Petrosaudi Oil Services (Venezuela) Ltd v Novo Banco SA & Ors

An obiter observation does not create issue estoppel or its Henderson equivalent. A party that invites the court to decide an injunctive issue, does not appeal an adverse observation or refusal of relief, and later seeks equivalent relief from arbitrators or a foreign court may be acting abusively and oppressively, particularly where the application would deprive the successful party of the fruits of the appeal. The appellate court may make consequential orders, including a limited injunction, to achieve restitution. A draft judgment embargo should not be lifted to facilitate such an application. A declaration about future demands should be refused where it depends on interpreting the judgment and concerns unknown circumstances.

Petrosaudi appealed to the Court of Appeal from proceedings in the High Court, Queen’s Bench Division, Commercial Court, concerning its entitlement under a standby letter of credit. The substantive appeal had succeeded, and this judgment addressed consequential matters after the draft judgment was circulated.

PDVSA sought permission to communicate the result to the UNCITRAL tribunal and to renew an application for interim relief, or to seek relief in the French courts, restraining Petrosaudi from obtaining payment. Petrosaudi opposed that course and sought an injunction preventing such applications, relying on abuse of process and estoppel. The central issues were whether the embargo should be lifted, whether the proposed applications were abusive, what consequential relief should be granted, and what costs order should follow.

1. Draft judgment embargo. The Court refused to lift the embargo under the Civil Procedure Rules 1998 para 2.4. A draft judgment should not be used to enable a party to seek relief designed to prevent the successful party obtaining the fruits of the appeal. It was also undesirable for arbitrators to make an interim ruling without the complete judgment, including its reasoning, before them.
2. Estoppel and abuse of process. The Court was not persuaded that issue estoppel or the Henderson v Henderson equivalent arose. The relevant observations of HHJ Waksman QC were obiter. However, PDVSA had invited the Commercial Court to determine the breach-of-contract point and seek injunctive relief, had not appealed the adverse decision, and then sought equivalent relief from the arbitrators after losing the appeal. In the circumstances, that course was an abuse of process and oppressive. The Court noted that the interlocutory test referred to in MW High Tech Projects UK v Biffa Waste Services [2015] EWHC 949 (TCC) differed from any test the tribunal might apply, but that difference did not affect the conclusion. The SBLC issue decided by the Court was distinct from the underlying breach-of-contract question.
3. Consequential relief and declaration. The Court followed its practice of making consequential orders as nearly as reasonably possible to achieve the restitution required by the result. In exceptional circumstances it granted a limited injunction restraining PDVSA and PDVSA Services from seeking to restrain Petrosaudi from seeking or receiving payment under the September 2016 demand and the order giving effect to the judgment. It refused a wider declaration concerning future demands because it would require the judgment itself to be construed and concerned demands in unknown circumstances.
4. Costs. PDVSA and PDVSA Services were ordered to pay the appeal costs on the standard basis. The Court declined summary assessment. The first-instance order requiring Petrosaudi to pay the bank’s costs was maintained, but PDVSA and PDVSA Services were ordered to reimburse Petrosaudi £70,000.

• Court of Appeal (Civil Division): The substantive appeal succeeded, as recorded in the Court’s earlier judgment [2017] EWCA Civ 9. In this consequential judgment, the Court refused to lift the draft-judgment embargo, granted limited injunctive relief, made payment and declaration orders, and addressed costs.
• High Court, Queen’s Bench Division, Commercial Court: HHJ Waksman QC decided the underlying proceedings. His observations on the breach-of-contract point were treated by the Court of Appeal as obiter, and that aspect of the decision was not appealed.