Obrascon Huarte Lain SA (t/a OHL Internacional) & Anor v Qatar Foundation for Education, Science & Community Development, England and Wales High Court (Commercial Court), Judgment, Law, casemine.com

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Attorney(S)

Mr Joe Smouha QC, Mr Roger ter Haar QC and Mr Siddharth Dhar (instructed by Shearman & Sterling LLP) for the Claimants
Mr Simon Lofthouse QC and Mr Zulfikar Khayum (instructed by Quinn Emanuel Urquhart & Sullivan LLP) for the Defendant

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Obrascon Huarte Lain SA (t/a OHL Internacional) & Anor v. Qatar Foundation for Education, Science & Community Development

Smart Summary

Factual and Procedural Background

The Claimants ("the JV") entered into a contract with the Defendant ("QF") in 2009 for the design and construction of a hospital complex in Doha, Qatar, governed by Qatari law and subject to ICC arbitration. The contract included a termination clause (Clause 19) allowing QF to terminate by notice under specified conditions, including default by the JV.

In 2014, QF served a Notice of Default followed by a Notice of Termination based on alleged default by the JV, and subsequently called on performance guarantees. The JV disputed the validity of termination, contending that under Qatari law termination required a court or arbitral order unless the contract met certain statutory conditions (Article 184 of the Qatari Civil Code - "QCC").

Arbitral proceedings commenced in July 2014, with the JV raising the argument that Clause 19 did not satisfy the conditions for termination without court sanction only in late 2016. The Tribunal issued a Fourth Partial ICC Award in November 2018, finding that QF lawfully terminated the contract without a court order. The JV challenged this Award under section 68(2)(a) of the Arbitration Act 1996 on grounds of serious irregularity, alleging that the Tribunal failed to fairly consider the "Automatic Termination Condition" under Article 184(1) of the QCC.

Legal Issues Presented

Whether the Tribunal breached its duty under section 33 of the Arbitration Act 1996 by deciding the validity of QF's termination without giving the JV a fair opportunity to address the "Automatic Termination Condition" under Article 184(1) of the QCC.
Whether Clause 19 of the contract satisfied the requirements of Article 184 of the QCC to permit termination without a court or arbitral tribunal order.
Whether the Tribunal's interpretation and application of Qatari law, including its treatment of relevant Qatari Court of Cassation decisions, was procedurally fair and legally sound.

Arguments of the Parties

Appellant's Arguments (the JV)

The Tribunal decided the termination issue on a legal basis (the rejection of the Automatic Termination Condition) that was not properly explored with the parties, breaching the duty of fairness under section 33 of the Act.
The Tribunal rejected the existence of the Automatic Termination Condition without discussion of Article 184(1) and without giving the JV an opportunity to address the Tribunal's view, including its suggestion of a mistranslation of a key Qatari Court of Cassation decision (Decision 219 of 2011).
The JV contended that Clause 19 did not provide for automatic termination without recourse to court or arbitral order, and thus QF's termination was invalid.
The JV asserted that the Tribunal's finding deprived it of a reasonable opportunity to put its case, causing substantial injustice given the high financial stakes.
The JV rejected a new argument by QF that the two conditions in Article 184 could be "rolled up" into one, stating this was not argued before the Tribunal.

Respondent's Arguments (QF)

The Tribunal fairly considered the issues, including the Automatic Termination Condition, and preferred the expert evidence supporting QF's position that Clause 19 satisfied Article 184.
Article 184 does not require a court order to validate termination if the contract provides a sufficiently clear mechanism for termination by notice.
The Tribunal's suggestion of a possible mistranslation in Decision 219 was a mere speculation and not relied upon as part of its reasoning.
The JV had ample opportunity to address all relevant points, and the Tribunal complied with its duty under section 33 of the Act.
Even if the Tribunal erred on the termination issue, QF argued no substantial injustice would arise because of the Tribunal's powers to award compensation and the overall findings on delay, defects, and bad faith.

Table of Precedents Cited

Precedent	Rule or Principle Cited For	Application by the Court
Bandwidth Shipping Corporation v. Intaari [2007] EWCA Civ 998	High threshold for court intervention in arbitration; intervention only for serious irregularity causing substantial injustice.	The court reaffirmed the principle that arbitration awards should be upheld unless there is a fundamental procedural irregularity.
Zermalt Holdings SA v Nu Life Upholstery Repairs Ltd [1985] 2 EGLR 14	Tribunal's duty of fairness and approach to errors in findings of fact.	Supported the principle that tribunals are not required to address every point seriatim and that errors in primary facts do not necessarily amount to unfairness.
Latvian Shipping Company v The People's Insurance Company OEJSC [2012] EWHC 1412 (Comm)	Interpretation of tribunal's duty and approach to challenges under s. 68.	Emphasized the importance of reading awards reasonably and commercially, not seeking minor faults.
Terna Bahrain Holding Co v Al Shamsi [2013] 1 Lloyd's Rep 86	Definition and proof of substantial injustice caused by tribunal irregularity.	The court held that it is sufficient to show that the tribunal might have reached a different outcome but for the irregularity.
RJ v HB [2018] EWHC 2833 (Comm)	Standards for proving breach of tribunal's duty of fairness.	Reiterated principles governing the tribunal's duty and court's intervention.
Petrochemical Industries Company (K.S.C.) v The Dow Chemical Company [2012] EWHC 2739 (Comm)	Scope of tribunal's duty and court's approach to challenges.	Referenced in relation to the duty of fairness and procedural irregularities.
Sonatrach v Staoil [2014] EWHC 875	Application of duty of fairness in arbitral proceedings.	Used to illustrate the limits of court intervention.
Fleetwood Wanderers v AFC Fylde Ltd [2018] EWHC 3318	Example of successful remission applications.	Referenced by the JV to demonstrate instances where remission was granted.
K v A [2019] EWHC 1118 (Comm)	Example of successful remission applications.	Referenced similarly as Fleetwood Wanderers.
P v D [2019] EWHC 1277 (Comm)	Example of successful remission applications.	Referenced similarly as Fleetwood Wanderers.

Court's Reasoning and Analysis

The court approached the challenge under section 68(2)(a) of the Arbitration Act 1996, focusing on whether the Tribunal breached its general duty of fairness under section 33 by deciding the termination issue on a basis not fairly presented to the parties.

The court found that the Tribunal had carefully considered the relevant Qatari law provisions, including Articles 171, 172, 183, and 184 of the QCC, and the associated expert evidence. The Tribunal preferred the evidence of QF's expert, Mr Abu Shaikha, who opined that Clause 19 provided a sufficiently clear contractual mechanism satisfying Article 184, permitting termination by notice without the need for a court or arbitral order.

The JV's argument that the Tribunal rejected the existence of the Automatic Termination Condition in Article 184(1) was rejected by the court. Instead, the Tribunal rejected the JV's construction that automatic termination precluded termination by notice without court sanction. The Tribunal's reasoning, including its treatment of the Qatari Court of Cassation decision (Decision 219), was found to be a fair evaluative assessment rather than an unfair procedural surprise or irregularity.

The court observed that the Tribunal had engaged fully with the parties' submissions and evidence on both the Automatic Termination and Contracting Out Conditions under Article 184, and that any suggestion of a mistranslation in Decision 219 was a speculative remark not relied upon in the decision.

The court emphasized that the high threshold for intervention under section 68 was not met because the JV failed to show that the Tribunal made a decision on an unargued basis or deprived the JV of a reasonable opportunity to present its case. The Tribunal's findings were within the bounds of its evaluative role and did not constitute a breach of the duty of fairness causing substantial injustice.

Holding and Implications

The court DISMISSED the JV's challenge under section 68(2)(a) of the Arbitration Act 1996.

The direct effect is that the Tribunal's Award, including the finding that QF validly terminated the contract without a court or arbitral order, stands. The JV's request for remission of the termination issue for reconsideration was refused due to absence of procedural irregularity causing substantial injustice.

No new legal precedent was established by this decision. The ruling reinforces the high threshold for court intervention in arbitration awards and confirms that a tribunal's evaluative judgments on complex foreign law issues, when fairly conducted, are not lightly disturbed.