Commercial Court strikes out proceedings on the grounds that a prior arbitral award created an issue estoppel which barred the claim, rejecting the claimant’s argument that the award had no res judicata effect for lack of jurisdiction.
In Tumpuan Megah Development Sdn Bhd v. ING Bank N.V. and O.W. Bunker (Far East) Ltd [2024] EWHC 2350 (Comm), the Commercial Court granted applications by the Defendants to strike out the claimant’s claim on grounds of res judicata and abuse of process, to set aside service on the Second Defendant (“OWBFE”), and to set aside an order extending time for service of the claim form under CPR 7.6(2).
The decision concerned a long-running dispute arising out of the collapse of the OW Bunker group in 2014. In May 2017, the Defendants brought LMAA arbitration proceedings against the Claimant (“TMD”) in London under two bunker contracts. TMD denied the existence of the contracts and challenged jurisdiction, amongst other things contending that the parties’ dispute was subject to a set-off agreement (“SOA”) which TMD and OWBFE had previously entered into under which disputes were to be referred to arbitration seated in Malaysia (the “SOA AA”). In 2020, the London tribunal made an award finding in favour of the Defendants and dismissing TMD’s jurisdictional objection under s. 73(1) Arbitration Act 1996 (“AA 1996”) for having been raised too late. Thereafter, TMD chose not to challenge the tribunal’s award in London under s. 67 AA 1996 and instead commenced a fresh arbitration in Malaysia under the SOA, seeking a declaration of non-liability and damages for breach of the SOA AA. In response, the Defendants applied for leave to enforce the LMAA award under s. 66 AA 1996 and to have it entered as a judgment, following which they applied to register the s. 66 judgment in Malaysia under the Malaysian Reciprocal Enforcement of Judgments Act 1958. TMD applied to the Malaysian court to set aside registration of the judgment, contending that it could not be deprived of its right to mount a “passive” challenge to the London award under the New York Convention 1958 and sought a trial of its contentions that the London tribunal had no jurisdiction. The Malaysian Court of Appeal later granted TMD’s application for a trial, which remains to be determined pending a further appeal by the Defendants to the Malaysian Federal Court.
In the meantime, the Defendants challenged the jurisdiction of the Malaysian arbitral tribunal appointed under the SOA AA on the grounds that TMD’s claim amounted to a collateral attack on the London award and was precluded by res judicata and abuse of process. In March 2023, the Malaysian tribunal made an award dismissing TMD’s claim, following which TMD applied to the Malaysian court to set that award aside. In May 2023, shortly before the 6 year anniversary of the commencement of the London arbitration and expiry of the applicable limitation period, TMD then commenced proceedings against the Defendants in England claiming declaratory relief and damages for breach of the SOA AA in respect of its costs of the London arbitration, the Malaysian court proceedings and the Malaysian arbitration. TMD served the Claim Form on ING as of right in London, and later applied for an extension of time to serve on OWBFE in Singapore.
The Defendants applied to strike out the claim on grounds of res judicata or abuse of process, and to have service of the Claim Form against OWBFE set aside, or for a stay of the claim against OWBFE under s. 9 AA 1996 on the grounds that TMD was required to bring its claim against OWBFE in arbitration in Malaysia.
TMD denied that the requirements of issue or cause of action estoppel were satisfied, including because its jurisdictional objection in the London arbitration had been dismissed under s. 73(1) AA 1996 and the tribunal’s decision on the substantive aspect of its challenge had been obiter. It further argued that neither the London award nor the s. 66 judgment could have res judicata effect in any event because the London tribunal had had no jurisdiction, in reliance on the Supreme Court’s decision in Dallah Real Estate and Tourism Holding Co. v. Ministry of Religious Affairs of the Government of Pakistan [2011] 1 A.C. 763. It said that it was entitled to a trial of its arguments on jurisdiction and that OWBFE was not entitled to a s. 9 stay because the SOA AA was inoperative or incapable of being performed, or that a stay should be refused because it would serve no real or proper purpose, in reliance on FamilyMart China Holding Co. Ltd v. Ting Chuan (Cayman Islands) Holding Corp. [2024] 1 All ER (Comm) 697.
In summary, the court rejected TMD’s arguments and held that both the London award and the s. 66 judgment had res judicata effect by virtue of TMD’s failure to mount a timely challenge to the award under s. 67 or s. 66(3) of the AA 1996 and that s. 73(2) AA 1996 created a form of statutory issue estoppel which precluded TMD from arguing that the tribunal had had no jurisdiction. It also rejected TMD’s arguments on s. 9(4) AA 1996, holding that the fact that OWBFE would inevitably seek to have any fresh claim made in arbitration under the SOA AA dismissed on grounds of issue estoppel did not render the SOA AA inoperative or incapable of being performed.
Also notable is the fact that the Court set aside service of the Claim Form against OWBFE on the grounds that no good reason had been shown for extending time under CPR 7.6(2). The case illustrates the difficulties and dangers in applying ex parte to extend time for service of a Claim Form in circumstances where the limitation period has expired.
Marcus Mander appeared for the successful Defendants, instructed by Michael Godden, Hugo Flaux and Abigail Witts of A&O Shearman.
