Tepe Insaat -v- Boru Hatlari lle Petrol Tasima AS and Turkish Petroleum and Botas International [2015] JRC 102 (13 May 2015)

judgment the commissioner: 1. This is an application by the Representor (" Tepe ") to re-amend its representation so as to join a Dutch company called Nacap BV (" Nacap ") as a Party Cited and for leave to serve Nacap outside the jurisdiction.

2. At the conclusion of the oral hearing on 23 rd April, 2015, I adjourned my decision and directed Advocate Moran to file the affidavit required under Rule 9 of the Service of Process Rules 1994 ("the 1994 Rules") in support of an application to serve out of the jurisdiction. This requirement has been the subject of a recent practice direction (RC 15/01) specifying what needs to be included in such an affidavit and it should have been filed in supported of the application. I gave Advocate Moran until 23 rd April, 2015, to file the necessary affidavit with consequential directions for Advocate Nicholls to file any written submissions thereon by 29 th April, 2015, with Advocate Moran having a right to file contentions in reply by 30 th April, 2015. It was agreed that thereafter I would reach my decision on the basis of the oral submissions heard on 23 rd April, 2015, supported by the subsequent written submissions. Background to the application 3. The background as pleaded by Tepe is as follows. Tepe is a Turkish construction company. The First Respondent (" Botas ") is a Turkish company which is owned by the state of Turkey. Its primary activity is the transportation of crude oil and natural gas by pipeline.

4. On 16 th April, 2002, Tepe entered into an unincorporated joint venture (the " Tepe-Nacap JV") with Nacap (then called Nacap Nederland BV), a Dutch company. Subsequently, on 20 th September, 2002, the Tepe-Nacap JV entered into a contract with Botas to carry out various construction work in connection with a section of pipeline in Turkey ("the Lot A Contract").

5. The Lot A Contract contained an arbitration provision to the effect that any dispute between the parties should be referred to arbitration under the rules of the International Chamber of Commerce (ICC) with three arbitrators being appointed in accordance with the ICC rules. English law was specified as being applicable to any dispute and the place of arbitration was to be Paris.

6. Disputes subsequently arose and in due course the Tepe-Nacap JV referred the disputes to the ICC for arbitration in Paris in June 2008. Three awards were in due course made by the arbitrators on 18 th October, 2010, 11 th October, 2012, and 21 st May, 2013, (together the "Lot A Arbitration Awards").

7. Subsequently, on 25 th July, 2014, Nacap and the Tepe-Nacap JV assigned to Tepe all their rights under the Lot A Contract and under the Lot A Arbitration Awards. Notice of that assignment was given to Botas by letter dated 31 st October, 2014.

8. Botas has not paid the sums due under the Lot A Arbitration Awards and accordingly, on 20 th November, Tepe presented a representation seeking to enforce the award against the assets of Botas in Jersey. At the time of the original representation, the only Jersey situated asset referred to was the Second Respondent, which is a Jersey company. Subsequently, the representation was amended to join the Third Respondent, which is also a Jersey company. Both of these are owned by Botas . The Court has granted an interim arret over the shares in the Second and Third Respondents together with any sums owed to Botas by those two Jersey companies.

9. In its answer to the representation, Botas has pleaded, amongst other matters, state immunity. However at paragraph 2 of the answer it has also challenged the assignment in the following terms:- "2. Clause 1.7.1 of the Particular Conditions of Contract prohibits any assignment of any right arising under the Contract. The Lot A Arbitration Awards Debt and any other right under the Lot A Arbitration Award are such rights. As a consequence, they are not assignable to the representor. The representor is required to prove that the other requirements to make out a valid assignment are established." 10. In its reply, Tepe disputes the challenge to the assignment and pleads that it is valid and not prohibited by the Lot A Contract. Nevertheless, in order to protect the position in case the Court should agree with Botas on the assignment point, Tepe now wishes to join Nacap to the proceedings. It therefore wishes to file a re-amended representation which joins Nacap as a party cited. The only amendments to the amended representation are to include a new paragraph 3B which simply states that Nacap is a Dutch company and a new paragraph 8A which reads:- " Nacap is joined to these proceedings for the sole purpose of ensuring that it is bound by any Orders made." Submissions 11. Advocate Moran submits that, whilst Tepe's primary case is that the assignment is valid and that Tepe can

accordingly enforce the award on its own, she wishes to ensure that the Court is able to determine the real issues in dispute (namely whether Botas must pay the sums due under the Lot A Arbitration Award) even if the Court is against her and holds the assignment to be invalid. She says that it is not clear whether the rights of Tepe and Nacap as parties to the Lot A Contract are joint or several. If they are several or joint and several, there is no difficulty. But if they are joint, then it is arguable that Nacap should be a party to the proceedings. She has not been able to find any authority as to Jersey law relating to this procedural point but under English law, the position is that all joint creditors should be joined to an action. If one joint creditor is unwilling to join, he can be joined as a defendant as long as he is given an indemnity as to costs. As authority for this proposition she refers to Halsbury's Laws of England (5th Edition) Vol. 22 at paragraph 642:- "Where, by a simple contract... a promise was made to a number of person jointly, they were entitled collectively to performance of it. Proceedings to enforce the performance of such a promise could be taken only in the names of all the joint promisees ; one of them could not sue alone, because the promise was made to all of them jointly, and not to any of them separately. Where a joint promisee refused to

be joined as a plaintiff in the proceedings, he might, after tender of an indemnity against costs, be made a defendant. The result was that at common law where a promise was made to two or more persons jointly, it could be enforced by any of the promisees . It is certainly the case with regard to a promisee who has supplied any part of the consideration, and it was probably also the case where he had provided no part of the consideration; but there should be distinguished the situation of joint and several promisees ." 12. To like effect is the extract from the Common Law Series; the Law of Contract , paragraph 6.347 which states simply:- "All joint creditors should be parties to the action. If one joint creditor is unwilling to join, the others should offer him an indemnity as to costs and, if he refuses, join him as a co-defendant." 13. This rule was considered by the English Court of Appeal in a case of Burnside v Harrison Marks Productions Limited [1968] 2 All ER 286. The facts in that case were that the defendants had engaged the plaintiff and a Mr Templeton jointly to write a script but when it was delivered the defendants refused to pay on the ground that the script was not good enough. The plaintiff sued the defendants. The defendants objected that Mr Templeton was not a co-plaintiff. Mr Templeton declined to join as plaintiff and the defendants objected to his being

joined as defendant on the grounds (amongst others) that the plaintiff had not offered Mr Templeton an indemnity for costs. The Court of Appeal held that Mr Templeton should be joined as a defendant and Lord Denning MR said this at 287:- "I think that the judge's decision proceeds on a misunderstanding of Johnson v Stephens and Carter Limited . That case shows that, when a promise is made to two persons jointly, then one of them cannot ordinarily require the other to join as plaintiff, and cannot add him as a defendant, unless he offers him an indemnity against costs. This, however, is a rule made for the protection of the joint contractor whom it is sought to add as plaintiff or defendant. It is not made for the benefit of the other contracting party who is the defendant to the action. He cannot insist on the indemnity or the offer of it; for it is no concern of his. All that he can require is that both the persons, with whom he made is contract, are before the court. So long as they are both there, even if one is a defendant, he cannot complain; and they are both present in this case, Mr Burnside as plaintiff and Mr Templeton as a defendant." 14. Advocate Moran submits that the key feature of the English rule is that a joint creditor must be before the court. This was the point made clear by Lord Denning. But it is clear that he cannot be forced to be a

plaintiff. Accordingly, if he is unwilling to act as a plaintiff, he is joined as a defendant. In such circumstances, having refused to be a plaintiff, he will presumably play no active part as a defendant; he will certainly not be defending the claim. It is simply that his presence as a party then allows the court to give judgment against the debtor in respect of a debt owed to joint creditors. She submits that, rather than join a reluctant joint creditor as a defendant, the better course in Jersey is to join him as a party cited. This is a concept which is not available in England but it much more accurately reflects the position. There is no question here of Nacap wishing to defend the claim; on the contrary it is entirely happy that Tepe pursue it. The joining of Nacap as a party cited will however mean that it is before the Court so that, by analogy with the English rule, the Court will be able to grant judgment against Botas even if it holds that its liability is to Tepe and Nacap jointly rather than to Tepe alone pursuant to the assignment.

15. Advocate Nicholls did not dispute that English law was as described in the extract from Halsbury as elaborated in the case of Burnside . However, he submitted that simply joining Nacap as a party cited would achieve nothing. A party cited was an entirely neutral party (such as a bank holding assets in dispute) and it did not put forward any particular case. Tepe had not explained how simply joining Nacap as a party cited would assist. If it were the case that the assignment was invalid, Tepe and Nacap , as joint creditors, would have to put forward a claim (presumably based on the Lot A Arbitration Awards) which would require Nacap to put forward a positive case. As party cited it would not be doing this and accordingly it was not clear how joining Nacap as a party cited would allow Tepe to assert rights to enforce the award that - assuming the assignment to be invalid - it did not possess. He therefore opposed the proposal to join Nacap as a party cited on the basis that it would achieve nothing. Furthermore, it could prejudice Botas in that, if Botas lost on the merits of the case but was successful on the assignment point, it might suddenly find at the end of the hearing that Nacap then put forward a positive case that it was a joint creditor and Botas would be faced with a new claim right at the end of the case. Nacap should either be a joint plaintiff or should

be joined as a co-defendant (or respondent as these proceedings are brought by representation) as in England. Decision 16. During the hearing I put to Advocate Nicholls that, if he was right in his submission that simply joining a joint creditor to the proceedings was insufficient and that such a creditor had to put forward a positive case, it was difficult to understand the English rule. A reluctant joint creditor joined against his will as a co-defendant, was hardly likely to be putting forward a positive case in support of the plaintiff creditor. Yet it was clear that the English courts considered the mere presence of the joint creditor as a defendant as sufficient to enable judgment to be given against the debtor. He was unable to explain satisfactorily to me how it would be sufficient for Nacap in this case to be joined as a respondent but insufficient for it to be joined as a party cited.

17. As far as I am aware, England and Wales does not have the concept of a party cited. But it seems to me that joining a reluctant joint creditor as a party cited must be as effective as joining him as a co-defendant (as in England). By definition, a reluctant joint creditor joined as a co-defendant will almost certainly play no part in the proceedings and will not put forward a positive case in support of the plaintiff joint creditor. The reluctant joint creditor does not wish to be a party at all and is joined essentially against his will. As a co-defendant, the reluctant joint creditor might even be presumed to be opposing the relief sought by the plaintiff. Yet clearly joining such a reluctant joint creditor as a co-defendant is sufficient to enable the court then to grant relief in favour of the joint creditors as a whole. This must be because all that is required is that the reluctant joint creditor should be a party to the proceedings, no matter in what capacity.

18. Accordingly I hold that joining Nacap as a party cited in Jersey will have the same effect as joining a reluctant joint creditor as a defendant in England and gives the Court power then to give judgment against the debtor because all necessary parties are before the Court.

19. In my judgment it would be highly undesirable if this case were to be contested and Tepe were to be successful on the main issues but there was then to be some technical issue as to whether the awards were enforceable by Tepe alone or by Tepe and Nacap as the original parties to the Lot A Contract and the original parties to the arbitration. Far better to have all the parties before the Court so that, in the event of it being found that the award is enforceable in this jurisdiction, it can be enforced by whomsoever is entitled to enforce it. As this Court said in Taylor v Kitchin [1985-6] JLR N 4a), it will normally allow such amendments as are necessary to enable it to determine the real issues in dispute provided that no party to the action would thereby be unavoidably prejudiced. I do not consider that there will be any prejudice in this case. The simple joining of Nacap as a party cited will not lead to any delay in the trial date, nor will it put Botas to material extra work or preparation.

20. In the circumstances, I give leave for Tepe to re-amend its representation. Nacap is a Dutch company and therefore outside the jurisdiction. Tepe accordingly requires leave to serve outside the jurisdiction. As stated at the beginning of his judgment, Advocate Moran failed to file the necessary affidavit under Rule 7 despite the recent Practice Direction (R/C 15/01) emphasising what should be contained in such an affidavit. However she has now done so and I am satisfied that it is proper to serve these proceedings on Nacap out of the jurisdiction pursuant to Rule 7(m) and ( i ) as well as Rule 7(c) of the 1994 Rules. Authorities Service of Process Rules 1994. Halsbury's Laws of England (5th Edition). Common Law Series; the Law of Contract. Burnside v Harrison Marks Productions Limited [1968] 2 All ER 286. Taylor v Kitchin [1985-6] JLR N 4a. Page Last Updated: 18 Jan 2017 BAILII: Copyright Policy | Disclaimers | Privacy Policy | Feedback | Donate to BAILII