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	England and Wales High Court (Commercial Court) Decisions
You are here: BAILII >> Databases >> England and Wales High Court (Commercial Court) Decisions >> Faruqi v Commonwealth Secretariat [2002] EWHC 681 (Comm) (26 March 2002) URL: http://www.bailii.org/ew/cases/EWHC/Comm/2002/681.html Cite as: [2002] EWHC 681 (Comm)

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IN THE HIGH COURT OF JUSTICE
COMMERCIAL COURT

		Royal Courts of Justice The Strand London WCA 2LL
		Tuesday, 26th March 2002

J U D G M E N T

MR. BRINDLE: By a claim form issued on 18^th March 2002 ("the Claim Form") the Applicant has brought a claim in this court challenging certain aspects of an arbitration reference, of which I will give further details below. The Applicant is a former senior employee of the Commonwealth Secretariat ("ComSec") and he seeks to challenge what I shall describe for the moment as a decision of the Commonwealth Secretariat Arbitral Tribunal ("CSAT"), which decision is contained in a document called "a judgment", dated 26^th and 27^th February 2002. By an application notice also dated 18^th March 2002, the Applicant seeks interim relief on an expedited basis to the effect that no further steps should be taken in the arbitral reference pending determination of the claim in this court.

CSAT has fixed a hearing for the consideration of the merits of the arbitration between 8^th and 12^th April of this year. Mr. Faruqi seeks to prevent that hearing from going ahead whilst the claim in this court is pending. Some directions have been given by Moore-Bick J. as to the further consideration of the claim, but no date has been fixed for the hearing of that matter. I am not concerned with the claim itself, but only the question of interim relief. I also say nothing at all about the basic merits of Mr. Faruqi's complaints against ComSec, save to note that those complaints fall within the jurisdiction of the CSAT, either as a matter of express contract or a deemed contract pursuant to section 1(3) of the Commonwealth Secretariat Act 1966 ("the 1966 Act"). Mr. Faruqi gave notice of arbitration. He served it on 24^th July 2001.

The course of events thereafter was not straightforward. Unfortunately the president of the CSAT had been ill and it was some time before Mr. Faruqi was able to progress his complaint. The essential matters resolved themselves in the first instance into the seeking of certain relief on an urgent preliminary basis from the President of CSAT, and that included three principal matters. Firstly, Mr. Faruqi sought interim relief on the merits relating to his status with the Commonwealth Secretariat. Secondly, he sought an order that certain costs should be paid in advance. Thirdly, and most importantly, he sought a direction for the special appointment of a Tribunal member upon consultation or with the approval of himself.

Among the grounds advanced in support of his claim for that relief, in particular the third point, was the submission that the CSAT was a creature of statute, namely the 1966 Act and also the 1996 Arbitration Act, and that the Human Rights Act 1998 applied so as to engage Article 6 of the European Convention. Delay occurred in this matter being dealt with, and I pass over the precise chronology. Suffice it to say that eventually, on 27^th February 2002, the President of CSAT, Professor Duncan Chappell, gave a decision in a lengthy document which I have had put before me and which I have read, which is entitled "Judgment of the Arbitral Tribunal of the Commonwealth Secretariat, February 2002". A little later on it says that it is "a judgment on preliminary issues" and the correspondence I have seen also refers to the preliminary issues, being the three matters that I have referred to already. Shortly before that decision was given, the Tribunal, in another matter called Mohsin, had given a ruling on similar matters, and that matter was appealed to this court and came before David Steel J., who gave a judgment on 1^st March 2002, in which he reached a conclusion as to the application of the Arbitration Act 1996 to the CSAT which differed from the views of the President in his decision. The President was invited to reconsider his decision in the light of that, but declined to do so.

Mr. Faruqi was dissatisfied with the decision of the President and therefore launched this claim, but the problem, and this is really the reason why this hearing has occurred, is that the President and CSAT have decided to proceed with the principal hearing of the complaint of Mr. Faruqi on the merits and, as I have already said, have fixed the date for hearing in April. Hence this application for interim relief, to prevent that occurring whilst the claim in this court remains outstanding.

The points that I have to decide are essentially two. Firstly, under what circumstances should this court grant relief of this nature? Essentially that is a legal question. Secondly, having resolved that, I need to apply that test to the facts of the present matter. As to the question of the general approach of the court to an application of this nature, it seems to me clear that as a general principle the court should be very hesitant about interfering with the arbitral process, even where the power to do so exists. This philosophy clearly underlies much of the Arbitration Act 1996 and was present beforehand, but it has certainly been reinforced by that Act.

I would also make the following particular points. Firstly, it is clear that there is no inherent common law jurisdiction to supervise arbitrations. This is not something which arises out of the 1996 Act but is a question of common law, and the point was very clearly made by the House of Lords in the decision in Bremer Vulkan & Shiffbau and Machine-n-fabrik v. South India Shipping Corporation Ltd [1981] AC 909. I have been shown two helpful more recent authorities which follow the same theme: first of all, the decision of the Court of Appeal in Fletamentos Maritimos v. Effjohn International [1997] 2 LR 302, and a case which I shall describe as The Smaro, a decision of Rix J. in [1999] 1LR 225. These authorities all clearly evince the unwillingness of the courts to intervene, even where they have the power to do so, in the arbitral process which has been chosen by the parties and which should be allowed to take its course except in unusual and exceptional circumstances.

Given the absence of an inherent common law jurisdiction to supervise, the second point is that any such jurisdiction could only be found either in contract or in statute. No express or implied contract is here relied upon to give the power of the court to exercise the jurisdiction which is here invoked. So the power would have to be found expressly or by implication in statute. I propose to look at certain provisions of the Arbitration Act 1996 to see whether any such power can be found. Before looking at that, one should of course bear in mind that there is a power under section 37 of the Supreme Court Act to grant injunctions in, on the face of it, general terms, although the extensive jurisprudence relating to that section shows that it has to relate to some legal right which is sought to be enforced.

As far as the Arbitration Act itself is concerned, I have had my attention directed to section 1 of that Act, particularly section 1(c), which provides that:

"The provisions of this Act are founded on the following principles and shall be construed accordingly.

(c) In matters governed by this Part the court should not interfere except as provided by this Part."

It is interesting to note that this is not quite a codification of Article 5 of the UNCITRAL Model Law, which provides that:

"No court shall intervene except when so provided."

The word "shall" has not been used. The word "should" has quite deliberately been used in the English Act, which indicates that there may be some situations – this is accepted by Mr. Stanley on behalf of the Respondent – in which the court might intervene other than is provided specifically in Part 1 of the Act, but those are, by their very nature, going to be situations which will rarely occur, and the strong general principle is against intervention.

When one looks at the rest of the Act, it is striking that nowhere does one find anything like an express provision envisaging that the court will make interim orders of the sort that I am asked to make here. Section 24, to which I will return later, concerning the power of the court to remove an arbitrator, contains provisions, including a provision in subsection (3) that:

"The arbitral tribunal may, despite a pending application under this section, continue the arbitral process and make an award while an application to the court under this section is pending."

That gives a liberty to the Tribunal itself either to continue or not, but nothing at all is said about the court itself making any order in this connection to interfere in the arbitral process whilst an application under section 24 is pending.

Section 33 is relied upon by Mr. Faruqi, through his counsel, Mr. Qureshi, which is the general duty of the Tribunal to act fairly and impartially. I will not read out the whole of that section, but it is a central provision of the Act. However, although the general rules are there laid out, there is no power given to the court specifically under that section to take any steps pursuant thereto, other than the sections which come later in the Act – sections 67 to 70 – which give powers to the court to interfere with awards where there is some defect in them either in law or in procedure.

Section 44 repays some consideration, because here there is some statutory provision for intervention by the court in certain circumstances, but those circumstances do not arise here and are not relied on. The point is made with some force by Mr. Stanley that here is the Act stating powers of the court to intervene in certain situations. It is notable that there is no similar provision relating to the sort of problem which arises here, and the fact that section 44 has been enacted but there is nothing else like it seems to me to indicate again that there is no power, certainly not expressed under the Act, providing for interim relief of the sort we are concerned with here.

I have already mentioned sections 67 to 69. It is worthy of note that section 67, dealing with challenging jurisdiction, also contains a provision rather like section 24, to the effect that the Tribunal may continue arbitral proceedings whilst an application to the court is pending – a very similar situation to that which arises under section 24. There is no similar provision in section 68 to that effect. That is the section dealing with serious irregularities.

Having considered the Act and the submissions of counsel, I accept Mr. Stanley's submissions that it will only be in very exceptional circumstances that the court will use such residual power as it has, whether that power is under section 37 of the Supreme Court Act or otherwise, to interfere with the progress of a reference. Mr. Qureshi was not himself inclined to disagree very strongly with this. He was keen to point out that there is jurisdiction, and Mr. Stanley did not say there was no jurisdiction. But even Mr. Qureshi accepted that there would have to be exceptional circumstances justifying the grant of relief of this sort. In my judgment he was right to do so, although it is not necessarily particularly helpful to pose as a test the existence of exceptional circumstances. But, in my judgment, any power to grant the relief of an interim nature such as is here sought would only be exercised in a very compelling case where justice could not be done without the grant of an order and the philosophy underlying the Act was not infringed by making such an order.

The fact of the matter is that Mr. Faruqi will be pursing and is fully able to pursue his remedies under sections 24, 68 and 69 of the Act, and nothing I am going to say could, or is designed to or will prevent or inhibit that. But to stop proceedings whilst these challenges are conducted seems to me something which I should only do unless compelled. Mr. Qureshi, in an attractive address, relied upon The American Cyanamid test [1975] AC 396, the well-known decision governing interlocutory injunctions in general, and invited me to apply that by analogy to the present situation. It seems to me that is not the right approach. It is not simply a question of finding a serious issue to be tried as to whether the substantive relief sought will be obtained and then looking at the balance of convenience. It seems to me that to adopt that approach would not be to give effect to the Act or the philosophy underlying it.

I now turn to the question of the application of the power which I have but which I have said I would only exercise sparingly in the present case. Mr. Qureshi says that this is an exceptional case. He urges on me the strength of the claims put forward by his client under sections 24, 69 and 68. I have to say that I think the claim under section 69 is extremely weak, although it is capable of going ahead. It is particularly weak in the light of Article IX of what is described as "the Statute", which is effectively the constitution of the CSAT, which seems to me on the face of it to provide an exclusion agreement which would cover this case and prevent a right of appeal on a point of law. I am not obviously deciding that, but that seems to me to be on the face of it a weak case.

More promisingly perhaps, Mr. Qureshi invokes section 68 of the Act dealing with serious irregularities. He has a problem here in that section 68 only applies to awards, and the question has been raised as to whether there is in this case an award or not, in that the document that I have described as "a decision" but calls itself "a judgment" was not a decision on the merits but a decision on procedural matters. I do not propose to resolve – I do not think it is necessary to do so definitively – the interesting question as to whether or not the decision was an award for the purposes of the Arbitration Act. It is at least very doubtful that it is an award. On the other hand, there is force in the submission made by Mr. Qureshi in reliance on a passage in The Smaro, where Rix J. at page 247 considers that a procedural decision may constitute an award if it is put in the form of a reasoned award, in that that may indicate that the matter is intended to be subject to appeal. Mr. Stanley counters by saying that that cannot be the case here, and if you look at the decision itself it is clear that the President was not envisaging an appeal. Suffice it to note for the moment that there is obviously a difficulty in Mr. Qureshi's way in invoking section 68, but I do not regard that as insuperable, and the point is plainly open for argument. I do not decide this on the basis that this cannot have been an award and that therefore section 68 cannot be available. The other requirement of section 68, apart from the fact that there has to be an irregularity, is that there has to have been substantial injustice to the applicant. (I will say a bit more about that later on.)

The third plank on which the claim in this court is made is section 24 of the Act concerning the removal of an arbitrator. This escapes the problem as to whether there is or is not an award. However, it does require the requirements of that section to be established. What is particularly relied on is 24(i)(d), that:

"The President has refused or failed properly to conduct the proceedings, or to use all reasonable dispatch in conducting the proceedings."

But there is again a requirement to show substantial injustice having been caused or that will be caused to the applicant.

I am prepared to proceed on the basis that the claims under section 68 and section 24 are arguable. They are plainly, however, not overwhelmingly strong and I would not put it any higher than that they are arguable. If the test was whether there was a serious issue to be tried – that is the American Cyanamid language – in relation to the substantive grounds for the claim in this court, I think that that test would be satisfied. However, as I said earlier, I do not think that the American Cyanamid approach is right.

In support of the fundamental merits of his attack on the decision of the President, Mr. Qureshi deploys two particular and related points. First, he complains about the refusal of the President to follow Steel J's decision in the Mohsin case and, secondly, he relies on Article 6 of the Human Rights Convention as incorporated into the Human Rights Act 1998. As to the first point, plainly one understands the substance of the argument. However, Mr. Stanley accepts that the Tribunal may well have been wrong in taking a different view from Steel J., but he argues that little difference is made by this, because even if the matter had been approached on the basis of Steel J's approach, the result would have been the same. It seems to me that that again may very well be right. I am not saying it is, but it is a perfectly arguable point.

Secondly, as for the Human Rights Act, the Tribunal President, although he did not accept that he or his organisation were bound by that Act principally because the organisation could not be a public authority, nevertheless proceeded on the basis that similar principles applied, essentially I think as a matter of international administrative law. I refer to paragraphs 52 and 53 of the decision, where he concludes, firstly, that there is no need for any amendment to be made to the statute as proposed by the Applicant in order for it to be compliant with Article 6 or anything similar if that Article does indeed apply, and also to the further point in paragraph 53:

"In any event the Tribunal could hardly amend its own statute or rules of procedure pursuant to this argument."

Again, I do not say that that is conclusively right, but the complaint by the Applicant may very well fail on the basis of those grounds. It can certainly be said that the matters argued on Mr. Faruqi's behalf were very fully considered by the President, whether he is right or not, in his detailed decision.

The highest it could be put is that there is, in my submission, some prospect of success or a serious issue to be tried in relation to Mr. Faruqi's complaints, but it is not a case which might give rise to a different answer – I do not say it would – where it is so overwhelmingly clear that the decision made is wrong that the court might use its residual power to intervene.

I now turn to the balance of convenience and the question of injustice. The main point put forward here – I do not say the only one – is the question of wasted costs and expenditure. It is said that it is pointless and indeed no doubt also burdensome to have to go through an arbitration hearing in April which may very well be wasted because very soon after that the court may effectively render that invalid or of no effect by reason of the challenge made in this claim. That is the principal point in relation to injustice.

It seems to me that although there may be something in it, this is not the sort of overwhelming point or the sort of unusual or exceptional circumstance which justifies this court in intervening in the arbitral process. One can well understand that if this was an ordinary American Cyanamid type approach that point may have some considerable force, especially in the light of the fact that there is not very much obvious prejudice to the other side if this relief were to be granted, certainly in terms of financial exposure. But it seems to me that if I were to grant the relief sought in this case on the facts that have been put before me very fully and clearly by counsel, I would be opening the door in not every case but nearly every case where a complaint could be made against a provisional ruling or a procedural ruling of a tribunal to say, "There is a serious issue to be tried, and please hold the ring whilst that is sorted out." It seems to me that if I were to accede to this application, then very many other cases of a fairly ordinary nature, in the sense that no particular exceptional element is involved, would also be decided in the same way. I do not discount the prejudice that is put forward and I do not suggest that it is minimal, but it does seem to me that it is inadequate and nothing like the sort of case that I would need to have if I were to say that the court without any express power in the Arbitration Act, but relying on some residual right such as I have described, could and should effectively prevent this arbitration from going ahead in the circumstances which are sought.

Mr. Faruqi may win the arbitration. Also, he may lose the arbitration but win his claim in this court, in which case, of course, he will be compensated in that the costs incurred and flowing from any wasted hearing will be recoverable. So although I can certainly see prejudice, I cannot see overwhelming injustice such that I ought to intervene in this matter.

It is said finally by counsel for Mr. Faruqi that the Tribunal has in a sense forfeited the confidence of at least his client by its insistence on following its own decision in Mohsin and not following the decision of Steel J. I see that, but on the other hand it does not seem to me to be necessarily the case that it is unacceptable for the Tribunal to have taken that view. I note that Mr. Stanley says that the decision in Mohsin is something which could be challenged and may be challenged by his client hereafter. I note that point, although for the moment we have all proceeded on the basis that the decision of Steel J. is right, and that seems to me to be the only basis on which to proceed. But I do not think that it can be said that the attitude of the Tribunal is such that I ought for that reason to take a different view from the view that I have otherwise concluded that I should take on the basis of the legal and factual considerations that I have set out above. For those reasons I dismiss the application.