1 December 2021 Marc Lenzo ArbitrationLinks

English High Court says no to counterclaims in enforcement proceedings

In Selevision Saudi Co v BeIN Media Group LLC [2021] EWHC 2802 (Comm), the English High Court rejected an argument that the court’s procedures allowed it to hear a counterclaim in an application for leave to enforce a New York Convention award.

Background

BeIN Media Group (“BMG”) and Selevision were parties to a Distributor Agreement pursuant to which BMG retained Selevision as a non-exclusive distributor of set top boxes that allowed customers to watch BMG media channels.

In 2016, Selevision commenced an arbitration with DIFC seat alleging that BMG had breached and wrongfully terminated the agreement. Selevision was successful, with the tribunal finding in a 2018 award that Selevision was entitled to terminate it, and to a sum of approximately US$8 million. Selevision commenced proceedings, without notice, in the English High Court for leave to enforce the award as a judgment of the Court pursuant to s 101 of the Arbitration Act 1996,which applies to awards made in other states party to the New York Convention (in this case, the UAE). The relevant procedure is set out in CPR 62.18. The Court granted Selevision’s application, and ordered Selevision (and gave it permission) to serve BMG with the relevant documents.

Having received these, BMG’s response was (amongst other things) to apply for permission in the enforcement proceedings to bring a counterclaim and an additional claim against another defendant. BMG alleged that Selevision orchestrated and was responsible for a very large piracy of BMG’s broadcasting rights in Saudi Arabia and elsewhere, particularly in the MENA region. BMG’s case that it should be allowed to bring a counterclaim was somewhat technical; BMG had observed that (emphasis added):

  • in cases where the applicant is ordered to serve the claim form commencing the application to enforce, CPR 62.18(3) provides that “the enforcement proceedings will continue as if they were an arbitration claim under [CPR 62.2 – 62.10]”;
  • CPR 62.3(1) in turn, provides that an arbitration claim form must be started “by the issue of an arbitration claim form in accordance with the Part 8 procedure”; and
  • CPR 8.7 permits counterclaims in Part 8 proceedings if the Court gives permission.

Decision

The Court, after noting that the relevant rules were not as clear as would be desirable, concluded that CPR 8.7 is not part of the procedure for applications to enforce awards under CPR 62.18 and that counterclaims may not be brought within them. The Court reasoned that:

  • Even if CPR 62.18(3) should be interpreted as importing some aspects of the Part 8 procedure (which was unclear), it is doubtful that all provisions, including CPR 8.7, should be imported. The same phrase – “in accordance with the Part 8 procedure” – has been held in the context of CPR 62.21(3) (relating to applications for registration of ICSID awards) not to import all the provisions of Part 8 – in that context, it serves only as a procedural device to generate a claim number and have the application determined on written evidence.
  • Applications under CPR 62.18 are intended to be a simple method to permit the enforcement of an award already made. There is no need for a power to allow into that process of obtaining permission for counterclaims (which by definition would have to be out of scope of the arbitration agreement as otherwise they should have been part of the arbitration) or claims against third parties.
  • Sometimes the Court under CPR 62.18 will not require the applicant to serve the arbitration claim form; instead it will first make the order granting permission and require that to be served instead. In that situation, the relevant provisions (CPR 62.18(7)-(9)) contain no equivalent reference to the Part 8 procedure, meaning BMG’s interpretation would lead to a difference, for “no good reason”, between these two types of cases.

The Court then went on to find, obiter, that it would have in any event refused to permit the counterclaim as a matter of discretion, for a number of reasons, including finding that:

  • permitting the counterclaim risked the inhibiting the enforcement of a New York Convention award;
  • the counterclaim was essentially unrelated to the award’s subject matter, as it related to a different time period and is of a very different judicial and factual nature;
  • enforcement proceedings under CPR 62.18 are “clearly intended to be…highly summary and essentially quasi-administrative proceedings” – the admission of the counterclaim would transform the action from a very streamlined procedure to an action requiring the full procedures for a significantly contested Part 7 claim; and
  • the counterclaim had almost no connection to the jurisdiction and, if brought as its own claim, no jurisdictional gateways in CPR 6BPD.3 would have applied.

Comment

The decision provides confirmation that parties will not be permitted to raise new counterclaims at the enforcement stage of New York Convention awards. It also provides clear guidance that enforcement proceedings, as facilitated by CPR 62.18, are intended, in the absence of challenge by the award debtor, to be highly summary and essentially quasi-administrative proceedings.

Click here for the judgment.