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 [ENGLISH]

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 [ENGLISH]

On 19 March 2020 the English Court of Appeal determined that English courts do have jurisdiction under s44(2)(a) of the English Arbitration Act (“the Act”) to issue an order compelling a non-party to an arbitration agreement to give evidence in support of arbitration proceedings seated both inside and outside England and Wales, overturning the High Court judgment.

The First Instance Decision

The court acknowledged that the wording of s44 of the Act might suggest that s44(2)(a) could apply to give the court the power to issue an order compelling a non-party to give evidence in support of a foreign seated arbitration.
However, given the decisions in earlier cases on s44, this was not a simple question.

The Commercial Court referred extensively to the decisions in Cruz City Mauritius Holdings v Unitech Limited [2014] EWHC 3704 (Comm) (“Cruz City”) and DTEK Trading SA v Morozov [2017] EWHC 1704 (Comm) (“DTEK”). In light of these authorities, the Court determined that s44(2)(a) was confined to parties to the arbitration agreement.

This, due to the following reasons:

  • s44 was stated to be subject to contrary agreement between the parties;
  • a number of other subsections pointed towards an intra-parties interpretation of s44 as a whole (such as subsections (4), (5), (6), and (7));
  • if Parliament had intended to permit the court to make third party orders in support of arbitrations around the world, it would have expressly said so in the Act; and
  • a difference in treatment between different subsections of s44 was unattractive without a difference in language.

Overruling the First Instance Decision, the Court of Appeal unanimously found that English courts do have jurisdiction under s44(2)(a) to compel a non-party to give evidence in support of an arbitration.

Lord Justice Flaux found that the wording of section 44(1) when read with section 2(3) and the definition of “legal proceedings” in section 82(1) makes it clear that provided the other limitations built into the section are met, the English Court has the same power under s44(2)(a) in relation to arbitrations as it has in relation to civil proceedings before the High Court. There was no justification for limiting the subsection to domestic arbitrations.

Ms Welsh, counsel of the non party, submitted that if the party has the power to make an order agains a non-party under s44(2)(a), it is anormal that there is a limitation in s44(7) on the non-party rights of appeal.
The court found that there was force in Ms Welsh’s submission, however the Court found that the anomaly was not enough to justify the restrictive approach.

This leads to the anomalous situation where the English Court’s powers to order a witness to give evidence in support of arbitration are wider than those in respect of foreing court proceedings where it cannot make a similar order unless there is an inwards letter of request.

This power will be a very important tool for the English Court in order to support domestic and foreign arbitrations.

In conclusion parties should ensure that the scope of their proposed order is narrow, confining the topics on which they seek evidence from a non-party to the issues actually in dispute in the arbitration.