H J Heinz Co Ltd v EFL Inc

On an application for summary judgment, the court must ask whether the claim has no realistic prospect of success. A claim resisting enforcement of a foreign arbitration award on public-policy grounds may require a rehearing rather than a review. Fresh evidence of concealed fraud may satisfy the reasonable-diligence requirement where the evidence lies in the opposing camp, but that issue will ordinarily require factual investigation and cross-examination. A failed challenge before the supervisory court does not, by itself, prevent an English enforcement challenge. Estoppel based on a foreign judgment requires careful proof that the relevant issue was finally and necessarily decided, rather than addressed collaterally or obiter. Where both issues remain strongly arguable, summary judgment must be refused.

EFL Inc obtained a Hungarian arbitration award against H J Heinz Co Ltd arising from a dispute concerning baby-food manufacturing equipment and alleged distribution agreements. Heinz alleged that some agreements were shams and that signatures on the Ridmal agreements had been forged. After the Hungarian arbitration, Heinz obtained further evidence of alleged forgery and challenged enforcement in England under section 103(3) of the Arbitration Act 1996.

The Hungarian Metropolitan Court dismissed the challenge to the award, and the Hungarian Supreme Court upheld that decision. EFL applied under CPR Part 24 for summary judgment, arguing that Heinz could not rely on the fresh evidence and was estopped by the Hungarian decisions. The central question was whether Heinz’s claim had no realistic prospect of success.

1. Application dismissed. EFL had not shown that Heinz’s claim had no realistic prospect of success.
2. The enforcement court’s task under section 103(3) of the Arbitration Act 1996 would be a rehearing rather than a review. The New York Convention’s presumption in favour of enforcement did not eliminate the statutory public-policy exception.
3. The applicable starting point for fresh evidence was the three-limb test in Ladd v Marshall, as applied to foreign awards in Westacre Investments Inc v Jugoimport-SPDR Holding Co Ltd. Materiality and credibility were common ground. The remaining issue was whether the evidence could have been obtained with reasonable diligence at the arbitration.
4. Reasonable diligence asked whether the party had acted reasonably, not merely whether a reasonable solicitor could in theory have discovered the evidence. In concealed fraud cases, particularly where the evidence was in the opposing camp, a more favourable assessment of reasonable diligence might be appropriate. Whether Heinz should have investigated the alleged forgery before the arbitration was fact-sensitive and could not be resolved without evidence and cross-examination at trial.
5. A failed challenge before a foreign supervisory court did not automatically bar an English enforcement challenge. Under Dallah Co v Ministry of Religious Affairs Pakistan, the supervisory court’s decision might create an estoppel by record, but only if the relevant issue had actually been finally determined.
6. The principles in Carl Zeiss Stiftung v Rayner and Keeler Ltd (No 2) and The Sennar (No 2) required a judgment relied upon for estoppel to be from a competent court, final and conclusive, and on the merits. The court had to proceed cautiously with a foreign judgment and be satisfied that the issue was clearly decided and formed the basis of the decision rather than being collateral or obiter, consistently with The Good Challenger.
7. The effect of the Hungarian judgments remained strongly arguable. The Supreme Court appeared repeatedly to have held that subsequently discovered evidence could not be used to impugn the award. Accordingly, EFL had not established a sufficient basis for summary judgment on estoppel.