Using the English courts to order a third party to provide evidence in a foreign arbitration

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4 min read

The English Court of Appeal has confirmed it has the power to compel third parties domiciled in England to give evidence in support of a foreign seated arbitration. It demonstrates the English courts’ approach to support foreign seated arbitrations.

The case concerned a New York seated arbitration and whether the English courts could compel a third party witness resident in England to provide evidence

The case concerned an arbitration seated in New York arising out of two settlement agreements.  There was a dispute between the parties regarding payments made and whether they amounted to a bribe.  A third party who had been involved in the negotiation of the payments was resident in England.  He had made it clear that he was not prepared to give evidence during the Arbitration.  The New York seated tribunal therefore gave the appellants permission to make an application to the English courts for an order requiring the third party to provide evidence. 

The third party argued the courts had no jurisdiction to compel a third party to give evidence in a foreign seated arbitration

The appellants proceeded to apply to the English courts for an order that the third party provide evidence by way of a deposition under CPR 34.8.  The third party resisted the application. The dispute between the parties was whether the English courts had power to compel the third party to give evidence in a foreign seated arbitration under Section 44 Arbitration Act 1996.  Section 44 provides that, unless otherwise agreed by the parties, the English courts have the “same power of making orders” in relation to Arbitral proceedings as they would “in relation to legal proceedings” in respect of specified matters including the taking of evidence. 

The third party argued that such a power did not extend over him as he was not a party to the arbitration agreement.  He relied on DTEK Trading SA v Morisov and Cruz City 1 Mauritius Holdings v Unitech Ltd. where applications for other relief against third parties under Section 44 (namely for the preservation of evidence and to serve an interim injunction respectively) were dismissed on the basis the English court had concluded that its powers under section 44 did not extend to third parties.

The Court of Appeal held that it did have jurisdiction

The third party succeeded at first instance.  However, the Court of Appeal overturned the decision.  In doing so, they distinguished from the decisions in DTEK and Cruz City

The Court concluded that it did have power under section 44 to make an order against a third party to provide evidence.  It held that section 44(1) gave the English courts the “same power of making orders” in relation to Arbitral proceedings as they would “in relation to legal proceedings”.  Section 82(1) Arbitration Act 1996 defined “legal proceedings” as meaning “civil proceedings in England and Wales in the High Court”.  CPR 34.8 and 34.9 grants the High Court power to order evidence be given by way of deposition.  Meanwhile, section 2(3) of the Arbitration Act 1996 provides that section 44 applies to arbitrations even seated outside of England and Wales or Northern Ireland.  And the Court of Appeal was satisfied that there was no justification for construing “witnesses” under section 44(2)(a) as being synonymous with just “parties” (i.e. those that were party to the arbitration agreement) or those under the parties’ control (e.g. employees etc).  The Court of Appeal concluded that it should exercise its discretion and order the third party to give evidence before the New York seated Tribunal.

A welcome development but the ambit of Section 44(2) Arbitration Act 1996 in respect of other forms of relief remain to be fought on another day

This is a welcome development and demonstrates the English courts’ approach of being supportive of arbitration whether seated in the UK or abroad.  It also allows parties the option of compelling a third party witness resident in England and Wales or Northern Ireland the ability to secure their evidence in support of a foreign seated Arbitration. 

However, it does not necessarily follow that the Court of Appeal’s reasoning will necessarily apply to other forms of relief against third parties under section 44.  Lord Justices Flaux and Males were both clear to point out at [35] and [57] of the judgment that the decision should not be seen as overturning DTEK and Cruz City – “I see no reason to doubt the actual decisions in Cruz City and DTEK, but I would reserve my opinion whether their reasoning on this point is correct as regards the other paragraphs of section 44(2).  There are, in my view, strong arguments either way and it may be that the position varies as between the various paragraphs of subsection (2).”  The fight therefore about whether the English court does have the power to compel third parties who are not party to an arbitration agreement to perform certain acts (such as to preserve evidence or honour injunctions) remain to be fought on another day.

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