Chalbury MccOuat International Ltd v PG Foils Ltd

Under Arbitration Act 1996, the English court may support an arbitration whose seat has not yet been designated where there is a sufficient connection with England and Wales and no inappropriate clash with a foreign jurisdiction. Relevant factors include the likely governing law, the likely seat, and contractual payment arrangements. The court should not itself designate or determine an undecided seat; that is ordinarily for the arbitral tribunal. Where the parties have failed to agree the composition of the tribunal, the default position is a sole arbitrator. In an international dispute, appointment should be entrusted to an experienced independent international arbitration institution rather than a domestic professional body.

The claimant, an English company, contracted with an Indian company to dismantle an industrial plant in the Netherlands. A dispute arose over unpaid instalments and an alleged counterclaim. The arbitration clause required unresolved disputes to be referred to arbitration under the prevailing laws of the European Union but did not specify the seat or provide an effective appointment procedure.

The claimant sought permission to serve an arbitration claim form outside the jurisdiction and then sought the appointment of an arbitrator under section 18 of the Arbitration Act 1996. The defendant did not appear. The issues were whether service was valid, whether section 2(4) permitted the English court to support the arbitration, and who should appoint the tribunal.

1. The court proceeded in the defendant’s absence after being satisfied that the claim form and notice of the hearing had been properly served in India. The provisions governing ordinary service out did not themselves govern service of an arbitration claim under CPR Part 62, although the applicable cross-references remained relevant.

2. For the substantive application, the court had to decide whether the seat was or would be in England and Wales, or whether the conditions in section 2(4) of the Arbitration Act 1996 were satisfied. The court was not required to designate or determine the seat. That question, if disputed, was for the arbitral tribunal once constituted.

3. Section 2(4) required a sufficient connection with England and Wales and an appropriate exercise of supportive jurisdiction. The supplementary DAC report showed that the power should not be used where another foreign court was already, or was likely to be, seized of the arbitration in a way producing a jurisdictional clash. An application concerning an arbitration should generally be made to the courts of the seat.

4. There was sufficient English connection. The characteristic contractual performance was dismantling the plant, to be carried out by the claimant, whose principal place of business was in England. The likely proper law was therefore English law under Article 4 of the Rome Convention. The clause indicated a European seat, possibly England and unlikely to be India. Payment was also to be made in England. These factors outweighed the defendant’s Indian connection and justified support under section 2(4).

5. The parties had failed to agree an arbitral tribunal, but there was no indication that more than one arbitrator was intended. Under section 15(3), the default tribunal was therefore a sole arbitrator. Because the dispute was international, the President, or a Vice-President, of the London Court of International Arbitration was directed to make the appointment.

Permission to serve out was granted, the substantive hearing proceeded, and the tribunal was to be constituted by the LCIA appointment.

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