Chenco Chemical Engineering And Consulting GmbH v DO Fluoride Chemicals Co Ltd 2021 EWHC 1052 Comm - 26 April 2021
Country
Year
2021
Summary
Introduction
The Claimant in these proceedings ("Chenco") claims to be owed certain sums by the Defendant ("DFD") pursuant to the terms of a Final Award issued by a Swiss-seated ICC Arbitration Tribunal and dated 15 May 2013 ("the Award").
In the Award, the tribunal held that in breach of contract DFD had impermissibly used Chenco's proprietary technology (broadly speaking, its designs for the creation of an Aluminium Fluoride ("AlF3") production plant) to construct four new plants for the production of AlF3 at its facilities in Jiaozuo, China. Aluminium Fluoride is a chemical which is itself used in the production of aluminium.
As a result, the tribunal in the dispositive part of the Award ordered DFD to pay various sums. These included, in paragraph 414 of the Award, an order for payment of €100,000 per month in contractual liquidated damages to Chenco from 23 March 2011, and on the 23rd of each following month, for as long as it continued to use "Claimant's Technology," and with a backstop date of 31 August 2016. The expression Claimant's Technology was defined in paragraph 192 of the Award. In this judgment, I shall use the expression "Chenco's Technology" (which has at times been used in these proceedings) to describe the same thing.
Paragraph 417 of the Final Award obliged DFD to pay Chenco interest on the sums awarded under paragraph 414 "until the date of payment". Alongside the sums which DFD was ordered to pay, Chenco was ordered to pay certain monies to DFD as reimbursement of fees and expenses.
In December 2018, Chenco applied to the Commercial Court for permission to enforce the award pursuant to section 101 of the Arbitration Act 1996. That application was made, in accordance with the applicable rules in CPR 62.18, without notice to DFD. The evidence in support of that application, in the witness statement of Ms Sophie Eyre (a partner in the firm of Bird & Bird, Chenco's solicitors) was that no payment had been made in respect of the Award by DFD or anyone or any entity on its behalf. No recoveries had been made in any jurisdiction including in China, where enforcement proceedings had taken place and where in May 2017 the Chinese Court had granted permission to enforce some of the sums awarded under the Award.
Moulder J granted the application, giving DFD liberty to apply to vary or discharge the order. DFD so applied, and the matter then came before Sir Michael Burton GBE on 22 June 2020. At that time, DFD was represented by solicitors, Steptoe & Johnson UK LLP, and leading and junior counsel. The application to set Moulder J's order aside was made on a number of grounds. These included an argument that the question of whether DFD had continued to use Chenco's Technology required a further factual inquiry.
Sir Michael Burton considered that he was not in a position to decide the factual question of whether DFD had continued to use Chenco's Technology after the date of the Award. He therefore set aside the order of Moulder J, but granted judgment to Chenco in the sum of €2,903,255.53 which represented the balance of sums owed to Chenco in respect of the period up to 23 April 2013 after setting off the sums owed to DFD under the Award. The order provided for judgment rate interest to accrue on the judgment debt of €2,903,255.53. Chenco says that this sum has not been paid, but it is not the subject of the present proceedings.
In relation to the period after 23 April 2013, the judge's order provided:
- "The extent to which any sums are owed to the Claimant for the period after 23 April 2013 pursuant to paragraph 414 and 417 of the Final Award is to be the subject of a further trial in the Commercial Court, pursuant to the directions attached at Schedule A".
During the course of argument at the hearing, the judge had referred to this further trial as an "enquiry". His directions in Schedule A provided for the service of pleadings, starting with DFD's Statement of Case, followed by standard disclosure by DFD and the sequential service of factual evidence. There was no requirement for disclosure by Chenco, since the critical question, concerning the use of Chenco's Technology, depended upon facts and circumstances at DFD's facilities, to which Chenco did not have access. The parties were granted permission to serve expert evidence, with directions for reports, a joint memorandum and responsive expert reports. The "enquiry of this matter" was ordered to be listed for a hearing with a time estimate of 3 days including pre-reading.
There was no appeal from any aspect of Sir Michael Burton's order.
The present trial was therefore to determine whether the Court should enforce paragraphs 414 and 417 of the Final Award for the period May 2013 to August 2016, which turns on whether DFD continued to use Chenco's Technology.
...
Conclusion
Chenco is entitled to judgment on the Award, in the sum of € 4,000,000, together with interest thereon as awarded by the tribunal.