(2020) EWHC 258 (Comm)
In the High Court of Justice
Business and Property Courts of England and Wales
Commercial Court (QBD)
The Honourable Mr Justice Foxton
C, D and E
The Claimants and the First and Second Defendants were parties to an arbitration being conducted in New York (“the Arbitration”) relating to an oil field in Central Asia of which they were co-venturers. Following the evidential hearing in the Arbitration and with the permission of the arbitration tribunal, the Claimants made an application in the Commercial Court for an order under section 44 of the Arbitration Act 1996 (“the Act”) for the compulsory taking of the evidence of the Third Defendant (who was not party to the Arbitration) in England. The relevant provisions of s.44 are as follows:
“44. Court powers exercisable in support of arbitral proceedings.
(1) Unless otherwise agreed by the parties, the court has for the purposes of and in relation to arbitral proceedings the same power of making orders about the matters listed below as it has for the purposes of and in relation to legal proceedings.
(2) Those matters are—
(a) the taking of the evidence of witnesses”
The issue between the parties was whether the court had the jurisdiction under s.44 to make an order against persons other than the arbitrating parties.
Foxton J considered that, if he were approaching the question without the benefit of prior authority, he could see “considerable force” in the Claimants’ arguments that the court’s jurisdiction under s.44 applied to non-parties.
Nonetheless, Foxton J took the view that he should follow the “persuasive” decisions of Males J in Cruz City I Mauritius Holdings v Unitech Limited  EWHC 3704 (Comm) and of Sara Cockerill QC (as she then was) in DTEK Trading SA v Morozov  EWHC 1704 (Comm) which “represent the two most extensive and recent treatments of this issue in the Commercial Court”. He noted that Moulder J had taken the same approach in Trans-Oil International SA v Savoy Trading KP  EWHC 57 (Comm).
Foxton J acknowledged that the decision of Commerce and Industry Insurance Co of Canada v Certain Underwriters at Lloyd’s  1 WLR 1323 (where an order under s.44(2)(a) against a non-party was refused as a matter of discretion), but noted that the jurisdiction point had not been argued in that case.
Distinguishing the authorities
Accordingly, the Claimants sought to distinguish Cruz City and DTEK from the present case by relying on the facts that their application: (i) was for an order pursuant to subsection (2)(a); and, (ii) did not require service out of the jurisdiction
First, the Claimants argued that s.44(2)(a) permits orders to be made against non-parties (even if the rest of s.44(2) does not) because it refers to the taking of evidence of witnesses. They noted that this position was advanced by Merkin and Flannery on the Arbitration Act 1996 (6th ed) in the course of their criticism of Cruz City and DTEK, neither of which involved an application under subsection (2)(a).
Foxton J rejected this argument for three reasons.
(1) The conclusions reached in Cruz City and DTEK were based on provisions in the Act which applied equally to all the powers under s.44(2), such as the opening words of s.44(1) (“unless otherwise agreed by the parties”). There is no language supporting differential treatment of the powers under s.44(2).
(2) Insofar as s. 44(2)(a) is concerned with letters of request issued to foreign courts for the taking of evidence from non-parties, such letters are not coercive orders directed at non-parties. Foxton J noted that the current position (namely that an English court can request a foreign court to exercise its coercive powers against non-parties but cannot exercise its own coercive powers) is “not a wholly happy one”.
(3) Orders under s.44(2)(a) against non-parties would give rise to additional complications that would not arise in relation to other powers under s.44(2), namely how such a power would fit in with s. 43 of the Act (which contains specific provision for securing the attendance of witnesses).
Service out of the jurisdiction
Second, the Claimants sought to distinguish the present case from DTEK and Cruz City (in which permission to serve out was sought pursuant to CPR Rule 62.5(1)(b) and (c) respectively) on the grounds that there was no need for permission to serve out in this case as the Third Defendant is resident in England.
The argument advanced by the Claimants was that the difficulties in seeking s.44 relief against non-parties only arise where the application must be served out of the jurisdiction. Again, the Claimant’s view was mirrored by Merkin and Flannery in which it is contended that the court would have in personam jurisdiction over such a non-party and suggested that the issue has only arisen due to the poor drafting of CPR Part 62.
Foxton J did not accept this argument. The gateway for service out contained in CPR Rule 62.5(1)(b) requires nothing more than that “the claim is for an order under section 44 of the 1996 Act”. It follows that s.44 applications cannot have failed by reason of an inability to serve out of the jurisdiction but must have been because s.44 does not apply to non-parties.
Foxton J considered whether, had he had the jurisdiction to do so, he would have exercised his discretion to grant the order sought. He referred to Commerce & Industry Insurance Co at  in which Moore-Bick J indicated that the court should balance the relevance of the evidence to the arbitration with the likely inconvenience to the witness in so giving evidence.
In brief, Foxton J was satisfied that the Third Defendant’s evidence would be sufficiently relevant (subject to two caveats) and noted that there was no suggestion of any particular inconvenience to him. The two caveats were that his order would have also required the Claimants to provide a narrower, more focussed list of topics on which the Third Defendant would give evidence, and would have in all likelihood ordered him to produce a witness statement and then give evidence by video-link to the arbitration tribunal or before an examiner.
Permission to appeal
Foxton J gave permission to appeal so that the Court of Appeal could give a definitive ruling on the issue of whether s.44 permits orders to be made against non-parties.