Gater Assets Ltd v Nak Naftogaz Ukrainiy

Recognition or enforcement of a New York Convention award may be refused on public-policy grounds only in exceptional circumstances. The conduct relied on must be reprehensible or unconscionable and dishonestly intended to mislead. A failure to disclose documents does not suffice unless it materially contributed to obtaining the award. The court must also be satisfied that the alleged misconduct caused the award to be made when it otherwise would not have been made. The existence of additional evidence, or the fact that the supervisory courts have already rejected substantially similar arguments, may be highly relevant. A residual jurisdiction based on procedural injustice is narrow and does not displace the statutory scheme.

Gater Assets Limited applied to enforce an arbitration award made in Moscow in favour of Monégasque de Réassurances S.A.M. against Naftogaz. The award concerned a subrogated claim arising from alleged unauthorised abstraction of natural gas. Colman J had permitted enforcement under section 101 of the Arbitration Act 1996.

Naftogaz sought to set aside that order under section 103, principally alleging that the award had been procured by fraud or reprehensible conduct through non-disclosure and misrepresentation concerning insurance and reinsurance arrangements. It also relied on public policy and a residual jurisdiction based on substantial procedural justice. The central issue was whether the evidence established conduct sufficient to justify refusing recognition or enforcement.

1. Application refused. There was no basis for setting aside the order permitting enforcement of the award.
2. Under section 103 of the Arbitration Act 1996, the public-policy ground is narrowly confined. The conduct relied on must be reprehensible or unconscionable, in the sense of conduct dishonestly intended to mislead. The court should not attempt an exhaustive definition of public policy.
3. A deliberate failure to disclose an important document may in an appropriate case amount to conduct contrary to public policy, as explained in Profilati Italia S.r.l. v Paine Webber Inc [2001] 1 Lloyd’s Rep 715. An innocent failure or error of judgment does not ordinarily meet the threshold. The analysis was adopted and reinforced by Elektrim S.A. v Vivendi Universal S.A. [2007] 1 Lloyd’s Rep 693, where the relevant public-policy concept was treated as no wider than an award obtained by fraud.
4. The alleged non-disclosure and statements concerning the reinsurance arrangements did not establish dishonest conduct. The evidence was consistent with the relevant participants believing that the arrangements were valid under Russian law. Naftogaz and the tribunal already possessed material from which the unusual structure could be understood, and Naftogaz had raised substantially similar points before the Russian supervisory courts.
5. In any event, the additional evidence would not have caused the tribunal to refuse the claim or prevented the award from being made. The required causal connection between the alleged misconduct and the award was therefore absent.
6. The residual jurisdiction discussed in Pemberton v Hughes [1899] 1 Ch 781 and Adams v Cape Industries [1990] Ch 433 concerned procedural injustice in the enforcement of foreign judgments. It did not apply where the agreed arbitral procedure had been followed. The exceptional possibility recognised in Minmetals Germany GmBH v Ferco Steel Limited [1999] CLC 647 was not engaged.

First-instance decision. The judgment does not state any subsequent appellate history.