Obtaining witness evidence in support of overseas arbitrations in England

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Sam Roberts
Cooke, Young & Keidan, London
sam.roberts@cyklaw.com

The English court’s ability to exercise its supportive powers in aid of arbitrations has been the subject of considerable jurisprudence since the enactment of the Arbitration Act 1996.¹ One of the unsettled areas of controversy has been to what extent, if at all, the court can make orders against non-parties to the arbitration. Although a recent trend of first instance decisions all held that the court could not, the Court of Appeal’s decision in A and B v C, D and E² steers in a very different direction.

Section 44

The provision which principally empowers the court to exercise its supportive powers in aid of arbitrations (whether seated in England or abroad) is section 44. This section exhaustively lists the matters about which the court can make an order for the purposes of arbitral proceedings, which are:

• the taking of the evidence of witnesses;
• the preservation of evidence;
• making orders for the inspection, photographing, preservation, taking of samples, etc, of property which is the subject of the proceedings;
• the sale of any goods the subject of the proceedings; and
• the granting of an interim injunction or the appointment of a receiver.

Case law before A v C

Since the Arbitration Act 1996, only a small number of cases have addressed the issue of whether the court can make an order against a non-party to the arbitration. Most frequently this issue has arisen in the context of applications for permission to serve the application outside the jurisdiction.

Among the decisions that tackled the subject most extensively was that of Mr Justice Males (as he then was) in Cruz City 1 Mauritius Holdings v Unitech Ltd and Others.³In that case, the applicant applied for a freezing order against several entities who were not parties to the arbitration. Although the case was decided on jurisdictional grounds (in that Males J found that the jurisdictional ‘gateway’ relied on by the applicant could not be used against non-parties), he went on to consider whether section 44 itself gave the court jurisdiction to make orders against non-parties – ultimately concluding that it could not. Males J placed emphasis on the ‘consensual nature’ of arbitration and textual clues within the section in reaching this conclusion. A few years later, Ms Sara Cockerill QC (as she then was) followed Males J’s reasoning in DTEK Trading SA v Morozov and Another,⁴ a case where the applicant had sought orders for the preservation of evidence against two non-parties, both outside of the jurisdiction. Shortly before A v C was heard at first instance, this line of reasoning was again followed by Mrs Justice Moulder in Trans-Oil International SA v Savoy Trading LP and Another.⁵

A v C at first instance

The present case was an application under section 44(2)(a) to take evidence by way of deposition from a non-party witness resident in England. The underlying arbitration, ongoing in New York between A and B on the one hand, and C and D on the other, concerned the sale of A and B’s interests in a stake in a Central Asian oil field and the proper quantification of proceeds arising therefrom. E had at times material to the arbitration been the lead negotiator for a consortium of foreign oil companies to which A and B belonged.

The taking of evidence of witnesses is one of the exhaustive list of matters in respect of which a court can intervene to support an arbitration. The ability of the court to make orders under section 44 is, however, expressly limited to what it can do in English court proceedings. Subsection (1) of section 44 reads as follows (emphasis added):

‘(1)       Unless otherwise agreed by the parties, the court has for the purposes of and in relation to arbitral proceedings the same power of making orders about the matters listed below as it has for the purposes of and in relation to legal proceedings.’

Unlike the recent decisions discussed above, the applicants in this case did not face the additional hurdle of needing permission to serve out of the jurisdiction: E was resident in England and A and B could serve on him as of right. For the applicants, though, that was where the good news ended: Mr Justice Foxton decided that he should follow the decisions above and held that the court lacked jurisdiction to make an order against E as a non-party.

A v C in the Court of Appeal

The applicants appealed to the Court of Appeal on two bases – the narrow basis, that regardless of the other subject matter covered by section 44, the provision regarding taking evidence from witnesses allowed orders against non-parties; and the broad basis, that section 44 per se allowed orders against non-parties.

In a unanimous judgment, the appeal was allowed on the narrow ground. Notably, one of the members of the appellate tribunal was (the now) Lord Justice Males, who had decided against the applicant in Cruz City.⁶

The Court of Appeal’s judgment parts company with the reasoning that came before which had placed great emphasis on the privity of arbitration, and focuses instead on interpreting the clear meaning of the legislation. Among the persuasive reasons given by the Court was the distinction in the Act drawn between parties and witnesses. It will certainly be rare in modern commercial arbitrations for parties also to be witnesses. Section 38(5) furthermore even uses ‘party or witness’ in the same sentence, demonstrating a clear parliamentary intent to delineate between the two concepts.

In Lord Justice Males’ words: ‘Thus on the plain language of the section, if the court is to have the same powers of making orders about the taking of a witness's evidence for the purpose of an arbitration as it would have for the purpose of High Court proceedings, that must include the power to order a deposition’.

Wider implications

Although the Court of Appeal was careful to limit its reasoning to section 44(2)(a), there are clearly wider implications for the other supportive powers listed in section 44. For instance, in circumstances where the Court stressed that the words ‘the same powers’ meant exactly what they appeared to mean, the full range of remedies available in litigation before the English courts should serve as a good starting point for arbitrating parties looking to obtain relief against non-parties. It is worth bearing in mind, however, that in all orders under section 44, the court does retain a discretion to refuse relief under section 2(3) if the fact that the arbitration is seated abroad makes it inappropriate to make the order. This is more likely to be the case the less the non-party has to do with England & Wales.

Sam Roberts acted for the successful appellants in the recent Court of Appeal judgment, A and B v C, D and E.

Notes

1. All statutory references in this article are to sections of this Act.
2. [2020] EWCA Civ 409.
3. [2014] EWHC 3704 (Comm).
4. [2017] EWHC 94 (Comm).
5. [2020] EWHC 57 (Comm).
6. See n 3 above.

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