Alexander Brothers Limited (Hong Kong S.A.R.) v. Alstom Transport SA and Alstom Network UK Limited

At a glance

Parties

Alexander Brothers Limited (Hong Kong S.A.R.) v. Alstom Transport SA (France) and Alstom Network UK Limited (England)

Case no.

Claim No. CL-2019-000630; [2020] EWHC 814 (Comm) (6 April 2020) and [2020] EWHC 1584 (Comm) (18 June 2020)

Court

High Court of Justice of England and Wales, Queen's Bench Division, Commercial Court

Forum and rules

Enforcement under section 103 of the Arbitration Act 1996, which gives effect to Article V(2)(b) of the New York Convention

Underlying award(s)

ICC award dated 29 January 2016 in a Geneva-seated arbitration under Swiss law. The tribunal was chaired by Christian W Konrad; the co-arbitrators were Willi Diestschi and Daniel Schimmel

Tribunal

Moulder J (judgment of 6 April 2020 on expert evidence); Cockerill J (judgment of 18 June 2020 on the set-aside application)

Sector

Railway equipment; consultancy agreements

Outcome

Alstom's application to set aside Teare J's order of 15 October 2019, which allowed enforcement of the award, was dismissed on both grounds: public policy (bribery) and failure to give full and frank disclosure.

Amount

In the arbitration ABL claimed €5,475,480. Unpaid invoices totalled about €2,975,480 plus default interest. The award ordered Alstom to pay about €1.56 million. In France, about €1.8 million (EUR 1,828,850.88) was paid under the French enforcement order and later returned to Alstom.

The dispute

Alexander Brothers Limited (ABL) is a Hong Kong company managed by Ms Guo Qi. Under five Swiss-law consultancy agreements, it helped the Alstom group win government railway contracts in China between 2003 and 2012. Alstom suspended payments under three of the agreements, citing compliance concerns and possible corrupt practices. An ICC tribunal seated in Geneva ordered Alstom to pay about €1.56 million, holding that corruption had not been established. The Swiss Federal Court rejected Alstom's annulment application. The Paris Cour d'Appel, however, refused enforcement on 28 May 2019, finding "serious, precise and consistent indicia" that Alstom's payments to ABL had financed the bribery of Chinese public officials. ABL then obtained an order in England allowing enforcement. Alstom applied to set the order aside on two grounds: that enforcement would be contrary to public policy under section 103(3) of the Arbitration Act 1996, which it supported with arguments based on EU law and an issue estoppel said to arise from the Paris decision; and that ABL had not given full and frank disclosure on its without-notice application.

Key holdings

1. Where the arbitral tribunal had jurisdiction over an issue of illegality and decided on the facts that there was none, the English court will almost never reopen the issue. It might do so only in exceptional circumstances, following Westacre (majority) and RBRG v Sinocore. 18 June 2020 Judgment ¶ 105
2. The tribunal did not decide the bribery issue "on the facts". Alstom had run only a tacit bribery case, and the tribunal disposed of it under the much higher Swiss standard of proof without examining the evidence in detail. There was therefore no identity of issue. 18 June 2020 Judgment ¶¶ 115–123, 130
3. Even so, Alstom was barred under the Henderson v Henderson principle. It could and should have brought a positive bribery case before the tribunal it had agreed to, using the same material, and it gave no explanation for not doing so. 18 June 2020 Judgment ¶¶ 148–150
4. There were no special or exceptional circumstances. The allegation was of incidental bribery, which is less serious than a contract made in order to bribe. The evidence was weak and rested on suspicion and inference. Neither comity nor the alleged risk of prosecution in France favoured Alstom. 18 June 2020 Judgment ¶¶ 159–175
5. The Eco Swiss/Claro line of cases did not apply. Apart from money laundering, the EU has adopted no mandatory rule or public policy on international corruption of this kind. 18 June 2020 Judgment ¶ 186
6. The Paris Cour d'Appel decision creates no issue estoppel. Its "indicia" test was not shown to be a final factual finding on the merits that bribery occurred, and identity of issue was not established. 18 June 2020 Judgment ¶¶ 193–199
7. No breach of the duty of full and frank disclosure, though by a narrow margin. The statement that Alstom had "not complied with the Award in any respect" was misleading taken alone. But the witness statement as a whole disclosed the French seizure and the order for repayment. 18 June 2020 Judgment ¶¶ 213–220
8. In an earlier judgment, Moulder J allowed Alstom to rely on expert evidence of French criminal law. She held that it was reasonably required under CPR 35.1 for the discretion stage of section 103(3) and, in the alternative, for the public policy balancing exercise. 6 April 2020 Judgment ¶¶ 35, 41–42

Procedural history

1. December 2013ABL commences ICC arbitration in Geneva under Swiss law.
2. 29 January 2016Award: ABL succeeds in part; Alstom ordered to pay about €1.56 million.
3. 3 November 2016The Swiss court dismisses Alstom's application to annul the award.
4. 28 May 2019The Paris Cour d'Appel refuses enforcement in France on public policy grounds (bribery indicia) and orders the €1.8 million returned. ABL appeals to the Cour de Cassation.
5. 15 October 2019After ABL files its claim form on 11 October 2019, Teare J grants permission to enforce the award in England without notice to Alstom.
6. 10 January 2020Alstom applies to set aside Teare J's order.
7. 6 April 2020Moulder J grants Alstom permission to adduce expert evidence on French criminal law.
8. 13–14 May 2020Hearing of the set-aside application before Cockerill J.
9. 18 June 2020Cockerill J dismisses the set-aside application on both grounds.

Tribunal, counsel and experts

For the claimant

Charles Fussell & Co LLP

For the respondent

Enyo Law LLP

Experts

Sebastien Schapira (respondent) · Gaëlle Le Quillec (claimant)

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Keywords

• Alstom
• enforcement
• New York Convention Article V(2)(b)
• Arbitration Act 1996 section 103(3)
• public policy
• bribery
• corruption
• Westacre
• RBRG v Sinocore
• Henderson v Henderson abuse
• issue estoppel
• Paris Cour d'Appel
• full and frank disclosure
• consultancy agreements
• China railways
• standard of proof
• Eco Swiss
• Bribery Act 2010

Summary generated with AI from the published documents — refer to the award for the authoritative text.