Dallah Real Estate and Tourism Holding Company v Ministry of Religious Affairs, Government of Pakistan
[2010] UKSC 46
Independent editorial summary — not the official judgment. Read the full judgment via the source link.
Ratio Decidendi
Where a person resists enforcement of a New York Convention award under section 103(2)(b) of the Arbitration Act 1996 on the ground that it never agreed to arbitrate, the enforcing court must make an independent judicial determination of whether an arbitration agreement existed under the law of the country where the award was made; the arbitral tribunal's own ruling on its jurisdiction has no legal or evidential value and cannot bind a party who did not submit the question of arbitrability to it. A party denying the agreement is under no obligation to challenge the award in the courts of the seat, and the residual discretion in the word 'may' provides no basis for enforcing an award made without jurisdiction.
Facts
Dallah, a Saudi group company providing services for the Holy Places, proposed to the Government of Pakistan a scheme for housing pilgrims in Mecca and concluded a memorandum of understanding with the Government in July 1995. The Government then established the Awami Hajj Trust by Ordinance, and the Agreement of 10 September 1996 - containing a clause referring disputes between Dallah and the Trust to ICC arbitration in Paris - was made between Dallah and the Trust, the Government's role being confined to guarantor. When no further Ordinance was promulgated the Trust ceased to exist in December 1996, and Dallah invoked ICC arbitration against the Government, which throughout denied being party to any arbitration agreement; the tribunal (Dr Mahmassani, Justice Dr Shah and Lord Mustill) ruled that it had jurisdiction and ultimately made a final award of US$20,588,040 against the Government, which Dallah sought to enforce in England. Aikens J set aside the enforcement order and the Court of Appeal upheld him.
Judgment Summary
The Supreme Court unanimously dismissed Dallah's appeal, refusing enforcement. Lord Mance held that under section 103(2)(b) and article V(1)(a) of the New York Convention the court conducts an independent examination - not a mere review - of whether the Government was party to the arbitration agreement under French law's common-intention test, and that on the whole history, including the letter of 19 January 1997 and the Pakistani court proceedings, there was no common intention that the Government be party to an Agreement deliberately structured to be between Dallah and the Trust. Lord Collins, surveying the competence-competence principle comparatively, concluded that a tribunal's power to consider its own jurisdiction never carries the last word, which lies with the courts on annulment or enforcement; Lords Hope, Saville and Clarke agreed, and the court held there was no scope for exercising the discretion in the word 'may' in favour of an award made without jurisdiction.
Key Quotes
"The tribunal’s own view of its jurisdiction has no legal or evidential value, when the issue is whether the tribunal had any legitimate authority in relation to the Government at all."
— Lord Mance, para 30(verbatim, verified against the judgment)
"It follows that 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."
— Lord Collins, para 104(verbatim, verified against the judgment)
Subsequent Treatment
The leading UK authority on the enforcing court's independent (de novo) determination of arbitral jurisdiction under s.103(2)(b) of the Arbitration Act 1996 and article V(1)(a) of the New York Convention; the Supreme Court took the same enforcement-stage approach in Kabab-Ji SAL v Kout Food Group [2021] UKSC 48. In the parallel French annulment proceedings the Paris Cour d'appel (17 February 2011) reached the opposite conclusion on the facts, holding the Government bound - a celebrated divergence that does not affect the decision's authority in England.
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