Case: Eletson Gas LLC v A Limited & Ors [2025] EWHC1855 (Comm)
Guest: Alexander Wright KC, 4 Pump Court
Luke, Calum and Alexander discuss recognition of foreign arbitral awards in England & Wales, in the Commercial Court decision Eletson Gas LLC v A Limited & Ors.
This case concerns an application under s.32 of the 1996 Arbitration Act (“AA”) regarding which of the two rival boards of Eletson Gas (“EG”) had validly appointed an arbitrator on EG’s behalf.
The two competing boards were: D4-D8 (“SPs”) and D9-D10 (“KPs”). The significance of this judgment (1) determined which competing Board had validly appointed the arbitrator and (2) explained the importance of recognition of a foreign award for it to produce legal effect and to be capable of being relied upon in England & Wales (“E&W”).
The Court analysed issues under English law, US arbitration and bankruptcy law, Marshall Islands law, and Liberian law.
This case arose out of three bareboat charterparties (“BBCs”) under which three oil tankers, owned by the 1st to 3rd Defendants (“Owners”), were chartered to EG. The BBCs were subject to arbitration in London.
The BBCs provided EG with a purchase option to buy the tankers. Each of the two rival boards issued its own notice purporting to act on EG’s behalf. Owners argued they needed to know whose notice was valid. Owners referred the dispute concerning the rival notices to LMAA arbitration. Both rival boards, purporting to act for EG, appointed an arbitrator. The KPs then initiated proceedings under s.32 of the AA for the English Court to resolve.
In the s.32 proceedings, the Court had to consider the relevant background which involved bankruptcy proceedings and ongoing vacatur proceedings of an award in the US.
To resolve the dispute, the Court had to determine who controlled the shares of EG. EG had two types of shares: common and preferred.
The common shares were owned by Eletson Holdings Inc (“EH”), company that between 2023 and 2024 underwent reorganization proceedings in the US. The KPs controlled EH before the reorganization. Their position was that they maintained control of EH after the US bankruptcy proceedings. The SPs argued that the KPs no longer controlled EH and, to the contrary, D7-D8 and an additional individual became directors in EH following the reorganization. Here, the Court also had to analyse the impact of the US bankruptcy proceedings in EH’s place of incorporation, Liberia.
The dispute over the preferred shares concerned a JAMS Award of 2023 (“JAMS Award”) that decided such shares belonged to nominees of the KPs and no longer belonged to a company named Levona Holdings Ltd (“Levona”). However, the award was subject to vacatur proceedings in the US for fraud on the arbitrator and the US court had issued an anti-suit injunction forbidding an application to recognise the JAMS Award. On this point, the Court also had to consider the status of the JAMS Award in EG’s place of incorporation, Marshall Islands.
In deciding who had control of EG, the Commercial Court had to decide (i) who controlled EH and (ii) who controlled the preferred shares.
In respect of the first issue, HHJ Pelling KC decided that the US bankruptcy proceedings were effective over EH and that the KPs no longer controlled EH.
On the preferred shares, the Court had to decide whether the KPs’ nominees or Levona were the owners of the preferred shares. The KPs relied on the JAMS Award. The SPs argued that reliance was unwarranted because (i) no application had been made for recognition in E&W under s.101 of the AA and (ii) the JAMS Award had been suspended in the US.
Based on the Court’s reasons, Luke, Calum and Alex dissect the importance of (1) the recognition of foreign arbitral awards in the UK under the NY Convention pursuant to s.101 of the 1996 Arbitration Act and (2) why absent that recognition, a party will not be entitled to rely upon that award by using domestic principles of issue estoppel, res judicata.
