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A brief summary of Enrroxs Energy and Mining Group v. Saddad, 2022 BCSC 285 

In this decision of Enrroxs Energy and Mining Group v. Saddad, 2022 BCSC 285, the Supreme Court of British Columbia recognized and enforced an arbitral award made in Geneva, Switzerland under British Columbia’s International Commercial Arbitration Act (ICAA) and Foreign Arbitral Awards Act.

Nader Saddad (Saddad) is a Canadian and Iranian national and engineer in the oil and gas industry. Michel Pacha (Pacha), a French national resident in Geneva and the United Arab Emirates, is the sole shareholder and director of the petitioner, Enrroxs Energy and Group (Enrroxs). In 2014, Saddad and Pacha entered into a business relationship in the upstream oil and gas sector. Pacha would provide funds, while Saddad would provide expertise and contacts. They incorporated a company, Caspian Energy Solutions (Caspian). Initially, Saddad was the sole shareholder and sole director of Caspian. Pacha and Saddad entered into a number of agreements including a memorandum of understanding, a letter of undertaking (LOU), and two loan agreements (collectively, the Agreements), all of which contained a forum selection and choice of law clause requiring all disputes to be arbitrated in Switzerland according to Swiss law. Under the LOU, Saddad agreed to resign and forfeit his shares in Caspian (Shares) upon a breach of the LOU. Enrroxs advanced funds to Saddad under the loan agreements, and Saddad purchased oil and gas equipment (Equipment).

By April 2015, Pacha felt that the project was not proceeding in accordance with the Agreements, and he transferred the Shares to himself, as security, citing the LOU. Pacha filed numerous civil and criminal charges against Saddad in Dubai. In February 2017, the Dubai Court dismissed the criminal charges. In 2017, Enrroxs initiated arbitral proceedings against Saddad in Switzerland seeking repayment of various loans. Saddad participated fully in the Swiss proceedings. On January 28, 2020, the Swiss arbitrator issued his award (Swiss Award), finding Saddad liable for the amounts under the loan agreements and directing him to pay Enrroxs approximately $4.8 million. On August 30, 2020, Saddad commenced a claim in the Dubai Court against Enrroxs and others seeking a declaration that he owned the Equipment, which he valued at approximately C$2.56 million, and compensation for lost profits while Enrroxs held the Equipment. On June 16, 2021, the Dubai Court confirmed that Saddad was the owner of the Equipment but dismissed his claim for damages. The decision was confirmed on appeal. In November 2020, Enrroxs filed the within petition seeking recognition and enforcement of the Swiss Award by the B.C. Court and obtained an ex parte Mareva injunction against Saddad.

The Court recognized and enforced the Swiss Award. In doing so, the Court noted that s. 35(1) of the ICAA, which is modelled after the UNCITRAL Model Law on International Commercial Arbitration, requires the court to recognize the award unless the award debtor can establish that a specific s. 36 exception applies. Under s. 36(1)(b)(ii) of the ICAA, the court can refuse domestication of an award if it finds it would be contrary to public policy. However, the public policy exception is focused on the integrity and fairness of the foreign arbitral process and the laws on which the award was based, not on post-arbitral domestic enforcement matters. The Court determined that Saddad fell short of establishing the high threshold required to show that registration of the Swiss Award would offend public policy. The Court considered the fact that the parties agreed to have disputes determined by Swiss arbitration. In addition, the appropriate time to raise substantive issues about valuation and set-off was before the Swiss arbitrator or the Dubai Court. Saddad also failed to show that domestic recognition and enforcement would result in double recovery. Finally, the Court denied Saddad’s alternative claim for a stay of execution pending valuation, as there was no precedent on analogous facts on which to ground such a claim.

 

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