Ekran OAO v Magneco Metrel UK Ltd, Court of Appeal - Commercial Court, September 01, 2017, [2017] EWHC 2208 (Comm)

Resolution Date:September 01, 2017
Issuing Organization:Commercial Court
Actores:Ekran OAO v Magneco Metrel UK Ltd

Case No: CL-2016-000720

Neutral Citation Number: [2017] EWHC 2208 (Comm)




Rolls Building, 7 Rolls Buildings

Fetter Lane, London

Date: 01/09/2017

Before :


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Between :

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Andrew Lenon QC and Ekaterina Sjostrand (instructed by Marriott Harrison LLP) for the Claimant

Philip Gillyon (instructed by Archers Law LLP) for the Defendant

Hearing date: Friday 9 June 2017

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JudgmentMr Justice Blair :

  1. This is an application by the defendant (``D'') pursuant to s. 103(2)(c) of the Arbitration Act 1996 and CPR r 62.18(9) to set aside an order of Males J dated 16 January 2017 by which he (i) gave the claimant (``C'') leave to enforce an arbitration award against D pursuant to s. 101(2) and (ii) entered judgment against D in the terms of the award pursuant to s. 101(3) of the Act. The arbitration award (``the Award'') is dated 13 July 2016 and was made by an arbitral tribunal of the International Commercial Arbitration Court (``the ICAC'') at the Chamber of Commerce and Industry of the Russian Federation.

  2. The sole issue for decision is whether D was given ``proper notice'' of the arbitration proceedings within the meaning of s. 103(2)(c) Arbitration Act 1996. C says that ``proper notice'' was given, and that the application should be dismissed.

  3. D to the contrary says that it was not (i) given proper notice of the appointment of the arbitrators, (ii) given proper notice of the arbitration proceedings, and (iii) was otherwise unable to present its case in the arbitration, and that consequently the court should refuse recognition and enforcement of the Award.

    The making of the contract

  4. There are a number of witness statements and exhibits before the court which set out the facts so far as relevant. C is a Russian glass manufacturing company based in Novosibirsk, Siberia, and D is an English company based in Country Durham which manufactures refractory materials: it is a subsidiary of Magneco Metrel Inc, an Illinois company.

  5. On 30 April 2013, C and D entered into a sale and purchase contract under which D agreed to supply certain refractory materials to C for use in the repair of one of C's furnaces (``the Contract''). The Contract contained text in English and in Russian side by side, providing that ``in case of any discrepancies the English text will prevail''.

  6. The Contact was expressed to be subject to Russian law, and provided for disputes to be referred to arbitration at the ICAC at the Russian Chamber of Commerce and Industry in Moscow. In full, the relevant clause was as follows:

    ``10. Arbitration.

    10.1 All disputes and discrepancies arising during the fulfilment of this Contract will be resolved as far as possible by negotiations between parties. Should the parties not negotiate, the matter should be transferred with the exception of general courts jurisdiction to the International Commercial Arbitration Court at the Russian Chamber of Commerce and Industry under the Russia law.

    10.2 The parties agree that during the settlement of disputes the Rules of the International Commercial Arbitration Court at Russia's Chamber of Commerce and Industry and the substance of Russia shall be applied.

    10.3 The Contract shall be governed by the laws of Russia. The place of arbitration - Moscow, Russia.

    The language of arbitration - Russian.

    10.4 In all other cases not stipulated in this Contract the parties are governed by Russia law and International regulations of interpretation of Incoterms 2010.

    10.5 The Arbitrage award is final and obligatory for both parties.''

    The dispute and the subsequent arbitration

  7. The goods were supplied, and repair works were carried out in 2013, but problems arose with the repaired furnace (furnace no 4) after it was put back into operation in 2014. The cause is strongly disputed. C's case is that the concrete wall showed signs of damage and in November 2014 there was a major leak of molten glass. C alleges that the goods supplied by D were of poor quality and that D is liable to compensate it for failure to fulfil the Contract. This is denied by D which contends that the materials were compliant with the contractual specification, and that the problem may have been caused by C's failure to operate the dry-out procedure. D says that an acceptance certificate had been issued by C, but that it sought to assist by providing expert opinions, and that no claim was made within...

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