This is the Defendant's ("Mr McNally's") application to set aside part of the order made by Cockerill J on 18 April 2021 ("the Cockerill Order") granting the Claimant ("Mr Sodzawiczny") permission under s.66 Arbitration Act 1996 to enforce the Third Partial Award of 9 December 2020 ("the Award") "in the same manner as a judgment or order of the court". Mr McNally seeks to set aside that part of the Cockerill Order which applies to "so much of the [Award] as relates to the Property".
"The Property" is a property in Mallorca which gave rise to one set of the issues in an LCIA Arbitration (LCIA Arbitration no 183969 - "the LCIA Arbitration") involving claims by Mr Sodzawiczny against Mr McNally, Dr Gerald Martin Smith and Mr Simon Cooper, and for which Mr Stuart Isaacs QC was appointed the sole arbitrator ("the Arbitrator").
In the LCIA Arbitration, Mr Sodzawiczny alleged that he had agreed with Mr McNally that the Property would be acquired for his benefit by a Spanish SL (originally called McNally Properties SL, later renamed Treehouse Properties SL, and which I shall refer to as "Treehouse Spain") which was in turn owned by an Isle of Man Company (McNally Properties (SP) Limited, later renamed Treehouse Investments Limited, and which I shall refer to as "Treehouse IOM") the shares in which were held by Mr McNally. The relief sought by Mr Sodzawiczny in relation to the Property was as follows:
i) a declaration that Mr Sodzawiczny was the ultimate beneficial owner of the Property;
ii) a declaration that Mr McNally held and holds on trust any powers or interests he had or has, directly or indirectly, in relation to the Property on trust for Mr Sodzawiczny; and
iii) an order that Mr McNally transfer or do whatever is necessary to effect the transfer of the Property or its indirect ownership to Mr Sodzawiczny.
There was a live issue between the parties in the LCIA Arbitration as to whether the factual basis for the declarations sought was established on the evidence. There was also a dispute as to whether Mr McNally was (any longer) in a position to effect a transfer of Treehouse Spain (which was the legal owner of the Property). It was Mr McNally's case that his shareholding in Treehouse IOM was diluted to 0.2% on 25 September 2014, as a result of an issue of shares to GAC Holdings Limited ("GACH"). However, two months later, Mr McNally executed documentation in Mallorca which, if the transaction had completed, would have transferred 100% of the shares in Treehouse Spain to Mr Sodzawiczny.
It is also relevant to note in this context that Mr Sodzawiczny advanced a number of serious allegations against Mr McNally in the LCIA Arbitration. Those allegations were essentially upheld by the Arbitrator who found that Mr McNally was adept at using trusts, similar structures and nominee arrangements to hide the true beneficial ownership of entities in the ownership structures he established.
The Arbitrator found that Mr McNally had procured the acquisition of the Property for Mr Sodzawiczny and holds or held any interest in the Property on trust for Mr Sodzawiczny (Award, ). The Arbitrator noted that no issues had been raised by Mr McNally (who was represented in the LCIA Arbitration, as he is now, by Mr Bajul Shah) as to the terms of the declarations and orders sought. The Arbitrator considered the issue of relief at Award, -: