Egiazaryan & Anor v OJSC OEK Finance& Anor

On a Arbitration Act 1996 section 67 application, the court conducts a complete rehearing and decides whether the tribunal’s jurisdictional conclusion was correct. It is not bound by the tribunal’s factual findings.

A non-signatory may be joined where the law identified by English conflicts rules makes that person liable to arbitrate, even though the arbitration agreement is governed by English law. A broadly worded arbitration clause may encompass a tort claim closely connected with the contractual relationship, including where other participants in the alleged wrongdoing are not parties to the arbitration agreement. The court may remit the claim to the tribunal where it was materially advanced in the arbitration and no abuse of process or inevitable failure has been established.

The claimants challenged an arbitration award under section 67 of the Arbitration Act 1996. The tribunal had held that it lacked jurisdiction over tort claims brought against OJSC OEK Finance and the City of Moscow concerning the alleged deprivation of interests in a Moscow redevelopment project.

The second claimant pursued the challenge after the first claimant ceased to do so. The issues were whether the tort claim fell within arbitration clauses in the Konk Shareholders’ Agreement and Konk Share Purchase Agreement; whether the City of Moscow could be joined under article 105 of the Russian Civil Code; and whether the claim should be remitted to the tribunal.

1. Section 67 rehearing. The court’s task was to determine the correctness of the jurisdictional answer, not whether the arbitrators had reached a conclusion open to them. The hearing was de novo, and the arbitrators’ factual findings were not binding: [2015] EWHC 3532 (Comm), paras [23]-[28].

2. Joinder of the City of Moscow. English law governs the arbitration agreement, but the question was not simply who was an original party to that agreement. It was whether a non-signatory was liable to arbitrate under a legal principle supplied by the applicable law. English conflicts rules therefore looked to Russian law, including the law of incorporation of OJSC OEK Finance. On the accepted Russian-law findings, article 105 made the City jointly and severally liable on the relevant contract and liable to arbitrate. It was properly joined: para [21].

3. Scope of the arbitration clauses. The court identified the dispute and compared it with the arbitration clauses, without assessing the merits. The tort claim was alleged to arise from the parties’ contractual relationship and concerned the loss of the Konk shares and the claimant’s interest in the project. The clauses were sufficiently broad to encompass it. The fact that the claim was framed in tort, involved alleged conspirators who were not parties, or arose against a background involving other agreements did not exclude arbitration: paras [28]-[34].

4. Remission. The second claimant had advanced a tort claim concerning the Konk shares and moral damages in the arbitration, although the claim had been presented on the mistaken basis that he was merely a nominee. The tribunal’s finding that he owned the shares beneficially did not necessarily create a new reference. The claim was remitted under section 67, including the question whether the claimant could pursue the share-loss element. The tribunal could address any Henderson v Henderson abuse-of-process issue. No inevitable factual failure or absence of loss justified refusing remission: paras [35]-[49].

5. The tort claim against both respondents was remitted to the arbitrators pursuant to section 67.

The judgment concerned a section 67 challenge to an arbitration award dated 5 June 2014. The tribunal had held that it lacked jurisdiction over the tort claims. The High Court held that the City of Moscow was properly joined, that the tort claim fell within the arbitration clauses, and remitted the claim to the arbitrators.