DTEK Trading S.A. v Morozov & Anor

Section 44 of the Arbitration Act 1996 does not confer jurisdiction to make orders against persons who are not parties to the arbitration agreement. Accordingly, CPR 62.5(1)(b) does not permit an arbitration claim form seeking such relief to be served out of the jurisdiction. A jurisdictional question should ordinarily be decided at the permission stage, applying the good arguable case standard. A perceived remedial gap cannot justify finding jurisdiction absent statutory authority. Even if jurisdiction existed, permission would have been refused because the relief was exceptional, no substantive claim was asserted against the foreign third parties, and a letter of request offered a less intrusive alternative.

DTEK sought permission to serve an arbitration claim form in Ukraine on an individual and a testing company. The application arose from an arbitration concerning the quality of a coal cargo and an alleged discrepancy between two settlement agreements. DTEK sought an order under section 44 of the Arbitration Act 1996 requiring preservation and inspection of the original agreement relied upon in the arbitration.

The defendants were not parties to the arbitration and did not appear. The tribunal consented to the application. The central issue was whether CPR 62.5(1)(b) permitted service out for a section 44 claim against non-parties.

1. Application dismissed. Permission to serve the arbitration claim form out of the jurisdiction was refused.
2. The jurisdictional issue had to be decided at the permission stage. The relevant threshold under CPR 62.5 was a good arguable case, meaning that one side had a much better argument on the material available. There was no reason to defer the issue merely because the defendants were unrepresented.
3. The judge approved the reasoning in Cruz City 1 Mauritius Holdings v Unitech Ltd [2014] EWHC 3704 (Comm). Read as a whole, section 44 was directed to applications between parties to an arbitration agreement. It did not authorise orders directly against non-parties.
4. The earlier decisions in The Cienvik [1996] 2 Lloyd's Rep. 395 and Vale do Rio Doce Navegacao SA v Shanghai Bao Steel Ocean Shipping Co Ltd [2000] 2 Lloyd's Rep. 1 supported that conclusion. The contrary authorities established, at most, that the issue was arguable or that a good arguable case existed.
5. The comparison with ordinary litigation powers, witness-evidence provisions, section 44(2)(c), section 2(3), and the alleged remedial lacuna did not alter the result. A letter of request was directed to the foreign court and did not amount to jurisdiction over the foreign non-party.
6. Although unnecessary to the decision, permission would also have been refused in the exercise of discretion. Relief against foreign non-parties was exceptional, no substantive claim was asserted against the defendants, and a letter of request was a less intrusive alternative.