Abuse of process before English tribunals

In Union of India v Reliance Industries Limited and another [2022] EWHC 1407, the English High Court considered the degree to which, regardless of the substantive law to be applied by it, an English seated arbitral tribunal could still apply English principles of abuse of process to preclude a party from raising arguments which it should have raised earlier.

Background

The Government of India and two energy contractors, Reliance and BG, concluded certain exploration and production sharing contracts (PSCs) relating to Indian oilfields. The PSCs are governed by Indian law, with disputes being referred to London-seated UNCITRAL arbitration.

Disputes arose under the PSCs and resulted in long-running (still ongoing) proceedings involving numerous awards and applications to the English courts.

This, latest, instalment of the saga concerned a partial award made by the tribunal in 2021 under which Reliance/BG had been awarded some USD 111 million. That sum related to the balance of certain development costs that Reliance/BG had claimed were owed to them after an earlier (2016) award had awarded some of them. As a threshold defence to the claims for the balance, the Government had, for the first time, relied on provisions of the Indian Constitution. By contrast, no such defence was deployed in the run up to the 2016 award even though it could have equally applied. The tribunal had, therefore, and on the basis of English Henderson abuse of process principles, rejected the arguments as they should have been raised at that earlier stage.

The Government challenged the 2021 partial award in the High Court; one of its grounds being that, under s.69 Arbitration Act 1996, the tribunal had committed an error in law in that this English law principle had no application to an Indian law governed dispute and that, even if it did, it should have a more limited application in the arbitration context.

The Court’s findings

As part of the Government’s challenge under s.69, the Court had to determine whether the tribunal’s decision was “obviously wrong”. On this issue it disagreed with the Government and upheld the tribunal’s approach. In summary, its conclusions were:

• Abuse of process is a matter of procedure and follows the law of the seat, not the substantive law of the dispute. The Court applied the decisions of the UK Supreme Court in Virgin Atlantic and Takhar which characterised the Henderson principle as a procedural power rooted in the court’s wider jurisdiction to protect its process from wasteful and duplicative litigation. Consequently, there was no error in the tribunal’s application of this English procedural rule to the London-seated arbitration, regardless of the proper law of the contract.
• Abuse of process is applicable to both arbitration and court proceedings; the power to guard against abusive and duplicative proceedings applied equally to an arbitral tribunal, and was encapsulated by s. 33(1) of the Arbitration Act (which requires a tribunal to act fairly and avoid unnecessary delay or expense).
• Abuse of process can apply to all stages of the arbitration process; in this respect the Court rejected the Government’s argument that abuse of process should only apply to preclude the introduction of new claims (as opposed to defences) and where those claims should have been raised in, separate, earlier proceedings (as opposed to an earlier stage of the same proceedings). The doctrine was meant to limit abusive and duplicative proceedings, however they might arise.

Key takeaways

• The decision confirms that the concept of abuse of process applies to English seated arbitrations (not just English court proceedings), and that it is a procedural rule so is capable of application irrespective of the governing law of the dispute.
• A party may be precluded from raising arguments not only where there are multiple sets of proceedings, but multiple stages within the same proceedings. Parties to arbitrations should carefully consider their arguments and look to bring their entire case forward at an appropriately early stage.  Where new arguments are sought to be raised, parties should be ready to demonstrate that they arise as a result of a change of circumstances or new information that was not available at an earlier stage of proceedings.
• Interestingly, notwithstanding its finding that the Government’s arguments amounted to an abuse of process, it appears that the tribunal had nonetheless gone on to consider (and reject) the substantive arguments in the interests of completeness. It may be that tribunals would err on the side of caution and take a similar, comprehensive approach – but arguments of abuse of process should nonetheless be raised and relied upon where available – there is a risk of cross-estoppel or waiver of such objections if they are not raised at the earliest opportunity.