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Aes Ukh V. Aes Notes

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AES UKH V. AES FACTS The owner and the operator of hydroelectric facilities in Kazakhstan entered into a concession agreement which contained an arbitration clause governed by English law and which provided for arbitration in London. In proceedings relating to the concession, the Kazakhstan Supreme Court held that the arbitration clause was contrary to Kazakhstani public policy and thus invalid. Subsequently the defendant, the successor in title to the owner which had entered into the agreement, brought proceedings in the Kazakhstan Economic Court against the claimant, the successor of the operator which had entered into the agreement, for information as to the value of the concession assets. That court, in light of the Supreme Court's decision as to the invalidity of the arbitration clause, allowed the claim to proceed. The claimant continued to deny the jurisdiction of the Kazakhstani court but defended the merits of the claim since unless it did so, under Kazakhstani law, it was precluded from appealing the court's decision on jurisdiction. The claimant commenced proceedings in England for a declaration as to the validiity of the arbitration clause and obtained without notice an interlocutory anti-suit injunction in respect of the Kazakhstani proceedings, which it brought to the attention of the Kazakhstani court. In the present proceedings, the essential dispute concerns the jurisdiction of the English court. In this connection the following issues remain disputed on appeal: (i) the owner submits that the operator lacks a proper jurisdictional gateway for service of its proceedings out of the jurisdiction upon it in Kazakhstan; (ii) the owner submits that there is no power in the English court to intervene in arbitration in the absence of existing or prospective arbitration proceedings in England; and (iii) the owner submits that the English court ought in any event to recognise and/or enforce the decision of the Economic Court, inter alia because the operator had submitted to the jurisdiction of that court in the Kazakhstan proceedings. Supreme Court's finding on the arbitration clause: The first was that clause 32 did not exclude tariff disputes within clauses

17.8 and 17.9 but included them: this would put such disputes beyond the control of the republic in matters which concerned monopolist pricing and ran counter to statutory provisions. The second was that the arbitration clause was unenforceable in practice, both because it senselessly required that disputes not related to tariffs would first have to go through the procedures relating to disputes which did concern tariffs, and because clause

32's reference to the rules of the ICC was not a reference to the ICC itself and thus left the arbitral body unspecified. QUESTIONS Whether the English court ought to recognise the decision of the Kazakhstan Economic Court that clause 32 of the concession contract, which contains the parties' arbitration agreement, is void as being against Kazakhstan public policy. Whether the operator submitted to the jurisdiction of the Kazakhstan Economic Court in the 2009 litigation in Kazakhstan.

HOLDING RIX LJ General Principles: Enforcement - breach of arbitration agreement (i) Section 32(1)(a) states the general rule that a judgment of a foreign court in proceedings brought contrary to an agreement under which the dispute in question was to be settled otherwise than in the courts of that country "shall not be recognised or enforced in the United Kingdom". Thus the general rule is that a judgment of a foreign court in proceedings which ought instead to have been brought in arbitration in London shall not be recognised or enforced here. (ii) That general rule, however, is subject to the special provision that it does not apply where the person against whom the judgment is given has submitted to the jurisdiction of the foreign court: section 32(1)(b)(c). In such a case, it would seem to follow that the judgment of the foreign court may be recognised or enforced, and the question becomes whether it "should" be. (iii) The general rule is subject to another special provision, contained in section 32(2) , to the effect that the section 32(1) general rule "does not apply" where the agreement for the settling of the dispute otherwise than by proceedings in the courts of the foreign country whose judgment is in question was "illegal, void or unenforceable or ... incapable of being performed for reasons not attributable to the fault of the party bringing the proceedings". The merits of that exception appear to speak for themselves. In such a case it would again appear to follow that the judgment of the foreign court may be recognised or enforced here, and the question is whether it should be.

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