Reed Smith Client Alerts

The Court of Appeal, in its recent decision in the case of A and B v. C, D and E1, has brought further clarity to a “long-standing controversy” as to whether orders under section 44 of the Arbitration Act 1996 (the Act) can be made against non-parties to an arbitration.

Section 44 of the Act provides that, unless otherwise agreed by the parties, the court has the same power to make orders for the purposes of and in relation to arbitral proceedings as it would in respect of legal proceedings in relation to a range of matters, including, notably, the taking of evidence of a witness (section 44(2)(a)), the preservation of evidence (section 44(2)(b)) and the granting of an interim injunction or the appointment of a receiver (section 44(2)(e)).

The Court of Appeal in this case held that the English courts have the power under section 44(2)(a) of the Act to order a non-party witness to give evidence in aid of arbitration proceedings, and furthermore that the English courts may exercise this power in aid of an arbitration that is seated outside of England and Wales.

The Court of Appeal’s judgments focused specifically on section 44(2)(a) of the Act. The extent to which the other powers available to the court under section 44 of the Act can be exercised against a non-party has yet to be fully decided. This decision could, however, also pave the way for other subsections of section 44 to be construed broadly in future.

The facts

This case concerned an application to the English courts for an order under section 44(2)(a) of the Act to take evidence, by way of deposition, from a non-party to New York-seated arbitration proceedings.

The underlying dispute, and the subject of the New York arbitral proceedings, concerned two settlement agreements between the appellants and the first and second respondents relating to the exploration and development of an oil field off the coast of Central Asia. The key issue in dispute was whether certain payments made by the first and second respondents to a Central Asian government were bribes that were not to be taken into consideration in determining amounts owed to the appellants. The third respondent, who was not a party to the arbitration and was resident in England, had acted as lead negotiator for the respondents with the foreign government. The third respondent was not prepared to go to New York to give evidence in the arbitration.