English High Court considers meaning of giving “proper notice” of an arbitration

In Ekran OAO v Magneco Metrel UK Ltd [2017] EWHC 2208 (Comm), a respondent sought relief from the English Commercial Court in respect of the enforcement of an award. It argued that it had not received “proper notice of the arbitration” under the English Arbitration Act 1996 (the “Act”), as the documentation that it received was not in its home language. The Court decided that, on the facts, the respondent had nonetheless been given “proper notice”.

Background

The claimant, a Russian glass manufacturing company, had entered into a sale and purchase contract with the respondent English company in April 2013. The contract contained text in English and in Russian side by side, with a provision that in the event of doubt, the English would prevail. The relevant contract was subject to Russian law and provided for disputes to be referred to arbitration with seat in Russia, conducted in the Russian language at the International Commercial Arbitration Court at the Russian Chamber of Commerce and Industry in Moscow (“ICAC”).

A dispute arose between the parties and the claimant referred the dispute to arbitration under the ICAC Rules.

Although the respondent took no part in the arbitration, numerous letters and documents were sent to it by ICAC. In particular, the respondent accepted that it had received the arbitration claim form and documents annexed to it (all in Russian). These were under cover of a letter from ICAC, which was almost entirely in Russian save for a statement, in English, identifying it as being from ICAC. Various other letters were received by the respondent from ICAC over the next few months, including concerning the appointment of arbitrators, with the same ICAC heading etc. as that earlier letter.

The tribunal awarded the claimant its full claim and costs. The claimant then obtained permission to enforce the award in England as a New York Convention award under section 101(2) of the Act. The respondent subsequently applied to have the order set aside. It relied on section 103(2)(c) of the Act. That enacts Article V(1)(b) of the New York Convention and provides that recognition or enforcement of a New York Convention award may be refused if the person against whom it is invoked proves that “he was not given proper notice of the appointment of the arbitrator or of the arbitration proceedings or was otherwise unable to present his case”. Specifically, the respondent argued that it had not known the significance of the documents sent to it because it was prevented from understanding their content by the absence of a translation into its home language (English).

Decision

The judge, Blair J, dismissed the respondent’s application.

Blair J noted that although there is little English authority on the meaning of “proper notice”, in context it is part of the wider notion that a defendant has been unable to present his case, suggesting some unfairness on the part of the defendant. Blair J set out that the test of “proper notice” in the context of section 103(2)(c) of the Act is “such as is likely to bring the relevant information to the attention of the person notified, taking account of the parties’ contractual dispute resolution mechanism”. The judge observed that notice is treated as a question of fact by the court, with the onus of proof being on the party raising it as a ground of refusal of enforcement.

Against that background, Blair J turned to the question before him and noted that the fact that the arbitration notice had not been received in the respondent’s home language (English) did not in itself affect the validity of the notice. That would depend on the circumstances. And, in the circumstances before him, the validity of the notice could not be impugned. In that respect, whilst he noted, inter alia, that it was relevant that the parties had agreed to arbitration in Russia through ICAC, that they had communicated in Russian, and that the language of the arbitration was agreed to be Russian, there was, in any event, one point from which it should have been obvious to the respondent that an arbitration was on foot; being the English heading of the letter which stated that it came from the ICAC (see paragraphs 24-25 of Blair J’s judgment).

Comment

What lessons arise from this decision when serving notice of arbitration proceedings on a respondent against whom an arbitration award is likely to require enforcement in England, and where the specified language of arbitration is different from the respondent’s home language? it is important to note that as we have seen, the judgment did not decide that wider contextual factors (such as the parties’ agreement as to the language of the arbitration) were irrelevant. Rather, the fact that there was a reference to ICAC, in the respondent’s home language, in the relevant letters made the respondent’s argument unsustainable on its own terms. Accordingly, Blair J did not even have to decide the precise importance of such wider contextual factors to the case.

Whilst, therefore, the ruling does not exclude the possibility that such factors would, in any event, have been determinative, parties wishing to avoid any ambiguity or delay may wish to consider ensuring, when serving notice of arbitration proceedings on a respondent with a view to later enforcement in England, that adequate indication is given to it, in its home language (if different from the language of the arbitration), of the fact of the arbitration proceedings.