In a judgment handed down today (PJSC NBT v Mints [2022] EWHC 871(Comm)), Foxton J has addressed a number of important and novel questions of law concerning issue estoppel and abuse of process.
In the underlying Commercial Court proceedings, the claimant bank contends that some of the defendants caused it to enter into a disadvantageous transaction, which was a fraud on the Bank, and that the other defendants were implicated in this fraud. Since the transaction documents contained LCIA arbitration clauses, the Bank’s contractual counterparties (referred to in Foxton J’s judgment as ‘the LCIA Claimants’) had commenced arbitration in 2018 seeking a declaration that the transaction was valid. The Bank counterclaimed in the arbitration for damages for fraud against the LCIA Claimants. To establish the alleged fraud, the Bank contended that the knowledge of D1-D3 was attributable to the LCIA Claimants.
In June 2021, the LCIA Tribunal handed down a partial award on liability alone, dismissing the LCIA Claimants’ claims for negative declaratory relief and upholding the Bank’s counterclaim. In September 2021, the Bank sought leave to amend to plead in the Commercial Court proceedings that D1-D3 were bound by the Tribunal’s findings. It also sought summary judgment against them for some $470 million.
The first issue considered by Foxton J was whether an arbitral award is capable of giving rise to an issue estoppel against a non-party to the arbitration. On the law as it presently stands, a court judgment may bind not only the parties but also their ‘privies’, described by Foxton J as ‘Gleeson privies’: see para 13 and Gleeson v Wippell & Co Ltd [1977] 1 WLR 510. D2-D3 contended that an arbitral award is conceptually incapable of binding Gleeson privies because the foundation of any estoppel is the implied (contractual) obligation to honour an award, to which Gleeson privies, by definition, are not parties. Foxton J held that there is no absolute rule to this effect, but that that the contractual source of an arbitral tribunal’s jurisdiction is one of the reasons why establishing that an award has preclusive effect against non-parties ‘will be an extremely challenging task’: para 26. As to the test of privity applicable generally (i.e. to court judgments), Foxton J declined to consider whether Gleeson was (as D2-D3 contended) wrongly decided, observing that this point is ‘not realistically open before a first instance judge’: para 29.
Applying the Gleeson test to this case, it was not even arguable that D2-D3 are privies of the LCIA Claimants, having regard (among other things) to the fact that the source of the alleged estoppel was an arbitral award rather than a court judgment: see paras 41-42. Nor was there any arguable case of abuse of process: paras 71-83.
Accordingly, Foxton J refused the Banks’ application for leave to amend and for summary judgment, concluding that the proposed amendments had no real prospect of success.
The judgment is available here.
Laurence Rabinowitz QC and Niranjan Venkatesan acted for the Second and Third Defendants (with Simon Paul of Fountain Court). They were instructed by Enyo Law LLP.