NATIONAL INVESTMENT BANK LTD v ELAND INTERNATIONAL (THAILAND) CO LTD & Anor

Section 72 of the Arbitration Act 1996 protects a person who disputes an arbitral tribunal’s jurisdiction and has taken no part in the arbitral process. A court appointment under section 18 does not, without more, deem that person to have participated or remove the protection. The section 18 threshold is ordinarily a good arguable case, so the court need not finally determine the existence or scope of the arbitration agreement, or the efficacy of the notice commencing arbitration. A permissive arbitration clause may be exercised by unequivocal election, but that right can be waived by conduct which is consistent only with choosing litigation. The effect of related parties’ conduct is assessed cumulatively and in context.

The claimant sought declarations and consequential relief under section 72(1) of the Arbitration Act 1996 concerning an arbitration purportedly commenced by the defendants. The dispute arose from agreements concerning collateral management and earlier proceedings commenced by the first defendant in Ghana. The second defendant later entered an unconditional appearance, resisted amendments, and subsequently sought a stay in favour of arbitration. An arbitrator was appointed by the English court under section 18 while the claimant did not participate.

The claimant argued that the defendants had waived any right to arbitrate the disputes raised in the Ghana proceedings, that the notice of arbitration did not identify those disputes, and that the Ghana orders created issue estoppels. The central questions were whether section 72 remained available, whether the right to arbitrate had been waived, whether the notice was effective, and what effect the Ghana orders had.

1. Section 72 protection. The application succeeded. Section 72 provides important protection to a person who does not accept the tribunal’s jurisdiction and takes no part in the arbitral process. A section 18 appointment, deemed by section 18(4) to have effect as if made with the parties’ agreement, deems the effect of the appointment. It does not deem the non-participating party to have participated for other purposes or remove the ability to invoke section 72. Sections 18 and 72 can therefore operate together.
2. Section 18 threshold. Following London Steam-ship Owners’ Mutual Insurance Association Limited v The Kingdom of Spain and Noble Denton Middle East v Noble Denton International Ltd, the court need only be satisfied that the section 18 applicant has a good arguable case that an arbitration agreement exists and covers the dispute. A final determination of those matters is unnecessary. The same approach applies to the efficacy of a purported section 14 notice.
3. Waiver. The permissive clause was capable of allowing a party to elect arbitration by an unequivocal request. Eland Thailand waived that right by commencing and pursuing the Ghana proceedings. Eland Ghana also waived it. Its unconditional appearance, conduct in resisting amendments, reliance on the Ghana court determining the merits, and prolonged failure to suggest arbitration, viewed cumulatively against the proceedings commenced by its sister company, led a reasonable businessperson to conclude that the election had been completed. The conclusion was confined to the particular facts.
4. Notice and issue estoppel. The notice of arbitration, read broadly and flexibly in its context, sufficiently referred the disputes in the Ghana proceedings. The Ghana set-aside order did not create an issue estoppel on English public policy arbitrability because the arbitration agreement was governed by English law and the two public policy questions were different.
5. Costs. The court rejected the argument that the section 18 costs order automatically fell away for want of jurisdiction. However, because the claimant’s non-participation reflected its valid section 72 right, relief was granted so that it was not liable for the costs of the section 18 application. The parties were directed to address the terms of the order and consequential matters.

First-instance decision. No appellate history was stated in the judgment.