CHALBURY MCCOUAT INTERNATIONAL LTD V PG FOILS LTD

[2010] EWHC 2050 (TCC), Queen's Bench Division, Technology and Construction Court, Mr Justice Ramsey, 3 August 2010

Arbitration - Application for appointment of arbitrator - No designated seat of arbitration - Whether English court had jurisdiction to give permission for service abroad - Whether sufficient connection with England - Arbitration Act 1996, sections 4(2), 15(3) and 18 - CPR Part 65.5(1)(c) - Rome Convention, article 4

CMIL, an English company specialising in dismantling and then reassembling and installing industrial units, entered into an agreement dated 8 February 2008 with PGF, an Indian company which manufactured aluminium foils and laminates for the packaging of pharmaceuticals and food products in India, under which CMIL was to dismantle a manufacturing plant in the Netherlands which had been purchased by PGF. The arbitration clause provided: "In case if there is any dispute between the parties of this contract the same will be sorted out by mutual discussion, But in case if the issue is not resolved even after discussions the same will be referred to arbitration as per prevailing laws of European Union in the Europe. The decision of the Arbitrator is final and binding on both parties". Following disputes between the parties, CMIL sought to initiate arbitration proceedings in England, but PGF refused and indicated that it would start arbitration in India. CMIL applied to the English court for the appointment of an arbitrator under section 18 of the Arbitration Act 1996. Ramsey J upheld the application, and ruled as follows. (1) The English court could give permission for service of an arbitration claim form on PGF out of the jurisdiction under CPR 65.5(1)(c) if the conditions in section 2(4) of the Arbitration Act 1996 were satisfied. (2) Under section 2(4) there had to be a close connection to England. That close connection would be met if English law governed the substantive agreement. (3) Under article 4 of the Rome Convention 1980, the performance which characterised the contract was that of CMIL so the presumption was that English law would apply, England being the place of CMIL's habitual residence. (4) The English court would exercise its section 18 powers and appoint a sole arbitrator, in accordance with the default rule in section 15(3) that a sole arbitrator was to resolve disputes, and the appointment would be delegated to the London Court of International Arbitration.