rather than electronic, as appeared at the end of the SPA, seeking to account for the difference between the two by saying that it was to do with the expansion of the electronic signature and that:

I do not think that the Court is in a position to form a view as to whether the two signatures are different such that the Court can infer that it was a manual signature on Exhibit A. There is insufficient evidence from which such an inference can reliably be made.

It was submitted for Mr Ganz that:

However Mr Goren did provide an explanation in his evidence before the Tribunal: Mr Goren’s evidence was that he probably took Mr Marakkar’s signature from a previous document and that Mr Marakkar was never at Petronz but was at Petropas and that Petropas was a different entity from Petronz. Further in cross examination Mr Goren agreed with the proposition that was put to him that Mr Marakkar was an “unfortunate victim of drafting”.

The highest that Mr Ganz is able to put his submissions in this regard (skeleton 115) is that the "timing" of Mr Goren's production of the SPA and the sending of the PDF to Mr Ganz is consistent with Mr Goren having produced the SPA and sending it to Mr Marakkar who signed it and returned it.

Accepting the premise that the PDF attachment was the copy received by Mr Ganz from Mr Goren, this submission concerning execution of the SPA by Mr Marakkar has no evidence to support it and is purely speculative. The cross references that are included in Mr Ganz's written submissions to Mr Goren's evidence do not amount to evidence which provides any substance to this theory.

However the explanation of Mr Goren is in my view a plausible explanation and in any event it is not necessary for Mr Goren to prove how the signature of Mr Marakkar came to be on the SPA. It is for Mr Ganz to prove the existence of a valid agreement and I do not accept that Mr Ganz has established on the evidence the likelihood that Mr Goren obtained Mr Marakkar’s signature from him on behalf of Petronz before sending it to Mr Ganz as a PDF attachment.

Further in relation to the issue of the authenticity of the SPA as far as Petronz is concerned, I note the correspondence from Petronz in response to the arbitration proceedings.

In its letter to DMH Stallard of 28 November 2017 Petronz wrote that the agreement: “which was supposedly signed by Petronz FZE is a forgery. Petronz FZE never signed or otherwise entered any agreement for the acquisition of any shares of the company mentioned in the forged document…”.

I also note a further letter from Petronz dated 24 January 2018 to the LCIA in which it wrote:

There was then a further letter from Petronz dated 15 February 2018 directly to the Tribunal:

In line with the correspondence Petronz did not participate in the arbitration proceedings. Further Petronz has not been served with these proceedings.

It was submitted for Mr Ganz that Petronz did not state that Mr Marakkar was not a director and the burden should be on Petronz to establish that the agreement was a forgery.

It was submitted for Mr Ganz (skeleton 52) that:

Although I accept that the letters referred to above are not sworn evidence and the statements of Petronz in those letters have not been tested by cross examination, it seems to me that that when assessing whether Mr Ganz has proved his case that it is an authentic agreement, the Court is entitled to give some weight to these letters. It was submitted for Mr Ganz that the letters are "self-serving" but there is no apparent reason why letters would be sent to the LCIA and the Tribunal purporting to be from Petronz and alleging that the agreement was a forgery (not binding). (This is not a case where there has been part performance of the contractual bargain on one side and a failure to pay the consideration on the other.)

Mr Goren wrote in an email to the LCIA dated 16 January 2018 that the SPA:

In light of my assessment of the evidence of Mr Goren I am cautious about giving weight to this evidence of Mr Goren. However it seems to me that his evidence is consistent with the correspondence from Petronz.

In order to establish its case that there was a was a valid Arbitration Agreement between Mr Ganz and Mr Goren, Mr Ganz does not need to prove Mr Marakkar's identity, employment by or directorship of Petronz at the relevant time, his authentic signature and whether that corresponds with the signature said to be his on the SPA as I do not need to form a concluded view on the binding nature of the SPA vis a vis Petronz. However I am entitled to take into account and give some weight to this evidence as relevant to the issue which I do have to determine namely whether there was a valid Arbitration Agreement between Mr Ganz and Mr Goren and that evidence supports Mr Goren’s case

One of the matters relied upon by Mr Ganz is the email from Mr Goren to Mr Ganz with the PDF attachment. However that email does not say why the SPA was sent and thus of itself the email provides no support for Mr Ganz’s case. The significance of the attachment with respect to the signature of Petronz is dealt with above. The email cast no light on the circumstances in which Mr Goren’s signature came to appear on the SPA.

Mr Ganz also relies on Mr Goren’s evidence that he did not think that Mr Ganz had forged the SPA. However accepting that Mr Ganz did not forge the SPA, there is another equally plausible explanation which was the evidence of Mr Goren that the SPA was to be shown by Mr Ganz to his bankers.

This evidence has to be weighed in light of the other evidence on this issue. It goes not to the subjective intention of one party but to the rationale of the SPA.

There was a loan agreement dated 7 November 2011 entered into between Ganz Properties Ltd (“Ganz Properties”) and Gi3 Holdings pursuant to which Mr Ganz (through Ganz Properties) lent Gi3 US$4.63m for Gi3’s investment in “a project in Chennai, India” for a term of 5 years. The transfer documentation on their face described the payments on 23 June 2015 and 9 July 2015 as “partial repayment of loan facility”.

It was submitted for Mr Ganz that:

The evidence of Mr Goren to the Tribunal was:

It was put to Mr Goren in cross examination that the descriptions on the transfers were “deceptive” and that the transfers were in fact part payment for Mr Ganz’s shares. Mr Goren replied:

Further I note that Mr Ganz’s evidence to the Tribunal was that the payments were recorded in the books of Mordchai Ganz Limited as “return loan”.

As to the emails in October/November 2015, Mr Swirsky sent an e-mail to Mr Goren headed “Property in Chennai” in which he said:

Underneath Mr Swirsky had apparently set out the questions from the auditors:

Mr Goren responded to that email and the detailed points raised. In relation to the question concerning the payment of $1 million he replied that this was an amount received by Gi3 from a UAE company and was paid as an advance for purchase of agricultural produce.

Mr Swirsky continued the email exchange and in relation to the $1 million payment asked:

Mr Goren then replied:

In cross examination it was put to Mr Goren that:

However Mr Goren rejected this. His evidence was that he did not intend to imply such a connection but was annoyed as he was being asked the question three times by Mr Swirsky.

Whatever Mr Goren may have intended by the word “formally” and I note that English is not his first language, in my view this is a contemporaneous document, albeit from Mr Goren, which supports Mr Goren’s case that the payments under the Procurement Agreement were used to repay Mr Ganz part of his loan and the payments to Mr Ganz were not advances under the SPA.

It was submitted for Mr Ganz that even if this was a method of getting payment to Mr Ganz, it was consistent with payments under the SPA. It was submitted for Mr Ganz (skeleton 76) that the payment of US$1m in total represented “approximately 50% of the sum due” ie Mr Ganz’s share of the advance payment.

In his Defence (paragraph 31) in the arbitration Mr Goren raised the amount of the payments as inconsistent with the amount of the advance due under the SPA:

In my view it would make little commercial sense for the payment to be made for “approximately 50% of the sum due” rather than the exact amount due and there is no evidence which provides an explanation for the discrepancy.

Mr Ganz also relied on the comments made by Mr Goren on the draft “Due Diligence Report” of Mr Swirsky in November 2015.

In the draft report under a heading “Sale” Mr Swirsky wrote (Bold text represents comment inserted by Mr Goren into the draft):

It was submitted for Mr Ganz (skeleton 120) that there is no mention by Mr Goren in his comments on the draft of the USD 1m payment being part repayment of the Loan and not being an advance payment of the purchase price. It was submitted for Mr Ganz that there could only have been one agreement pursuant to which the payments had been made-the SPA.

The evidence of Mr Goren (Day 3 p178) to the Tribunal was that this was a reference to the advance payment on account of maize (corn); it went to Gi3 and Gi3 needed to give it back to Petropas.

The only agreement for sale that is mentioned in the draft report is the agreement with Falcon (discussed further below). In addition, as is apparent from the section reproduced above, it appeared to contemplate a sale by Gi3 and not, as the SPA provides, a sale of the shares of Gi3. It would therefore be consistent with this for the “advance payment” to be (as Mr Goren stated) a reference to the payment that was made to Gi3 under the Procurement Agreement (albeit that this was a device or sham transaction to get money to Gi3).

It seems to me that Mr Goren’s evidence denying that these payments by Gi3 to Mr Ganz were part payment for Mr Ganz’s shares is supported by the following:

For all the reasons discussed, I find that these payments were not an advance under the SPA.

Mr Ganz relied (skeleton 53) in support of his case that the SPA was authentic and binding on what he termed “the factual context of the prospective sale to the affiliate of Falcon and its terms as set out in GI3 letter and Falcon letter against which the SPA was produced.”

There are 2 versions of the letter dated 27 May 2015 (the “Gi3 Letter”) to Mr Ganz before the Court. It was accepted that the letters were sent by Mr Goren to Mr Ganz. The first version appears to have read, so far as material, as follows:

The second version of the Gi3 Letter was sent with a covering email from Mr Goren to Mr Ganz and said, in Hebrew, words to the effect that Mr Ganz should use the attached letter. The second version had the following additional sentence at the end of paragraph 6:

It was submitted for Mr Ganz (Skeleton 102) that the transaction referred to in the Gi3 Letter was one with an affiliate of Falcon as set out in its letter of 27 May 2015 (the “Falcon letter”). It appeared to be common ground that, as stated by Mr Goren in his evidence, he travelled to India to attend a completion meeting for the sale which had been due to take place on 20 May 2015 but Falcon did not attend the meeting and completion did not occur. Mr Goren’s evidence was that he was waiting in the office with all the documents prepared and Falcon called and said they were not coming and wanted to wait 15 days. (Day 2 296) His evidence was that Falcon then sent an email saying that they wanted a 15% discount so he cancelled the deal. (Day 2 p301).

The Falcon letter was sent by Falcon Logistics India Limited to Mr Ganz and is headed “Oragadam Project-Chennai India”. The evidence of Mr Goren in cross-examination was that the letter was written by Falcon but he asked them what to write in general terms. [A347]

The Falcon letter commenced by expressing apologies and regret for the “delay in the completion of the subject transaction”. It continued:

The key points I note from the Falcon letter are:

It was submitted for Mr Ganz (skeleton 104) that the reference in the letter to shares logically could only refer to shares in Gi3 as the letter was addressed to Mr Ganz and it was only the shares of Gi3 that Mr Ganz and Mr Goren between them could sell as the shares in Seder were held in part by Parrot Grove.

Mr Goren’s evidence was that the letter was addressed to Mr Ganz because Mr Ganz needed to show it to the bank and that if they wanted to buy shares in Seder, Parrot Grove would have agreed to sell them the shares.

I do not need to resolve this issue. The key issue is whether the Falcon transaction and the Falcon letter provide evidence which supports Mr Ganz’s case that the SPA was an authentic document.

Mr Ganz relied on the fact that the letter proposed that the transaction could be effected through a foreign subsidiary and submitted (skeleton 107) that the Falcon letter “is consistent with what then happened”. It was submitted for Mr Ganz (skeleton 112) that “it is likely that the SPA was the continuation of the same transaction that had been agreed with Falcon”.

However the terms of the SPA which Mr Ganz relied on in his written submissions (skeleton 108) as “broadly consistent” with the transaction outlined in the Gi3 Letter and the Falcon letter were as follows:

In my view the terms of the SPA were inconsistent with the Falcon transaction in the following respects:

In his oral submissions counsel for Mr Ganz submitted that the fact that the SPA was apparently backdated to 20 May 2015, the date of the failed completion meeting for the Falcon deal, also suggested that the SPA was a continuation of that deal.

However, as submitted for Mr Goren in its closing submissions to the Tribunal, there is no explanation as to why the Gi3 letters or the Falcon letter were necessary to show to the banks if a deal under the SPA (whether a continuation of the Falcon deal or otherwise) had already been agreed and entered into with effect from 20 May 2015. Mr Ganz's evidence to the Tribunal (day 2 p4-10) was that he did not remember what he wanted to do with the letter but he wanted to know that they were selling the property. He denied that he wanted to show it to other people but he said he wanted it documented that they had sold the company. I note in this regard the submission for Mr Goren that these letters were in English and not in Hebrew so it is difficult to accept that Mr Ganz only wanted these for his own use given his own evidence to the Tribunal (Day 2 p26) that he does not read English.

I therefore reject the submission that the Falcon transaction and the Falcon letter support an inference that the SPA was a continuation of the Falcon transaction.

It was submitted for Mr Ganz (skeleton 112) that alternatively it was an agreement with a company that was owned by Mr Pharis or in which he had an interest or with which he had a connection or in the further alternative was an agreement with an unconnected third party. It was submitted that it is not necessary for Mr Ganz to prove which of the alternatives it was.

Whilst I accept that it is not necessary for Mr Ganz to prove whether the SPA was with a connected or unconnected party, it is for Mr Ganz to prove that the agreement which on its face was entered into with Petronz is authentic.

Mr Goren’s evidence was that Petronz was entirely separate.

In my view it seems unlikely and implausible that a new deal (on different terms) with a different entity would be made under the SPA on 20 May (or 31 May) 2015, before it was clear that the first deal with Falcon would not go ahead, in circumstances where the buyers were apparently seeking additional time to complete.

For all these reasons, in my view the Falcon transaction and the Falcon letter do not support Mr Ganz’s claim that the SPA was an authentic agreement with Petronz but rather tend to support a finding that there was no such binding agreement.

Mr Goren submitted that there was “a dearth of relevant material against which the alleged SPA is to be understood”. I understand the submission to be that one would have expected there to be more documents which fell to be disclosed (although Mr Ganz submitted that they may have been lost) but I also understand him to refer to the absence of any reference to the alleged SPA whatsoever between 31 May 2015 and the opening letter in the arbitration proceedings some two and a half years later on 27 October 2017. However, there are some documents before the Court which relate to the period from 31 May 2015 and 27 October 2017 which I now turn to consider.

The Court has before it a letter from Standard Chartered dated 30 June 2015 (the "Standard Chartered Letter") to Mr Swirsky. It was accepted by Mr Ganz (skeleton 29 viii) that in 2015 Mr Ganz was coming under “some pressure” from Standard Chartered Bank Botswana Limited (“Standard Chartered”) in relation to one of his business operations, Motiganz Botswana Limited (“Motiganz”), to minimise his borrowing and that Mr Ganz engaged Mr Swirsky to assist him in that regard.

In the Standard Chartered Letter the bank referred to a conference call on 4 June 2015 with Mr Swirsky, representing Motiganz, and the actions which had been agreed that Motiganz would take with respect to settlement of an outstanding amount of approximately US$6.9m by 29 June 2015. These included:

The Standard Chartered Letter noted that none of the obligations mentioned in the letter had been met. The letter concluded with a request that Motiganz settle all outstanding amounts.

In his submissions (skeleton 148) Mr Ganz does not address the inferences which can be drawn from the Standard Chartered Letter and says only that:

I note that by the date of the conference call with Standard Chartered on 4 June 2015 the completion of the deal with Falcon on 20 May 2015 had failed and Falcon had written on 27 May 2015 indicating a delay until possibly mid-July. Although, according to the letter, during the conference call Mr Swirsky had agreed to remit the proceeds of sale of the Indian property on 29 June 2015 and to share a copy of the sale contract, it is clear from the Standard Chartered letter that the payment was not made and no agreement was in fact shown to Standard Chartered.

The evidence of Mr Swirsky to the Tribunal was that he advised Mr Ganz to withhold details of the sale on the basis that he should not mix his properties with his trading business. In his evidence Mr Swirsky said that the call was an “ambush” and he did not recall whether he agreed to 29 June although he appeared to accept that he would have agreed to pay across any proceeds (Day 2 p129-132).

It is difficult to assess the evidence of Mr Swirsky. I note that he was said by the Tribunal to be independent and that his recall may have been affected by personal circumstances in the intervening period.

Taking Mr Swirsky’s evidence at face value, the Standard Chartered Letter provides no support for Mr Ganz’s case that there was a binding SPA.

Mr Swirsky’s evidence in relation to Standard Chartered was that he knew about the SPA but advised Mr Ganz to withhold details from the bank. However in the email exchanges with Mr Goren in October/November 2015 Mr Swirsky made no reference to the SPA. He does refer to a “deal” to which Mr Goren responded:

In an email from Mr Swirsky dated 25 November 2015 to Mr Goren he proposed a mortgage of the property and a pledge of the shares and loan accounts. Mr Swirsky also stated that:

Mr Swirsky produced 2 reports. The first was a draft “Due Diligence Report” dated 27 November 2015 with Mr Goren’s comments marked. It was in the process of being written with a view to refinancing for the benefit of Motiganz.

In this first draft report Mr Swirsky wrote (Bold text represents comment inserted by Mr Goren):

It was put to Mr Swirsky by the Tribunal that his sentence that “other buyers … have approached Rami” was “quite tentative” as opposed to “we've got a deal in our pocket and everything's signed already”.

Mr Swirsky’s evidence was that the one million had already appeared but he would have liked it to have been done more clearly.

There was a second report produced by Mr Swirsky in April 2017 (Damal (India) Project Review of April 2017). It was written for a different purpose following his visit to India and the land in question, namely consideration of Mr Ganz’s commercial options. The SPA is not mentioned in that report.

Mr Swirsky’s evidence to the Tribunal was that he did not mention the SPA because he was concerned with what would happen with the land on the ground and not the level of the shares. He also initially said that he did not mention the SPA because he did not have to although later in his evidence he said he should have made reference to it.

One of the options for going forward mentioned in the report was to sell it to a foreign entity. Mr Swirsky was asked whether he had in mind the SPA to which he responded:

The report in April 2017 did refer to Falcon:

Mr Ganz was asked about in his evidence why the report referred to Falcon as the buyer and not Petronz. His answer was that his agreement was with Mr Goren and he did not care whether it was Falcon.

I did not have the benefit of hearing Mr Swirsky’s evidence first-hand and have had to rely on the transcript. However his explanations for why the SPA was not referred to in his reports appear confusing at best. In my view the absence of any reference to the SPA in his reports is difficult to reconcile with the existence of an authentic and binding SPA.

As discussed at the outset, the test, both as to whether the SPA was an authentic agreement made between the parties or whether there was a valid agreement to arbitrate, is an objective test depending on what was communicated between the parties by words or conduct and not upon their subject state of mind. It was accepted for Mr Ganz that extrinsic evidence is admissible to show that what appears to be a valid and binding contract is in fact no contract at all.

I have found above that the payments by Gi3 to Mr Ganz and relied on by Mr Ganz were not advances under the SPA. This is not therefore a case where the dicta in RTS Systems (“The fact that the transaction was performed on both sides will often make it unrealistic to argue that there was no intention to enter into legal relations the transaction can be said to have been performed”) has any force.

In relation to the matters relied upon by Mr Ganz (other than the payments) the only evidence that supports his case is the SPA itself, with an electronic signature of Mr Goren and perhaps a manual signature and on its face executed for Petronz.

However the letters from Petronz to the LCIA and the Tribunal are some evidence that Petronz did not enter into a binding agreement and the proposition advanced by Mr Ganz that Mr Marakkar had time to sign the SPA before it was sent as a PDF attachment to Mr Ganz by Mr Goren is purely speculative and carries no weight.

There is a lack of documentation which may have been expected such as evidence of the negotiation of the SPA but leaving aside whether any inference should be drawn from such absence, the documentation that is before the Court does not support Mr Ganz’s case. As discussed above, I do not accept that the “factual context of the prospective sale to an affiliate of Falcon” adds support to Mr Ganz’s case in circumstances where the only documentation (the Gi3 letters and the Falcon letter) is inconsistent with the existence of a binding SPA. The Standard Chartered Letter, a contemporaneous document from an independent third party, is inconclusive in light of the evidence but is not evidence which supports Mr Ganz’s case. The absence of any reference to the SPA in the reports of Mr Swirsky has not been satisfactorily explained.

It was submitted by Counsel for Mr Ganz that it was “perfectly possible” for the Court to be undecided as to whether there was a binding SPA but sufficiently satisfied that there was an agreement to arbitrate any dispute in relation to Mr Goren and Mr Ganz.

I accept that applying the approach laid down in Fiona Trust, section 7 of the Act means that even though the main agreement and the Arbitration Agreement were bound up with each other, they must be treated as having been separately concluded and the Arbitration Agreement can be invalidated only on a ground which relates to the Arbitration Agreement and is not merely a consequence of the invalidity of the main agreement. However in my view the matters discussed above which lead to the conclusion that Mr Ganz had not proved his case that there was an authentic and binding SPA apply equally to the alleged Arbitration Agreement and there are no separate matters raised by Mr Ganz that would alter the conclusion in that regard.

For all the reasons discussed above, I find that the Arbitration Agreement is not valid and binding as between Mr Ganz and Mr Goren and the Tribunal has no substantive jurisdiction over Mr Ganz and Mr Goren.

As referred to above, Mr Ganz also challenges the Award under Section 68(2)(a) of the Act i.e. that the Tribunal failed to comply with her general duty under Section 33 of the Act to act fairly and impartially as between the parties and/or adopt procedures suitable to the circumstances of the particular case so as to provide a fair means for the resolution of matters referred to her.

It was submitted for Mr Ganz that it was seriously irregular for the Tribunal to have decided that Mr Marakkar’s alleged signature on the SPA was not his in the way she did and this has caused Mr Ganz substantial injustice. In essence the complaint is that there was discussion of the need for handwriting evidence at the Procedural Hearing in September 2018 and Mr Ganz’s request for that evidence was not acceded to; it was accepted (in oral submissions) that the issue was left open at the Procedural Hearing but it was submitted that it was to be done on a responsive basis, that is that there was no need for Mr Ganz to produce his own evidence but if it was produced by Petronz then Mr Ganz would produce responsive evidence. It was submitted that Petronz did not take part in the arbitration proceedings and in those circumstances Mr Ganz did not renew his application for expert handwriting evidence. However it was then procedurally unfair and has caused substantial injustice that one of the key elements of the Tribunal’s conclusion as to the binding nature of the SPA was that Petronz was not a party and this was based on lack of signature.

From the transcript of the Procedural Hearing (conference call) on 4 September 2018 I note the following passages:

Mr Goold then confirmed that the issue about expert evidence was only relevant to Petronz:

The arbitrator noted that she would “not give any decisions today” although she indicated that she was not persuaded of the need for expert evidence in relation to Mr Pharis. She then noted that expert evidence might also need to be adduced around the validity as a matter of UAE law but Mr Goold rejected this as unnecessary in order to advance Mr Ganz’s claim:

The exchange between Mr Goold and the arbitrator concluded as follows:

When this transcript is read carefully, it is clear that Mr Goold was seeking permission for a handwriting expert in relation to Mr Marakkar’s signature and the Tribunal without deciding it was minded to agree to this. The additional expert evidence in relation to UAE law was evidence which she said would be open to Petronz to adduce but that such evidence need not be provided by Mr Ganz but if adduced by Petronz would then be adduced in response.

I do not accept the submission that the Tribunal declined the request, or as orally submitted, left it open, on the basis that it would only be required from Mr Ganz as responsive evidence to evidence if and when adduced by Petronz. Mr Ganz in his submissions focussed on the final paragraph of the Arbitrator’s remarks but this paragraph has to be read in the light of the preceding exchanges which clearly indicate that the remark about Mr Ganz providing responsive evidence referred only to the foreign law expert evidence and not to the handwriting evidence.

On 13 September 2018 the Tribunal issued directions following the Procedural Hearing which included the following:

It was therefore open to Mr Ganz to have pursued his application for disclosure and expert evidence on the issue of Mr Marakkar’s signature when the directions were proposed by him and Mr Ganz cannot now complain of a lack of procedural fairness.

For these reasons the challenge based on section 33 must therefore be dismissed.

In the light of my finding above the issue of substantial injustice does not arise and I do not propose to address it.