Dallah Real Estate and Tourism Holding Co v The Ministry of Religious Affairs, Government of Pakistan (Rev 1)

Under section 103(2)(b) of the Arbitration Act 1996, a party resisting enforcement may prove that it was never bound by the arbitration agreement on which the tribunal relied. The court must determine that issue by a rehearing of the relevant evidence, subject to any established issue estoppel.

Where French law governs, the question is whether the parties had a common intention, assessed objectively through their conduct, that the non-signatory should be bound. The inquiry considers the whole chronology, including negotiation, performance, termination, contractual structure, awareness of the clause, good faith and, where relevant, the legal position of a state entity. General good faith cannot make a person a party to an arbitration agreement when the evidence otherwise shows that it was not.

Dallah obtained an ICC award in Paris requiring the Government of Pakistan to pay damages arising from an agreement concerning housing for Pakistani pilgrims. The agreement was made between Dallah and the Awami Hajj Trust. The Government of Pakistan was neither named as a party nor a signatory.

The arbitral tribunal nevertheless held in its First Partial Award that the Ministry of Religious Affairs, Government of Pakistan, was bound by the arbitration clause. The Commercial Court had granted leave to enforce the Final Award under section 101 of the Arbitration Act 1996. The Government applied to set that order aside, contending that it was not bound by the arbitration agreement and that recognition and enforcement should therefore be refused under section 103(2)(b).

1. Construction of section 103(2)(b). The reference to the “arbitration agreement” concerns the underlying agreement to submit future disputes to arbitration, rather than the particular reference of the dispute. The section includes the question whether the party resisting enforcement was bound by that agreement.
2. Scope of the enquiry. The statutory requirement that the resisting party prove the relevant ground requires a determination on the balance of probabilities. Subject to any applicable issue estoppel, the court must consider all relevant evidence, including foreign law. The enquiry is a rehearing, not merely a review of the tribunal’s jurisdictional decision.
3. French law. The relevant inquiry was whether Dallah, the Trust and the Government had a common intention, express or implied, that the Government should be bound. That intention had to be assessed through objective conduct across the whole chronology. Relevant matters included involvement in negotiation and performance, the contractual wording and structure, awareness of the arbitration clause, the Government’s legal and constitutional position, the possible loss of immunity, and good faith.
4. The Government’s involvement in the project, the Minister’s signature as chairman of the Trust’s board, the proposed guarantee, correspondence after the agreement, and the later Pakistani proceedings did not establish the necessary common intention. The agreement expressly named only the Trust and Dallah. Its assignment provision indicated that the Government would acquire rights and obligations only upon assignment. Article 173 of the Constitution of Pakistan was at least a powerful factor against an intention to bind the Government. The evidence, considered as a whole, showed that the Government was not intended to be bound.
5. Good faith could not make the Government a party to the arbitration agreement. Article 264 of the Constitution of Pakistan did not establish succession to the Trust, and no issue estoppel arose from the First Partial Award. The reasoning in Svenska Petroleum Exploration AB v Government of the Republic of Lithuania (No 2) did not require recognition of the First Partial Award where the tribunal had not obtained jurisdiction over the Government and the English court had not previously recognised that award.
6. There was no residuary discretion under section 103 to enforce the Final Award after the Government had proved the statutory ground and no estoppel applied. The enforcement order made by Christopher Clarke J was set aside.

Not stated in the judgment. This was a first-instance Commercial Court decision on the Government of Pakistan’s application to set aside an order granting leave to enforce the ICC Final Award.