Halpern & Anor v Halpern & Ors

A non-national religious or customary system cannot ordinarily constitute the governing law of a contract where the applicable conflicts rules require the law of a country. Parties may, however, submit contractual disputes to arbitration and agree that the tribunal will decide the substance according to such rules, provided the arbitration agreement itself is governed by a national system of law. The law of the arbitral seat generally governs the arbitration’s conduct and supervision. On a summary judgment application, a defence should proceed to trial where the evidence gives it a realistic prospect of success. Alleged duress, affirmation and the effect of lost or destroyed documents may require oral and expert evidence. A compromise is not rendered uncertain merely because some performance details require valuation or construction.

The claimants sought damages for alleged repudiation of a compromise agreement arising from a family inheritance dispute. The dispute had been submitted to a religious arbitration conducted by a Beth Din in Zurich. The defendants relied on alleged fraud, duress, mistake, frustration, uncertainty, failure to satisfy a contractual condition and absence of personal liability.

The claimants applied for summary judgment under CPR Part 24 and related provisions. The principal questions were which law governed the arbitration agreement and compromise agreement, whether Jewish law could govern or be incorporated into the compromise, and whether any pleaded defence had a realistic prospect of success.

1. Applicable law. The arbitration agreement required selection of the law of a country. Jewish law was a non-national system and could not itself be the law governing the arbitration agreement or arbitration. The agreement was likely governed by English law, although Swiss law was also arguable and no material difference between the two systems had been identified.
2. The arbitration’s seat was Zurich. The juridical seat is a legal home requiring a municipal system of law. In the absence of contrary agreement, the law of the seat governs the arbitration’s conduct and the court’s supervisory powers. The court therefore treated Swiss law as governing the arbitration, without needing finally to decide that issue because enforcement of the award was no longer sought.
3. The compromise agreement was subject to the Rome Convention. No governing national law had been chosen with reasonable certainty, but England was probably the country with the closest connection. There was no realistic prospect that halachah had been incorporated as contractual terms: no sufficiently identified black-letter rules had been pleaded, and such incorporation would effectively substitute a non-national system for the chosen national law.
4. The fraud, mistake, frustration, alleged failure to satisfy clause 4, and absence of personal liability defences had no realistic prospect of success and were struck out. The agreement was sufficiently certain. It identified assets to be transferred, provided for valuation, and imposed obligations on the relevant siblings. The brothers’ obligations were not conditional on Esther having no prior claim under Jewish law.
5. Duress remained triable. An unjustified requirement or threat of a religious oath could amount to illegitimate pressure, but the issue required evidence concerning the oath’s religious significance and its actual effect. Third-party pressure could render the agreement voidable if the claimants knew of and benefited from the illegitimate pressure.
6. Questions of affirmation and restitutio in integrum also required trial. Partial performance, participation in later proceedings and reliance on the agreement did not conclusively establish affirmation on the evidence. The destruction of documents did not necessarily bar avoidance for duress.
7. The case was to proceed to trial on whether the compromise was procured by duress and, if so, whether affirmation or inability to restore the parties barred reliance on it. The defendants were ordered to provide and translate the relevant settlement transcripts. The issue of Mordechai’s authority to bind David and Jacob could be added if maintained.

First-instance decision. No appellate history is stated in the judgment.