Case No. CL-2019-000290

s Building Fetter Lane, London, EC4A 1NL Before : MR JUSTICE FOXTON Between : ALBION ENERGY LIMITED Claimant and – ENERGY INVESTMENTS GLOBAL BRL Defendant Lord Grabiner QC, Julian Kenny QC and Michal Hain (instructed by Charles Fussell & Co LLP) for the Claimant Guy Morpuss QC of Macfarlanes LLP for the DefendantHearing date: 30 January 2020 Approved Judgment I direct that pursuant to CPR PD 39A para 6.1 no official shorthand note shall be taken of this Judgment and that copies of this version as handed down may be treated as authentic. MR JUSTICE FOXTON Mr Justice Foxton : 1.This hearing involves: i)An application by the Claimant (“Albion”) against the Defendant (“EIGL”) for summary judgment for the final instalment of the purchase price of 20% of the shares in Heritage Oil Limited (“Heritage”) under a sale and purchase agreement dated 31 January 2018 between Albion as seller and EIGL as buyer (“the SpA”). ii)An application by EIGL for a stay of these proceedings under s.9 of the Arbitration Act 1996, alternatively for unconditional leave to defend the proceedings, and for a stay pending the resolution of proceedings to be brought by EIGL in Jersey. 2.Albion was represented before me by Lord Grabiner QC, Julian Kenny QC and Michal Hain, instructed by Charles Fussell & Co LLP, and EIGL by Guy Morpuss QC of Macfarlanes LLP. I am grateful to all counsel for their oral and written submissions. The background 3.Mr Buckingham founded Heritage, an oil production and exploration company incorporated in Jersey. It was listed on the LSE. In 2014, EIGL (a company beneficially owned by Sheikh Hamad, the former prime minister of Qatar) acquired 80% of the share capital of Heritage and took the company private. The other 20% remained owned by Albion, a Guernsey company beneficially owned by Mr Buckingham. 4.On 31 January 2018, Albion agreed to sell its remaining 20% interest in Heritage to EIGL on the terms of the SpA for the sum of $100m. There were six parties to the SpA, which contained other provisions beyond the sale transaction. In addition to Albion and EIGL, Heritage, Mr Buckingham, a company called Albion Resources and a company called Sundance Investments Ltd (“Sundance”) were also parties. 5.The first two instalments under the SpA were paid by EIGL. However, shortly before the final instalment became due on 20 December 2018, Macfarlanes LLP, on behalf of Heritage, wrote to Albion on 14 December 2018 asserting claims against Mr Buckingham. By a second letter of the same date, Macfarlanes LLP wrote to Albion on behalf of EIGL saying that in view of Heritage’s claims against Mr Buckingham, EIGL intended to withhold payment of the outstanding amount payable under the SpA. However, there was no suggestion at this stage that the matters raised in Macfarlanes LLP’s correspondence gave EIGL its own claim against Albion. On 15 December 2018, solicitors acting for Albion pointed out that any claims which Heritage might claim to have could not provide a legitimate reason for EIGL to withhold the final instalment of the purchase price due to Albion. In response, on 17 December 2018, Macfarlanes LLP suggested for the first time that the matters raised were capable of supporting a petition for unfair prejudice which could give EIGL a claim against Albion. 6.Solicitors’ correspondence followed in which EIGL agreed to pay $20m of the outstanding instalment unconditionally, with the remaining $13.3m (“the Escrow Amount”) to be held by Albion’s solicitors on the terms of an escrow agreement dated 22 January 2019 (“the Escrow Agreement”). 7.Albion has now brought proceedings and seeks summary judgment for the outstanding amount of $13.3m. In response EIGL seeks a stay of the proceedings, relying for this purpose on the arbitration clause in the Escrow Agreement. Alternatively, EIGL contends that Albion is not entitled to summary judgment because EIGL has a defence with a realistic prospect of success, namely an equitable set-off arising from EIGL’s claim for relief for unfair prejudice against Albion. EIGL also contends that these proceedings should be stayed under the inherent jurisdiction of the Court pending the determination of EIGL’s unfair prejudice claim in proceedings to be commenced in Jersey. 8.Logically, the issue which falls to be determined first is EIGL’s application for a stay under s.9. If that application succeeds, then the merits of Albion’s claim, and whether there is any defence to it, are matters for the arbitrators, and it would not be desirable for the Court to say anything about them. EIGL’s application for a stay under s.9 of the Arbitration Act 1996 The relevant arbitration and jurisdiction agreements 9.The SpA, under which the various instalments of the price for the 20% interest in Heritage were payable, provided by clause 11.2: “The Parties submit to the exclusive jurisdiction of the courts of England and Wales as regards any claim, dispute or matter (whether contractual or non-contractual) arising out of or in connection with this agreement (including its formation)”. 10.In the circumstances which I have summarised above, in January 2019 Albion, EIGL and Mr Buckingham (but not the other three parties to the SpA) entered into the Escrow Agreement. This referred to the various claims asserted by Heritage and EIGL against Albion and Mr Buckingham, and by Albion against EIGL for the outstanding $13.3m. There were then a series of promises: i)by EIGL to pay the outstanding $13.3m into escrow; ii)by Albion, Mr Buckingham and EIGL not to instruct Charles Fussell & Co LLP to act other than in accordance with the undertaking it was giving as to the terms on which the Escrow Amount was held; iii)by Mr Buckingham to provide certain responses to queries which Heritage and EIGL had raised; iv) by EIGL to provide certain information to Mr Buckingham; v) by EIGL, Albion and Mr Buckingham, if there remained outstanding disputes after 1 March 2019, to use reasonable endeavours promptly to agree an appropriate dispute resolution procedure to resolve them, and not to commence proceedings in relation to the disputed matters prior to 1 April 2019. 11.Clauses 2.8 and 2.9 involved agreements by all parties that the transfer of funds into the Escrow Account was “entirely without prejudice to the legal rights and position” of those parties, including, in the case of Albion, “the legal rights and position … in respect of any and all claims arising as a result of EIGL’s alleged failure to comply with the terms of the [SpA] and/or any other rights which Albion … may have under the [SpA] or otherwise”. 12.Finally, and most materially for present purposes, clause 6 provided: “Any dispute or difference (whether contractual or non-contractual) arising out of or in connection with this letter (including any question regarding its existence, validity, interpretation performance or termination) shall be referred to and finally settled by arbitration in accordance with the Rules of Arbitration of the International Chamber of Commerce by three arbitrators appointed in accordance with the said Rules. The place of arbitration shall be London, England and the language of the arbitral procedure shall be English”. 13.It was Mr Morpuss QC’s submission for EIGL that the arbitration clause in the Escrow Agreement (“the Arbitration Agreement”) had varied and supplanted the High Court jurisdiction clause in the SpA (“the Jurisdiction Agreement”) so far as the claim to the outstanding $13.3m was concerned. The proper approach on a s.9 application14.S.9 of the Arbitration Act 1996 provides for a mandatory stay of legal proceedings in the English court in respect of a matter which the parties have agreed to refer to arbitration: "Stay of legal proceedings. (1) A party to an arbitration agreement against whom legal proceedings are brought (whether by way of claim or counterclaim) in respect of a matter which under the agreement is to be referred to arbitration may (upon notice to the other parties to the proceedings) apply to the court in which the proceedings have been brought to stay the proceedings so far as they concern that matter. … (4) On an application under this section the court shall grant a stay unless satisfied that the arbitration agreement is null and void, inoperative, or incapable of being performed." 15.Before ordering a s.9 stay, the Court must be satisfied both that there is an arbitration clause, and that the subject matter of the claim falls within that clause (Al-Naimi (t/a Buildmaster Construction Services) v Islamic Press [2000] CLC 647). There are occasions when the Court is willing to stay proceedings under its case management jurisdiction, in order to allow the arbitration tribunal to consider these matters under its kompetenz kompetenz jurisdiction. However, (in my view rightly) neither party suggested that this was the appropriate course in this case, nor did anyone suggest that this was not an issue which could and should be finally determined by me. The approach to overlapping dispute resolution clauses 16.A number of authorities have considered the position where parties have entered into more than one agreement, and their agreements contain different dispute resolution clauses. Many of those cases are concerned with the position where a suite of documents containing different arbitration or jurisdiction clauses are entered into at or around the same time, to give effect to different aspects of one overall transaction, and the issue arises as to which clause applies to a dispute which, at least on first reading, is fairly capable of falling within more than one of them. 17.I was referred by both parties to the following summary of the law by Hamblen LJ in BNP Paribas v Trattamento Rifiuti Metropolitani SpA [2019] EWCA Civ 768 at [68] as to the proper approach in these circumstances: “In the light of the guidance provided by these authorities, so far as relevant to the present case I would summarise the approach to be as follows: (1)Where the parties' overall contractual arrangements contain two competing jurisdiction clauses, the starting point is that a jurisdiction clause in one contract was probably not intended to capture disputes more naturally seen as arising under a related contract: Trust Risk Group at [48]; Dicey, Morris & Collins at § 12-110. (2)A broad, purposive and commercially-minded approach is to be followed - Trust Risk Group at [48]; Sebastian Holdings at [39] and [50]. (3)Where the jurisdiction clauses are part of a series of agreements they should be interpreted in the light of the transaction as a whole, taking into account the overall scheme of the agreements and reading sentences and phrases in the context of that overall scheme: see UBS v Nordbank [2009] at [83]; Trust Risk Group at [47]; Sebastian Holdings at [40]. (4)It is recognised that sensible business people are unlikely to intend that similar claims should be the subject of inconsistent jurisdiction clauses: UBS v Nordbank at [84], [95]; Sebastian Holdings at [40]; Savona at [1]. (5)The starting presumption will therefore be that competing jurisdiction clauses are to be interpreted on the basis that each deals exclusively with its own subject matter and they are not overlapping, provided the language and surrounding circumstances so allow: Monde Petroleum at [35]-[36]; Savona at [1]. (6)The language and surrounding circumstances may, however, make it clear that a dispute falls within the ambit of both clauses. In that event the result may be that either clause can apply rather than one clause to the exclusion of the other – Savona at [4] and [31].” 18.The present case concerns the interrelationship between the dispute resolution clause in an agreement documenting a transaction, and the effect on that clause of the parties deciding at some later point in time to conclude a further agreement with a different dispute resolution clause. In this context, it might be suggested that the approach identified by Hamblen LJ applies with less force. The passage from Dicey, Morris & Collins on the Conflict of Laws (15th) at ¶12-110 which Hamblen LJ cited (and the fact pattern he was considering) concerned the position “where a complex financial or other commercial transaction is put in place by means of a number of inter-linked contracts”. Nonetheless where, as here, it is not suggested that the agreement which was later in time superseded the earlier agreement for all purposes, such that the parties must have contemplated the agreements subsisting together, the approach identified in the Trattamento case remains a helpful guide as to the parties’ likely intentions. I note in this regard that the Court of Appeal decision in Satyam Computer Services Ltd v Upaid [2008] EWCA Civ 487, which was concerned with successive agreements rather than a single transaction embodied in multiple agreements, was cited by the Court of Appeal when considering essentially simultaneous inconsistent dispute resolution clauses in UBS AG v HSH Nordbank AG [2009] EWCA Civ 585 at [83] and Deutsche Bank AG v Sebastian Holdings Inc [2010] EWCA Civ 998 at [42]. 19.Finally, it may be apparent from the nature of the agreement in which a particular dispute resolution provision is located that it is intended to have a narrower scope and is principally concerned with disputes of a particular kind. I note that the Court of Appeal in UBS AG rejected the contention that the English jurisdiction clause in the Kiel notes extended to the parties’ overarching dispute because it was a “`boilerplate’ bond issue jurisdiction clause … primarily intended to deal with technical banking disputes” ([89]). The scope of a dispute resolution provision in an escrow agreement which is in different terms to that contained within the associated principal contract has been considered in at least two cases. In PT Thiess Contractors Indonesia v PT Kaltim Prima Coal [2011] EWHC 1842 (Comm), Blair J considered a case in which the parties had entered into a “Cash Distribution Agreement” (which he found was essentially an escrow agreement: [42]) containing an English jurisdiction clause, alongside an Operating Agreement for Mining Services which provided for arbitration. He noted at [41] that “there is nothing unusual about submitting a contractual dispute to arbitration whilst referring matters relating to security to the jurisdiction of one or more courts”, noting “this is frequently a feature of international transactions, and the choice of jurisdiction in the security agreement may have to do with factors independent of the principal agreement”. At [43] he concluded: “In my view, the claim in the English action is a claim under the CDA concerned with a procedure whereby the sums in dispute are to be set aside until the dispute is determined. It raises a discrete claim, related to, but distinct from, the underlying dispute arising under the OAMS which is the subject of the arbitration. There is no reason why the parties cannot be taken to have intended that these claims are to be the subject of different jurisdiction clauses.”. 20.In his judgment, Blair J referred to the decision of Andrew Ang J in the Singapore High Court in Transocean Offshore International Ventures Ltd v Burgundy Global Exploration Corp [2012] 2 SLR 821. That case involved a principal agreement (an offshore drilling contract) which provided for arbitration, and an escrow agreement which provided for the jurisdiction of the Singapore High Court. Andrew Ang J rejected the contention that proceedings brought under the escrow agreement fell within the arbitration clause, so as to require the court to stay the proceedings under s.6 of the Singapore International Arbitration Act. He also referred to the different types of dispute which might arise under the principal contract and the escrow agreement, noting that the latter were likely to be “relatively straightforward and nontechnical in nature” and for that reason the parties were likely to have deliberately chosen a dispute resolution provision for the escrow agreement which could ensure more speedy relief (at [21]). 21.While those were both cases in which the court jurisdiction clause appeared in the security document, and the arbitration clause in the principal agreement setting out the parties’ primary obligations (as opposed to this case where the location of the two types of dispute resolution clause is reversed), they reflect the fact that the parties may frequently choose a different dispute resolution provision for an agreement which sets out the primary obligations of their relationships, and an agreement intended to operate by way of a security, without intending that the dispute resolution provision in the security agreement extend to disputes arising under the principal agreement. Analysis and conclusion 22.On the facts of this case, I am quite satisfied that the claim which Albion now brings – which is essentially concerned with establishing its entitlement to be paid the outstanding instalment of the purchase price, and not with the operation of the Escrow Agreement so as to realise the benefits of the security provided for that liability if established – does not fall within the Arbitration Agreement. I refer to the claim which Albion “now brings” because as originally formulated, Albion’s Particulars of Claim sought relief in the form of “a declaration that Albion is entitled to payment of the Escrow Monies”. However, to avoid any debate as to whether that relief fell within the ICC arbitration clause, Albion has confirmed that it does not pursue that claim at this stage. It is accordingly not necessary for me to determine whether that claim for declaratory relief would have been stayed. 23.I have reached the conclusion that EIGL is not entitled to a stay under s.9 of the Arbitration Act 1996 for the following reasons. 24.First, I agree with Blair J and Andrew Ang J that there is nothing particularly surprising in parties stipulating for different dispute resolution provisions in principal and security agreements, given the different purposes of those agreements, and the more limited scope of the latter. I consider it inherently more likely that the Arbitration Agreement in the Escrow Agreement was intended to address the security and other ancillary obligations created by that agreement, rather than to displace (at least so far as the outstanding instalment is concerned) the parties’ agreed choice of jurisdiction under the SpA for the purposes of determining whether EIGL is in fact under any liability to Albion. 25.Mr Morpuss QC submitted that it would be “absurd” if Albion was required to establish its entitlement to the amount due in one forum but might be forced to resort to another forum for the purpose of realising the security provided for that obligation. However, that is the position whenever the principal and security agreements in a transaction contain different dispute resolution provisions which, as Blair J noted, they frequently do and for good reasons. Further, while the amount paid into the Escrow Account is clearly the most obvious means of enforcing any judgment which Albion might obtain, it is far from Albion’s only option. In particular, Albion has security for the outstanding instalment in the form of a charge over 20% of the shares in Heritage. Further, in the event of a dispute, it was inherently likely that Albion might become entitled to recover a sum in excess of the Escrow Amount once interest and costs were taken into account. For these reasons, it would be wrong to approach the identification of the agreed forum for the determination of Albion’s debt claim under the SpA solely from the perspective of enforcement against the Escrow Amount. 26.Second, the language of the Arbitration Agreement – in particular its reference to “any dispute or difference …. arising out of or in connection with this letter (including any question regarding its existence, validity, interpretation, performance or termination)”, suggests that the focus of the clause is obligations created by the Escrow Agreement (“this letter”) rather than disputes as to the interpretation, performance or termination of the SpA. When the parties were contracting against a background in which the outstanding balance was due under the SpA and subject to the Jurisdiction Agreement, it is unlikely that they would have used a clause which took “this letter” as the fulcrum of the Arbitration Agreement if that agreement had been intended to extend to claims under the SpA. 27.Third, I agree with Lord Grabiner QC that clause 2.9, which provides that the payment into escrow is “without prejudice to… any other rights which Albion … may have under the SpA” tells against the suggestion that clause 6 of the Escrow Agreement is intended to remove Albion’s right under the SpA to take proceedings in the High Court. While I accept Mr Morpuss QC’s submission that it would be possible to construe this provision as applying only to non-ancillary obligations (and therefore as not extending to the choice of forum), it can nonetheless be said that clause 2.9 points away from any suggestion that the parties intended provisions in the Escrow Agreement to supplant potentially inconsistent provisions in the SpA. This is particulary the case given the width of the language used to preserve Albion’s prior entitlements – not simply “in respect of any and all claims arising as a result of EIGL’s alleged failure to comply with the terms of the [SpA]” but also “any other rights which Albion … may have under the [SpA] or otherwise”. 28.Fourth, the Escrow Agreement concerns only three of the six parties to the SpA. This factor itself suggests that the parties can only have intended the Arbitration Agreement to have a localised effect, in order to avoid the commercially unattractive position where claims between some of the parties to the SpA were subject to High Court jurisdiction, and other related claims under the SpA were subject to ICC arbitration. Adopting Hamblen LJ’s language in Trattamento, this is an outcome which sensible businesspeople are unlikely to have intended. 29.Finally, although this is a point which merits very limited weight, I also accept Lord Grabiner QC’s submission that if cause 6 of the Escrow Agreement was intended to provide a new agreed and exclusive mechanism for resolving all of the disputes, it is perhaps surprising that clause 2.7 provides that the parties are to “use reasonable endeavours promptly to agree an appropriate dispute resolution process to resolve the dispute”. 30.EIGL’s application for a stay having been rejected, it is necessary to turn to Albion’s application for summary judgment. The test for summary judgment 31. There was no dispute before me as to the appropriate test on a summary judgment application. A frequently quoted summary of the applicable principles is that of Lewison J in Easyair Limited v Opal Telecom Limited [2015] EWHC 399 (Ch) at [15]: i)The court must consider whether the claimant has a "realistic" as opposed to a "fanciful" prospect of success: Swain v Hillman [2001] 1 All ER 91. ii)A "realistic" claim is one that carries some degree of conviction. This means a claim that is more than merely arguable: ED & F Man