Background
The Defendant, Bein Media Group (BMG), is an entertainment media company incorporated in Qatar, which operates satellite television channels in various countries. BMG broadcasts coverage of, amongst other things, major sporting events including the English Premier League. Through a subsidiary company, it holds the exclusive right to broadcast such coverage in the MENA region and broadcasts on ten sports channels in the region. The Claimant, Selevision Saudi Company (Selevision), provides broadcasting-related services in Saudi Arabia. The parties entered into a distributor agreement in May 2014 pursuant to which BMG retained Selevision as a non-exclusive distributor of set top boxes that allowed customers to watch BMG media channels (the Agreement). The Agreement contained an arbitration clause which provided for arbitration under the Arbitration Rules of the DIFC-LCIA Arbitration Centre and for the seat of the arbitration to be the DIFC in Dubai.
Selevision claimed that BMG had breached the Agreement by suspending or barring Selevision’s access to BMG’s customer relationship management system and by wrongfully terminating the Agreement. Selevision further claimed sums from BMG under the Agreement, including for unpaid commission. BMG counterclaimed, alleging that Selevision had breached the Agreement as a result of which BMG had suffered loss of around $30m. The disputes were referred to arbitration in June 2016. The arbitral tribunal issued a Final Award on 5 June 2018 concluding BMG had breached, and wrongfully suspended, the Agreement, and Selevision was entitled to terminate it (the Award). In the Award, the tribunal further dismissed BMG’s counterclaim and ordered BMG to pay Selevision sums of over $8m with interest.
Selevision identified that BMG held assets in England and Wales, and subsequently commenced proceedings in the English Court for leave to enforce the Award against BMG in the same manner as an English Court judgment. Selevision also applied for permission to serve the claim form out of the jurisdiction, and the order sought was granted without a hearing by Cockerill J in October 2020.
BMG’s application
In January 2021 BMG issued an application for permission to bring a counterclaim, to serve a part 20 claim on an additional defendant and for a stay of enforcement of the Award pending final determination of the dispute. Details of the counterclaim Selevision sought to pursue were set out in the application notice and arose from allegations that Selevision was responsible for “a very extensive campaign of broadcast piracy” concerning BMG’s broadcasting rights in the MENA region. The application confirmed that BMG did not dispute the validity of the Award but sought, in its counterclaim, sums that far exceeded the amount awarded to Selevision.
In determining BMG’s application the issues the Court had to decide were:
- Whether the Court had jurisdiction to allow a defence and counterclaim in an application for leave to enforce an arbitral award under the New York Convention and, if it did, should it exercise its discretion to grant permission in this case; and
- If the Court did exercise a discretion to permit the counterclaim, does it have jurisdiction to grant a stay of enforcement of the sum claimed by BMG pending determination of the counterclaim and, if it did, should it exercise a discretion in favour of granting a stay in this case.
Decision
In Mr Justice Butcher’s judgment dismissing BMG’s application, the Court considered that Part 20 proceedings, which govern counterclaims and other additional claims, are not contemplated as available in applications for permission to enforce arbitral awards. As those applications are intended to be a simple method to enforce an award already made, there appears to be no power to permit a process for allowing counterclaims. Such a claim would have to relate to a matter outside the scope of the arbitration agreement (otherwise it should have been brought within the arbitration) or be claims against third parties. However, notably, Butcher J did recognise that the “relevant Rules are not expressed with the clarity which would be desirable”. In particular, an argument arose as to whether the enforcement proceedings of the Award, as appears to be the case from the rules, should proceed under the Part 8 procedure which includes the application of Part 20. Notwithstanding this, the Court decided the correct reading of the rules is that Part 20 claims, including counterclaims, may not be brought within applications for enforcement of arbitral awards.
While this finding was determinative of BMG’s application, Butcher J went on to consider the other issues before the Court, making the following findings:
- The Court was not persuaded that, even if it had jurisdiction to permit it, BMG’s counterclaim should be permitted as it had very little connection to England and Wales. The fact that the counterclaim might not be fairly tried in Saudi Arabia did not mean it should be determined in the English Courts, and there were other jurisdictions in which it could be fairly tried which had a greater connexion to the dispute.
- The judge rejected Selevision’s argument that the Court did not have jurisdiction to grant a stay of enforcement of an award before a judgment is entered but could stay enforcement of such a judgment. Butcher J described this as “an artificial distinction”.
- The judge finally concluded that, if the Court had jurisdiction to permit the counterclaim and he had permitted it, he would have refused a stay of enforcement. Butcher J referred to the decision in Far Eastern Shipping v AKP Sovcomflot where it was stated the Court will “rarely, if ever” consider it is appropriate to make such an order in relation to a New York Convention award, and there were good reasons in this case not to depart from that principle.
Comment
The English Courts have historically demonstrated support for arbitration, rarely allowing challenges and, as highlighted in this case, supporting the enforcement of arbitral awards. While this decision is not surprising, it provides welcome confirmation that counterclaims cannot be brought within enforcement proceedings.
However, it is interesting that the judgment did highlight a potential ambiguity in the interpretation of the rules governing arbitration claims. The current rules appear to give rise to some uncertainty about the interplay between the procedure for Part 8 claims and Part 20 proceedings. The lack of clarity in this area was highlighted by Butcher J’s comments in this judgment, which further referred to the recent decision in VTB Commodities Trading DAC v JSC Antipinsky Refinery in which Cockerill J stated “I do however have considerable doubts as to whether there is jurisdiction to add defendants or permit Part 20 proceedings in respect of a Part 8 arbitration claim; and I think it right to flag this issue as one which may raise for determination in another case”. This decision seems to provide welcome guidance in this area but it will be interesting to see if further developments in the rules are proposed, particularly in light of the upcoming review of the Arbitration Act.
Selevision Saudi Company (A company incorporated in Saudi Arabia) v Bein Media Group LLC (A company incorporated in Qatar) [2021] EWHC 2802 (Comm)
Lorna Sleave