Not So Fast ' English Commercial Court Finds That LCIA Award Does Not Bind Third Parties

• Published date: 30 June 2022
• Subject Matter: Litigation, Mediation & Arbitration, Arbitration & Dispute Resolution
• Law Firm: McCarthy Tétrault LLP
• Author: The International Arbitration Blog and Alison Bond

In PJSC National Bank Trust and another v Boris Mints and others [2022] EWHC 871 (Comm), Foxton J of the English Commercial Court was tasked with deciding whether to allow the Claimant banks to amend their pleadings to include an allegation that findings from an award of the London Court of International Arbitration (the "LCIA"), involving parties allegedly under the control of the Claimants in the arbitration, bound the First, Second and Third Defendants in the Court proceedings (collectively the "Defendants"). Foxton J found that the arbitral award did not bind third parties, though he did not shut the door entirely for a different conclusion to be reached in the future on a different set of facts.

Background to the litigation

The Claimant banks brought an Application in the Commercial Court to amend their Particulars of Claim to allege that the Defendants in the Court proceedings were privies of the claimants to the LCIA arbitration with the result that the Defendants in the Court proceedings were estopped from denying certain allegations or it would be an abuse of process for them to do so.

Foxton J refused the Claimants' Application to amend their Particulars of Claim. He also rejected the Claimants' argument that: (1) the Defendants should be estopped from mounting a defence that was inconsistent with the findings in the LCIA arbitration, and (2) that it was an abuse of process for the Defendants to do so.

In arriving at his decision on issue estoppel, Foxton J considered whether the Defendants and claimants to the LCIA Arbitration were "Gleeson privies." Foxton J applied the test for issue estoppel laid out by Megarry VC in Gleeson v Wippell & Co Ltd [1977] 1 WLR 510, Ch D. In that case, Megarry VC described the doctrine of privity as being "narrow" and went on to state that "having due regard to the subject matter of the dispute, there must be a sufficient degree of identification between the two to make it just to hold that the decision to which one was party should be binding in proceedings to which the other is party".¹

Foxton J accepted that entities under the control of the Defendants in the Court proceeding (i.e., the claimants in the arbitration) were the "moving spirits" behind the arbitration.² However, Foxton J identified certain features of the arbitral process which require "a more restrictive approach to giving an award a preclusive effect in the context of Gleeson privies".³ The factors Foxton J cited in arriving at his decision...