Earlier this year, Butcher J handed down the judgment of the Commercial Court in the extraordinary case of Contax Partners Inc BVI v Kuwait Finance House and Ors [2024] EWHC 436 (Comm), ultimately putting to bed an attempt by fraudsters to purloin over £70 million from a banking group associated with the Kuwaiti sovereign wealth fund. What made this attempted fraud particularly noteworthy was that its central mechanism was an abuse of the processes of the court used to enforce arbitral awards.

Enforcement of arbitration awards

In the vast majority of cases, an award obtained in an arbitration will be enforced in England and Wales using the procedure under s.66 of the Arbitration Act 1996. That section allows an award made by a tribunal pursuant to an arbitration agreement to be enforced as if it were a judgment or order of the court and/or for judgment to be entered in the terms of the award with the court’s permission.

A s.66 application must be made using an arbitration claim form, following the procedure in Part 62 of the CPR. Where the party seeking to enforce the award wishes to enforce it as if it were a judgment or order (as opposed to seeking that a judgment be entered), the application can be – and frequently is – made without notice, and will ordinarily be considered by the court on the papers.

CPR r62.18(9) provides a safeguard: a defendant may apply to set aside an order enforcing an award within 14 days of service of the order upon them (or a longer period set by the court if the order is to be served out of the jurisdiction), and the order may not be enforced until that period has expired or any such application by the defendant has been finally disposed of. This preserves the ability of the defendant to challenge enforcement of the award, whether by claiming that the tribunal lacked substantive jurisdiction under s.66(3) of the Arbitration Act 1996 or on some other ground.

The fraud

An arbitration claim form was issued naming Contax Partners Inc BVI (“Contax”) as the claimant and three emanations of a Kuwaiti banking group (collectively “KFH”) as defendants, and seeking to enforce an arbitration award said to have been obtained before the Kuwait Chambers of Commerce and Industry Commercial Arbitration Centre (“KCAC”). It was signed by Hamza Adesanu, who also filed a witness statement in support of the claim terming himself a “Solicitor at H&C Associates”, which was in turn named on the claim form as Contax’s legal representative. Whilst Mr Adesanu was (and, at the time of writing, apparently is) a solicitor, H&C Associates was not a firm of solicitors and was not authorised to conduct litigation.

The evidence filed in support of the claim stated that Contax had attempted to liquidate its investment in a product offered by KFH, that KFH had owed Contax approximately €53 million, that an arbitration agreement had been specifically negotiated, leading to an award from the KCAC in Contax’s favour, which was then unsuccessfully challenged before the Commercial Court of Appeal in Kuwait (“the CoA”).

A witness statement from Mr Filippo Fantechi – the Managing Director of Contax, one of its shareholders, and its controlling mind – was also filed in support of the claim, together with documents purporting to be (amongst other things) a copy of the arbitration agreement, the arbitration award of the KCAC, the decision of the CoA, ID documents for Mr Fantechi, and corporate documents for Contax.

On 9 August 2023, Butcher J made an order on the papers granting leave to enforce the award under s.66 of the Arbitration Act 1996 and entering judgment, giving a period of 28 days from service of the order for KFH to apply to set it aside. The order was then served on the office of a UK subsidiary of KFH, and on 15 September 2023 applications were made for third party debt orders against four banks, quantifying the judgment debt at £70,634,614.04 and seeking payment to a US bank account. Interim TPDOs were made on 1 October 2023, with a final TPDO being made against Barclays Bank for the sum of £3,176,376.30 on 27 October 2023.

At around this time, just as the persons behind the claim were on the cusp of abstracting over £3m, KFH finally became alerted to the claim as a result of the bank accounts subject to the interim TPDOs being frozen, and it made an urgent application on 2 November 2023 to prevent execution of the TPDOs – just in the nick of time.

A notice of change was then filed, stating that H&C Associates no longer represented Contax, and giving contact details for Contax including a gmail address and a postal address in the USA. There then followed further documents purportedly sent on Contax’s behalf signed by ‘A Georgiou’ and ‘Shloumo Ezzra’, neither of whom were statutory officers of Contax.

KFH’s challenge

KFH claimed it had never signed any arbitration agreement with Contax, had no knowledge of any arbitration, and that the award was a forgery, relying on:

• Mr Fantechi’s witness statement, stating he was wholly unaware of the proceedings until being contacted by KFH’s legal department on 1 November 2023, that he was not aware of Contax having any claim against KFH, had not authorised Contax to commence any arbitration against KFH or to instruct H&C Associates, and that Contax did not use the gmail address or US postal address provided. He also confirmed that his ID and Contax’s corporate documents appeared to be genuine, and that he was concerned that they had been fraudulently misappropriated.
• Evidence from persons named in the arbitration award (as lay witnesses, expert witnesses, and counsel) who stated they had not participated in any such proceedings.
• Correspondence from the relevant Kuwaiti authorities stating that there was no record of any proceedings between Contax and KFH.
• Expert evidence that the award and the CoA judgment would have been in Arabic if genuine, and that the judges named in the purported judgment are not judges of the CoA.

The most astonishing feature of the case was that the purported arbitration award appeared to be virtually verbatim identical to the judgment of Picken J in Manoukian v Société Générale de Banque au Liban SAL [2022] EWHC 669 (QB), save that the names of all persons named in that judgment had been transposed.

The findings of the Judge

On the first hearing of KFH’s application to set aside Butcher J’s 9 August 2023 order (at which the author appeared, representing Mr Fantechi and Contax, in support of KFH’s application), the Judge set aside the TPDOs on the basis that his previous order had not been properly served on KFH, and made directions for an expedited hearing of the application.

Further evidence was then filed very late by a party alleging it had taken an assignment of the debt owed to Contax by KFH, making various statements as to communications with Mr Fantechi and exhibiting documents purportedly signed by him. Perhaps as a result of the confusion caused by this evidence, the Judge considered that the issue of whether Contax had been authorised to act as it did could not be resolved without a trial.

However, the Judge had fairly little hesitation in finding that the arbitration agreement and award were fabrications, partly because of the evidence relied upon by KFH and partly due to a lack of corroboratory evidence in relation to the arbitration agreement itself (such as the original of the agreement, or contemporaneous correspondence relating to it). The Judge therefore set aside his order of 9 August 2023.

Conclusions

The decision stands as authority – if any were needed – that a forged arbitration agreement or (probably more importantly) a forged arbitration award cannot be enforced, and that any order granting enforcement must be set aside if forgery is established.

There are also positive lessons to learn from KFH’s conduct. KFH only narrowly avoided a TPDO being executed by rapidly securing an urgent injunction, and was extremely thorough in its approach to debunking the fabricated award.

Mr Fantechi’s embroilment in the dispute is a cautionary tale: despite instructing highly reputable solicitors and giving evidence in support of KFH’s position, and despite the compelling evidence before the court, the theft of Mr Fantechi’s identity and the misappropriation of Contax’s name were found to be triable issues not capable of resolution without (at least the possibility of) cross-examination.

Finally, the case underlines the importance of proper service, particularly in relation to ex parte procedures. Had there been a deeper inquiry into service at the stage of the TPDOs being obtained, the fraud may well have been discovered sooner. It is, in the view of the author, difficult to see how the procedure under s.66 could be modified so as meaningfully to mitigate the risk of fraud without at the same time negating the ready enforceability and status of genuine arbitration awards.