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England and Wales High Court (Commercial Court) Decisions |
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You are here: BAILII >> Databases >> England and Wales High Court (Commercial Court) Decisions >> Port De Djibouti SA v DP World Djibouti FZCO [2023] EWHC 1189 (Comm) (22 May 2023) URL: http://www.bailii.org/ew/cases/EWHC/Comm/2023/1189.html Cite as: [2023] EWHC 1189 (Comm) |
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BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES
KING'S BENCH DIVISION
COMMERCIAL COURT
IN THE MATTER OF THE ARBITRATION ACT 1996
AND IN AN ARBITRATION CLAIM
Rolls Building, Fetter Lane, London, EC4A 1NL |
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B e f o r e :
____________________
| PORT DE DJIBOUTI S.A. |
Claimant/Respondent in the Arbitration |
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- and - |
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| DP WORLD DJIBOUTI FZCO |
Defendant/Claimant in the Arbitration |
____________________
Graham Dunning KC and Catherine Jung (instructed by Quinn Emanuel Urquhart & Sullivan UK LLP) for the Defendant
Hearing dates: 8 and 9 March 2023
Further written submissions received: 17 March, 30 March and 5 April 2023
Draft judgment circulated to the parties: 11 May 2023
____________________
Crown Copyright ©
Mr Justice Henshaw:
(A) INTRODUCTION
(B) BACKGROUND
(1) The parties and the key contracts
(2) The arbitration agreements
(3) Key provisions relating to shareholders and share transfers
(4) Subsequent events
(C) DP WORLD'S CLAIMS IN THE ARBITRATION
(D) PDSA'S JURISDICTION OBJECTION BEFORE THE TRIBUNAL
(E) THE TRIBUNAL'S CONCLUSIONS
(1) JVA Termination Claim
(2) Share Transfer Claim
(3) Breaches Claims
(F) JURISDICTION OVER THE SHARE TRANSFER CLAIM
(G) JURISDICTION OVER BREACHES CLAIMS
(H) WHETHER PDSA CEASED TO BE A SHAREHOLDER
(1) PDSA's submissions
(2) Analysis
(I) LOSS OF THE RIGHT TO OBJECT
(J) CONCLUSIONS
(A) INTRODUCTION
i) Presidential Ordinance No. 2018-001/PRE dated 9 September 2018 (the "Presidential Ordinance") immediately, automatically and compulsorily transferred to the Republic ownership of PDSA's shares in DCT. As was common ground before the arbitrator, under the applicable Djibouti law that meant that PDSA no longer owned equity in the share capital of DCT, such ownership having been vested in the Republic.
ii) The arbitration agreements in the parties' Joint Venture Agreement ("JVA") and in DCT's Articles of Association ("the Articles") were, by their terms, limited to disputes between "Shareholders".
iii) Under the contractual definitions, a person/entity could not be or remain a "Shareholder" unless it (a) actually owned equity in the share capital of DCT and (b) (unless it was an original signatory party to the JVA) had signed a deed of adherence and thereby agreed to be bound by the obligations of the JVA.
iv) Even though the Republic signed no deed of adherence, and therefore did not itself become a "Shareholder", PDSA ceased to be a Shareholder upon the Presidential Ordinance because it removed PDSA's equity ownership.
v) As a result, under the JVA terms, PDSA had no further rights or obligations under the JVA (including the arbitration agreement), save that it remained liable for any allegation of breach that occurred before it ceased to be a Shareholder (for which purposes the arbitration agreements would remain an applicable right and obligation).
vi) Consequently, the arbitrator had no jurisdiction to rule on contentions of contractual breach post-dating the Presidential Ordinance, nor on the question of whether PDSA remained a Shareholder thereafter. The arbitrator's contrary conclusion was a jurisdictional finding and was wrong.
i) It is undisputed that PDSA was a party to the arbitration agreements in the JVA and Articles, and that DP World validly commenced the arbitration against it by invoking those arbitration agreements.
ii) Properly analysed, PDSA has accepted that the arbitrator had substantive jurisdiction to determine the claims on which DP World actually succeeded in the Arbitration. Those include DP World's claim that the transfer of ownership effected by the Presidential Ordinance was made in breach of the JVA and Articles, both of which contained provisions stipulating that signature of a deed of adherence by the putative transferee (i.e. the Republic) was a "condition of any transfer of Shares".
iii) PDSA's challenge falls outside the scope of section 67, because it does not concern an issue going to the arbitrator's "substantive jurisdiction" (as that term is defined in the Arbitration Act). PDSA's real objection is not to the arbitrator's substantive jurisdiction but to the relief that the arbitrator awarded in respect of DP World's claims.
iv) In reality, what PDSA is in fact seeking to do is to challenge the arbitrator's findings on the merits of the dispute.
v) In any event, PDSA has lost the right to pursue its challenge, pursuant to section 73(1) of the Arbitration Act. PDSA was given the express opportunity by the arbitrator, before the Award was issued, to clarify the scope of the jurisdictional objection it pursued. Not only did PDSA fail to raise any objection to the claims on which DP World succeeded and the relief DP World sought in respect thereof, but it in fact positively confirmed that the arbitrator enjoyed jurisdiction.
vi) In any event, PDSA's challenge would fail as a matter of substance, because:
a) PDSA did not cease to be a Shareholder for the purposes of the JVA and Articles, despite the transfer of ownership to the Republic as a matter of property law; and
b) even if it did, the arbitrator retained jurisdiction to determine all the claims on which it found in DP World's favour, including the claim that PDSA remained a Shareholder following the Presidential Ordinance.
(B) BACKGROUND
(1) The parties and the key contracts
(2) The arbitration agreements
"19.1 This Agreement shall commence on the date of execution of this agreement and, unless terminated by the written agreement of the parties to it, shall continue for so long as two or more parties continue to hold Shares in the Company but a Shareholder will cease to have any further rights or obligations under this Agreement on ceasing to hold any Shares except in relation to those provisions which are expressed to continue in force and provided that this Clause shall not affect any of the rights or liabilities of any parties in connection with any breach of this Agreement which may have occurred before that Shareholder ceased to hold any Shares."
"20.1 In the event of any dispute between the Shareholders arising out of or relating to this Agreement, representatives of the Shareholders shall, within 10 Business Days of service of a written notice from any Shareholder to the others (a "Disputes Notice") hold a meeting (a "Dispute Meeting") in an effort to resolve the dispute. In the absence of agreement to the contrary the Dispute Meeting shall be held at the registered office for the time being of the Company."
20.3 Any dispute which is not resolved within 20 Business Days after the service of a Disputes Notice, whether or not a Dispute Meeting has been held, shall, at the request of either party made within 20 Business Days of the Disputes Notice being served, be referred to arbitration under the rules of London Court of International Arbitration ."
"All disputes which could arise during the course of the Company or its liquidation, either between the Shareholders themselves regarding the Company affairs, or between the Shareholders and the Company, are subject to arbitration, in accordance with the Rules of the International Court of Arbitration of London, the State and the artificial persons of Djiboutian public law, Shareholders of the Company expressly waiving any privilege of jurisdiction or enforcement."
(3) Key provisions relating to shareholders and share transfers
"Shareholders means:
(i) any shareholders in the Equity Share Capital of the Company who are Parties to this Agreement, being PAID and DPW Djibouti [i.e. DP World] as of the date hereof; and
(ii) any Person to whom Shares are issued or transferred in accordance with this Agreement from time to time and who has executed a Deed of Adherence;
while any Shares are held by such Persons; and Shareholder means any of them (as the context requires)."
"14.1 General
(b) The restrictions on Transfer contained in this Clause 14 shall apply to all Transfers, operating by law or otherwise.
(d)The provisions of this Clause 14 are serious and are for the protection of the legitimate interests of all the Shareholders and the Company.
14.5 Deed of adherence
It shall be a condition of any transfer of Shares (whether permitted or required) that:
(i) The transferee, if not already a party to this Agreement, enters into an undertaking to observe and perform the provisions and obligations of this Agreement in the Agreed Form set out in Annexure 5 [sc. 4] hereto (a "Deed of Adherence"); and
(ii) The relevant transferor of Shares assigns its obligations under any guarantee or encumbrance to which it is a party, to the transferee.
14.6 Registration of transfers
(a) The Directors shall only register any Transfer made in accordance with the provisions of this Agreement.
(c) A person executing an instrument of transfer of a Share is deemed to remain the holder of the Share until the name of the transferee is entered in the register of members of the Company in respect of it.
(d) Upon registration of a Transfer of Shares, and provided that the requirements of Clause 15.5 [sc. 14.5] have been complied with, a Shareholder's benefit of the continuing rights under this Agreement shall attach to the transferee who may enforce them as if it had been a party to this Agreement and named in it as a Shareholder."
"(a) The subscribers to these Articles of Association holding Shares in the Capital of the Company, and
(b) Any Persons to whom Shares are issued or Transferred in accordance with these Articles and who have executed a Deed of Adherence;
while any Shares are held by such Persons; and Shareholder means any of them (as the context requires)."
"11.2 Any Transfer of Shares is subject to Clause 14 of the [JVA]. Any Transfer of the Shares of the Company in contravention of this Article 11 or the provisions of the [JVA], shall be void and unenforceable and the Board of Directors shall not register such Transfer under Article 11.1".
"11.3 Consequently
(ii) The conditions provided by the present Article 11 are applicable to any legal or conventional Transfer;
(iv) The provisions of this Article 11 are serious and are for the protection of the legitimate interests of the Company."
"11.7 Deed of Adherence
It shall be a condition of any Transfer of Shares (whether permitted or required) that:
(i) The Transferee, if not already a Party to this Agreement, enters into an undertaking to observe and perform the provisions and obligations of these Articles under a Deed of Adherence; and
(ii) The relevant transferor of Shares assigns its obligations under any guarantee or encumbrance to which it is a party, to the transferee."
"11.8 Registration of Transfers
(i) The Directors shall only register any Transfer made in accordance with the provisions of these Articles and the [JVA].
(iii) A person executing an instrument of Transfer of a Share is deemed to remain the holder of the Share until the name of the transferee is entered in the register of members of the Company in respect of it.
(iv) Upon registration of a Transfer of Shares, and provided that the requirements of [the JVA] have been complied with, a Shareholder's benefit of the continuing rights under this Agreement shall attach to the transferee who may enforce them as if it had been a party to this Agreement and named in it as a Shareholder."
(4) Subsequent events
"Article 1: The ownership of the shares held by the company [PDSA] in the capital of the company [DCT] is transferred to the State to ensure protection of the nation's fundamental interests.
Article 2: The State will compensate the company [PDSA] within a maximum period of two months in exchange for the shares transferred to the State. The compensation terms will be determined by decree.
Article 3: The State representatives in the corporate bodies of the company [DCT], in respect of its stake in the share capital, will be appointed by decree.
Article 4: This order shall take effect upon signature and shall be published under the emergency procedure."
(C) DP WORLD'S CLAIMS IN THE ARBITRATION
"231. Without prejudice to its right to amend, supplement or restate the relief to be requested in the arbitration, DPWD respectfully requests that the Tribunal, by way of a partial award, to:
(a) DISMISS PDSA challenge to the admissibility of DPWD's claims;
(b) UPHOLD its jurisdiction to determine DPWD's claims under DCT's Articles;
(c) [JVA Termination Claim] DECLARE that, notwithstanding PDSA's purported termination of the JVA on 28 July 2018, the termination of the JVA is unlawful and consequently, the JVA remains valid and binding;
(d) [Share Transfer Claim] DECLARE that notwithstanding the Presidential Ordinance, the purported transfer of shares from PDSA to the Republic is in breach of the JVA and Articles and, consequently, invalid and unenforceable and that PDSA remains a shareholder of DCT;
(e) [Breaches Claims] DECLARE that PDSA has also breached Clauses 4.3(c), 5.2(a), 7, 8.5, 9.3, 11.1, 13.1, 14.1(a), 14.3(b),14.5, 15.1(a), 15.1(i), 15.1(j), 16.1, 17.1, 17.2(d) of the JVA and Articles 11.1, 11.2, 11.7, 17, 21.5, 23, 42A, 47.1 of the Articles;
232. In addition, DPWD respectfully requests that the Tribunal:
(a) DECLARE that PDSA is liable to indemnify DPWD for any damages resulting out of the wrongful termination;
(b) ORDER PDSA to pay to DPWD compensation for damages DPWD has incurred as a result of PDSA's wrongful actions in an amount to be quantified at a later date;
(c) DECLARE that PDSA remains party to the JVA and the Articles."
"64. DPWD has described each breach committed by PDSA (or through its affiliate the Republic) in its Statement of Case: ΆΆ 153173. In summary, PDSA is liable for breaches of Clauses 4.3(c), 5.2(a), 7, 8.5, 9.3, 11.1, 13.1, 14.1(a), 14.3(b),14.5, 15.1(a), 15.1(i), 15.1(j), 16.1, 17.1, 17.2(d) of the JVA and Articles 11.1, 11.2, 11.7, 17, 21.5, 23, 42A, 47.1 of DCT's Articles in respect of the following actions:
(a) treating the JVA as terminated (also a breach of the English Injunction);
(b) purporting to transfer its shares to the Republic in breach of the JVA and the Articles, having failed to secure a Deed of Adherence from the Republic;
(c) attempting to unlawfully remove DPWD's nominated directors on the DCT Board at a shareholders' meeting and depriving those directors from exercising their rights as directors of DCT;
(d) seeking to invalidate DCT's Articles and the 18 February 2018 Board Resolution in the Djibouti courts;
(e) appointing an Administrator to take over the Board of DCT, notwithstanding that action is a Reserved Matter;
(f) failing to ensure the distribution of dividend to the shareholders of DCT for at minimum, the year 2017;
(g) preventing DPWD from managing the Terminal and instead managing the Terminal itself, through SGTD, following the passage of Law 29 and Decree 99, as well as undertaking such management and operations of the Terminal, in breach of DCT's exclusivity rights (which are given additional protection under the JVA and Articles);
and
(h) using DCT's assets, including the Terminal and cash in the on-shore bank accounts of DCT for its own benefit and at DPWD's expense." (footnotes omitted)
(D) PDSA'S JURISDICTION OBJECTION BEFORE THE TRIBUNAL
"As PDSA set out in its Statement of Defence, the Tribunal does not have jurisdiction to hear DP World's claims under the Articles, insofar as they relate to events that occurred after the passage of the Dispossession Ordinance on 9 September 2018. As shown in Section III above, upon the passage of the Dispossession Ordinance, PDSA was dispossessed of its shares as a matter of law and fact. As a result, PDSA ceased to be a 'Shareholder' (as defined in the Articles). Since the arbitration clause in the Articles is limited to disputes either 'between the Shareholders themselves regarding the Company affairs' or 'between the Shareholders and the Company', the Tribunal has no jurisdiction to hear any claims under the Articles against PDSA arising out of events that occurred after the Dispossession Ordinance.
In the event that the Tribunal finds that the JVA was wrongfully terminated and that the effect of this is that the JVA remains valid and binding, the Tribunal would also lack jurisdiction for any of DP World's claims under the JVA after the passage of the Dispossession Ordinance. This is because the arbitration clause in the JVA also applies only to disputes between 'the Shareholders arising out of or relating' to the JVA (JVA, C-1, Clause 20). 'Shareholders' is defined in the JVA, inter alia, as 'any shareholders in the Equity Share Capital of [DCT] who are parties to' the JVA " (§§ 89-90)
"188. The Respondent disputes the Tribunal's jurisdiction in the following terms:
"Declare that the Tribunal does not have jurisdiction to hear DP World's claims under the Articles post-dating the dispossession of PDSA's shares in DCT; [ ] and
Declare that the Tribunal does not have jurisdiction to hear DP World's claims under the JVA post-dating the dispossession of PDSA's shares in DCT." (footnote omitted)
"So upon the issuance of that ordinance, PDSA no longer have the quality of a shareholder in DCT which is a necessary component of the Tribunal's jurisdiction . Thus, for events which occurred after the ordinance, this Tribunal is not the available forum; for events which occurred before the ordinance, the Tribunal remains an available forum, in principle."
and:
"Let me turn now to the jurisdiction consequences of the dispossession of PDSA which took effect on 9 September 2018. As of that date, we respectfully submit, the Tribunal is to find that PDSA was no longer a shareholder in DCT and, as we see on the slide that is now on your screen, the arbitration clause in DCT's articles applies only to disputes between shareholders, so far as company affairs are concerned, or between shareholders and DCT itself. That is the effect of article 52.1 of DCT's articles of association. Exactly the same conclusion applies, Madam with respect to clause 20.1 of the JVA."
"THE ARBITRATOR: If I look now at the claimant's request for relief in the statement of reply, the first declaration other than not challenging admissibility and upholding jurisdiction is regarding the termination of the joint venture agreement. My understanding here is that there is no challenge regarding the jurisdiction of this Tribunal regarding that particular claim and I would like to confirm that with the respondent.
DR PETROCHILOS: Madam President, let me perhaps take that starting with your latter point. Your understanding is correct. The termination pre-dates the dispossession arguments and therefore temporally it is within your jurisdiction."
"THE ARBITRATOR: Let me now go to the next claim by the claimant, which is the one that, notwithstanding the presidential ordinance, the purported transfer - - and I'm here quoting from the claimant's request for relief - - the purported transfer of the shares from the respondent to the Republic is in breach of the JVA and the articles and, as a consequence, is invalid and unenforceable.
My understanding is that you have of course a number of objections to, you know, making that particular claim, but am I right that you are not objecting to the jurisdiction on the basis that that is not postdating 9 September?
DR PETROCHILOS: That is correct, Madam President."
"THE ARBITRATOR: So what we have left with is the list of various other breaches, and I would like here to take your list that you have put, for instance, on slide 46 of the presentation that we just went through. It very helpfully lists the various actions on the left-hand side and you've identified those that are in your submission post 9 September, post ordinance, presidential ordinance, and so these concern - - and I believe here the numbers are referenced in the claimant's skeleton. These are 64(d), 64(e), 64(f) and 64(g). So in your submission it is these four claims that there is a jurisdictional challenge, not for the others?
DR PETROCHILOS: Madam, the issue of the temporal limitation, post termination of the JVA, applies to a number of claims. Forgive me, the issue of the post dispossession ordinance applies to a number of claims and these are the four claims that you have identified. I am confirming it in long form so you have it on the record. So they are 64(d), (e), (f) and (g), that is correct."
(E) THE TRIBUNAL'S CONCLUSIONS
"VI. AWARD
NOW THEREFORE THE ARBITRAL TRIBUNAL DECIDES, HOLDS, AND ORDERS AS FOLLOWS:
a. Decides that it has jurisdiction to hear the Claimant's claims under the JVA and the Articles;
b. [JVA Termination Claim] Declares that notwithstanding the Respondent's purported termination of the JVA on 28 July 2018, the termination of the JVA is unlawful and consequently, the JVA remains valid and binding;
c. [Share Transfer Claim] Declares that notwithstanding the Presidential Ordinance, the purported transfer of shares from the Respondent to the Republic is in breach of the JVA and Articles and, consequently, unenforceable and that the Respondent remains a shareholder of DCT;
d. [Breaches Claims] Declares that the Respondent breached Clause 14.5 of the JVA and Article 11.7 of the Articles;
e. Declares that the Respondent is liable to indemnify the Claimant for any damages resulting out of the wrongful termination;
f. Declares that the Respondent remains a party to the JVA and the Articles;
g. Order the Respondent to pay to the Claimant GBP 1,644,165.78 as Legal Costs and GBP 91,743.75 as Arbitration Costs; and
h. Reserves its decision on other matters. "
(1) JVA Termination Claim
(2) Share Transfer Claim
"notwithstanding the Presidential Ordinance, the purported transfer of shares from PDSA to the Republic is in breach of the JVA and Articles and, consequently, invalid and unenforceable and that PDSA remains a shareholder of DCT." (as quoted in Award § 396)
"this Tribunal has not been asked to, and will not, make any determination on the lawfulness or validity of any foreign act of state, such as the Presidential Ordinance or Law 29 confirming it. Rather, this Tribunal accepts as a given the lawfulness and validity of the Presidential Ordinance or Law 29 under Djiboutian law and decides only on the contractual rights of the Parties to this arbitration under the JVA and the Articles" (Award § 412)
" the Tribunal will take the validity and the lawfulness of the Presidential Ordinance as a given under Djiboutian law and assess whether the Share Transfer it effected was in breach of the JVA and Articles" (Award § 419)
"457. it is important to keep in mind the scope of the Tribunal's decision regarding the Claimant's Share Transfer Claim. As set out above, the Tribunal's decision is limited to determining the contractual rights of the Parties to this arbitration under the JVA and the Articles, as governed by Djiboutian law. As noted, it is not for this Tribunal to make any determination as to whether the Presidential Ordinance is valid and lawful as a matter of Djiboutian law, but instead takes its validity and lawfulness as a given.
458. In light of the above, the Tribunal accepts as valid the order contained in the Presidential Ordinance, which as matter of Djiboutian law is deemed valid. Article 1 of the Presidential Ordinance states that "[t]he ownership of the shares held by [the Respondent] in the capital of [DCT] is transferred to the State [ ]." The validity of this act by a sovereign State, and the transfer of ownership resulting from it, are not questioned by the Tribunal. Accordingly, the declaration sought by the Claimant that the "the purported transfer of shares from [the Respondent] to the Republic is [ ] invalid" is beyond the scope of the Tribunal's decision.
459. This is so even though Article 11.2 of the Articles specifically provides that any transfer of shares in breach of the JVA's transfer restriction "shall be void". The Parties' private agreement cannot change the order contained in the Presidential Ordinance, an executive act by a sovereign State, and part of Djiboutian law as the law governing the JVA. In light of the conflict between the order contained in the Presidential Ordinance (ordering the transfer of ownership of the DCT shares) and the contractual provisions of the JVA (providing that the transfer of shares is void), the former prevails, as a mandatory part of the law governing the JVA (and the Articles).
460. However, at the same time, as detailed above, the JVA and the Articles require not only a valid share transfer but also the signature of a deed of adherence by the transferee as a new shareholder. Without such deed of adherence, the transfer of shares be it valid in and of itself is unenforceable vis-a-vis the Company, i.e., DCT. Concretely, as detailed above, this means that the transferee is not registered in the Company's share register, is not deemed to be a shareholder, and therefore cannot benefit from any right under the JVA and Articles linked to being a DCT shareholder.
461. Accordingly, since it is undisputed that the Republic, as the transferee, has not signed or provided a deed of adherence, the Share Transfer pursuant to the Presidential Ordinance, even though valid, is unenforceable vis-a-vis DCT under the JVA and the Articles. In other words, pending the signed deed of adherence, for the purposes of the JVA and the Articles, the Respondent is still deemed to be a shareholder in DCT.
462. For the avoidance of doubt, the Tribunal notes that the fact that the share transfer is held unenforceable vis-a-vis DCT is not in contradiction with the order contained in the Presidential Ordinance. That order, as detailed above, only relates to the transfer of ownership of the DCT shares between the Respondent and the Republic. It does not deal with the effect this transfer of ownership has vis-a-vis DCT (or the Claimant). Accordingly, the Share Transfer, even though valid, is unenforceable vis-a-vis DCT (or the Claimant), pending the signature of the deed of adherence by the Republic.
* * *
463. In sum, for the reasons detailed above, the Tribunal partially grants the Claimant's Share Transfer Claim and declares that notwithstanding the Presidential Ordinance, the purported transfer of shares from the Respondent to the Republic is in breach of the JVA and the Articles and consequently unenforceable and that the Respondent remains a shareholder of DCT."
(footnotes omitted)
(3) Breaches Claims
"471. As set out above, the Respondent challenges the Tribunal's jurisdiction to hear the Claimant's claims post-dating the Presidential Ordinance on the basis that the Respondent ceased to be a shareholder in DCT after that date, i.e., after 9 September 2018. However, the Tribunal has determined in the previous section of this award that the Respondent remained a shareholder in DCT, even after 9 September 2018. Accordingly, the Tribunal finds that it has jurisdiction to hear the Claimant's JVA and Articles Breaches Claim, irrespective of whether the underlying events pre- or post-date 9 September 2018. " (Award § 471, footnotes omitted)
i) on the true construction of JVA § 14.5 and Article 11.7, PDSA promised to procure (or, possibly to use best efforts to procure) the signature of a deed of adherence from any transferee of shares, but failed to do so (§§ 491-492); and
ii) the Presidential Ordinance could not excuse performance of that obligation, because nothing in it prevented the Republic from signing a deed of adherence nor prevented PDSA from taking any steps towards procuring such a signature. There was no evidence that PDSA had taken any step to procure it, even though "[i]t could clearly have done so, even in light of the Presidential Ordinance" (§§ 499-500).
(F) JURISDICTION OVER THE SHARE TRANSFER CLAIM
i) under the contractual definitions, PDSA could not remain a "Shareholder" once the Presidential Ordinance deprived it of actual ownership, under Djibouti law, of shares in DCT;
ii) the arbitration agreements in the JVA and the Articles did not apply to any matters occurring once PDSA ceased to be a Shareholder; and
iii) those matters included the question of whether PDSA remained a Shareholder following the Presidential Ordinance.
i) The question of whether it remained a Shareholder after the Presidential Ordinance is a jurisdictional issue, because the arbitration agreements apply only to disputes between "Shareholders" (as defined). They thus impose a ratione personae jurisdictional requirement that both the party invoking the arbitration agreement and the party against whom the arbitration agreement was being involved fulfil the requirements of being a "Shareholder".
ii) The position stated in (i) above is subject to the point that (as JVA § 19 confirms) all rights and obligations arising prior to ceasing to be a Shareholder remain, including the obligation to arbitrate any question of breach arising prior to ceasing to be Shareholder. In other words, (as PDSA puts it) the ratione temporis jurisdiction of the tribunal extends to any alleged breach occurring prior to a party ceasing to be a Shareholder.
iii) These limitations on the arbitrator's jurisdiction are not merely questions about the scope of the arbitration agreements, but raise the logically antecedent question about the existence of party consent to arbitration, that being a precursor to any question of subject-matter scope.
iv) When there is an issue as to whether a party has consented to arbitration in the first place, no question of the scope of the arbitration agreement arises, because the 'arbitration shop' is closed for business: see DHL Project & Chartering v Gemini Ocean Shipping (The "Newcastle Express") [2022] EWCA Civ 1555:
" the modern 'one-stop' dispute resolution presumption in contractual interpretation" is concerned with the interpretation of dispute resolution clauses, as made clear in Fiona Trust. ... The presumption has nothing to do with the question whether the parties have concluded a contract (including a contract to arbitrate) in the first place. On the contrary, to hold that the question whether a binding arbitration agreement has been concluded is subject to ordinary principles of contract formation is a principled approach. It recognises that an arbitration agreement is a contract like any other, so that there is no justification for treating the question whether such an agreement has been concluded as subject to special presumptions uniquely applicable in arbitration cases. One-stop shopping is all very well, but if the parties have not entered into an arbitration agreement, the shop is not open for business in the first place." (§ 75)
"[The separability principle] applies where the parties have reached an agreement to refer a dispute between them to arbitration, which they intend (applying an objective test of intention) to be legally binding. It means that a dispute as to the validity of the main contract in which the arbitration agreement is contained does not affect the arbitration agreement unless the ground of invalidity relied on is one which "impeaches" the arbitration agreement itself as well as the main agreement. But it has no application when, as in the present case, the issue is whether agreement to a legally binding arbitration agreement has been reached in the first place." (§ 80(5))
The same analysis applies, PDSA submits, in the present case where a Shareholder loses the status of Shareholder. In this situation too, the 'arbitration shop' is closed for business, and any subsequent question about the scope of the arbitration agreement does not arise.
v) Thus the question of whether PDSA remained a Shareholder was a jurisdictional issue, which concerned whether party consent remained or had been withdrawn. That was an issue on which the arbitrator could not make any final determination: only the court can do so.
vi) This is a 'gateway' question: the parties agreed that only Shareholders can cross the gateway and invoke arbitration. The definition of Shareholder by its nature involved a question as to whether the party said to be a Shareholder had certain required attributes (of holding shares). Investment treaty cases are a useful analogy: jurisdictional clauses under such treaties require one of the parties to have the attribute of being an "investor" in order to invoke the arbitration agreement against the respondent State (cf GPF GP Sarl v Poland [2018] EWHC 409 (Comm) § 70 and Republic of Korea v Dayyani [2019] EWHC 3580 (Comm) § 88). Determinations by arbitrators of these necessary jurisdictional qualities, which all go to the question of party consent to arbitration, are subject to the court's control under section 67.
vii) For the question of jurisdiction to decide whether PDSA remained a Shareholder to be an issue of the scope of the arbitration clause, the arbitration agreement would have needed to be drafted in unusual terms so as to confer on the arbitrator jurisdiction to determine questions of party consent as a matter of the scope of the arbitration agreement. It would have had to be drafted along the lines of: "Any dispute between the parties as to whether they have the contractual status of Shareholders shall be determined by arbitration": see, e.g., the decisions of the Supreme Court in Dallah Real Estate v Ministry of Religious Affairs [2011] 1 AC 763 (§§ 24 and 84), and AES Ust-Kamenogorsk Hydropower Plant [2013] 1 WLR 1889 (§ 35) where Lord Mance said:
"In short, any tribunal convoked to determine a dispute may, as a preliminary, consider and rule on the question whether the dispute is within its substantive jurisdiction, without such ruling being binding on any subsequent review of its determination by the court under sections 32, 67 or 72 of the 1996 Act. However, a tribunal cannot by its preliminary ruling that it has substantive jurisdiction to determine a dispute confer on itself a substantive jurisdiction which it does not have. Absent a submission specifically tailored to embrace them (as to which there is no suggestion here), jurisdictional issues stand necessarily on a different footing to the substantive issues on which an award made within the tribunal's jurisdiction will be binding." (emphasis supplied)
Thus only under a very specifically tailored arbitration agreement could: (a) the question of whether PDSA remained a Shareholder raise a question of scope (as opposed to party consent), and (b) the arbitrator's finding on the (in-scope) issue be a merits determination. By contrast, the arbitration agreements in the JVA and the Articles contain no such language, and require Shareholder status as a necessary quality of consent to arbitration. Thus, in the present case the question of whether PDSA remained a Shareholder is a jurisdictional question: it is a question of whether PDSA's consent to arbitration remains or has ceased.
viii) The question of whether PDSA remained a Shareholder in this case is analogous to the jurisdictional question that arises in cases of implicit or express revocations of an arbitration agreement. The jurisdictional implications when Shareholder status ceases are identical to the implications when an arbitration agreement is terminated or revoked. In both situations, the arbitration agreement falls away and disputes pertaining to matters after that time cannot be arbitrated (because the arbitration agreement is inoperative and therefore there is no longer a valid arbitration agreement). See in this regard:
a) G Born, International Commercial Arbitration (3rd ed., 2021) at § 5.06[D][6] (first paragraph):
"The termination, repudiation, or abandonment of international arbitration agreements provides another basis for challenging the validity of such agreements in particular cases. Issues of termination and repudiation are generally, and properly, regarded as falling within Article II(3)'s reference to arbitration agreements that are inoperative."
b) AJ van den Berg, "The New York Arbitration Convention of 1958, Towards a Uniform Judicial Interpretation" (1981) at pages 158-159, stating that the term "inoperative" as used in Article II(3) of the New York Convention (1958) refers inter alia to cases where the arbitration agreement has ceased to have effect because for example the parties have "implicitly or explicitly revoked the agreement to arbitrate".
c) The analysis of the Court of Appeal in Downing v Al Tameer Establishment [2002] 2 All ER (Comm) 545 §§ 25, 34-35, 39 holding that, for the purposes of section 9(4) of the Arbitration Act 1996 (which implements Article II(3) of the New York Convention), if a concluded arbitration agreement has come to an end, then it is inoperative. See also Costain v Tarmac Holdings [2017] EWHC 319 (TCC) § 88 (indicating that the question is whether there was an express or implied agreement that the arbitration would not be the final means of dispute resolution so as to render the arbitration agreement inoperative).
ix) It makes no difference that PDSA was previously a party to the arbitration agreements: the question of whether it remained a Shareholder after the Presidential Ordinance is an issue that arises post-Ordinance i.e. after PDSA's loss of Shareholder status. It is therefore irrelevant whether there was party consent to arbitration pre-Ordinance.
x) It is indicative that the arbitrator herself did not approach the matter on the basis that the question whether PDSA remained a shareholder did not involve a merits determination, or solely a merits determination. The arbitrator did not determine the issue of whether PDSA remained a Shareholder in the context of her finding (at Award § 444) that there was a breach in failing to procure a deed of adherence prior to the transfer of ownership effected by the Presidential Ordinance. Instead, she addressed it in Award §§ 460-463 and 471 as a jurisdictional finding which was the predicate for her view that she could resolve claims of post-Presidential Ordinance breach.
xi) Accordingly, the question of whether PDSA ceased to be a Shareholder following the Presidential Ordinance is not one that the arbitrator would have jurisdiction over PDSA to resolve, if, on the true analysis by the court, PDSA had ceased to be a Shareholder. To that extent, this case is no different from a contract formation case.
xii) It follows that unless the court concludes that PDSA did indeed remain a Shareholder following the Presidential Ordinance, the arbitrator lacked jurisdiction to decide that issue i.e. whether PDSA did or did not remain a Shareholder.
i) The question of whether PDSA remained a Shareholder after the Presidential Ordinance is indistinguishable from the question of whether PDSA ceased to be a Shareholder at the moment when the Presidential Ordinance was issued. PDSA was a Shareholder at the moment in time at which it ceased to be a Shareholder (if it did so cease). That is sufficient, in my view, to mean that the question of whether PDSA remained a Shareholder is a dispute "between the Shareholders" for the purposes of the arbitration agreements: even if, at the moment in question, PDSA in fact ceased to be a Shareholder.
It is true that § 19 of the JVA provides for the parties' obligations under the JVA to cease when they cease to be Shareholders, except in relation to "provisions which are expressed to continue in force" and "rights or liabilities in connection with any breach of this Agreement which may have occurred before that Shareholder ceased to hold any Shares" (my emphasis); and § 19 applies to the arbitration agreement as it does to other provisions of the contract (cf Enka Insaat Ve Sanayi v OOO Insurance Company Chubb [2020] UKSC 38 §§ 61-62), so that §§ 19 and 20 need to be read together. However:
a) The natural reading of both the arbitration agreement in the JVA and the arbitration agreement in the Articles (which contains no equivalent to JVA § 19) is that they are of general application to disputes about matters that arose while the parties are/were Shareholders, whether or not such disputes concern allegations of "breach" as such as distinct from other matters in contention. In my view JVA §§ 19 and 20, read as coherent whole, are to be interpreted in the same way: the parties have agreed to refer to arbitration all disputes relating to their relationship as Shareholders, whether or not any such dispute relates specifically to an allegation of breach of contract/duty. The disagreement about whether PDSA ceased to be a Shareholder upon issue of the Presidential Ordinance is such a dispute.
b) In any event, the question of whether PDSA ceased to be a Shareholder upon issue of the Presidential Ordinance is a question "in connection with" a breach or alleged breach of the JVA that occurred before PDSA ceased (if it did cease) to be a Shareholder, within JVA § 19. On DP World's case and on the arbitrator's analysis, the cessation issue is directly linked to the breaches of JVA § 14.5 and Article 11.7 which the arbitrator found to have occurred in the first section of her analysis of the Share Transfer Claim (in relation to which no jurisdictional objection was made). PDSA rightly has never sought to argue that those breaches occurred only at, as opposed to before, the moment at which on PDSA's case it ceased to be a Shareholder, and hence outside JVA § 19 and two arbitration agreements. That would have been an untenably narrow view of those provisions. On the contrary, as noted earlier, PDSA expressly confirmed to the arbitrator that it took no jurisdictional objection in respect of DP World's claim that PDSA was in breach by "purporting to transfer its shares to the Republic having failed to secure a Deed of Adherence".
ii) More broadly, the parties as rational business entities are likely to have intended any dispute arising out of relationship of co-shareholders into which they entered to be decided by the same tribunal (Fiona Trust & Holding Corp v Privalov [2007] 4 All ER 951 § 13). In my view, they should be taken to have intended that the arbitration agreements would apply to disputes about matters arising when they are both alleged to have been Shareholders, even if the ultimate conclusion of the arbitrator or court is that one or both of them had in fact ceased to be a Shareholder by the relevant time. It is unlikely that rational businessmen would have intended, in a situation where a dispute arose about alleged breaches during a period when one party alleged the other to have remained a Shareholder but the other denied it, would be validly subject to arbitration if the ultimate conclusion were that the party did remain a Shareholder but not if the ultimate conclusion were the converse.
i) A challenge under section 67 of the Arbitration Act can be made only in relation to "substantive jurisdiction", defined in section 82(1) by reference to the matters specified in section 30(1)(a) to (c), viz:
"(a) whether there is a valid arbitration agreement,
(b) whether the tribunal is properly constituted, and
(c) what matters have been submitted to arbitration in accordance with the arbitration agreement."
ii) As the arbitrator noted, "[PDSA] does not challenge as such the validity of the arbitration agreements nor does it contest that this Tribunal is validly constituted under these arbitration agreements" (Award § 193).
iii) The definition of "matters", for the purposes of s. 30(1)(c) and section 67, was considered by Flaux J in Gulf Import & Export Co v Bunge SA [2008] 2 All ER (Comm) 161 at [20]:
"Mr Stephen Males QC for Gulf submits that "matters" in section 30(1)(c) is referring to the claims that can be submitted to arbitration, not the way in which discretion is exercised in relation to a claim which has been validly submitted to arbitration. It seems to me that this must be right."
iv) The question of whether PDSA remained a Shareholder post the Presidential Ordinance goes only to the relief the arbitrator granted to DP World in respect of the claims on which it succeeded. It does not concern one of the "matters" submitted to arbitration, but only the arbitrator's exercise of one of the "powers exercisable by the arbitral tribunal as regards remedies" referred to in section 48 of the Act, viz the section 48(3) power to "make a declaration as to any matter to be determined in the proceedings". As the phraseology makes clear, the granting of such relief is not itself a "matter" for the purposes of the Act but rather the consequence of the arbitrator's determination of that matter.
(G) JURISDICTION OVER BREACHES CLAIMS
"500. As set out above, the Tribunal finds that the Respondent's failure to seek or procure a signed deed of adherence from the Republic is in breach of Clause 14.5 of the JVA and Article 11.7 of the Articles.514 It is this contractual breach that would have to be excused by the Presidential Ordinance as a force majeure event. However, the Presidential Ordinance (which ordered that the ownership of the DCT shares be transferred from the Republic to the Respondent) does not provide any excuse for the Respondent to have not sought the signature of a deed of adherence from the Republic. Indeed, nothing in the Presidential Ordinance prevents the Republic from signing a deed of adherence, or the Respondent from taking any steps towards procuring such a signature. As already noted above, there is no evidence on record that the Respondent has taken any step to procure the signature of such a deed of adherence from the Republic.515 It clearly could have done so, even in light of the Presidential Ordinance."
"514 See above at paras. 442-444."
"515 See above at para. 451.
"501. In these circumstances, the Tribunal finds that the Presidential Ordinance cannot excuse the Respondent's contractual breach of the JVA/Articles, and this is irrespective of the question whether it could, in principle, rely on it as a force majeure event.
"502. In sum, for the reasons detailed above, the Tribunal finds that the Respondent breached Clause 14.5 of the JVA and Article 11.7 of the Articles."
"it is not open to Westland to deploy as a basis for their case that the arbitrator had no jurisdiction to award interest the submission that there was no jurisdiction to award the capital sum by reference to which such interest was awarded. This is because there is an issue estoppel in respect of the award as to the capital sum" (§ 34)
"where issues A and B have been determined by an arbitrator who has issued an interim award and the losing party wishes to use a procedure under the 1996 Act for challenging the arbitrator's conclusion on issue B but not on issue A, it is not open to him to challenge the conclusion on issue B by arguing that the arbitrator should have reached a different conclusion on issue A". (§ 37)
"241(1) By majority decision, the Tribunal declares that Clause 26 the SPA does confer jurisdiction on the Tribunal to determine claims arising from alleged breaches by the Claimant of the terms of the PSC, as asserted by [D1];
(2) By majority decision, the Tribunal declares that Clause 11.1 of the SPA requires the Claimant to indemnify [D1] in respect of Pre-Economic Date Liabilities (including claims with respect to the PSC covered thereby) suffered by [D1] and its Affiliates subject to the limitations and other provisions of the SPA."
C challenged the jurisdictional finding quoted at § 241(1) above. The finding at § 242(2) was a finding on the merits, to which no jurisdictional objection was taken, but was relevant to C's jurisdiction challenge to § 241(1). Carr J rejected C's contention that it could attack the finding at § 241(2) for the purpose of its jurisdiction challenge:
"81. Overnight, C committed its position to paper as follows. On a section 67 challenge, the court determines the jurisdictional issues de novo , by way of a complete re-hearing. This means that no relevant issue is or can be res judicata or the subject of an issue estoppel. If and insofar as the meaning of any clause in the SPA is relevant to the issues before the court on C's section 67 challenge, the court is to determine the meaning of that clause itself, unfettered by any ruling by the Tribunal.
82. If the court were not able to determine any relevant issue afresh on a section 67 challenge, the applicant would not be able effectively to challenge the jurisdiction of the Tribunal. A tribunal could potentially extend its jurisdiction by deciding matters within its jurisdiction (pulling itself up by its bootstraps).
83. I cannot accept that it is open to C now to seek to challenge the Tribunal's reasoning and finding at paragraph 241(2), even if only for jurisdictional purposes.
84. The settled position for all purposes between the parties is that, pursuant to paragraph 241(2) of the Award, Clause 11.1 extends to claims arising out of breaches of the PSC. In the absence of a challenge to that finding, the finding is final and binding, enforceable under s.66 of the 1996 Act and under the New York Convention internationally. Any challenge under s.67 of the 1996 Act has to be to a finding on jurisdiction. Here there is no challenge to the Tribunal's jurisdiction for the purposes of paragraph 241(2) of the Award.
85. This position is consistent with the decision of Colman J in Westland Helicopters
86.
[after quoting Westland § 37]
This last paragraph is directly on point and confirms that it is not open to C to challenge paragraph 241(1) by reference to a challenge to paragraph 241(2), in relation to which finding there is an issue estoppel.
87. This is the result of the scheme of the Act and the LCIA Rules under which the parties chose to contract. If the Tribunal made an error of law on the merits (rather than jurisdiction), absent the possibility of any challenge under s.68 of the 1996 Act, the parties have elected finality."
"74. The discussion in Mr Born's book includes at pages 493-5 the valuable insight that the non-existence of the main contract does not necessarily mean that an arbitration agreement is also non-existent. Rather, the separability principle means that the question of contract formation must be asked twice, once in relation to the main contract and again in relation to the arbitration agreement. In most cases the same answer will be given to both questions, although it is theoretically possible for parties to conclude a binding agreement to arbitrate even if they have not (or not yet) agreed on the main contract. But in both cases the issue is one of contract formation, in particular whether, applying usual principles, the parties have evinced an intention to be bound. As Mr Born puts it:
"It is true that the non-existence of an underlying contract may be accompanied by the nonexistence of the arbitration agreement. Thus, where two parties never met or negotiated in any way, there will be no arbitration agreement and no underlying contract. This is not, however, in any way inconsistent with the separability presumption; on the contrary, properly analyzed, this type of case is a useful illustration of the separability presumption's application.
As discussed above, the separability presumption does not provide that, where the underlying contract is non-existent or invalid, the arbitration agreement is nonetheless necessarily existent and valid. Rather, that the arbitration agreement may be existent and valid even if the underlying contract is not; that is because the arbitration agreement is presumptively a separate agreement, distinct from the underlying contract, whose terms and status differ from those of the underlying contract. The relevant question, therefore, is whether the parties did or did not negotiate and conclude a valid agreement to arbitrate their disputes even if they did not also conclude the underlying contract.
In general, given the close relationship between the underlying contract and the arbitration agreement, defects in the formation of the former are likely to affect the latter: parties do not ordinarily agree to arbitration provisions in the abstract ('floating in the legal ether'), without an underlying contract. Nevertheless, there will be instances where the parties are held to have concluded their negotiations, and reached a valid binding agreement, on an arbitration clause, but not on the underlying contract.
The most difficult issues arise when a particular alleged defect in formation affects both the arbitration clause and the underlying contract (e.g. the contract, including the arbitration clause, was never executed, or the contract was affected by forgery, or a party lacks mental capacity). These are cases of 'doubly relevant facts' or 'identities of defects', is simultaneously relevant to the validity or existence of both the underlying contract and the associated arbitration agreement.
In these cases, absent special or additional circumstances, the reasons for the defect in the underlying contract almost always also affects the substantive validity of the arbitration agreement. There is seldom a credible basis for arguing that forgery of a signature on a contract, affecting the underlying contract, does not also impeach the arbitration clause: unless the arbitration clause was separately signed, or agreed in some other manner, then a forged signature on the underlying contract evidences the absence of agreement on anything in that document. Similarly, the failure to execute the underlying contract will generally evidence a failure to agree upon the associated arbitration clause; there may be cases where separate expressions of assent exist with regard to the arbitration agreement, but the circumstances will be unusual, and must be established through allegations directed specifically at the existence of an arbitration agreement. "
75. I do not accept that the approach which I have set out is (as Mr Young submitted) "antithetical to the modern 'one-stop' dispute resolution presumption in contractual interpretation". That presumption is concerned with the interpretation of dispute resolution clauses, as made clear in Fiona Trust . But there is no issue about the interpretation of the arbitration clause in this case. The presumption has nothing to do with the question whether the parties have concluded a contract (including a contract to arbitrate) in the first place. On the contrary, to hold that the question whether a binding arbitration agreement has been concluded is subject to ordinary principles of contract formation is a principled approach. It recognises that an arbitration agreement is a contract like any other, so that there is no justification for treating the question whether such an agreement has been concluded as subject to special presumptions uniquely applicable in arbitration cases. One-stop shopping is all very well, but if the parties have not entered into an arbitration agreement, the shop is not open for business in the first place."
(H) WHETHER PDSA CEASED TO BE A SHAREHOLDER
i) the Court's task is to ascertain the objective meaning of the language which the parties have chosen to express their agreement: Wood v Capita Insurance Services Ltd [2017] AC 1173 § 10;
ii) where there are rival meanings to the words used, the court can give weight to the implications of rival constructions by reaching a view as to which construction is more consistent with business common sense (ibid. § 11);
iii) however, in striking a balance between the indications given by the language and the implications of the competing constructions, the court must consider the quality of drafting and be alive to the possibilities that one side may have agreed to something that with the benefit of hindsight did not serve its interests, or a provision may be a negotiated compromise, or that the negotiators were not able to agree more precise terms;
iv) commercial common sense is not to be invoked retrospectively: the mere fact that a contractual arrangement, if interpreted according to its natural language, has worked out badly for one of the parties is not a reason for departing from the natural language: it is not the function of the Court to re-write the parties' bargain (Arnold v Britton [2015] AC 1619 §§ 18-20); and
v) business common sense has a role to play only when the language used by the parties is open to different interpretations: its role is not to replace the language used with something which is not to be found in the documents at all: BNY Corporate Trustee Services Ltd v Eurosail-UK 2007-3BL Plc [2013] 1 WLR 1408 § 64.
(1) PDSA's submissions
"Parties means PAID, DPW Djibouti, the Company and any other Persons who may become parties to this Agreement by the execution of a Deed of Adherence; and Party means any of them."
"Transfer shall include:
(i) any transfer or other disposition of any Shares or voting interests or any interest therein, including, without limitation, by operation of Applicable Laws, by court order, by judicial process, or by foreclosure, levy or attachment;
(ii) any sale, assignment, gift, donation, redemption, conversion or other disposition of any Shares or any interest therein, pursuant to an agreement, arrangement, instrument or understanding, including retention arrangements, by which legal title to or beneficial ownership of any Shares or any interest therein passes from one Person to another Person or to the same Person in a different legal capacity, whether or not for value;
(iii) the creation of any Encumbrance over any Shares or any interest therein, other than a pledge of the Shares of the Shareholders that is made in favour of the Financiers."
"Applicable Laws" was widely defined and included decrees and ordinances.
i) a voluntary transfer by way of (inter alia) sale, assignment, gift or donation, which was subject to the restrictions on "Permitted Transfers" contained in JVA § 14.2 (which included certain pre-emption rights);
ii) a contractually required transfer, by reason of contractual default, under § 14.3 (which made provision for the other party to have an option to purchase shares at a fair value); and
iii) any form of compulsory transfer by operation of law, including an immediate and automatic transfer. This included the transfer brought about by the Presidential Ordinance.
i) the Presidential Ordinance had to be treated as valid (Award § 458);
ii) the Presidential Ordinance overrode the provisions of the Articles and JVA and their share transfer restrictions to the extent that the latter provided for the transfer of shares to be void (Award § 459); and
iii) PDSA therefore ceased to own the shares.
"A person executing an instrument of transfer of a Share is deemed to remain the holder of the Share until the name of the transferee is entered in the register of members of the Company in respect of it."
i) the "Party" to the JVA (PDSA) would no longer be a "Shareholder" because it did not own the Shares; and
ii) the entity now owning the "Shares" (the Republic) would not be a "Party" and therefore would not be a "Shareholder".
(2) Analysis
"The Government Shareholders agree that, at any time during the Operations Period the DPW Shareholder(s) shall have the right to propose the sell-down of the Government Shares by the Government Shareholders on a pro rata basis in favour of any Shipping .Companies. The Transfer of Government Shares in favour of such Shipping Companies shall be decided as a Reserved Matter.
For the avoidance of doubt, it is clarified that the provisions of Clause 14.2(g) shall not apply to such a Transfer of Shares by the Government Shareholders to the Shipping Companies, provided always that the Shareholding Proportion of the Shipping Companies does not exceed the Shipping Companies Equity Cap. Upon such Transfer, the Parties hereto shall procure a Deed of Adherence from such transferee Shipping Companies.
"
The Government Shareholders further agree that they shall (if required) mutually discuss and agree with the DPW Shareholders and the Shipping Companies, any changes that may be required to be made to this Agreement; provided always that no such changes shall in any way have a material adverse effect on the rights or powers of the DPW Shareholders and the management and control of the Project by the Manager."
The disapplied clause 14.2(g) would otherwise provide pre-emption rights to the DPW Shareholders in the event of a proposed sale of shares by the Government Shareholders.
(I) LOSS OF THE RIGHT TO OBJECT
"If a party to arbitral proceedings takes part, or continues to take part, in the proceedings without making, either forthwith or within such time as is allowed by the arbitration agreement or the tribunal or by any provision of this Part, any objection
(a) that the tribunal lacks substantive jurisdiction
he may not raise that objection later, before the tribunal or the court, unless he shows that, at the time he took part or continued to take part in the proceedings, he did not know and could not with reasonable diligence have discovered the grounds for the objection."
"(1) The fundamental principle, or policy, is fairness, and justice, in the sense of openness and fair dealing between the parties: see Moore-Bick J in Rustal at 19-20, Colman J in Zestafoni at [64], Aikens J in Primetrade at [59]-[61] and Carr J in C v D1 at [150].
(2) There is also a concern to seek to avoid waste of time and expense: see Moore-Bick J in Rustal at paras. [19-20].
(3) The issue as to jurisdiction must normally have been raised at least on some grounds before the arbitrator: see Colman J in Zestafoni at [64].
(4) In addition, each ground of challenge to jurisdiction or of objection to jurisdiction must have been raised if it is to be raised; by this is meant the jurisdictional objection that the party considers renders the whole or the relevant part of the arbitral process invalid: see Colman J in Zestafoni at [64], and Aikens J in Primetrade at [59]-[61].
(5) It is wrong to be prescriptive or try to lay down precise limits in the abstract for the meaning of the phrase "ground of objection", but it is usually easy to recognise (or obvious) in particular cases whether a party is attempting to raise a new ground of objection to jurisdiction on an appeal: see Aikens J in Primetrade at [59]-[61].
(6) The 'grounds of objection' should not be examined closely as if a pleading, but broadly, or adopting a broad approach. The fact that different and broader arguments are raised or new evidence is put forward does not mean that there is a new ground: see Aikens J in Primetrade at [59]-[61] and [112] and Hamblen J in Ases at [36]-[37] and Habas Sinai at [86]-[87].
(7) This is not to suggest an unduly relaxed approach, especially bearing in mind sub-para. (1) above. The substance of each ground of objection relied upon should have been communicated to the other party (and the arbitral tribunal).
(8) It would be unfair if a party took part in arbitration yet kept an objection up his sleeve and only attempted to deploy it later: see Moore-Bick J in Rustal at 10-20 and Carr J in C v D1 at [150].
(9) It is not enough that the party mention an issue; the issue must be distinctly put to the arbitral tribunal as denying jurisdiction." (§ 36)
"Recalcitrant parties or those who have had an award made against them often seek to delay proceedings or to avoid honouring the award by raising points on jurisdiction etc. which they have been saving up for this purpose or which they could and should have discovered and raised at an earlier stage. Article 4 of the Model Law contains some provisions designed to combat this sort of behaviour (which does the efficiency of arbitration as a form of dispute resolution no good) and we have attempted to address the same point in this Clause. In particular, unlike the Model Law, we have required a party to arbitration proceedings who has taken part or continued to take part without raising the objection in due time, to show that at that stage he neither knew nor could with reasonable diligence have discovered the grounds for his objection (the latter being an important modification to the Model Law, without which one would have to demonstrate actual knowledge, which may be virtually impossible to do). It seems to us that this is preferable to requiring the innocent party to prove the opposite, which for obvious reasons it might be difficult or impossible to do "
(J) CONCLUSIONS
