UK Court rejects enforcement of £70m fabricated award

One does not often come across a brazen attempt to defraud the Court. Indeed, it is almost unheard of for a Judge to realise that he had been misled to make an order on the basis of fabricated documents. However, the judgment of Contax Partners Inc BVI v Kuwait Finance House & Ors [2024] EWHC 436 (“Contax BVI v KFH”) centres precisely on such a scenario. The Honourable Mr Justice Butcher described this case to be “unique in [his] experience, and involves allegations of fraud on the court, as well as on others, which are very disquieting and of the utmost seriousness.”

The dramatic facts of Contax BVI v KFH are summarily set out here.

An arbitration claim was brought in June 2023, ostensibly by Contax Partners Inc BVI (“Contax BVI”) against three companies in the Kuwait Finance House banking group (“KFH”). Contax BVI was represented by H&C Associates, a London law firm.

The application filed by Contax BVI in the English High Court sought to enforce a Kuwaiti arbitration award dated 28 November 2022 which was said to have been rendered in pursuance of an arbitration agreement between Contax BVI and KFH dated August 2021. The application which was made on a without notice basis was accompanied by a witness statement, which stated that the award was rendered in the Kuwait Chamber of Commerce and Industry Commercial Arbitration Centre (“KCAC”), and that KFH had sought to appeal that award to the Commercial Court of Appeal in Kuwait and the Upper Court in Kuwait had endorsed the award.

The application was also supported by a witness statement from one Filippo Fantechi, who said that he was Contax BVI’s Managing Director.

Butcher J recalled in retrospect that he gave “undue allowance for difficulties apparently arising from documents being prepared by people who were not native English speakers and/or whose grasp of English procedure was not perfect.” However, it understandably did not occur to him then that “any of the documents might be fabrications. [He] was not on the lookout for fraud, and did not suspect it.”

After Butcher J made the order granting Contax BVI leave to enforce the award, H&C Associates purported to serve the order on a London company of the KFH Group. After the time to set aside the order had lapsed, H&C Associates applied for Third Party Debt Orders (“TPDO”) in relation to the £70m judgment debt and froze the third party bank accounts in compliance with the TPDOs. It was only after KFH’s bank accounts were frozen did they come to know of the proceedings.

KFH then applied to Court to prevent any payment under the TPDOs until Butcher J’s order was set aside, their case being that the order was not validly served on them but “more than this … there was never an arbitration award” and that “substantial parts” of the award was “taken from Picken J’s judgment in Manoukian v Société Générale de Banque au Liban SAL [2022] EWHC 669 (“Manoukian”)”.

Further, the “real Mr Fantechi”, Contax BVI’s Managing Director, said that he was totally unaware of these proceedings.

In these circumstances, Butcher J found that there was “no real doubt” that the award was not genuine. There were “very strong grounds” for concluding that the award was a fabrication, given, inter alia, the substantial lifting from the judgment of Picken J in Manoukian, the “use of exactly the same, far from standard, defined terms (eg ‘General Transfer Right Issue’)”, the “use of English legal terms (eg ‘claim in debt’, ‘exclusion clause’, ‘specific performance’) and “exactly the same phraseology being used, including the argot of English judgments (‘be that as it may’ …)”.

In addition, evidence was given that the award did not comply with basic requirements of Kuwaiti Civil Procedure Law, including that it is in English rather than Arabic, which “enhances the improbability that it is an award under the auspices of the KCAC.” Serious doubt was also cast on the Kuwaiti judgment enforcing the KCAC award, as “the names of the judges who purportedly issued the ruling does not belong to members of the Court of Appeal in Kuwait” and the titles “Junior Judge” and “Secretary of the Court” were terms that were not used in the Kuwaiti judicial system.

On the basis that the award and the Kuwaiti judgment were clearly fabrications and there was no arbitration agreement or arbitration giving rise to such an award, Butcher J set aside the order he had made.

The Court’s approach when faced with a fabricated arbitral award

Prior to Contax BVI v KFH, there was uncertainty as to the approach the Court should adopt in a setting aside hearing when faced with a fabricated arbitral award that it had previously enforced.

In Contax BVI v KFH, at paragraphs 30 to 31, Butcher J accepted the Defendants’ submissions that “the approach the court should take on this hearing” should be “effectively the same as that which it would adopt on a summary judgment application”. Hence, the Court will assess whether the issue of setting aside of the award was contingent on any triable issues. If the issue of whether the award should be set aside “depended on a matter as to which there was a triable issue, then the court should order a trial of that issue or issues, and make, no doubt, orders permitting oral evidence.” However, if there was no triable issue the Court can proceed to decide whether the award should or should not be set aside. This approach was found to be a “just and convenient one” in the circumstances.

On the evidence, the Court had no difficulty concluding that there was no arbitration agreement or arbitration, and that the award and the Kuwaiti judgment were fabrications. As there was no triable issue on those points, there was no need for the defendants to cross-examine the “principal participants” to uncover who was behind this elaborate scheme to perpetrate a fraud on the court.

As remarked by Butcher J, questions as to “who was responsible for the fabrications” and “whether there is culpability (and if any whose) as to the way in which the application for permission to enforce the purported award was presented to the court” remain unanswered. Given that the approach in Contax BVI v KFH was likened to that of a summary judgment, this dramatic series of events ends with a cliff-hanger.

Above all, Contax BVI v KFH serves as a helpful reminder that caution should always be exercised, even in the most unlikely of circumstances such as in manufactured evidence being presented to the Court to support enforcement of a made-up arbitration award.