Province of Balochistan v Tethyan Copper Company Pty Limited

Section 73(1) of the Arbitration Act 1996 bars a later jurisdiction challenge based on a new ground, even where the underlying evidence or arguments develop later. Grounds of objection are construed broadly, but the objection must have been properly put to the tribunal as an objection to jurisdiction. A contention that a foreign court held an arbitration agreement invalid is distinct from an independent contention that corruption itself invalidated the agreement. A party that knowingly elects to accept separability and the tribunal’s jurisdiction may also be bound by waiver by election. A section 67 challenge cannot be used to reopen merits issues which the tribunal considered because the party chose to advance them on the merits.

The Province challenged under sections 67 and 68 of the Arbitration Act 1996 a partial award in an ICC arbitration seated in London. The arbitration concerned disputes arising from the Chagai Hills Exploration Joint Venture Agreement and related agreements. The Province sought to rely on an allegation that those agreements were void because of corruption.

The preliminary issues included whether that allegation was barred by section 73(1), waiver by election, issue estoppel, the doctrine of separability, and the limits of a section 67 challenge. The Court also considered whether the allegation was included in the Arbitration Claim Form and whether amendment should be permitted.

1. Section 73(1). The purpose of section 73 is fairness, openness and fair dealing, together with avoiding wasted time and expense. Grounds of objection must be construed broadly and need not be pleaded with forensic precision. Different arguments and further evidence may be advanced if they remain within an existing ground. However, the objection must have been properly made to the tribunal as an objection that it lacked jurisdiction. A mere reference to corruption, or a challenge based on the proposition that the Supreme Court of Pakistan had already invalidated the arbitration agreement, was not the same ground as an independent objection that corruption itself invalidated the agreement. The latter ground had not been raised and was therefore precluded: [2021] EWHC 1884 (Comm) [110]-[111], [233]-[240].
2. Knowledge and diligence. The Province had sufficient knowledge by 2015 to raise the independent corruption objection. Its decision instead to rely on corruption only on the merits was informed and deliberate. Later evidence did not alter the character of the unraised jurisdictional ground: [262]-[266].
3. Waiver by election. The Province made a clear choice in January 2016 not to pursue the argument that corruption vitiated the arbitration agreement and accepted that the tribunal had jurisdiction. The October/November 2014 exchange postponed the time for challenging the tribunal’s rulings, but did not preserve a jurisdictional ground that had not been raised or reverse the later informed election. The corruption allegation was therefore additionally barred by waiver by election: [190]-[200], [218]-[229], [272]-[282].
4. Separability. Separability is relevant to an objection that an invalid underlying contract invalidates the arbitration agreement. A party raising that objection must address separability. Having expressly accepted in the arbitration that separability was recognised by the applicable laws and rules, the Province was barred by section 73 from later denying it. The Court did not decide the consequences of separability under Pakistani law: [283]-[287], [336]-[344].
5. Issue estoppel. The Supreme Court of Pakistan had decided that the arbitration agreement was not separable from the CHEJVA, but TCCA was not a party or privy to that litigation. TCCA was therefore not precluded from alleging separability or denying that the arbitration agreement was governed by Pakistani law: [288]-[332].
6. Merits challenge. Although a section 67 rehearing may in principle involve factual findings relevant to jurisdiction, the Province could not use the present challenge to reopen merits matters which it had deliberately advanced before the ICC tribunal as a merits defence. The corruption allegation therefore impermissibly sought to challenge the tribunal’s merits decision: [349]-[362].
7. Procedure and disposition. The allegation was not included in the Arbitration Claim Form in the legally relevant sense. Amendment would introduce a materially new and previously unraised ground and undermine the finality protected by section 73. The amendment application was refused. Issues concerning the governing law of separability and consequential matters were deferred: [364]-[387].

The judgment determined preliminary issues in an arbitration claim arising from an ICC partial award. Henshaw J had ordered the preliminary issues on 7 August 2020. The Court’s decisions were confined to the issues determined in this judgment; issues concerning the governing law of separability and consequential objections were deferred.