Founding Partner Sarosh Zaiwalla discusses his approach to law at the Indo-UK Legal Summit

November 22 2018

My dear colleagues and friends.

It is an honour to be invited as a speaker to address such a distinguished gathering of Indian lawyers and I thank the conference organiser for inviting me. The topic on which I shall be speaking today is my experience and achievement of an Indian starting an English law firm in the one square mile financial district of the City of London. It was way back in 1982, when London was not as diverse as it is now. 95% of my firm’s clients today are international clients. I do so in order to inspire other fellow Indians that they are capable of achieving the same in whatever field they are in and in support of  the India – UK good relationship. This requires silent courage and to always act with courtesy and complete integrity. 

Most lawyers today think of strategy as a way to ambush the opponent. I have never followed this approach. Instead I have considered an overriding requirement to show silent courage and pursue what you believe should be the correct interpretation of the law. This principle has never failed me and I have been successful almost invariably against large international firms before the English Court. I have often found that a case which appears most difficult there may be one or two strategic issues of law which needs to be focussed on and not take all possible issues before the Court.

Many years ago when I had just started my firm, we were fortunate to have the Indian High Commission in London as a client. At that time India was going through a deep financial and food crisis and the United States was donating free wheat to India under what was known as a PL480 scheme. The Indian Government had to provide ships to carry the wheat to Indian ports and practically every charter party for the carriage of the vessel had a dispute which went to London Maritime Arbitration. The Indian Government would always pay 10% balance of freight and demurrage late and there were countless maritime disputes going to arbitration in London. One such case was before the Sole Arbitrator, Mr Bruce Harris, who awarded for the first time compound interest. This concerned a voyage made by a ship called La Pintada. The arbitrator made an award for compound interest on the basis of Lord Denning’s judgment in a case called Techno-Impex [1981] 1 Lloyds 587.

The Indian Government was very concerned as they faced huge liability in respect of interest on a compounded basis. This liability would go to millions of pounds as there were several charter parties. When the case came to me I looked at the Techno-Impex judgment and I researched the law myself and came to the conclusion that it was very arguable that Lord Denning was wrong. Awarding compound interest would amount to making the debtor an involuntary banker. Jurisprudence wise compound interest is awarded where there is a conclusive presumption that the defendant has made a profitable use of the money.

As a then very young lawyer, I appeared before the Sole Arbitrator as an advocate who enthusiastically turned down my interpretation of law. The shipping barristers’ chambers all considered my view on the law as hopeless. No shipping or commercial barrister were prepared to accept my firm’s instructions to argue the law as I wanted them to argue. So I decided to instruct Counsel from labour law chambers, who was none other than Tony Blair who later went on to become the Prime Minister. Earlier, Tony had shown interest in being instructed in my firm’s maritime cases. Tony suggested that I should also instruct Derry Irvine (who later went on to become Tony Blair’s Lord Chancellor) as a leader as this would be an important test case.

Before I got instructions from my client to instruct Tony Blair and Derry Irvine for the Court hearing, I went for a preliminary chat with both Tony and Derry at their chambers to make sure that they agreed with my proposed submissions on law and after nearly 2 hours of discussions on law they appeared to accept my view of the law that the Court of Appeal had wrongly decided the Techno-Impex’s case.

The matter came up for hearing before Mr Justice Staughton in the Commercial Court. On the day of the hearing I received a call at 9 in the morning from Tony Blair informing me that he and Derry Irvine wanted to see me with the client, the Indian High Commission’s representative at 9:45am. The hearing was at 10:30am. When I met Derry and Tony outside the court room with my client, I was told by the Counsel team that my argument was hopeless and it would adversely affect the reputation of the Indian Government if they were to put my argument to the Court. I firmly disagreed.

I advised the clients representative to not follow Derry Irvine QC and Tony Blair’s advice. Reluctantly the Counsel team entered the Court room for the hearing along with me and the client’s representative from the Indian High Commission. Mr Justice Staughton had apparently come well prepared for the hearing as English Judges normally do and he found my point on law very interesting. He had obviously done a lot of research and asked many questions of Derry Irvine QC. Derry Irvine would turn around to Tony Blair for an answer and there was a blank. He would tell the Judge that he would answer the Judge’s questions after the lunch break. Martin Moor-Bick, who later went on to become Vice President of the Civil Division of the Court of Appeal was the opposing Counsel. The Judge grilled him too. To both Counsel teams’ surprise the Judge referred the matter back to the arbitrator for reconsideration based on my submissions on law [1983 1 Lloyds 39].

When the matter went back before the Sole Arbitrator, again I appeared before him. The arbitrator refused to follow Mr Justice Staughton’s guidance given in his judgment. In a post-script to his new award he said that he had maintained his decision after reconsideration with great enthusiasm. My client challenged the award once again under the Special Case Procedure which was applicable to arbitration in those days. The matter came up again before Mr Justice Staughton. I could not find any barristers from any commercial or maritime chambers who were prepared to accept my firms’ instructions to argue the point of law which I had put forward on behalf of my client, the President of India. Ultimately, I managed to find an English Counsel called Ellis Myer from matrimonial chambers. Mr Myer was an elderly counsel who many years ago had practiced in Calcutta High Court. Mr Justice Staughton thought my point was an arguable one and of his own volition told the parties that he intended to give leave to leap frog to the House of Lords. 

In the House of Lords I instructed Nicholas Phillips QC who later went on to become the first President of the Supreme Court. We won 5-0 in the House of Lords [1984] 2 All ER 773. All these judgments are reported judgments.

I also recall one of my firm’s cases many years ago called Lips Maritime Cooperation where we were acting for the Government of India. Anthony Grabiner QC (now Lord Grabiner) was appearing for the Respondent opponent ship owner. My client’s counsel was Anthony Diamond QC. When Mr Diamond finished opening the appeal, Lord MacKay of Clashfern, who was then the Lord Chancellor, asked him if he was going to deal with a point of law in respect of which I had made submissions in my affidavit at the hearing before the lower Court.  Mr Diamond turned back towards me and said to the court “with the greatest respect I am unable to put it forward”. 

After Mr Grabiner QC finished his reply, Lord Brandon asked him to deal with my submissions made in my affidavit on the issue of construction of a term in the Charter Party Contract, which was the main issue before the court. Mr Grabiner QC told the court he had no obligation to do so, as Mr Diamond QC had not made any submissions in respect of what I had submitted in my affidavit. At this, Lord Brandon expressly showed some annoyance and said, “we are the highest court in the land and we are restricted to determine an issue of law before us”. 

The hearing concluded, and a few weeks later there was the Judgment. My client, The Government of India, had won based on the very point of law in respect of which I had made submissions in my affidavit and which both sides Counsels before the House of Lords had refused to argue because they considered it to be of manifestly wrong submissions. The only down side was that because of this the House of Lords did not award costs to our client of the appeal. A few weeks later, Lord MacKay, who was then the Lord Chancellor, attended a Christmas party at my office. At this event he told me that he had only accepted the invitation because he wanted to see my office. Earlier this year Lord MacKay also invited me to House of Lords for lunch with him where he enquired how the firm was doing.

A strategy in litigation is not simply a physical strategy but a strategy on how the law should be interpreted and put before the Court. One other interesting case which came to my firm was an arbitration award by three eminent QC’s, Adrian Hamilton, Martin Moor-Bick and Gordon Pollock. The arbitrators made an award against The Indian Oil Corporation, one of the Indian oil giants owned by the Indian government who had never previously been a client of my firm. The award was for some US$18million. For this arbitration, parties had agreed not to appeal which was permissible and binding under the Arbitration Act 1979. So there was no remedy available under the Arbitration Act to challenge the award in Court. Unusually, one of the arbitrators, Gordon Pollock QC, had added a post-script to the award effectively saying that the Indian Oil’s legal team was not competent. The postscript read as follows.

"I wish to record my regret that the sellers had not at some stage broadened the scope of their case…..

"The documents gave rise to a strong indication that the buyers had intended to create clear impression in the minds of the seller that if a satisfactory settlement of the demurrage claim were made, nothing further would be heard of the “enormous losses” said to have been suffered by the buyers…..

In the result I believe that the sellers had far stronger case than they allowed themselves to advance, one of which might well have succeeded had that been formulated differently….”

Right up to the arbitration award, Indian Oil was represented by a big City maritime firm Ince & Co. After the Award was published, the Indian Oil’s legal team had consulted two eminent silks from the Temple. Both of them had said there was no remedy available under English law. Indian Oil came to me in a desperate state. It was a Government company. The head of the legal department said “if we lost there was no problem but this comment of Mr Pollock in the award would have our heads chopped off in India” and urged me to do something. The question was what, if any, remedy a party has, who had lost the arbitration because of incompetence of its legal team which included both English Counsel and solicitors.

I instructed a new Queens Counsel from another leading maritime law chambers suggesting a novel approach. The new Queens counsel gave me a short two page written opinion saying my suggested approach was ‘illusory’. I then drafted the application on my own without Counsel’s assistance challenging the award on the grounds of English Public Policy. The essence of the short argument that I had put forward was that the award on the face of it raised doubt that it was based on the true legal analysis of the evidence and therefore it would be against English public policy to give leave in future to enforce the award as a judgment of the English Court. The matter came up before Mr Justice Evans and I instructed my old friend Hon. Michael Beloff QC. We succeeded. The English Court accepted our novel submissions and Mr Justice Evans in his Judgment accepted Lord Atkin’s comment in a different context in the case of Ras Behari Lal v The King – Emperor (1933) 50 T.L.R.1 that “finality is a good thing but justice is better”.

I must give one other example of the importance of legal strategy which when taken with courage could bring success. This involved an issue of construction of a term in a charter party as to when the time to commence this charge would count. The charter party provided the words “entered at customs”. At the Indian ports there were two entries at customs, prior entry and final entry. The London maritime arbitrators decided that it must mean prior entry. Two Judges, Mr Justice Lloyd and Mr Justice Bingham in two earlier cases had confirmed that the correct answer was prior entry. In fact, Mr Justice Bingham had said that the contrary point was so bad that it ought to have been ‘twisted at birth’. Some other firm had earlier acted for the Indian client, Food Corporation of India (FCI).

FCI were unhappy and they came to me. Again FCI faced several million dollars liability which depended on this issue because there was always congestion at Indian ports and on the basis of prior entry, the payment for the time lost by the vessel because of congestion, which fell on FCI. One would have correctly expected any law firm to have followed the two judgments of Bingham & Lloyd JJ on this legal issue. I realised that there was some injustice to my clients. I advised the client to start a new arbitration. At the hearing before a Tribunal of three, I appeared personally as advocate. When I put forward my newly formed submissions on law to show that this issue had been wrongly decided by both Mr Justice Bingham and Mr Justice Lloyd, the Chairman of the Tribunal got angry and said I had no respect for the judiciary and he was not going to hear me put forward such an argument. He told me I was plainly wrong. I courteously told him that it was wrong on his part to express a view before hearing me out fully and he might therefore consider stepping down. The Chairman (who remains nameless), got very angry and walked out in the midst of the hearing with a few abusive words directed at me. There was a stunned silence. I remained calm.

A new Chairman, Michael Dean QC, was later appointed in due course by the tribunal to fill the vacancy caused by the resignation of the Chairman. He was much more patient and courteous. He told me he understood my legal proposition but he was bound by the earlier decisions of the Commercial Court. He made an award against my client but very fairly set out my arguments. My clients appealed to the Commercial Court and we were successful before Mr Justice Webster.

This caused ripples in the Baltic exchange. There then followed an arbitration on the same issue in a new case with all guns blaring from the London P&I clubs who represent the ship owners. Once again, I appeared and the award went against us. FCI again appealed to the Commercial Court and the appeal came before Mr Justice Leggatt. We were successful. He considered that my submissions were correct, not because of comity but because of inclination.

The other side representing the vessel owner appealed. Their solicitors were a well- known shipping firm Holman Fenwick & Willan. The leave to appeal application was listed before Lord Justice Bingham who was the same Judge who had earlier decided this issue against my client. He unusually directed to convert our client’s application an inter-party application and fixed it for half a day hearing. To everyone’s surprise the Judge after hearing both sides counsel gave a short judgment that after considering the new submissions which were now before him his earlier decision on law was wrong. A week later out of the blue I got a telephone call from The Rt. Hon. Lord Wilberforce who many will remember is considered the Judge of the last century. He introduced himself and asked me if it was correct that Lord Justice Bingham had given a judgment saying that his earlier decision on law was wrong. I said that was correct and he asked me to send a transcript of the judgment. A few days later I received a hand written letter from Lord Wilberforce which I still cherish, in which he paid “great tribute” to Lord Justice Bingham and myself for my “persistence and skill in producing the victorious argument”. I have got a copy of Lord Wilberforce's letter (please find here) if anyone wants to see.

Some 3 years ago when the Russian Government were faced with the Yukos award of USD$50billion made by the International Arbitation Forum in the Hague with no potential legal remedy available, a team was sent to London to consult me. I was asked to recommend a Dutch lawyer and I attended the first meeting with that lawyer and suggested a new challenging argument relating to the Arbitration Tribunal’s jurisdiction on which they were ultimately successful. It was the same argument I had taken challenging the London GAFTA Arbitration appeal award in the case of PEC v Asia Golden Rice which was accepted by Mr Justice Andrew Smith which is the reported decision.

My firm has gone some distance and a few weeks ago we were separately shortlisted for Best International Law Firm of the Year and Boutique Law Firm of the Year awards at the Law Society Excellence Awards. We won a commendation for the best boutique law firm of the year. One of our big successes was before the UK Supreme Court for Iranian client, Bank Mellat, who were listed by the UK Government for allegedly supporting Iran’s nuclear proliferation. We took over this case after Bank Mellat had lost in the High Court and Court of Appeal and their solicitors had advised them that their chances of succeeding before the Supreme Court were minimal. My firm worked hard and the Supreme Court, by the decision of five Judges to four, decided that the UK Government had acted irrationally and unlawfully and listed Bank Mellat.

With the recent technology revolution has changed the landscape of litigation. Lay clients can get information on the internet. Therefore it is all the more important that lawyers will have to think and how to add the human element when considering the issues of law.

London is now recognised internationally as a litigation capital of the world and this has happened because of the integrity and independence of the English Judges who are of very high calibre and have an open mind. The English bar and the City of London solicitors’ ethics have also contributed to making London the litigation capital. I hope long may this remain.

Finally, might I remind all of you that India is soon going to open to foreign lawyers and there is a great potential for English law firms to open offices in India.

Sarosh Zaiwalla

Thursday 22 November 2018

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