Summary

The court refused to grant interim relief to a company which was involved in litigation in the same dispute in both the British Virgin Islands and in Swiss arbitration. In those circumstances it was not appropriate for the court to exercise its powers under the Arbitration Act 1996 s.44 to preserve assets or evidence.

Facts

The claimant company (C) applied for an order requiring the first defendant company (D) to pay a sum into a joint account held by the parties' solicitors, or alternatively for an interim freezing order for that amount, and for disclosure of certain documents.

C and D had both been engaged in marketing and sales of jet aircraft, in different regions. They entered into a joint venture agreement and set up a joint company in the British Virgin Islands (BVI) to promote and trade preowned jets worldwide. The agreement was subject to arbitration in Switzerland, with English and Welsh law to apply. The second defendant (D2) was D's beneficial owner and acted for the joint company. Commissions earned by the joint company were to be placed in a Swiss bank account for distribution between C and D. C alleged, inter alia, that D had entered into jet sales and earned commissions which should have been carried out through the joint company. C and D each commenced arbitration proceedings in Switzerland; no arbitrator had yet been appointed. D also commenced proceedings in a BVI court regarding underrpresentation on the joint company's board. Six weeks after discovering the alleged missing commissions, C brought the instant proceedings. It wanted D to pay two sums into the joint account, representing the commissions that D had allegedly entered into outside the agreement. It also applied for production of D's sales management agreements.

Held

Jurisdiction - The court's power to make an order where arbitral proceedings existed was set out in the Arbitration Act 1996 s.2(3) and s.44. Section 44(3) imposed two hurdles: that the case was urgent, and that an order was necessary for the specific purpose of preserving assets or evidence. If it was not urgent, or was not necessary for that purpose, the court did not have jurisdiction. As a general rule, there was inevitably significant urgency regarding a freezing order. There was currently no mechanism by which that relief could be obtained in the arbitral proceedings. It would only be in unusual circumstances that such an application would not meet the urgency test. While an arbitrator might be appointed shortly, the parties were in the Swiss court's hands, and D2 had not agreed to be a party to the arbitration. As for necessity, if the requested order was made, the assets would be preserved. Therefore, the court had jurisdiction to consider the application in respect of the commissions under s.44 (see paras 47, 50-51, 66-68, 72-74 of judgment).

Appropriateness of the disclosure application - The application for document production was more like a disclosure application than one for preserving assets or evidence. Further, there was no evidence that D or D2 were likely to destroy or withhold the documents. That militated against finding that the application regarding the documents was urgent. The disclosure application was dismissed (paras 77-79).

Forum - The court was concerned that the dispute was being litigated in three different countries. It was not clear why English proceedings had been brought when the BVI court was seized of the matter and could apply English law. Even if that court was unable to grant relief, the natural court for interim injunctive relief was that of the country of the seat of arbitration, Econet Wireless Ltd v Vee Networks Ltd [2006] EWHC 1568 (Comm) considered. As a general principle, an application to an alternative court was inappropriate. Any link with England and Wales was tenuous, especially where the BVI court was already seized. It was not appropriate for litigation on the same subject to be conducted simultaneously in multiple countries. It would not be appropriate for the court to exercise its s.44 powers regarding the commissions (paras 88-94).

Risk of dissipation - If it had been necessary to decide, C's delay of six weeks in applying for the injunction was a long one if there was a risk that monies would be dissipated. That militated against concluding that there would be dissipation. The sum requested was significant and it was not clear how long the restrictions would apply. However, the joint company did not need the monies to operate. Overall, the court would not have granted the order regarding the commissions. Worldwide freezing orders were only granted if the respondent or the dispute had a sufficiently strong link with England and Wales, which was not the case. Further, the application regarding the commissions was not actually an application for a freezing order; it would be more onerous. Even if there had been a strong link with the jurisdiction, C had not established a real risk of dissipation. C was actually seeking advance security for its claim (paras 125, 135-140).

Applications refused