International Commercial Arbitration

Assignment

Case Summary on:

“CE International Resources Holdings LLC v. Yeap,

Supreme Court of British Columbia (BCSC), Docket S126437
Case Date 1 October 2013”

Submitted to:

Md. Khairul Islam

Faculty, Department of Law
East West University

Submitted by:

Muntaka Nusrat Khan (2019-2-87-009)

LL.M (Summer 2019)

Department of Law
East West University

Submitted on: 27th July, 2019

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 This is a judgment declared by the Supreme Court of British Columbia (BSCS)
by Hon’ble Justice Fischer on 1st October 2013 between the following parties:

Petitioner- CE International Resources Holdings LLC

Respondent- YEAP

The Petitioner, CE International Resources Holdings (CEIR), filed this application for

recognition and enforcement of a foreign Arbitration Award issued on 24 th May, 2013 by

an Arbitration Tribunal in the United States under the International Commercial

Arbitration Act, RSBC 1996, c 233 (the ICAA) and the Foreign Arbitral Awards Act,

RSBC 1996, c 154 (the FAAA).

FACTS AND BACKGROUND OF THE CASE

An international commercial arbitration was initiated by the petitioner in New York. The

arbitration arose from two contracts and in both the contracts the petitioner was one of

the parties, and both the contracts had arbitration clauses. The petitioner (hereinafter

referred to as C) in the arbitration, claimed breach of contract, fraud and conversion

against Mr. Yeap (hereinafter referred to as Y) and two corporate entities, S.A. Minerals

Ltd. (hereinafter referred to as S) and Tantalum Technology Inc. (hereinafter referred to

as T) seeking damages of over $8 million USD, plus interest and costs.

C entered into a contract with S, where S would sell C a quantity of rare minerals at a

fixed price and C paid the money and performed his part of the contract. C entered into

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another contract with T, where T would buy the same rare minerals from C at a higher

price agreed between the parties. S never delivered the minerals to C under the first

contract and subsequently under the second contract, the minerals were not delivered and

T did not pay any money beforehand. C therefore, initiated the arbitration proceeding

against S and T, and later on found that S and T belonged to the same entity as the

signatory for both the contracts were Y and hence added Y as a party.

On September 14, 2012, C filed this petition against Y, seeking an ex parte freezing order

which was granted by this Court and Y did not apply for setting aside that freezing order.

On October 26, 2012, the arbitrator gave an interim award in the arbitration (the Interim

Award) granting a similar relief of freezing order issued by this Court; it further asked Y,

S and T to provide security of $10 million USD and froze assets pending the security

being provided. None of the parties provided any security against the freezing order. The

arbitrator also found that Y was fraudulent in his conduct in performing the contracts. On

November 9, 2012, further order was issued by the arbitrator directing Y to provide a

further and better list of assets, verified by affidavit, within seven days (by November 16,

2012). Y never conformed to this award and on 13 th December 2012, C filed an

application before this court to declare Y to be in contempt of court and the application

was adjourned. On December 10, 2012, United States District Court of New York passed

an order confirming the Interim Award and subsequently found Y to be in contempt of

Court again and directed Y to appear in a deposition which he failed to do. On January

24, 2013, the New York court found Y to be in civil contempt for intentionally refusing

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to comply with the order dated December 10, 2012 and on February 5, 2013, this Court

also found Y (Mr. Yeap) to be in contempt of the order dated November 9, 2012.

C obtained a final award on May 24, 2013 in the United States against Y and T jointly

which was confirmed in the United States District Court, Southern District of New York.

Later, C came to this court for recognition and enforcement of that same final award

under Section 3 of the ICAA read with FAAA.

ISSUES

The main legal issue in this case is whether an award can be enforced against a person

who was not a party to the arbitration agreement but was accepted and present as a party

to the arbitration; especially where the arbitrator has decided on this exact issue and

issued the final award.

LEGAL ANALYSIS

C made an application under section 35(1) ICAA which provides that arbitral award

(made in any state) must be enforced on application. The Supreme Court of British

Columbia thus had the jurisdiction to enforce the final award dated May 24, 2013. The

petitioner also provided the required copies of the arbitration agreement and the final

award and hence has proved his case.

Y on the other hand applied to the court to refuse recognition and enforcement of the

final award under Section 36(1)(a)(iv) and 36(1)(b) of the ICAA. Section 36 of the ICAA

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incorporates the exact provision of Article 5 of the New York Convention. The addition

of Y as a party to the arbitration was met with strong objection from Y as he claimed that

he was not a party in either of the contracts subject to the arbitration. Y thus raised this

issue as a ground alongside procedural fairness. ICAA and the FAAA follows the

Convention as well as the UNCITRAL Model Law and hence, the burden lies with the

applicant; which means that Y had to satisfy the court that he had legal grounds as set out

in section 36(1)(a)(iv) and 36(1)(b) for the court to refuse to recognize or enforce the

final award.

Under section 36(1)(a)(iv), an award can be refused if it was dealing with a dispute not

within the submission to arbitration. Here, the arbitrator had jurisdiction as given by the

arbitration agreement to decide on the issue of adding Y as a party as Y himself signed

the arbitration agreements. Furthermore, the court emphasized that an arbitrator’s role in

an arbitration proceeding and his jurisdiction can be determined by the arbitrator himself

and it was not for the Court to determine.

Y argued that he had signed the contracts in his personal capacity and the arbitrator was

wrong in determining that Y was a party to both the contracts as he was merely a

signatory or a signing authority and hence, not a party to the agreements. The arbitrator

adjudicated this on the principle of ‘lifting the veil’ and he found it proper in piercing the

corporate veil since he found that Mr. Y would benefit from the fraudulent transactions

from both the contracts in his personal capacity. Further, as Y signed on the contracts on

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behalf of S and T, the doctrine of estoppel prevents him from denying that he was a party

to the contract. The court thus ruled that it is not for the court to determine the status of Y

as a party to the arbitration as this issue was raised in the arbitration itself and after

extensive hearing the arbitrator found that Y was a party to the contract.

Y also did not raise this issue in any of the previous applications or earlier stage in court,

and as a result he is again estopped from raising this issue afresh in the final stage of

enforcing the award.

Y also relied on Javor V Francoeur; 2003 BCSC 350 to rely on his case. The Court here

found material facts of Javor and this case to be different as in the former, F was not a

party to the arbitration whereas in the latter case before the court today, Y was a party to

the arbitration and hence this Court has reasons to not follow that precedent.

Hence, this final award does not fall within the exception of section 36(1)(a)(iv) and thus

cannot be refused. The court will not interfere in what the arbitrator has already decided

as it will undermine the whole system of international commercial arbitration and the

faith in business arbitration.

Secondly, under article 36(1)(b)(ii), a court may refuse to enforce an award if it is against

public policy. Mr. Y argued that as S was a Thai limited partnership, he had legal right to

represent a Thai counsel to explain the Thai law and hence the procedure was not fair for

him. The arbitrator found this irrelevant as Y had a US counsel by then and hence the

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Thai counsel’s representation was not necessary. Furthermore, the arbitrator relied on

British Island Law as a procedural law of the arbitration proceeding and the New York

Law as the substantive law of the contracts. Thai law was not considered as a factual

ground anywhere in the final award and hence there was no issue of unfairness against Y.

The Court did not go beyond the arbitrator’s findings and as a result, found that there are

no laws in British Columbia which would render this award to have been made against

public policy.

HELD

Y was thus unable to prove his case on valid legal grounds and the Court gave judgment

in favor of C and enforced the final award and awarded costs against Y.

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