Enforcement Proceedings: Keep Them Simple

In enforcement proceedings relating to a New York Convention Award, the English High Court has refused to permit new counterclaims and has emphasised the “streamlined” nature of the enforcement process.

Facts of the case:

Selevision Saudi Co v BeIN Media Group LLC [2021] EWHC 2802 (Comm) concerned the enforcement of a New York Convention Award. Selevision Saudi Co (“Selevision”), a broadcast service provider based in the Kingdom of Saudi Arabia (“KSA”), entered into a Distributer Agreement (the “Agreement”) with BeIN Media Group LLC (“BMG”), a broadcasting organisation which held the exclusive rights to coverage of major sporting competitions, including the English Premier League, within the Middle East and North Africa. Under the terms of the Agreement, BMG retained Selevision as a non-exclusive distributor of set top boxes, which allowed customers in KSA to watch BMG channels.

Following a breakdown in the parties’ relationship, Selevision claimed that BMG breached the Agreement in several ways, including by wrongfully terminating the Agreement and withholding payment of commissions. Pursuant to an arbitration clause, the dispute was referred to arbitration under the Arbitration Rules of the DIFC-LCIA Arbitration Centre, with its seat in the DIFC in Dubai. Selevision successfully obtained an award against BMG for approximately $8 million (the “Award”). Further proceedings in the DIFC Court ensued, at which an order was made that the Award be recognised and enforced in the same manner as a judgment of the DIFC Court.

In the absence of the Award and subsequent order being honoured, Selevision commenced enforcement proceedings in the English High Court (the “English Proceedings”) under section s.101(2) of the Arbitration Act 1996, on that basis that BMG held assets in England and Wales. During the English Proceedings, BMG made an application for permission to bring a counterclaim under CPR 8.7 and to serve a Part 20 claim on an additional Defendant, Selevision’s CEO. The counterclaim and additional claim concerned a very large piracy of BMG’s broadcasting rights in KSA allegedly orchestrated by Selevision.

The key questions facing the Court were:

  1. Did the English Court have jurisdiction to allow a defence and counterclaim in the context of an application for leave to enforce a New York Convention Award?

  2. If so, should the Court exercise its discretion to grant such permission in this case?

Findings:

The Court clarified the scope of its power under CPR 62 in enforcement proceedings and provided illuminating (albeit obiter) guidance on the exercise of its discretion in such cases.

CPR 62.3(1) (which applies to enforcement proceedings by virtue of CPR 62.18(3)) provides that that “an arbitration claim must be started by the issue of an arbitration claim form in accordance with the Part 8 procedure”. BMG claimed, in essence, that this imported all features of Part 8 into applications to enforce an arbitration award, therefore providing the Court (by CPR 8.7) with the power to permit the counterclaim and additional claim.

Mr Justice Baker expressed some sympathy for BMG’s interpretation, as “(the) relevant Rules are not expressed with the clarity which would be desirable” [26], but was not persuaded by such a broad reading of CPR 62. In particular, the Judge:

  1. Referred to the doubt over whether “it is contemplated that arbitration claims should give rise to Part 20 proceedings at all” [28] (per Cockerill J in VTB Commodities Trading DAC v JSC Antipinsky Refinery [2021] EWHC 1758 (Comm) [161]); and

  2. Noted that the nature of applications to enforce awards suggests no power to allow counterclaims is desirable: “(such) applications are intended to be a simple method to permit the enforcement of an award already made” [29]. To do otherwise would be to expand the proceedings beyond the scope of the arbitration with which they are concerned.

Despite concluding that the Court does not have the power to permit a counterclaim or additional claim in applications for enforcement of New York Convention awards, Baker J provided useful guidance as to the exercise of the Court’s discretion if a different decision were to be reached. Two factors were particularly persuasive in favour of not permitting the application.

  • First, the Court will be hesitant to inhibit the enforcement or broaden the scope of a New York Convention Award. Baker J endorsed Rix LJ’s assessment that enforcement proceedings are “highly summary and essentially quasi-administrative proceedings” (Gater Assets Ltd v NAK Naftogaz Ukrainy [2007] 2 Lloyd’s Rep 588, 591 at [72]) [40]. The counterclaim and additional claim for which permission was sought in these proceedings were “essentially unrelated to the subject matter of the Award” [42(2)] and so permitting them would transform the intended nature of the proceedings from what should be a “very streamlined procedure” [42(3)].

  • Second, neither BMG nor the subject matter of the counterclaim for which they sought permission had sufficient connection to England and Wales to permit service of a claim form within the jurisdiction.

It should also be noted that the Court considered but was not persuaded by concern over whether BMG would obtain justice on its proposed claim in KSA, particularly given that that the piracy claim involves factual allegations relating to the Saudi Government or closely related persons. In dismissing this consideration, Baker J emphasised the lack of connection between the claim and this jurisdiction, and found that, even if it may not be capable of being tried fairly in KSA, there may be other, more appropriate forums with greater ties to the dispute.

Comment:

This decision should give parties the confidence to pursue arbitration when it is the most appropriate form of dispute resolution and seek straightforward, cost-effective enforcement in England and Wales, where necessary to do so. The judgment underlines the English Court’s support for arbitration as a means of dispute resolution and, importantly, the desire to preserve the “streamlined”, “quasi-administrative” nature of enforcement proceedings relating to an arbitral award. Baker J’s guidance also provides insight into the exercise of the Court’s discretion, particularly where a dispute lacks sufficient connection to the jurisdiction.