Published
Earlier this year, Butcher J handed down the judgment of the Commercial Court in the extraordinary case of Contax Partners Inc BVI v Kuwait Finance House and Ors [2024] EWHC 436 (Comm), ultimately putting to bed an attempt by fraudsters to purloin over £70 million from a banking group associated with the Kuwaiti sovereign wealth fund. What made this attempted fraud particularly noteworthy was that its central mechanism was an abuse of the processes of the court used to enforce arbitral awards.
In the vast majority of cases, an award obtained in an arbitration will be enforced in England and Wales using the procedure under s.66 of the Arbitration Act 1996. That section allows an award made by a tribunal pursuant to an arbitration agreement to be enforced as if it were a judgment or order of the court and/or for judgment to be entered in the terms of the award with the court's permission.
A s.66 application must be made using an arbitration claim form, following the procedure in Part 62 of the CPR. Where the party seeking to enforce the award wishes to enforce it as if it were a judgment or order (as opposed to seeking that a judgment be entered), the application can be – and frequently is – made without notice, and will ordinarily be considered by the court on the papers.
An arbitration claim form was issued naming Contax Partners Inc BVI ("Contax") as the claimant and three emanations of a Kuwaiti banking group (collectively "KFH") as defendants, and seeking to enforce an arbitration award said to have been obtained before the Kuwait Chambers of Commerce and Industry Commercial Arbitration Centre ("KCAC"). It was signed by Hamza Adesanu, who also filed a witness statement in support of the claim terming himself a "Solicitor at H&C Associates", which was in turn named on the claim form as Contax\'s legal representative. Whilst Mr Adesanu was (and, at the time of writing, apparently is) a solicitor, H&C Associates was not a firm of solicitors and was not authorised to conduct litigation.
The evidence filed in support of the claim stated that Contax had attempted to liquidate its investment in a product offered by KFH, that KFH had owed Contax approximately €53 million, that an arbitration agreement had been specifically negotiated, leading to an award from the KCAC in Contax\'s favour, which was then unsuccessfully challenged before the Commercial Court of Appeal in Kuwait ("the CoA").
On 9 August 2023, Butcher J made an order on the papers granting leave to enforce the award under s.66 of the Arbitration Act 1996 and entering judgment, giving a period of 28 days from service of the order for KFH to apply to set it aside. The order was then served on the office of a UK subsidiary of KFH, and on 15 September 2023 applications were made for third party debt orders against four banks, quantifying the judgment debt at £70,634,614.04 and seeking payment to a US bank account.
At around this time, just as the persons behind the claim were on the cusp of abstracting over £3m, KFH finally became alerted to the claim as a result of the bank accounts subject to the interim TPDOs being frozen, and it made an urgent application on 2 November 2023 to prevent execution of the TPDOs – just in the nick of time.
KFH claimed it had never signed any arbitration agreement with Contax, had no knowledge of any arbitration, and that the award was a forgery, relying on:
The most astonishing feature of the case was that the purported arbitration award appeared to be virtually verbatim identical to the judgment of Picken J in Manoukian v Société Générale de Banque au Liban SAL [2022] EWHC 669 (QB), save that the names of all persons named in that judgment had been transposed.
On the first hearing of KFH's application to set aside Butcher J's 9 August 2023 order, the Judge set aside the TPDOs on the basis that his previous order had not been properly served on KFH, and made directions for an expedited hearing of the application.
The Judge had fairly little hesitation in finding that the arbitration agreement and award were fabrications, partly because of the evidence relied upon by KFH and partly due to a lack of corroboratory evidence in relation to the arbitration agreement itself (such as the original of the agreement, or contemporaneous correspondence relating to it). The Judge therefore set aside his order of 9 August 2023.
The decision stands as authority – if any were needed – that a forged arbitration agreement or (probably more importantly) a forged arbitration award cannot be enforced, and that any order granting enforcement must be set aside if forgery is established.
There are also positive lessons to learn from KFH's conduct. KFH only narrowly avoided a TPDO being executed by rapidly securing an urgent injunction, and was extremely thorough in its approach to debunking the fabricated award.
Mr Fantechi's embroilment in the dispute is a cautionary tale: despite instructing highly reputable solicitors and giving evidence in support of KFH's position, and despite the compelling evidence before the court, the theft of Mr Fantechi's identity and the misappropriation of Contax's name were found to be triable issues not capable of resolution without (at least the possibility of) cross-examination.
Finally, the case underlines the importance of proper service, particularly in relation to ex parte procedures. Had there been a deeper inquiry into service at the stage of the TPDOs being obtained, the fraud may well have been discovered sooner. It is, in the view of the author, difficult to see how the procedure under s.66 could be modified so as meaningfully to mitigate the risk of fraud without at the same time negating the ready enforceability and status of genuine arbitration awards.
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