Enforcement of a Foreign Award and the Slip Rule - Norsk Hydro v State Property Fund of Ukraine & Others [2002] All ER (D) 269

The Commercial Court recently (18 October 2002) had to deal with the question of the validity of an enforcement order in respect of a foreign arbitral award. The parties named in an award differed from those referred to in the enforcement order. The case involved an agreement governing the development of a terminal in the Ukraine and which regulated the relationship between the various owners. A dispute between the owners arose and Norsk Hydro claimed that it had been wrongly expelled from the joint venture; that, effectively, its interest in the terminal had been expropriated.

The agreement was to be governed by and construed in accordance with the substantive laws of Sweden. It also provided that any dispute arising out of or in connection with the agreement was to be resolved by arbitration under the UNCITRAL Arbitration Rules. The Stockholm Chamber of Commerce was to be the appointing authority for the three arbitrators, and the seat of the arbitration was also to be in Stockholm.

One of the parties referred to in the agreement as an "owner" was the "State Property Fund of Ukraine, being an agency of the Government of Ukraine". However, in the Request for Arbitration, the first Respondent was referred to as "Republic of Ukraine, represented through the State Property Fund of Ukraine." There was no issue as to sovereign or diplomatic immunity, this having been waived, and there was also no issue as to the contractual capacity of the parties. Throughout the arbitration, the first Respondent did not participate, save to contest jurisdiction on the ground of a signature point. However, all communications to it were sent to the address of the State Property Fund.

Norsk Hydro requested the Tribunal to find that the Respondents were in breach of the agreement and that they should pay, jointly and severally, US$21.26 million plus interest from the date of the award. The Tribunal, finding that it had jurisdiction to hear the claim and that the agreement was valid, ruled that "the Republic of Ukraine, through the State Property Fund" (and one other Respondent - Concern Primorsky) were in breach of the agreement. An award in the sum of US$16 million plus interest was made in favour of Norsk Hydro.

The award remained unsatisfied. Despite various negotiations, Norsk Hydro was unable to resolve the matter. Consequently, an application was made to the English Courts in 2002 for permission to enforce the award against the Respondents. The Respondents...