“(1) The arbitrator ascertains the facts. This process includes the making of findings on any facts which are in dispute. (2) The arbitrator ascertains the law. This process comprises not only the identification of all material rules of statute and common law, but also the identification and interpretation of the relevant parts of the contract, and the identification of those facts which must be taken into account when the decision is reached. (3) In the light of the facts and the law so ascertained, the arbitrator reaches his decision.”
“Provided that BUYER shall have fulfilled all of its obligations under this Contract (including but not limited to full payment of the Contract Price and settlement of any indebtedness to BUILDER), delivery of the SEMI-RIG shall be duly made hereunder by BUILDER, and such delivery shall be evidenced by a Protocol of Delivery and Acceptance signed by the parties hereto, acknowledging delivery of the SEMI-RIG by BUILDER and acceptance thereof by BUYER.”
“In the meantime, you mentioned that there is only a very limited period for the parties to find a suitable accommodation. However, as we mentioned from the beginning of the letter and you can see from our view set out above, the current difficulty and wide differences are attributable to the parties’ different views regarding the design responsibility. Therefore, DSME consider that the time has arrived for the difference with regard to design responsibility to be resolved. DSME propose that for a quick resolution of the design responsibility issue, the parties refer the issue of design responsibility to London arbitration to be resolved as a preliminary issue on a very expedited basis and timetable. DSME are strongly of the view that once the issue of the design responsibility has been ruled upon by an independent Tribunal, all other matters should be able to be discussed and be dealt with amicably thereafter on what is hoped would be a practical and commercial basis.”
“In addition, the Parties wish to address how they intend to proceed with certain other matters that are in dispute between the Parties so as to allow delivery of the Semi-Rig to proceed and these matters are addressed below.”
“… The Builder asserts a claim in this regard (the “FEED Claims”), which the Buyer rejects in full, which encompasses: 5.1.1 the Builder’s claims for losses and schedule extension resulting from deficiencies in the design documents, including but not limited to those covered in the Builder’s letter dated26 May 2015 addressed to Songa Offshore SE. 5.2 It is agreed that notwithstanding the delivery of the Semi-Rig pursuant to the agreement evidenced by this Addendum No. 2, the Builder is entitled to pursue the FEED Claims against the Buyer in arbitration under the relevant provisions in the Contract and that both the Builder’s and the Buyer’s rights in this regard are fully reserved.”
“Your letter refers to the need to incur significant time and expense in addressing extensive and highly technical material and obtaining specific input from experts. However, if your clients are prepared to agree to a preliminary issue on design responsibility, there will be no need for them to expend such time and costs at thisstage. DSME would be prepared to agree to an order whereby your clients pleaded back on the issue of design responsibility only, with any need to plead back to the balance of the claim postponed by agreement. We are also bound to say that the reference in your letter to the highly technical and expert aspects of the case fully justifies DSME’s proposal of a preliminary issue on design responsibility. Put shortly, unless DSME’s case on design responsibility is wellfounded, the technical aspects of the case do not arise, and there is no need to spendthe undoubtedly significant time and costs which would be required to investigate andresolve these issues.” (my emphasis) The letter then addressed claims in relation to two further Semi-Rigs with Hull nos. 3034 and 3035 where the surrounding facts were said to be somewhat different. It was proposed that the parties proceed with the issue of design responsibility on Hull nos. 3031 and 3032 first but: “For the avoidance of doubt, the preliminary issue in relation to H.3031 and H.3032 remains potentially determinative of the references in the cases of H.3034 and H.3035, in the sense that DSME accepts that if its case on design responsibility in relation to the earlier hulls fails, its claim in relation to the later hulls would also necessarily fail.”
“You baldly assert that the undefined “design responsibility” preliminary issue will be dispositive if decided against your clients, thereby commending it for consideration as a preliminary issue as it will dispose of any factual enquiry and hearing into how your clients constructed the vessels. Again, until you properly identify what it is that you have in mind, it is hard to know whether a preliminary issue will be dispositive of the case or a substantial part of it. ….”
“In our client’s view, the time has now come to grasp the nettle and for the Tribunal to direct a preliminary issue on design responsibility. If our client’s case on that pointfails, that will be the end of our client’s claim in this reference. If our client’s case succeeds, the Tribunal will have to consider then how to proceed with regard to the balance of the technical issues in the case…..”
“This Reply and Defence to Counterclaim is served without prejudice to DSME’s right to serve a Reply and Defence to Counterclaim dealing with the balance of the Defence and Counterclaim following determination of such preliminary issues, or in the event that no order for the determination of preliminary issues is made.”
“This application is based upon a consideration which has been apparent to DSME since the outset of this dispute: unless DSME is correct that it had a contractual right under the [contracts] to notify Songa of design defects within 90 days of contract award, with the result that the defects notified within that period are for Songa’s account, the technical issues adverted to above do not arise. Nomatter how fundamentally defective the FEED was, if DSME bore unqualifieddesign responsibility under the [contracts], these defects are irrelevant.Whatever delays and cost overruns resulted will be for DSME’s account in anyevent.The issues concerning whether and how these defects resulted in delaysand cost over-runs, and the calculation of the losses resulting, will never need tobe determined and no legal consequences will attach to them.” (Emphasis added)
“Whilst, therefore, the preliminary issue would not be entirely determinative of the counterclaim, it would be determinative of the vast majority of the counterclaim.”
“DSME has now served a Reply and Defence to Counterclaim in both references. The Reply is concerned only with the contractual arguments, on the basis that if there is a trial of preliminary issues, the work which would be required to provide a Reply on the technical issues, which would be substantial, would potentially be wasted. In the event that there is a preliminary issues trial and DSME is successful at that trial, DSME will seek permission in due course to serve an Amended Reply covering also the technical issues. ….”
“Further and/or alternatively, DSME relies on the matters set out hereinbelow as a defence to Songa’s Counterclaim. DSME’s claim included a claim (at paragraph Q.58) for the repayment of liquidated damages asserting that Songa was not entitled to make the deduction “having caused such late Delivery and thereby acted in breach of contract and/or on the basis that time was at large by reason of Songa’s breaches.”
“Here, the parties reached an understanding as to the fate of DSME’s claim but the Reply and Defence to Counterclaim was pleaded by agreement on a partial basis; and there was no discussion as to whether it would be open to DSME to advance alternative justifications for delay in the event that DSME lost on the preliminary issues.” (vi) Mr Marrin QC then addressed various factors relied on by Songa in support of the contention that DSME’s application was oppressive and abusive. These included the interests of finality in arbitration and economy and efficiency in the conduct of the arbitration which weighed in Songa’s favour. However, the issue that then seems to have outweighed these considerations for him was the impact on DSME’s Defence to the Counterclaim: “Beyond these, there is to my mind a further matter to be taken into account. It concerns the ambit of the Defence to Counterclaim. By its counterclaim, Songa claims liquidated damages in respect of some 487 critical days of delay. So far, DSME has, in defending that claim, sought to justify the delay solely by reference to its case, now rejected by the Tribunal, that Songa was responsible for the defects in the FEED. However, DSME now seeks to rely on its new allegations of breach in support of alternative defences to the counterclaim. These are, first, that time was set at large and, second, that the delay was attributable to Songa’s breach. So much is clear from paragraph Q.58 of theAmendedClaim Submissions. Yet, if Songa’s argument on abuse is well-founded, DSME will be shut out from advancing these defences even though they were never mentioned, still less expressly abandoned, in the exchanges leading up to the order for the hearing of preliminary issues upon which Songa relies.”
“The parties to Addendum No. 2 (and also no doubt the financiers) clearly assumed that, without a reservation of claims, delivery of the rigs would amount to an acceptance by DSME [that Songa] had “fulfilled all its obligations under this Contract”
“After considerable negotiation with DSME and Songa’s financiers from the end of May and through June 2015, this was dealt with in Addendum No. 2 which also contained a specific reservation for DSME’s claims which were stated to be the FEED claims. There was no reference to breach of contract or non-fulfilment of obligations or default on the part of Songa in Addendum No. 2.”
“However: a. The Tribunal went on to assert …. that “in truth the arrangement [for a PIH] made no sense unless DSME was not merely stating that it was its intention not to make new claims, but was actually promising not to do so if the Tribunal ordered the trial of preliminary issues.”
“It may well be ….. that what is now taken to be the rule in Henderson v Henderson has diverged from the ruling which Wigram V-C made, which was addressed to res judicata. But Henderson v Henderson abuse of process, as now understood, although separate and distinct from cause of action estoppel and issue estoppel, has much in common with them. The underlying public interest is the same: that there should be finality in litigation and that a party should not be twice vexed in the same matter. This public interest is reinforced by the current emphasis on efficiency and economy in the conduct of litigation, in the interests of the parties and the public as a whole. The bringing of a claim or the raising of a defence in later proceedings may, without more, amount to abuse if the court is satisfied (the onus being on the party alleging abuse) that the claim or defence should have been raised in the earlier proceedings if it was to be raised at all. I would not accept that it is necessary, before abuse may be found, to identify any additional element such as a collateral attack on a previous decision or some dishonesty, but where those elements are present, the later proceedings will be much more obviously abusive, and there will rarely be a finding of abuse unless the later proceedings involves what the court regards as undue harassment of a party. It is, however, wrong to hold that because a matter could have been raised in earlier proceedings it should have been, so as to render the raising of it in later proceedings necessarily abusive. That is to adopt too dogmatic an approach to what should, in my opinion, be a broad, merits-based judgment which takes account of the public and private interests involved but also takes account of all the facts of the case, focusing attention on the crucial question whether, in all circumstances, a party is misusing or abusing the process of the court by seeking to raise before it the issue which could have been raised before. As one cannot comprehensively list all possible forms of abuse, so one cannot formulate any hard and fast rule to determine whether, on given facts, abuse is to be found or not. … it is in my view preferable to ask whether in all the circumstances a party’s conduct is an abuse than to ask whether the conduct is an abuse and then, if it is, to ask where the abuse is excused or justified by special circumstances. …”
“The amendment point was contemplated, and was clearly not sought to be invoked in relation to post transfer date bulk transfers. That was a conscious decision on which the other parties were entitled to, and did, rely, to their prejudice on the matter referred to above. If the point was going to be taken it ought to have been taken at that point. All parties intended that the list of issues should be conclusive. That means that matters which must have been known to the parties as potential issues, but which were not to be litigated because a position was conceded, should be taken conclusively not to be issues. Once the litigation, based on that position, has started, and a decision issued which depends on it, it becomes too late to raise the point thereafter – it should have been raised before.”
“g. The doctrine is not restricted to cases where the alleged abuse comes in a separate, later action. It is possible to conclude that a claim or defence not initially raised ought properly, if it was raised at all, to have formed part of an earlier stage within a single action at which at least some matters were finally determined. h. It is a strong thing to shut out pursuit of a point not actually decided previously against the party raising it; and it may be an even stronger thing to do so in relation only to different stages of a single action. I would though add, as to the latter, that much may depend on the nature of the stages involved. Here, the parties had their final trial of all issues, not merely, for example, a decision on preliminary issues or a summary judgment decision on some particular claim or defence or a final determination of an individual point as part of dealing with some other interlocutory application. If the doctrine be available, as indeed it is, in the context of a single set of proceedings, the potential for it to apply on the facts where those are the circumstances plainly may arise more readily than during the interlocutory life of the process.”
“47. So far as the authorities are concerned, the proposition that the Henderson principle can be invoked even at a later stage in the same proceedings is now clearly established by Tannu and the line of subsequent cases that have applied it. Contrary to Mr Hutchings’ submission, the weight to be afforded to Jackson J’s decision in Ruttle is itself diminished by the fact that the earlier Court of Appeal decision in Tannu was not cited to him. 48. So far as the point of principle is concerned, I do not see why the existence of a broad discretion in the context of an application to amend is a reason to preclude altogether the application of the Henderson principle within the same action. A finding that a new claim would amount to an abuse must lead to the claim being disallowed, as a rule of law, and not merely as an exercise of discretion. If a new claim would amount to abuse, therefore, the mere fact that it is sought to be introduced in circumstances where the court has a broad discretion is not sufficient reason to preclude the application of the Henderson principle. … 63. For these reasons, while I consider that the Henderson principle is capable of being engaged upon an application to amend made after the strike-out of the original claim in the same proceedings, it is likely to be appropriate to apply it in more limited circumstances than if the earlier judgment was given after a trial (for example on a preliminary issue) at an earlier stage in the same proceedings.”
“a. The principle is a principle to obtain finality in litigation; b. The principle applies to prevent litigation of an issue which has been decided by a previous Tribunal, or of an issue relevant to the determination of that issue which ought to have been raised at the time of such determination; c. The principle does not apply to new issues not decided upon by a Tribunal previously where those are not issues within the scope of the issues previously determined; d. The principle relates to such issues which have been decided, as opposed to being a principle concerning pleadings.”
“It may be that the Court would have said that it was for Aldi to elect whether it wished to pursue its claims in the proceedings, and if it did not, that would be an end of the matter.”
“Notwithstanding the terms of any appointment of an arbitrator, unless the parties otherwise agree, the jurisdiction of the tribunal shall extend to determining all disputes arising under or in connection with the transaction the subject of the reference, and each party shall have the right before the tribunal makes its award (or its last award if more than one is made in the reference) to refer to the tribunal for determination any further dispute(s) arising after the commencement of the arbitral proceedings. When and how such dispute is dealt with in the reference shall be in the discretion of the tribunal.”
“A broad, merits-based judgment is required which takes account of the public and private interest involved and also takes account of all the facts of the case (Johnson v Gore Wood at 31D. The Tribunal did not purport to undertake such an exercise. ….”
“But as I understand what my learned friends are saying in this hearing is that not only should we not be allowed to pursue our claim for the amended claim, but that we should not be allowed to pursue that as a defence to their counterclaim. That is their case, and that is a remarkable submission. And although many of their arguments, I submit, don’t go to whether or not you should be allowed to pursue a defence, for example limitation wouldn’t arise, but that is their case. I will come back to that in a moment.”
“What should not happen, in my submission, is that you have applications made … where another party seeks to shut out someone, certainly from running bona fide claims, or, going beyond that, running a defence to a substantial claim on grounds, not that this has been decided before or some kind of genuine abuse, but because of something that was said in the course of submission during a procedural debate.”