• Avinder Laroya

Enforcement of arbitral awards and counterclaims, review of the CPR and NY Convention



This article will review the case of Selevision Saudi Company v Bein Media Group LLC [2021] EWHC 2802 (Comm).


The case discussed whether the Court had jurisdiction to allow a counterclaim in the context of CPR 62.18 for leave to enforce an award under the New York Convention.


The article will provide

  • a brief synopsis of the case by way of a background analysis,

  • discuss the main issues brought before the Court by the Defendant

  • the Court’ decision on these issues

  • Summary

The matter of Selevision Saudi Company (“SSC”) (Claimant) v Bein Media Group LLC (“BMG”) (Defendant) recently heard in the Royal Courts of Justice was an application by the Defendant for permission to bring a counterclaim in an arbitration commenced by the Claimant.


The Defendant was also seeking to bring Part 20 proceedings against Mr Raed Khusheim (CEO of SSC) and to serve him out of the jurisdiction and for a stay of enforcement of a foreign arbitration award in favour of SSC pending final determination of the proceedings.


The dispute arose out of arbitration between the two parties which was conducted in Qatar. The Arbitrators found BMG was liable to pay SSC over $8 million (USD) for its breach of the Distribution Agreement. BMG did not honour the award.


Background


BMG is a broadcasting organisation in Qatar, and operates satellite television channels in 40 countries and broadcasts several sporting events such as La Liga and the Premier League. Pursuant to its subsidiary, Bein Sports MENA LLC (BSM), it holds exclusive rights to broadcast such events in the Middle East and North America.


SSC, a Saudi Arabian Company, provided broadcasting-related services. SSC and BMG were non-exclusive partners in a Distributor Agreement. SSC distributed set top boxes which allowed users both residential and commercial to watch BMG media channels.


In 2016, SSC brought disputes before arbitration against BMG. SSC claimed;

  1. that BMG was in breach of the Distributor Agreement by suspending or barring SSC’s access to BMG’s customer relationship management system

  2. that BMG had wrongfully terminated the Distributor Agreement

  3. for unpaid commissions

  4. for the payment of other sum

BMG brought a counter claim that SSC had breached the Distributor Agreement which caused BMG a loss of $30 million (USD).


By a final award issued at the DIFC in 2018, it was concluded that BMG had been in breach of and wrongly suspended the Distributor Agreement. BMG’s counterclaim was therefore dismissed.


Later that year, BMG applied to DIFC Court to set aside the Award claiming that it was in conflict with UAE public policy because of SSC’s fee arrangements with lawyers who represented it in the arbitration. SSC cross-applied seeking recognition and enforcement of the Award.


BMG’s application was dismissed but SSC’s cross-application was granted for an order that the Award be recognised and enforced as a DIFC Court judgement.


BMG, again, dishonoured the Court’s order. SSC commenced proceedings in the Royal Courts of Justice in London for leave to enforce the Award as an English court judgment since BMG has assets in England.


BMG brought a counter claim against SSC for orchestrating a large piracy of its broadcasting rights, particularly in the MENA region.


Key Issues considered by the Court


SSC resisted BMG’s counter claim and argued that the Court take into consideration the following issues;

  1. The Court’s jurisdiction to allow a defence and counterclaim during an application for leave to enforce a New York Convention Award pursuant to s.101(2) of the Arbitration Act 1996 and CPR 62.18 (1) (b)

  2. If the Court has such jurisdiction, is it right for it to exercise its discretion in favour of granting such permission in this case?

  3. If the Court would like to exercise its discretion in favour of BMG’s counterclaim, does it have the jurisdiction to grant a stay of the enforcement of the sum claimed by BMG pending the final determination of the counterclaim

  4. If the Court has jurisdiction to order a stay, should it exercise such discretion in favour of a stay case in this case?

Court’s decision



  1. Does the Court have jurisdiction to permit a counterclaim?

BMG argued that the Court has jurisdiction to permit a counterclaim because in relevant aspects, SSC’s claim is a claim under the Part 8 procedure and that CPR 8.7 therefore applies.


CPR 62.18 (3) provides that the enforcement proceedings will continue as if they were an arbitration claim once the parties to whom the arbitration claim form is served had filed an acknowledgment of service.


BMG received a claim and filed an acknowledgment of service. CPR 8.7 states that where the Part 8 procedure is used, Part 20 (counterclaims and other additional claims) applies unless the party has not sought the Court permission.


SSC argued that they brought the claim under CPR Part 62.18 and it is therefore not a Part 8 claim. CPR 62.18 (3)’s reference to the claim continuing as if it were and arbitration claim under Section 1 does not import CPR 8.7.


Service of a claim form does not mean that all features of Part 8 are applicable to an application to enforce an award.


Moreover, reference to proceedings ‘continuing’ as if an arbitration claim under section 1 does not refer back to CPR 62.3 (1) which is concerned which is concerned only with starting and arbitration claim.


The judge explained that even if reference to Section 1 in CPR 62.18 (3) should be interpreted as providing for the application of some aspects of Part 8, there are further grounds for doubting that it was intended to import all the provisions of Part 8, particularly CPR 8.7.


Reference was drawn from the case of Union Fenosa Gas SA v Egypt [2020] in which it was held that the use of Part 8 to register an ICSID award in the High Court under CPR 62.21 was a procedural device to generate a claim number and to allow the claim to be determined on the basis of written evidence only.


It did not import Part 8 in its entirety. It was therefore concluded that neither counterclaims nor Part 20 claims are consistent with the purpose of CPR 62.18.

  1. Should the court permit a counterclaim if there is jurisdiction to do so?

Butcher J went on to provide commentary on this issue even he had held that the BMG could not bring a counterclaim.


SSC’s argument that there was no claim for BMG to defend and counterclaim against since their application was only for leave to enforce the Award and not an attempt to enforce the Award was rejected.


This is because SSC’s claim form actually referred to a possibility to make a further claim or relief in addition to the leave to enforce the Award.


In considering how the Court would exercise any such discretion if it existed, the judge noted the following as the relevant points to consider;

  • that the CPR envisages Part 20 proceedings to be in exception circumstances even on the ordinary run of Part 8 proceedings.

  • the intention of CPR 62.18 to encourage a summary and essentially quasi-administrative enforcement of awards under the New York Convention. Permitting counterclaims or additional claim would only complicate the enforcement process.

  • Whether the existing claim and counterclaim had a connection, the effect of admitting the counter claim and how appropriate it was for the Court as a forum to determine the counterclaim.

It was concluded that the BMG’s counterclaim has a limited connexion to the English jurisdiction. The English jurisdiction was only currently involved because SSC was seeking to enforce the Award in England.


This alone in inadequate to for the Court to permit a counterclaim and assume jurisdiction over BMG’s piracy claim. Therefore, even if there was jurisdiction to permit a counterclaim in this case, it was held that, the court would reject it.

  1. Does the court have jurisdiction to grant a stay of enforcement of the Award?

Butcher J did not decide on this issue but expressed his disagreement with SSC’s case and authorities in trying to argue the limits of the Court’s jurisdiction.

  1. Should the court grant a stay of execution?

The judge stated that had he permitted the counterclaim to be brought, he would have refused a stay of enforcement, he explained that the Court will rarely, if ever, find it appropriate to grant an order to stay execution in respect of a Convention Award.


Additionally, he noted that there was not adequate connection between the counterclaim and award, SSC would be prejudiced by the grant of stay given that it is a small company which is suffering hardship due to the non-payment of the Award and lastly there is insufficient evidence and no application for a free standing preservation order.


In conclusion, BMG’s application was dismissed.


Summary


The decision in this case closed the perceived loophole in the CPR that may have allowed a party to resist enforcement of an arbitral award.


The judgement also provided some useful guidance on the circumstances in which the court considers it has jurisdiction to permit a stay of enforcement of an arbitral award.


Applications to enforce an arbitral award under CPR 62.18 are intended to be a simple method to permit the enforcement of an award already made.


CPR62.18 is intended to give effect to the New York Convention and the court is required to recognise the pro-enforcement bias which may swing marginal decisions.


Consideration should be made to the strength of the party’s case to enforce an arbitral award.


The Court’s decision confirmed previous authorities which held that the Part 8 procedure does not by default apply in its entirety to all arbitration claims but rather in exceptional cases.


Although this may create uncertainty around the exceptional cases in which Part 8 is applicable, it provides confidence in the English Court’s priority in the efficient enforcement of New York Convention awards without re considering underlying claims or other disputes between the parties involved which may be outside the scope of the award.


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