The English Court of Appeal decides it has the power to order a non-party witness to give evidence in aid of a foreign arbitration

By Sophie Eyre, Rebecca Slater

04-2020

In A and B v C, D and E [2020] EWCA Civ 409 the Court of Appeal has provided at least a partial resolution to the "long-standing controversy" of whether or not orders under section 44 of the Arbitration Act 1996 can be made against non-parties. In a departure from earlier Commercial Court decisions dealing with the other subsections of section 44, the Court held that third parties can indeed be compelled to give evidence in a foreign arbitration under section 44(2)(a).

Whether or not this approach could be applied to the other subsections of s.44 remains to be seen. The Court of Appeal declined to rule on the correctness of the Commercial Court decisions in Cruz City and DTEK but it is conceivable that the Court's decision on section 44(2)(a) could pave the way for a broader construction to applied to the other section 44(2) powers.

The facts

The appellants and the first and second respondents are parties to an ongoing arbitration seated in New York. The dispute being arbitrated concerns two settlement agreements between the appellants and the first and second respondents which relate to the development of an oil field in Central Asia. A key issue in the arbitration is whether certain payments made by the first and second respondents to the Central Asian government were in fact bribes.

The third respondent, who is not a party to the arbitration, had acted as lead negotiator for the first and second respondent in relation to the payments. He is resident in England and was not willing to give evidence to the tribunal in New York.

The appellants were granted permission by the tribunal to apply to the English Commercial Court to compel the third respondent's testimony. They subsequently applied under s.44(2)(a) of the Arbitration Act 1996 for an order for the third respondent's evidence to be taken by deposition.

At first instance Foxton J had expressed that there was "considerable force" in the applicant's arguments in favour of the court having jurisdiction against a non-party to an arbitration under section 44. However, he somewhat reluctantly refused the application, relying on two Commercial Court authorities, Cruz City Mauritius Holdings v Unitech Limited [2014] EWHC 3704 (Comm) and DTEK Trading SA v Morozov [2017] EWHC 1704 (Comm) which concerned the granting of interim injunctions under section 44(2)(e) and the preservation of evidence under 44(2)(b) respectively.

The decision of the Court of Appeal

Section 44(2)(a) provides for the Court's power to make orders about "the taking of the evidence of witnesses". The question for the Court was whether section 44(2)(a) gave the Court the power to order a non-party witness to give evidence in aid of a foreign arbitration. The judges unanimously decided that it did, preferring to decide the case on a narrow approach to just section 44(2)(a), rather than considering all the heads of section 44(2) as a whole.

The Court reasoned that under section 44(2)(a) the Court has the same powers in relation to arbitrations, regardless of where they are seated, as it does in relation to proceedings before the High Court or the County Court. It was wrong to limit section 44(2)(a) as applying only to arbitrations with their seat in England as this would disregard section 2(3) of the Arbitration Act which states that the powers conferred by section 44 apply "even if the seat of the arbitration is outside England and Wales or Northern Ireland or no seat has been designated or determined".

The Court went on to consider whether the words "the taking of the evidence of witnesses" covered all witness, or just those who were a party to the arbitration. The Arbitration Act clearly distinguishes between a "party" and a "witness" where necessary and as such there was no justification for limiting "witnesses" to those who are either parties or in the control of a party. Contrary to the respondents' submissions, the other subsections of section 44 did not point against section 44(2)(a) being applied to third parties.

The Court also held that the English Court's powers regarding the taking of evidence of witnesses included the power to order evidence to be given by deposition under Civil Procedure Rule 34.8.

Finally, the Court noted that the same conclusion had been reached by Moore-Bick J in Commercial & Industry Insurance Co of Canada v Certain Underwriters at Lloyd's [2002] 1 WLR 1323 which, although not binding, the Court found its reasoning to be compelling.

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