Caparo Group Ltd v. Fagor Arrasate Sociedad Cooperative
(England and Wales) High Court of Justice (Commercial Court), Clarke J, August 7, 1998.
ICC arbitration - s. 72 Arbitration Act 1996 - letter sent to ICC stating that request for arbitration should be rejected as there was no jurisdiction - whether this was taking part in the proceedings so as to preclude recourse to s. 72 - consideration of steps that might constitute taking part in arbitral proceedings so as to bar recourse to s. 72.
Facts:
The respondent ("Fagor"), as seller, and Caparo Maruti Ltd ("CML"), as buyer, entered into a written contract for the manufacture, assembly and final preparation of certain machinery and equipment. The contract was governed by English law and provided for the arbitration of certain disputes under ICC rules. The appellant ("Caparo") was an English company that, through a subsidiary, owned 60% of the issued share capital of CLM. Disputes arose and were referred to arbitration by Fagor in July 1997, both Caparo and Caparo Maruti Ltd being named as respondents. Caparo, by letter of the 14th August 1997, requested the ICC to reject the arbitration involving it for lack of jurisdiction. The ICC decided that the matter should proceed and appointed an arbitrator.
Caparo applied to the court under s. 72 of the Arbitration Act 1996 ("the 1996 Act") for a declaration that neither the arbitrator appointed by the ICC nor the ICC's International Court of Arbitration had jurisdiction over Caparo in relation to the dispute and for an injunction against
Fagor.
Fagor contended that Caparo was barred from bringing the matter before the court under s. 72 of the 1996 Act because it had taken part in the arbitral proceedings by requesting the ICC to reject the arbitration involving it on the grounds that the ICC had no jurisdiction. It said, that by this request, Caparo had invoked the ICC's jurisdiction to make a prima facie assessment of the question under Article 8.3 of the ICC Rules. In consequence, as provided for under ss. 30 and 31 of the 1996 Act it was for the arbitral tribunal to determine Caparo's jurisdictional objections.
Held:
Caparo was entitled to the declaration and injunction sought. A person who disputed that an arbitral tribunal had jurisdiction could bring the matter before the court under s. 72 of the 1996 Act, provided it had taken no part in the arbitral proceedings. It could not do so if it took any part in those proceedings that involved consideration of the tribunal's jurisdiction. The issue was, therefore, whether by the 14th August letter, Caparo invoked the jurisdiction of the ICC to consider whether it had jurisdiction. Considering this letter, in its context, it could not be fairly held that Caparo intended to take part in the process. All it was saying was that it was nothing to do with them; the ICC had no jurisdiction. There was no request to the ICC to deal with the matter under Article 8.3; neither did Caparo make representations to the ICC as to why it should be prima facie satisfied that there was no jurisdiction. If there had been, Caparo would have taken part in the process.
This was, in consequence, a case for the application of s. 72 of the 1996 Act and for the court to determine Caparo's jurisdictional objections. Applying English law, there was no basis on which it could be held that Caparo was a party to the contract or the arbitration agreement and neither the ICC nor the arbitrator had jurisdiction over it in relation to these disputes.
For the applicant: Mr S Dennison (instructed by Messrs Berwin Leighton).
For the respondent Mr T Landau: (instructed by Messrs Eversheds).
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