Kuwait: Where an arbitration didn’t happen
A High Court judge has set aside an order he made to enforce a £74m arbitration award after discovering that both the arbitration agreement and ruling were fabricated.
Mr Justice Butcher described the case as “unique in my experience, and involves allegations of fraud on the court, as well as on others, which are very disquieting and of the utmost seriousness”.
Large parts of the arbitration decision, supposedly issued in Kuwait, were actually drawn from a 2022 decision of Mr Justice Picken, the judge found.
The claim was brought last June, ostensibly by Contax Partners Inc BVI against three companies in the Kuwait Finance House banking group.
It sought to enforce, under section 66 of the Arbitration Act 1996, what was said to be a 2022 Kuwaiti arbitration award rendered following an arbitration agreement in 2021, and then upheld by a court in Kuwait on appeal.
Contax BVI was said to be represented by London law firm H&C Associates, with the claim form signed by solicitor Hamza Adesanu and supported by a witness statement from him which said Contax BVI had been attempting to liquidate its gold investment account held by the defendants.
There was also a witness statement from Filippo Fantechi, who said he was Contax BVI’s managing director.
Butcher J said the application was put before him on a without-notice basis, as was usual, for consideration on the papers in early August 2023.
“I gave, I would say in retrospect, undue allowance for difficulties apparently arising from documents being prepared by people who were not native English speakers and/or whose grasp of English procedure was not perfect.
“It did not, however, occur to me that any of the documents might be fabrications. I was not on the lookout for fraud, and did not suspect it.”
H&C Associates purported to serve the order on a London company in the defendants’ group. After 28 days, the firm applied for third-party debt orders (TPDOs), with the judgment debt now amounting to nearly £71m, against Citibank, HSBC, Barclays Bank and JP Morgan Chase.
Master Stevens made interim orders on 1 October and, a few weeks later, another in relation to Barclays Bank, ordering that it should pay Contax BVI a further £3.2m.
The defendants said they only became aware of the proceedings when their bank accounts were frozen in compliance with the interim TPDOs. They applied to halt payment until they could seek to set aside the August order.
“I regard the position in relation to who had and was properly exercising authority on behalf of Contax BVI at the material times as not being clear,” Butcher J said.
But, in any case, there was “no real doubt” that the award was not genuine.
“No original has been produced. There is no documentary (in which I include electronic) evidence of the existence of this alleged agreement before June 2023, when it was exhibited to the witness statement of, or supposed to be of, Mr Fantechi in support of the application to enforce the award.”
Secondly, there were “very strong grounds” for concluding that the award itself was a fabrication, with it containing “substantial passages which are taken, with some modifications, from the judgment of Picken J in Manoukian [v Société Générale de Banque au Liban SAL [2022] EWHC 669 (QB)]”.
The text used “exactly the same phraseology”, including the argot of English judgments (‘be that as it may’, ‘the submission is not entirely without merit’, ‘that said’, ‘fall to be considered’) and the same punctuation, “even when it was not obvious, and arguably incorrect”.
“The almost identical assessment of factual and expert evidence could not, in my view, have been the result of chance,” Butcher J continued; the mirroring of the terms of Picken J’s judgment was “not the result of the adoption of transposable legal reasoning”.
The defendants also adduced evidence that the award did not comply with basic requirements of Kuwaiti law, and particularly that it was in English, rather than Arabic, while individuals named in the award as having been involved in the arbitration said they were not.
The judge concluded that “there was no arbitration agreement or arbitration, and that the award and the Kuwaiti judgment are fabrications”.
Setting aside the order, he continued: “The result of this decision is that there are a considerable number of unanswered, but serious, questions, and in particular as to who was responsible for the fabrications which I have found to have been made, and whether there is culpability (and if any whose) as to the way in which the application for permission to enforce the purported award was presented to the court.
“Those are matters which are likely to require investigation hereafter.”
This incident emphasises the (obvious ?) fact that documents can be fabricated and that is facilitated if copies, electronic or otherwise, are all that are available for inspection.