Award – Appeal – Defendant employed by claimant

Wilson & Partners Ltd v Emmott: QBD (Comm) Mr Justice Andrew Smith: 8 June 2011

The claimant company was incorporated in the British Virgin Islands.

It practised both as a conventional law firm, with a practice particularly of transactional work, and as a business consultancy in central Asia. It had offices in, among other places, Almaty, Kazakhstan. Its managing partner was MW. The defendant, an Australian citizen, was admitted as a solicitor in the Supreme Court of New South Wales in 1978 and as a solicitor in England and Wales in 1985. The defendant was employed by the claimant under an agreement (the Emmott agreement) from January 2002 until his resignation in June 2006. The circumstances of his resignation gave rise to certain disputes which were referred to arbitration by the claimant. In the reference, the claimant claimed that the defendant had been in repudiatory breach of the Emmott agreement on the basis that: (i) he had purported to terminate it with immediate effect and without giving the requisite six months’ notice; (ii) in breach of his contractual and fiduciary duties to the claimant, the defendant had diverted work and business opportunities to an individual, RB; (iii) the defendant had received secret profits from RB and elsewhere, including a reward for acting in relation to a series of transactions leading to, and following the floatation of, Max Petroleum (Max) by way of 14.75 million shares in Max and some $950,000; (iv) the defendant had, with others, formed a competitor (Temujin) to the claimant that comprised a group of companies and a trust that once again had diverted work, commercial opportunities and clients or potential clients from the claimant; and (v) the defendant had misappropriated confidential documents, information and materials belonging to the claimant. The tribunal gave a second interim award dated 19 February 2010. In that award the tribunal found in favour of the claimant on a number of points but failed to award damages as a remedy because it felt that the claimant had already been adequately compensated by an order made which stripped the defendant of his one-third interest in the claimant. The claimant applied under section 68 and 69 of the Arbitration Act 1996 in relation to the award contending that the tribunal was guilty of a large number of serious irregularities in its conduct of the reference and of making numerous errors of law, in respect of each of which it was obviously wrong.

There were four main matters about which the claimant complained: (i) the tribunal’s conclusions about remedies; (ii) the tribunals findings about the Max shares and the payment of $950,000; (iii) the tribunal’s conclusions about money earned by Temujin; and (iv) the tribunal’s treatment of the consequences of the defendant’s breaches of duties owed to the claimant. Applications under both sections 68 and 69 of the 1996 act were made about each of those four matters.

The applications would be dismissed.

In the instant case, despite the large number of serious irregularities alleged against the tribunal and the many allegations of obvious errors of law, there was no substance in any of the allegations and all applications, both under sections 68 and 69 of the 1996 act, would be refused (see [117] of the judgment).

David Cavender QC and Edward Davies (instructed by ENYO Law) for the claimant; Philip Shepherd QC (instructed by Michael Robinson) for the defendant.