ARBITRATION

International investment disputes - jurisdiction - treaties - provisions of bilateral investment treaty - principle of non-justiciability - application on challenge to jurisdiction of arbitration tribunal - UNCITRAL arbitration rules

Occidental Exploration & Production Co v Ecuador (2005): CA (Civ Div) (Lord Phillips of Worth Matravers Master of the Rolls, Lords Justice Clarke and Mance): 9 September 2005



The appellant Californian corporation, Occidental, appealed against a decision ((2005) EWHC 774 (Comm)) that the English courts had jurisdiction to entertain an application by the respondent, the Republic of Ecuador, challenging the jurisdiction of an arbitration tribunal.


The place of the arbitration was recorded as being London and was held under the arbitration rules of the United Nations Commission on International Trade Law. Arbitrators made an award in the appellant's favour. The respondent wished to have the award set aside under section 67 of the Arbitration Act 1996. The appellant raised the preliminary objection that the respondent's challenge required the English court to interpret provisions of a bilateral investment treaty made between the US and Ecuador, in contravention of the rule of English law making such an issue non-justiciable.


The judge held that the principle of non-justiciability did not apply and could not prevent the English court from entertaining an application made by a party challenging the jurisdiction of the arbitration tribunal, where the parties had agreed that their rights should be determined by domestic law. The appellant argued that the principle of non-justiciability did apply. If the respondent's challenge were allowed, the court would be required to enforce or interpret the terms of the treaty contrary to the principle in JH Rayner (Mincing Lane) Ltd v Department of Trade and Industry (1989) 3 WLR 969 or to 'adjudicate upon the transactions of foreign sovereign states' contrary to a wider principle of 'judicial restraint or abstention' as stated in Buttes Gas and Oil Company v Hammer (1982) AC 888.


Christopher Greenwood QC, Toby Landau (instructed by Debevoise & Plimpton) for the appellant; David Lloyd Jones QC, Simon Birt (instructed by Weil Gotshal & Manges) for the respondent.


Held, the respondent's challenge was justiciable by the English court. It had been held that the principle of non-justiciability was not an absolute rule, Kuwait Airways Corp v Iraqi Airways Co (2002) UKHL 19, (2002) 2 WLR 1353 considered.


Moreover, the authority on which the appellant relied itself recognised exceptions to the rule, JH Rayner considered. It followed that English courts were not wholly precluded from interpreting or having regard to the provisions of unincorporated treaties but the context was always important. The court was to take into account the special character of a bilateral investment treaty and the agreement that it was intended to facilitate, which was both recognised under English private international law rules and in the instant case subject to the Act.


The treaty involved a deliberate attempt to ensure for private investors the benefits and protection of consensual arbitration. That was an aim to which national courts should aspire to give effect by reason of internationalist spirit, and because it had been agreed between states at an international level.


Moreover, there was nothing in the resolution of the issues in the instant case that could make them remotely comparable in difficulty to the issues in Buttes Gas considered. Furthermore, the states that were parties to the treaty had deliberately chosen to provide for a mechanism for dispute resolution that invoked consensual arbitration that had domestic legal connotations. That factor was one that should make an English court hesitate long about subjecting such arbitration proceedings to special principles of judicial restraint developed in relation to international transactions or treaties lacking any foundation or incorporation in domestic law. Appeal dismissed.





CONTRACT


Sport - bias - clubs - disciplinary procedures - procedural impropriety - National Greyhound Racing Club - rules of racing - doping - stewards' inquiry - implied obligation of fairness

National Greyhound Racing Club Ltd v Tom Flaherty (2005): CA (Civ Div) (Sir Mark Potter (President), Lord Justice Scott Baker, Sir Peter Gibson): 14 September 2005


The appellant greyhound racing club appealed against a decision ((2004) EWHC 2838 (Ch)) that a stewards' inquiry had acted in breach of the appellant's implied duty of fairness under the contract between it and the respondent, a greyhound trainer.


The appellant was the body responsible for regulating the sport of greyhound racing. The respondent's greyhound had provided a positive urine sample at a race meeting and there had been an inquiry by the appellant's stewards into whether there had been a breach of the rules of racing, which bound the respondent as a matter of contract. The stewards found that he had been in breach of the rules of racing by administering a banned substance to the greyhound.


He had sought a declaration that the stewards' decision was invalid. The judge had found apparent bias on the part of the veterinary steward and that there had been a procedural irregularity in that the appellant's chief executive had been present during the stewards' deliberations, although he had made no contribution.


Timothy Charlton QC, Jasbir Dhillon (instructed by Kirkpatrick & Lockhart Nicholson Graham) for the appellant; Tim Penny (instructed by Russell Jones & Walker) for the respondent.


Held, the stewards were exercising a domestic jurisdiction that involved a contractual relationship between the respondent and the appellant. The appellant owed a duty to all its contracting members to conduct fair inquiries. The inquiry was inquisitorial in nature, conducted by stewards familiar with the world of greyhound racing, and was to be distinguished from court proceedings. That was the context in which the allegation of bias had to be considered.


The allegation of actual bias against the veterinary steward had been rejected. Therefore, the starting point for consideration of apparent bias was that the steward's integrity was to be presumed. There was nothing in his relationship with the stadium at which the doping incident occurred to take the case out of the ordinary run in which it was entirely appropriate for an individual with expertise to sit on a specialist tribunal.


There was nothing objectionable about the particular expertise he brought to the instant case. The veterinary steward's prior relationship with stadium staff did not disqualify him from participating in the inquiry. The steward had firm views about the adequacy of security arrangements at the stadium but security was very much a sub-issue. The judge had erred in concluding that there had been apparent bias.


It had not been good practice for the chief executive to retire with the stewards. The judge should have given full weight to the uncontradicted evidence of the stewards that the chief executive had taken no part in the deliberations. He was not the prosecutor. In any event, the process was inquisitorial not adversarial. The correct test to apply was that for apparent bias and there had been no real possibility of bias occurring through the chief executive's presence.


There had been no procedural unfairness and the conclusion of the stewards had been a just one because the case against the respondent was overwhelming. Having regard to the course of the proceedings, there had been a fair result, Calvin v Carr (1979) 123 SJ 112 applied. Appeal allowed.





MENTAL HEALTH


Human rights - capacity - consent - inhuman or degrading treatment or punishment - right to respect for private and family life - therapeutic or medical necessity for treatment - mental capacity to make decision - failure to accept mental illness

R (On the application of B) v (1) Dr S (Responsible Medical Officer, Broadmoor Hospital) (2) Dr G (second-opinion doctor) (3) Secretary of State for Health (2005): QBD (Admin) (Mr Justice Charles): 8 September 2005


The claimant (B) sought judicial review of a decision to give him treatment to which he refused to consent. He was detained under the Mental Health Act 1983. The first and second defendant doctors wished to treat him with anti-psychotic drugs. He refused consent.


The doctors considered that B did not have capacity to make the decision. Accordingly, they sought and authorised compulsory treatment under section 58(3) of the Act. B argued that he had the capacity to refuse medical treatment. The compulsory treatment proposed engaged article 3 of the European Convention on Human Rights and therefore could only be justified if it met the test in Herczegfalvy v Austria (1993) 15 EHRR 432, namely, that it had been convincingly shown that there was a therapeutic or medical necessity for it, which was not indicated by the evidence. The proposed treatment interfered with his rights under article 8 of the convention and was not permitted under article 8(2).


The test in Herczegfalvy applied to article 8 as it did to article 3, such that a therapeutic or medical necessity was required to be convincingly shown.


Paul Bowen (instructed by Scott-Moncrieff Harbour & Sinclair) for the claimant; Owain Thomas (instructed by Capsticks) for the first defendant; Jeremy Hyam (instructed by the Treasury Solicitor) for the second defendant; Ben Hooper (instructed by the Department of Health) for the third defendant.


Held, B did not have capacity to refuse medical treatment. He was able to comprehend and retain information concerning his proposed treatment. However, he did not believe that he was or might be mentally ill.


The fact of his illness was a cornerstone of the factors to be taken into account in considering the information about his proposed treatment. It followed that he was not able to use and weigh in the balance the relevant information concerning that treatment in reaching a decision as to whether or not to accept it.


Article 3 of the convention was not engaged. It was not the case that the mere fact that compulsory treatment was capable of reaching the article 3 threshold meant that it could only be justified if it met the test in Herczegfalvy.


Strictly, it was only when what was proposed reached the appropriate degree of severity to engage article 3 that the question of medical or therapeutic necessity arose. The determination of that question was for the court itself and in so doing it was quite proper for the court to place particular weight on the evidence of the responsible medical officer and the second-opinion appointed doctor. The relevance of their day-to-day experience as to the nature and extent of any relevant medical dispute was an important consideration in deciding between competing arguments.


In the instant case, it was unlikely that he would physically resist treatment and it was unclear whether his continued objection to it would cause him marked distress. It was hoped that the proposed treatment would enable him to reach capacitated decisions that could include a continued refusal of treatment.


In those circumstances, it was unlikely that compulsory administration of an anti-psychotic drug would result in intense physical or mental suffering sufficient to engage article 3.


The test in the case of Herczegfalvy did not apply to article 8 and a therapeutic or medical necessity was not required to be convincingly shown. The European Court of Human Rights did not state that that was the case and there was no other authority to support that proposition.


The justification for an interference with rights under article 8(1) by reason of medical treatment turned on the application of the orthodox three-stage test in article 8(2). However, the parties had proceeded on the basis that if the court was satisfied that it had been convincingly shown that that the proposed treatment was a therapeutic or medical necessity, all the elements of article 8(2) would be satisfied. The evidence indicated that there were sound and compelling reasons to believe that the treatment would achieve many or all of its purposes to a significant degree. In all the circumstances, the proposed treatment was a therapeutic or medical necessity. Application refused. bitration






TRANSPORT


Burden of proof - heavy goods vehicles - operators licences - loss of good repute - financial standing - professional competence - transport manager - adjournment - representation - disqualification

(1) Muck It Ltd (2) Hazel Merritt (3) Hayley Merritt (appellants) v Secretary of State for Transport (intervener) (2005): CA (Civ Div) (Lords Justice Tuckey and Rix, and Mr Justice Wilson): 15 September 2005


The appellant company and two directors appealed against the decision of the transport tribunal to revoke the company's operator's licence under sections 26 and 27 of the Goods Vehicles (Licensing of Operators) Act 1995 and disqualify it and the two directors from holding operator's licences for five years.


The directors were mother and daughter. The daughter was the owner of the company, and her husband was its transport manager.


After complaints of fly-tipping, the traffic commissioner held a public inquiry to consider the revocation of the company's licence. The directors did not attend the inquiry. The husband did attend and made representations.


The commissioner revoked the company's licence because it had failed to demonstrate its financial standing and had lost its good repute, determined that the husband had lost his good repute, and disqualified the appellants from holding operator's licences. The transport tribunal dismissed the appellants' appeal.


The appellants submitted that the traffic commissioner had erred in not adjourning the hearing to allow the company to appear, not permitting the husband to represent it, and holding that the burden lay on the company to satisfy him not to revoke its licence.


Tim Nesbitt (instructed by Jeremy Fear & Co) for the appellants; Alan Maclean (instructed by the Treasury Solicitor) for the Secretary of State.


Held, in all the circumstances, the commissioner was plainly entitled to proceed in the absence of the company on the basis that it had received proper notice and had chosen not to attend or had taken the risk that the husband would be permitted to represent it.


The commissioner should have permitted the husband to represent the company, but in the circumstances there was no further assistance that it could have provided to him that would have made any difference to his decisions. He was well aware of the distinction between the company and its transport manager. But in the instant case, as he held, the husband was the true controller of the company and the loss of his good repute entailed the loss of the company's good repute.


The commissioner had been entitled to conclude either that the directors were complicit in the husband's activities or that they had abdicated their responsibilities. By finding the facts concerning the company's operations and by finding on the balance of probabilities that the husband controlled it, the commissioner had met any burden that rested on him to be satisfied as to the loss of good repute of the husband, and therefore also of the company. The loss of good repute meant that its licence had to be revoked under section 27. Its appeal was dismissed.


The applicant for a licence bore the burden under section 13 of the 1995 Act of satisfying the commissioner that it fulfilled the relevant requirements, but the language of section 27 was different.


The Act implemented council directive 96/26 and article 6 of the directive provided for revocation of licences if the competent authorities established that the relevant conditions of good repute, financial standing and professional competence were no longer satisfied.


Accordingly, for revocation to be possible under section 26 or mandatory under section 27, it was the commissioner who had to be satisfied of the ground of revocation, and not the licence holder who had to satisfy him to the contrary.


The commissioner had failed to carry out a proper balancing exercise before disqualifying the directors because, had they been represented, there might have been something which could have been said on their behalf, if they had been ignorant of the company's activities.


The decision to disqualify them was quashed and the matter of their disqualification remitted to the commissioner for reconsideration in the light of any representations that they might wish to make. Appeals allowed in part.