OMV Petrom SA v Glencore International AG

Relitigating issues decided in earlier proceedings may amount to abuse of process even where the later claimant was not a party to those proceedings and cannot rely on res judicata. The court must apply the Bairstow test: relitigation may be abusive where it would be manifestly unfair or would bring the administration of justice into disrepute. The fact that the earlier proceedings were confidential arbitration, or that the party seeking to relitigate succeeded overall but lost on the relevant issue, is not conclusive. The court must weigh all circumstances, including the seriousness of the allegations, witness fairness, delay, procedural conduct and mutuality. The burden is on the applicant, and the test is exacting. Relief should be sought promptly where the alleged abuse is apparent.

The claimant sought damages arising from alleged dishonest delivery of non-contractual crude oil blends. An earlier arbitration brought by Petex, a commission agent connected with the claimant, had determined overlapping issues concerning limitation, deliberate concealment, dishonesty, title to sue and quantum. Petex failed because it had suffered no actionable loss, while the tribunal made findings adverse to Glencore on deliberate concealment and assessed substantially lower damages than claimed.

The claimant, which had not been a party to the arbitration, later brought court proceedings after an assigned claim in a second arbitration failed on res judicata grounds. It applied to strike out parts of Glencore’s defence, arguing that the defence improperly reopened issues determined in the first arbitration. The central issue was whether that relitigation constituted an abuse of the court’s process.

1. Application dismissed. The claimant did not establish that Glencore’s defence was an abuse of process.
2. Abuse of process is distinct from res judicata. A party who was not a party or privy to earlier proceedings may nevertheless rely on abuse where relitigation would be manifestly unfair or would bring the administration of justice into disrepute. That principle applies where the earlier decision was made by an arbitral tribunal. Confidentiality and the private contractual nature of arbitration are relevant, but do not create an absolute bar to relief.
3. The fact that Glencore had succeeded overall in the arbitration did not prevent an abuse finding in relation to an issue on which it had lost. Nor was the distinction between ratio and obiter decisive. That distinction is important to res judicata, but abuse of process focuses on the undesirability and unfairness of having the same matter adjudicated again.
4. The court balanced the competing factors. The claimant could point to overlapping evidence, the death of a material witness, the passage of time and the burden on witnesses of renewed cross-examination. Against that stood the seriousness of the fraud allegations. Preventing Glencore from defending those allegations would be more unfair than requiring the claimant to prove them again. The claimant also sought to rely on favourable findings on liability while reopening unfavourable findings on quantum, which was incompatible with its abuse argument.
5. Promptness was material. The alleged abuse was apparent before the late strike-out application, after pleadings, directions, disclosure and evidence had substantially progressed. The proposed order was also internally inconsistent and risked leaving an unintelligible and intertwined defence. The burden lay on the claimant, and the test was exacting. The court therefore refused the application. Glencore’s separate confidentiality application was not pursued and consequential matters were left for further hearing.