Company 1 v Company 2 & Anor

Under sections 2(3) and 44 of the Arbitration Act 1996, the court may assist an arbitration seated abroad only where the application is urgent and an order is necessary to preserve evidence or assets. The jurisdiction is limited and does not provide a general route to obtain disclosure or advance security for an arbitral claim.

In deciding whether it is appropriate to intervene, the court should consider the seat of the arbitration, the existence of proceedings in another competent jurisdiction, the strength of the connection with England and Wales, and the risk of interfering with the arbitral process. Ordinary expenditure in business does not establish dissipation. A freezing order requires cogent evidence of a real risk that assets will be dissipated to frustrate enforcement.

Company 1 and Company 2 were parties to a joint venture agreement containing an arbitration clause. The agreement provided for arbitration seated in Zürich and governed by English law. Company 1 alleged that Company 2 and A had diverted aircraft-sale commissions and sought orders requiring payment of approximately $596,725 into a joint solicitors’ account, alternatively a freezing order.

Company 1 also sought sales-management agreements and bank statements. Arbitration proceedings were already pending in Switzerland, and related proceedings had taken place in the British Virgin Islands. The central questions were whether the English court had jurisdiction under sections 2(3) and 44 of the Arbitration Act 1996, whether it was appropriate to exercise that jurisdiction, and whether the requested relief was justified.

1. Jurisdiction. Section 44(3) imposed two requirements: the case had to be urgent, and the order had to be necessary for preserving evidence or assets. It did not create a general jurisdiction to grant interim injunctions. The absence of an appointed arbitrator meant that the application concerning the commissions was urgent, and an order would preserve assets. The court therefore had power to consider that aspect of the application.
2. Disclosure. The requests for sales-management agreements and bank statements were, in substance, applications for disclosure. They did not concern evidence at risk of destruction or loss and fell outside the limited preservation jurisdiction under section 44. Such matters should ordinarily be addressed to the arbitral tribunal once constituted. The bank statements were also third-party documents, and the defendants’ earlier undertaking did not itself confer jurisdiction on the court.
3. Appropriateness. It was inappropriate to exercise the section 44 jurisdiction. The arbitration was seated in Zürich, related proceedings were continuing in the British Virgin Islands, and the dispute had only a tenuous connection with England and Wales. The natural forum for interim relief was generally the court of the arbitral seat. Intervention in England would risk parallel litigation and interference with the arbitral process.
4. Merits. Even if intervention had been appropriate, the requested payment order and freezing order would have been refused. The payment order was in substance advance security for the claim. Company 1 had shown a good arguable case that Company 3 might be entitled to the commissions, but not a real risk of dissipation. Spending money on ordinary business operations was not dissipation directed at frustrating enforcement. Delay in applying also militated against that conclusion.
5. The applications for payment, freezing relief and disclosure were dismissed. Any alleged breach of the earlier undertaking had to be pursued, if appropriate, through contempt proceedings.