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Dallah: Conflicting Judgments from the U.K. Supreme Court
Publication and the Paris Cour d'Appel
Journal of International Jacob Grierson; Mireille Taok
Arbitration (*)
Abstract
Jurisdiction In Dallah v. Pakistan, the English and French courts reached contradictory views on the
enforceability of an award rendered against the Government of Pakistan: the English courts
United Kingdom held that an ICC tribunal sitting in Paris had been wrong to assume jurisdiction over the
France Government of Pakistan, a non-signatory of the relevant arbitration agreement; the Cour
Saudi Arabia d'appel de Paris, by contrast, upheld the arbitral tribunal's finding that it had jurisdiction. This
Pakistan is despite the fact that the English and French courts all sought to apply French law to this
question. This article examines the reasons for these contradictory views, including the
fundamentally different legal cultures of England and France.
Court
Supreme Court of the United I Introduction
Kingdom On November 3, 2010, the U.K. Supreme Court ruled (on an appeal from the English Court of
Appeal) that an ICC award rendered in Paris could not be enforced in England against the
Government of Pakistan (“the GoP”) because it was not a party to the arbitration
Arbitrators/Judges agreement, despite an arbitral tribunal (“the Tribunal”) having reached precisely the
opposite view. (1) Just over three months later, on February 17, 2011, the Cour d'appel de
Lord Hope, judge Paris, rejecting the GoP's annulment application, upheld the Tribunal's finding that the GoP
Lord Saville, judge was a party to the arbitration agreement. (2)
Lord Mance, judge
Lord Collins, judge These two decisions, and the interplay between them, raise a number of questions,
Lord Clarke, judge including the following:
(1) Did the Supreme Court perform a different, more interventionist type of review than
the Cour d'appel? Did one court undertake a rehearing and the other a mere review of
Case date the Tribunal's decision on jurisdiction?
15 November 2010
P 407 (2) If so, which is the better approach? Is the Supreme Court's or the Cour d'appel's
P 408 approach more “pro-arbitration”?
Parties (3) Did the English courts, on the one hand, or the Tribunal and the Cour d'appel, on the
other, correctly apply the French test for determining whether the GoP was a party to
Appellant, Dallah Real the arbitration agreement?
Estate and Tourism Holding
Company (4) What does the difference in the decisions of the English and French courts reveal
Respondent, The Ministry of about the different legal cultures of England and France?
Religious Affairs, These questions will be addressed in the commentary section below, following a brief
Government of Pakistan summary of the background, of the Tribunal's jurisdiction decision, of the three judgments
of the English courts and of the judgment of the Cour d'appel.
Link(s) to Related Case(s) II The Background
CASE: Dallah v. Pakistan Dallah Real Estate & Tourism Holding Co. (“Dallah”) had in July 1995 entered into a
Memorandum of Understanding (MoU) with the GoP to acquire land in Mecca and construct
housing on that land for Pakistani pilgrims performing Hajj and Umra. In the end, however,
Bibliographic reference it was a trust created by the GoP, the Awami Hajj Trust (“the Trust”), which signed the
agreement with Dallah for the construction of the housing in Mecca (“the Agreement”) in
Jacob Grierson and Mireille September 1996. The government Ordinance establishing the Trust lapsed at the end of
Taok, 'Dallah: Conflicting 1996, with the result that the Trust ceased to exist just three months after the Agreement
Judgments from the U.K. had been signed.
Supreme Court and the Paris
Cour d'Appel', Journal of On January 19, 1997, the Secretary of the Ministry of Religious Affairs (MORA) of the GoP, who
International Arbitration, had also been the Secretary of the board of trustees of the Trust, wrote to Dallah on MORA's
(© Kluwer Law International; headed notepaper to give notice of termination of the Agreement on the ground that
Kluwer Law International Dallah had failed to submit specifications and drawings for approval by the Trust; and on
2011, Volume 28 Issue 4) pp. the following day (January 20, 1997) he commenced proceedings on behalf of the defunct
407 - 422 Trust before the courts of Islamabad. Those proceedings were quickly brought to an end on
the ground that the Trust had ceased to exist, and were replaced by new proceedings
(commenced on June 2, 1998) in the name of the GoP.
Dallah, meanwhile, had commenced arbitration under the ICC Rules on May 19, 1998. Since
the Trust no longer existed and Dallah had not obtained a guarantee from the GoP, it now
needed to argue that the GoP was a party to the Agreement which had been signed by the
Trust (including the arbitration agreement). The Tribunal, sitting in Paris, held (in a first
partial award rendered on June 26, 2001) (“First Partial Award”) that the GoP was indeed a
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party to the Agreement. It reached this conclusion by applying “those transnational
general principles and usages reflecting the fundamental requirements of justice in
international trade and the concept of good faith in business.” Its reasoning in that respect
will be summarized below. (3) A second partial award and then a final award (on January
19, 2004 and June 23, 2006, respectively) followed, finding for Dallah on the merits and
awarding it a total of U.S.$20,588,040.
P 408
P 409
Dallah sought to enforce the final award in England, and (following an initial ex parte order
granting it leave to do so) failed at every step: on the inter partes proceedings before
Aikens, J., in the High Court (August 1, 2008), before the Court of Appeal (July 20, 2009), and
before the U.K. Supreme Court (November 3, 2010). These judgments, which all found that
the GoP was not a party to the arbitration agreement, will be summarized below.
Meanwhile, Dallah also took steps to enforce the final award in France. It obtained an
initial order from the Tribunal de grande instance de Paris granting it leave to do so on
August 24, 2009. In order to prevent such enforcement, the GoP on December 21, 2009
applied to the Cour d'appel de Paris to annul the three awards on the ground that the
Tribunal had erred in finding that it had jurisdiction over the GoP. On January 25, 2010, the
Supreme Court refused Dallah's application to stay the English proceedings pending the
outcome of the French application. On February 17, 2011 (shortly after the Supreme Court
had issued its judgment), the Cour d'appel held that the creation of the Trust was merely a
formality and that the GoP was involved in the economic transaction and had behaved as
the true Pakistani party during the negotiation, performance, and termination of this
transaction. The Cour d'appel therefore rejected the GoP's annulment application. This
judgment will also be summarized below.
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existing commercial relations. I have to decide whether the relevant party was aware of
the existence and scope of the arbitration clause by which it is said that party is bound. I
must also bear in mind the fact that the relevant party sought to be bound in this case is a
state entity and that, if it were bound, it might thereby lose its immunity from suit and
enforcement. I must take account of the doctrine of good faith. In doing all this I have to
analyse the whole chronology, from beginning to end. (9)
Aikens, J., applied this test to the relevant facts, as summarized at column three of the
table in the Annex, infra. He thus concluded that the GoP was not bound by the arbitration
agreement:
On the evidence before me, my conclusion is that it was not the subjective intention of all
the parties that the GoP should be bound by the agreement or the arbitration clause. In
fact, I am clear that the opposite was the case from beginning to end. (10)
Aikens, J., then went on to reject two further arguments made by Dallah:
(i) that the GoP was estopped by the First Partial Award from denying that it was bound
P 410 by the arbitration agreement, in particular given the GoP's failure to challenge that
P 411 award before the French courts; and
(ii) that, because of the word “may” in section 103(2), the English court had residuary
discretion to enforce the final award even if the ground in section 103(2)(b) was
proved.
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(i) The Supreme Court rejected Dallah's argument that any enforcing court (other than
the court of the seat of the arbitration) should do no more than “review” the tribunal's
jurisdiction. The Supreme Court pointed out that this was inconsistent with “the
concept of transnational arbitration” that had “been advocated in arbitral circles,”
and with the notion that “[w]hat matters in real terms is where an arbitration award
can be enforced.” (17) It held that “[t]he tribunal's own view of its jurisdiction has no
legal or evidentiary value,” other than to place the burden of proof on the party
challenging jurisdiction. (18) Accordingly, “the starting point cannot be a review of the
decision of the arbitrators that there was an arbitration agreement between the
parties … The starting point in this case must be an independent investigation by the
court of the question whether the person challenging the enforcement of the award
P 412 can prove that he was not a party to the arbitration agreement under which the
P 413 award was made.” (19)
(ii) The Supreme Court also rejected the estoppel argument (see above). It held (with
reference to U.S., English, and French case law) that the concept of compétence-
compétence, although applied in slightly different ways around the world, always
allows some form of judicial review of the arbitrators' jurisdictional decision. (20) In
other words, an arbitral tribunal's decision as to the existence of its own jurisdiction
could never bind a party who had not submitted the question of jurisdiction to the
tribunal. To the contrary, “the English court is entitled (and indeed bound) to revisit
the question of the tribunal's decision on jurisdiction if the party resisting
enforcement seeks to prove that there was no arbitration agreement binding upon it
under the law of the country where the award was made.” (21)
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[C]ette implication du Gouvernement de la République, Ministère des Affaires Religieuses,
sans qu'il soit fait état d'actes accomplis par le Trust, comme son comportement lors des
négociations pré-contractuelles confirment que la création du Trust était purement
formelle, et que le Gouvernement du Pakistan, Ministère des Affaires Religieuses comme
Dallah en convenait s'est comporté comme la véritable parties pakistanaise lors de
l'opération économique. (26)
Accordingly, the Cour d'appel rejected the annulment application and ordered the GoP to
pay Dallah €100,000, a large amount by the standards of French litigation.
III Commentary
A Did the Supreme Court take a more interventionist approach than the Cour
d'appel?
P 414 As explained above, the three English courts all held that they had to conduct a full
P 415 rehearing, rather than a mere review of the Tribunal's First Partial Award, in order to
decide whether the GoP was bound by the arbitration agreement. And they, or at any rate
Aikens, J., and the Supreme Court, did exactly that, re-examining the facts of the case in
minute detail.
This is, at least in theory, no more than what the French courts do in similar circumstances.
Thus, in the well known Plateau des Pyramides case, the Cour de cassation held:
[S]i la mission de la cour d'appel saisie en vertu des articles 1502 et 1504 du Code de
procédure civile est limitée à l'examen des vices énumérés par ces textes, aucune
limitation n'est apportée au pouvoir de cette juridiction de rechercher, en droit et en fait,
tous les éléments concernant les vices en question. (27)
Similarly, in its recent decision in Abela, the Cour de cassation held:
[L]e juge de l'annulation contrôle la décision du tribunal arbitral sur sa compétence, qu'il
se soit déclaré compétent ou incompétent, en recherchant tous les éléments de droit ou
de fait permettant d'apprécier la portée de la convention d'arbitrage et d'en déduire les
conséquences sur le respect de la mission confiée aux arbitres. (28)
In Dallah, the Cour d'appel did not make clear whether it was following this same case law.
However, there is no reason to think that it was not doing so. It certainly did not make any
statement to the contrary.
But does the practice of the French courts correspond to the theory described above? We
believe that it does. Although the Cour d'appel's decision in Dallah may appear to be very
concise compared with the English courts' judgments, this does not mean that the Cour
d'appel did not carry out a full rehearing. Indeed, even in a judgment on an ordinary (i.e.,
non-arbitration-related) claim one would expect the French Cour d'appel to render a
judgment similar in length and detail to that in Dallah.
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(1) The English courts were influenced by what happened in the period leading up to the
signing of the Agreement: the deliberate replacement of the GoP (signatory of the
MoU) by the Trust (signatory of the Agreement); and the fact that Dallah was
represented by lawyers who could explain what this change would entail.
(2) The French court, by contrast, was influenced not only by what happened during the
negotiations of the Agreement but also by what happened in the period after signing
of the Agreement: the GoP's involvement in the performance of the Agreement; the
fact that the Trust did nothing to perform the Agreement; and the sending of the
termination letter by the Secretary of MORA on MORA's (rather than the Trust's)
headed notepaper.
There appear to be two reasons why the English courts were less influenced than the
French court by the post-signing events.
First, the detailed factual findings of the Supreme Court were different from those of the
Cour d'appel. For example, the Supreme Court held that the Secretary of MORA must have
sent the termination letter on the Trust's behalf rather than the GoP's, given that he issued
proceedings in the Trust's name the following day. (29) By contrast, the Cour d'appel found
that “tout indique dans ce courrier la qualité du Ministère au nom duquel il accepte la
résiliation du Contrat.” (30)
P 416
P 417
Second, the Supreme Court drew a distinction between (a) the common intention test (i.e.,
whether the parties intended the GoP to be a party to the arbitration agreement) and (b)
the direct involvement test that had been applied by the Tribunal (i.e., whether the GoP
had been directly involved in the negotiation and performance of the contract). Thus, Lord
Mance held:
[T]he French legal test … is that an international arbitration clause may be extended to
non-signatories directly involved in the performance of a contract: provided that it is
established that their contractual situation, their activities and the normal commercial
relations existing between the parties allow it to be presumed that they have accepted the
arbitration clause of which they knew the existence and scope.
In contrast, under the test stated by the tribunal … direct involvement in the negotiation
and performance of the contract is by itself said to raise the presumption of a common
intention that the non-signatory should be bound. The tribunal's test represents, on its
face, a low threshold, which, if correct, would raise a presumption that many third persons
were party to contracts deliberately structured so that they were not party. Asked about
the tribunal's test, M. Vatier did not consider it accurate enough, adding that “the
principles adopted were in general the principles that might be adopted in French law.
But they are too general.” I consider that Aikens J was therefore correct to doubt (in para.
148) whether the tribunal had applied a test which accords with that recognised under
French law. (31)
The distinction drawn here by the Supreme Court contrasts with the approach taken by the
Cour d'appel in Dallah, where it focused on the GoP's involvement in the negotiation and
performance of the Agreement. In other words, the Cour d'appel in Dallah treated the
involvement test as being part and parcel of the common intention test.
In this respect, there seems to have been an evolution in French case law. In 1990, in the
Orri case (cited by the Supreme Court) (32) the Cour d'appel held:
[S]elon les usages du commerce international la clause compromissoire insérée dans un
contrat international a une validité et une efficacité propres qui commandent d'en
étendre l'application aux parties directement impliquées dans l'exécution du contrat et
les litiges qui peuvent en résulter, dès lors qu'il est établi que leur situation contractuelle,
leurs activités et les relations commerciales habituelles existant entre les parties font
présumer qu'elles ont accepté la clause d'arbitrage, dont elles connaissent l'existence et la
portée, bien qu'elles n'aient pas été signataires du contrat qui la stipulait. (33)
By contrast, in its ABS judgment, rendered shortly before the High Court's decision in
P 417 Dallah, the Cour de cassation, without any reference to the presumption of acceptance,
P 418 held:
[L]'effet de la clause d'arbitrage international s'étend aux parties directement impliquées
dans l'exécution du contrat et les litiges qui peuvent en résulter. (34)
In later decisions, in addition to the involvement criteria, the Cour de cassation did invoke
the presumption of a common intention, at least indirectly. In the Suba case, for example,
the Court emphasized that the non-signatory “ne pouvait pas valablement soutenir avoir
ignoré la convention d'arbitrage.” (35)
And in the Abela case, it was held that the non-signatories:
[S]'étaient comportés comme les véritables actionnaires [et de ce fait] ne pouvaient
légitimement prétendre être étrangers à la clause compromissoire, dont ils ne pouvaient
ignorer la teneur et qu'ils avaient implicitement acceptée compte tenu de leur immixtion
dans le fonctionnement de la AAC [Albert Abela Corporation]. (36)
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The Cour d'appel in Dallah appears to have followed the ABS line of reasoning rather than
that taken in the other cases.
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Issue The factTribunal
Arbitral that had
High Court the project
Supreme does
Court Gouvernement du
Cour d'appel, Paris
the GoP was to contemplated
(Aikens, J.) not itself mean Pakistan … Certes
provide a that the GoP that the Dallah présentant
guarantee for would be a Government (or les dispositions
the U.S.$100 party to an Dallah) contractuelles à
million agreement to intended that ses avocats
financing that implement the the Government chargés de
was to be project.” should be party rédiger le Contrat
provided by an [H.C. para. 112] to the a mentionné le
affiliate of Agreement Trust comme la
Dallah. deliberately partie
[H.C. para. 109] structured so as pakistanaise,
The unilateral to be made, mais les
right of the after the Trust's négociations se
Trust to assign creation, sont déroulés
both its rights between Dallah exclusivement
and obligations and the Trust.” entre DALLAH et
under the [S.C. para. 42] le Ministère des
agreement to “[T]he structure Affaires
the GoP, without of the Religieuses, mais
the prior Agreement non le Trust,
consent of made clear that jusqu'à la veille
Dallah. the Government de la signature du
[H.C. para. 109] was distancing Contrat … au
itself from any demeurant, le 30
direct juillet 1996 M.
contractual Nackvi a indiqué
involvement.” clairement au
[S.C. para. 43] Président du
“Dallah was groupte DALLAH
throughout this que l'approbation
period advised de l'opération
by lawyers, Orr, économique
Dignam & Co.” envisagée relevait
[S.C. para. 43] du Ministère et lui
“[T]he firm well a fait savoir que
understood the le Premier
difference Ministre tiendrait
between an une réunion sur ce
agreement with point le 15 juin.”
a State entity, [Cd'a at 5, 6]
on the one
hand, and the
State itself, on
the other.”
[S.C. para. 133]
“[T]here was a
clear change in
the proposed
transaction from
an agreement
with the State to
an agreement
with the Trust.”
[S.C. para. 134]
“[T]he
Agreement
(including the
arbitration
agreement) was
plainly an
agreement
between Dallah
and the Trust,
and the
Government was
referred to in
the Agreement
only in its
capacity of
guarantor of
loans to the
Trust.”
[S.C. para. 136]
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Issue Arbitral Tribunal High Court Supreme Court Cour d'appel, Paris
(Aikens, J.)
Involvement of “During the “There is no “The “dans la période
GoP officials in lifetime of the reference to the Government's d'exécution
performance of Agreement the Agreement in position and contractuelle,
Agreement; Government either letter. In involvement in deux
absence of continued itself my view these all these fonctionnaires du
activity by Trust to handle do not exhibit respects is clear Ministère des
itself matters relating any subjective but Affaires
to the intention on the understandable, Religieueses qui
Agreement and part of the GoP and again adds n'avaient pas
to act and to be bound by little if any aucune qualité au
conduct itself in the Agreement, support to the sein du Trust, ont
a way which let alone any case for saying adresséà Dallah à
confirmed that common that, despite six semaines
it regarded the intention.” the obvious d'intervalle les 26
Agreement as [H.C. para. 113] inference to the septembre et 4
its own. Absence of contrary novembre 1996
Government activity by deriving from des lettres
officials were Tribunal “does the Agreement relatives d'une
actively not, in my view, itself, any party part aux plans
involved in the assist either intended or d'épargne qui
implementation way. The GoP believed that devaient être
of the was not obliged the Government proposés aux
Agreement.” to find funds for should be or pèlerins, d'autre
[S.C. para. 141] the Trust. They was party to the part à l'annonce
The fact that were to come Agreement.” de la campagne
the Trust did from pilgrims [S.C. para. 44] d'information
little after the and “The fact that publicitaire …;
agreement was philanthropists.” the Trust never qu'aucun motif ne
signed and that [H.C. para. 114] itself acquired peut justifier
no funds were any assets is l'intervention de
forthcoming. neutral, since its ces deux
[H.C. para. 114] acquisition of fonctionnaires de
any property l'Etat … sans qu'il
always soit fait état
depended upon d'actes accomplis
the par le Trust.” [Cd'a
arrangement of at 6]
financing
through Dallah,
which never
occurred.”
[S.C. para. 45] “It
is scarcely
surprising that
in these
circumstances
the Trust never
itself acquired
its own letter-
paper, and
letters
recording its
activity were,
like those
reporting
decisions of its
Board of
Trustees, written
on MORA letter-
paper.”
[S.C. para. 45]
GoP's decision The fact that “I do not see
not to the GoP took a why, logically,
promulgate decision not to that leads to
Ordinance repromulgate any conclusion
the Ordinance; that the GoP
this was an intended to step
indication of into the shoes of
the GoP's the Trust.”
intention. [H.C. para. 115]
[H.C. para. 115]
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January
Issue 19, 1997 The January
Arbitral 19,
Tribunal Given that the
High Court “First,
Supreme theCourt “le
CourTrust ayantParis
d'appel,
termination 1997 letter was Trust hadJ.)
(Aikens, tribunal did not cessé d'avoir une
letter “very significant ceased to exist, put the letter in existence légale à
because it Mr. Mufti must its context. It compter du 12
confirmed in logically have did not mention décembre 1996
the clearest way been writing in the first set of faute d'une
possible that his capacity of proceedings at nouvelle
the Defendant Secretary to all in addressing promulgation du
[the GoP], after MORA. the letter's décret
the elapse of [H.C. para. 117] significance … présidentiel, M.
the Trust, The wording of Secondly, the Luftallah Mufti sur
regarded the the letter does tribunal papier à en-tete
Agreement with not identify the rejected any du Ministère des
the Claimant as acceptor of idea that Mr. Affaires
its own and Dallah's Mufti was, when Religieuses a
considered repudiation. writing the signifiéà Dallah le
itself as a party [H.C. para. 118] letter, acting in 19 janvier 1997 que
to such “However it is a manner which … /… tout indique
Agreement.” possible to get a was ‘absolutely dans ce courrier
[S.C. para. 56] clearer unauthorized, la qualité du
indication of the illegal and of no Ministère au nom
state of mind of legal effect.’ But duquel il accepte
the GoP at this that, on any la résiliation du
stage if account view, was Contrat.” [Cd'a at
is taken of the precisely what 6]
proceedings Mr. Mufti can be
that were begun, seen, with
by Mr. Lutfallah hindsight, to
Mufti, on the have been doing
following day. … Thirdly, the
These were the Tribunal's
first Pakistani comments on
proceedings …, the letter
in which the assume that the
Trust is named Government …
as plaintiff … It was aware of the
indicates that ‘elapse of the
he, on the part Trust’ and
of the GoP, believed that
thought the this ended any
Trust had rights possibility of
it could the Trust taking
enforce.” any legal stance
[H.C. para. 119] or proceedings.
That, for reasons
I have
indicated,
cannot have
been the case.
Fourth, the
tribunal … did
not address
Dallah's state of
mind, or its
objective
manifestation—
an important
point when
considering a
test based on
common
intention.” [S.C.
paras. 57–60]
“Read in the
objectively
established
context which I
have indicated,
it is clear that it
was written and
intended as a
letter setting
out the Trust's
position by
someone who
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Issue Arbitral Tribunal High Court believed that
Supreme Court Cour d'appel, Paris
(Aikens, J.) the Trust
continued to
exist.”
[S.C. para. 61]
“There is
nothing in the
text of the letter
to suggest that
it was written on
behalf of the
Government.”
First set of [S.C. para.
“[I]t was the138] “il est indifférent
Pakistani Trust which, que M. Luftallah
proceedings immediately ait initié au nom
(brought by the following the du Trust une
Trust on January termination procédure devant
20, 1997) letter of 19 la juridiction
January 1997, d'Islamabad dès
commenced lors qu'en faisant
proceedings dénoncer le 19
against Dallah janvier 1997 la
in Islamabad.” défaillance
[S.C. para. 137] contractuelle de
Dallah par ce haut
fonctionnaire, le
Gouvernement de
la République,
Ministère des
Affaires
Religieuses, s'est
comporté comme
si le Contrat était
le sien.” [Cd'a at
6]
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Issue Arbitral Tribunal High Court Supreme Court Cour d'appel, Paris
(Aikens, J.)
Second set of Mr. Mufti's “[I]f one “[T]he 1998
Pakistani verification on examines the Pakistan
proceedings oath of the pleading Proceedings
(brought by the plaint dated carefully, it does were
GoP on June 2, June 2, 1998 was not state commenced in
1998) an admission expressly that the name of the
providing the GoP was a Government …
“another piece party to the because, when
of evidence to agreement, save the 1997
be added to the in para. 16 Pakistan
other pieces, as where it refers Proceedings
to the fact that to ‘the were dismissed
the [GoP] has Agreement by the Pakistan
always been— being entered court on the
and has into between ground that the
considered the parties in Trust had
itself—a party Islamabad.’ That ceased to exist
to the paragraph is as of 11
Agreement,” there to December 1996,
and the letter establish the judge said
was an jurisdiction … I that, on
admission “that do not read it … dissolution of
it was a party to as an admission the Trust suit
such Agreement by the GoP that should have
and that it it was or had been filed by
could accept become a party the Ministry for
repudiation of to the Religious Affairs,
the Agreement Agreement.” apparently on
by [Dallah].” [H.C. para. 121] the basis that
[S.C. para. 62] the Government
had succeeded
to the rights and
obligations of
the Trust.”
[S.C. para. 139]
“[I]t is clear that
those
proceedings
were
commenced at
the erroneous
suggestion of
the Pakistan
judge and shed
no light on
whether the
parties
intended that
the Government
should be
bound by the
Agreement.”
[S.C. para. 144]
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Issue Arbitral Tribunal High Court Supreme Court Cour d'appel, Paris
(Aikens, J.)
June 5, 1998 The letter did “In my view, the The letter “was
letter to the ICC not say that the letter is written to draw
ICC arbitration equivocal. I express
could not go accept it attention to the
ahead because certainly does second set of
the GoP was not not state proceedings.”
a party to the expressly that [S.C. para. 62]
Agreement; it the GoP is not a “Further and in
stated that the party to the any event, a
arbitration agreement. At very short time
could not go the same time, afterwards on 15
ahead because it does not say August 1998 the
of the 1998 that it is. The Government
proceedings in effect of the wrote to the
Pakistan, in Pakistani tribunal making
which the GoP proceedings to clear also its
was the which it refers is current position
claimant. left opaque.” that it had
[H.C. para. 124] [H.C. para. 125] never been
party to any
contract or
arbitration
agreement with
Dallah.”
[S.C. para. 64]
Good faith “Dr. “If, on whatever
Mahamassini principles are
also concluded applicable, it is
that ‘the found that the
requirements of GoP was a party
good faith and to the
morality’ arbitration
demanded that clause and the
the GoP be agreement,
bound by both good faith adds
the Agreement nothing. If, on
and the the other hand,
arbitration it is found that
agreement. the GoP is not a
However, the party, then I
FPA records that hold, on the
Justice Dr. Shah French law
and Lord Mustill evidence before
were ‘not me, that the
convinced’ that invocation of a
a duty of good general
faith could principle of
operate ‘to good faith in
make someone commercial
a party to an relations and
arbitration who international
on other arbitration is
grounds could insufficient to
not be regarded make it a party.”
as such.’” [H.C. para. 130]
[H.C. para. 51]
S.C. = Supreme
Court judgment,
supra note 1.
H.C. = High
Court judgment,
supra note 1.
Cd'a = Cour
d'appel's
judgment, supra
note 2.
P 422
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References
*) Jacob Grierson is a Barrister (England and Wales) in the international arbitration
practice group of Jones Day Paris. Dr. Mireille Taok is a member of the Paris Bar, and an
Associate at Reed Smith L.L.P. in Paris. However, the views set forth herein are the
personal views of the authors and do not necessarily reflect those of the law firms with
which they are associated. The authors wish to thank Johannes Landbrecht and Agathe
Girard for their assistance with research related to this article.
1) Dallah Real Estate & Tourism Holding Co. v. Ministry of Religious Affairs, Government of
Pakistan, U.K. Supreme Court, November 3, 2010, [2010] 3 W.L.R. 1472 [hereinafter
“Supreme Court judgment”], upholding Dallah Real Estate & Tourism Holding Co. v.
Ministry of Religious Affairs, Government of Pakistan, English Court of Appeal, July 20,
2009, [2010] 2 W.L.R. 805 [hereinafter “Court of Appeal judgment”], itself upholding
Dallah Real Estate & Tourism Holding Co. v. Ministry of Religious Affairs, Government of
Pakistan, English High Court, August 1, 2008, [2008] 2 Lloyd's Rep. 535 [hereinafter “High
Court judgment”]. The authors have commented on the Court of Appeal judgment and
the High Court judgment in earlier volumes of this journal: Jacob Grierson & Mireille
Taok, Comment on Dallah v. Pakistan, 26 J. Int'l Arb. 467 (2009); and Jacob Grierson &
Mireille Taok, Comment on Dallah v. Pakistan: Refusal of Enforcement of an ICC
Arbitration Award Against a Non-Signatory, 26 J. Int'l Arb. 903 (2009).
2) Cour d'appel, Paris, February 17, 2011 [hereinafter “Cour d'appel's judgment”].
3) See infra.
4) High Court judgment, supra note 1, para. 49.
5) The chairman of the Tribunal.
6) The GoP's arbitrator.
7) Dallah's arbitrator.
8) High Court judgment, supra note 1, para. 50.
9) Id. para. 128.
10) Id. para. 129.
11) The Court of Appeal essentially restricted its analysis of this aspect to a review of
Aikens, J.'s decision. As Moore-Bick, L.J., stated (para. 29 of his judgment): “[T]he judge
had the opportunity of debating with the experts the essential nature of the relevant
principles of French law and thereby of gaining a fuller understanding of them which
he could bring to bear when applying them to the material before him. In these
circumstances I think an appellate court, which has not had the same benefit, should
be slow to hold that the judge, having formulated the principles correctly, erred in his
application of them.”
12) This was obiter because the GoP had at that time made no application to annul the
award. Indeed, once annulment proceedings were brought, the French courts (as will
be seen infra) actually upheld the award, so that this never became an issue.
13) The question had not yet been addressed by the English courts. By contrast, the French
courts have held that an award can be enforced in France notwithstanding its
annulment by the courts of the seat. See Cass. 1e civ., March 23, 1994 (Hilmarton), 1994
Rev. Arb. 327, note Charles Jarosson; 121 J. Droit Int'l (Clunet) 701 (1994), note Emmanuel
Gaillard; Cass. 1e civ., June 29, 2007 (Putrabali), 2007 Rev. Arb. 507, note Emmanuel
Gaillard; 134 J. Droit Int'l (Clunet) 1236 (2007), note Thomas Clay; 192 Petites affiches 20
(2007), note Matthieu de Boisséson; 2008 Rev. Crit. D.I.P. 109, note Sébastien Bollée;
2007 Bull. Assoc. Suisse Arb. 826, note Pierre-Yves Gunter; 24 Arb. Int'l 277 (2008), note
Philippe Pinsolle.
14) Supreme Court judgment, supra note 1, per Lord Mance, paras. 14–15. Dalico, Cass. 1e
civ., December 20, 1993, 1994 Rev. Arb. 116, note Hélène Gaudemet-Tallon; 121 J. Droit
Int'l (Clunet) 432 (1994), note Emmanuel Gaillard, and 663, note Eric Loquin. Lord
Collins pointed out (para. 115) that the existence of these “transnational law or
transnational rules … does not mean that a French court would not be applying French
law or that it is no longer a French arbitration. It simply means that the arbitration
agreement is no longer affected by the idiosyncrasies of local law, and its validity is
examined solely by reference to the French conception of international public policy.”
Accordingly, he found (para. 124) that French law's reference to the transnational rule
was not a case of renvoi (which is likely excluded from the New York Convention).
15) See Aikens, J.'s summary of that evidence, supra.
16) Supreme Court judgment, supra note 1, per Lord Mance, para. 18.
17) Id. para. 27 (citing among other authorities, Emmanuel Gaillard, Legal Theory of
International Arbitration ch. I (2010)).
18) Supreme Court judgment, supra note 1, per Lord Mance, para. 30. Thus, the tennis-
playing Lord Mance stated, in an already much quoted passage: “Dallah starts with
advantage of service, it does not also start fifteen or thirty love up.”See also Lord
Saville, para. 159 (“[T]o take as the starting point the ruling made by the arbitrators
and to give that ruling some special status is to beg the question at issue, for this
approach necessarily assumes that the parties have, to some extent at least, agreed
that the arbitrators have power to make a binding ruling that affects their rights and
obligations.”).
19) Supreme Court judgment, supra note 1, per Lord Saville, para. 160.
14
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20) Supreme Court judgment, supra note 1, per Lord Mance, paras. 25–26. Lord Collins
stated (para. 83) that “the principle that a tribunal has jurisdiction to determine its
own jurisdiction does not deal with, or still less answer, the question whether the
tribunal's determination of its own jurisdiction is subject to review, or, if it is subject to
review, what that level of review is or should be.”See generally Lord Collins'
comprehensive review of the notion of compétence-compétence in international
arbitration and other contexts, under French, U.S., and English law (paras. 79–98).
21) Supreme Court judgment, supra note 1, per Lord Collins, para. 104.
22) Id. per Lord Mance, para. 66.
23) Id. per Lord Collins, para. 145.
24) Id. per Lord Mance, para. 68.
25) Id. para. 69. See also Lord Collins, para. 131 (“There is certainly no basis for exercising
the discretion in this case.”).
26) Cour d'appel's judgment, supra note 2. Authors' translation: “[T]his involvement of the
Government of the Republic, Ministry of Religious Affairs, in the absence of acts
alleged to have been accomplished by the Trust, as well as its behaviour during the
precontractual negotiations, confirm that the creation of the Trust was purely formal
and that the Government of Pakistan, Ministry of Religious Affairs—as Dallah had
agreed—behaved as the true Pakistani party during the economic transaction.”
27) Southern Pacific Properties v. République Arabe d'Egypte, Cass. 1e civ., January 6, 1987,
1987 Rev. Arb. 469, note Philippe Leboulanger; 114 J. Droit Int'l (Clunet) 638 (1987), note
Berthold Goldman. Authors' translation: “[I]f the role of the Court of Appeal seized by
virtue of articles 1502 and 1504 of the Code of Civil Procedure is limited to the
examination of the grounds listed in these provisions, there is no restriction upon the
power of the court to examine, both as to the law and as to the facts, all the elements
pertaining to such grounds.”
28) Abela, Cass. 1e civ., October 6, 2010, 2010 Rev. Arb. 813, note Francois-Xavier Train.
Authors' translation: “[T]he annulment court reviews the jurisdictional decision of the
arbitral tribunal, whether the latter has claimed or declined jurisdiction, by examining
all legal and factual elements that allow it to judge the scope of the arbitration
agreement and to draw conclusions as to whether the arbitrators have acted in
accordance with their mission.”
29) See, e.g., Supreme Court judgment, supra note 1, per Lord Mance, para. 61.
30) Cour d'appel's judgment, supra note 2, at 6. Authors' translation: “Everything in this
letter indicates that he was accepting the termination of the Agreement in the name of
the Ministry.”
31) Supreme Court judgment, supra note 1, para. 40.
32) Id. paras. 18, 40.
33) Orri, Cour d'appel, Paris, January 11, 1990, 1992 Rev. Arb. 95, note Daniel Cohen
(emphasis added). Authors' translation: “According to the customary practices of
international trade, the arbitration clause inserted into an international contract has
its own validity and effectiveness which require that its application be extended to the
parties directly involved in the performance of the contract and any disputes which
may result therefrom, provided that it is established that their contractual situation,
their activities and the normal commercial relations existing between the parties
allow it to be presumed that they have accepted the arbitration clause of which they
knew the existence and scope, even though they were not signatories of the contract
containing it” (emphasis added). Compare Korsnas Marma, Cour d'appel, Paris,
November 30, 1988, 1989 Rev. Arb. 691, note P.-Y. Tschanz; Orri, Cass. 1e civ., June 11,
1991, 1992 Rev. Arb. 73, note Daniel Cohen; Cotunav, Cass. 1e civ., June 25, 1991, 1991 Rev.
Arb. 453, note Pierre Mayer.
34) ABS, Cass. 1e civ., March 27, 2007, 2007 Rev. Arb. 788, note J. El Ahdab; 134 J. Droit Int'l
(Clunet) 968 (2007), note C. Legros; cahiers de l'arbitrage 6 (No. 3, 2007), note François-
Xavier Train. Authors' translation: “The effects of an international arbitration clause
extend to parties directly involved in the performance of the agreement and any
disputes arising from it.”
35) Suba, Cass, 1e civ., May 7, 2009, Petites Affiches 10 (No. 159–160, 2009), note Jérôme
Barbet. Authors' translation: “[C]ould not credibly claim to be unaware of the
arbitration agreement.”
36) Abela, Cass. 1e civ., October 6, 2010, 2010 Rev. Arb. 813, note François-Xavier Train.
Authors' translation: “[A]cted as the true shareholders [and therefore could not]
legitimately claim to be strangers to the arbitration agreement, whose content they
could not be unaware of and which they had implicitly accepted considering their
involvement in the operation of the AAC.”
37) High Court judgment, supra note 1, para. 130, approved by Supreme Court judgment,
supra note 1, per Lord Mance, para. 66.
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