Karaha Bodas Co. L.L.C. v. Perusahaan Pertambangan Minyak Dan Gas Bumi Negra et al., (2011) 515 A.R. 14

• Judge: Côté, McFadyen and O'Brien, JJ.A.
• Court: Court of Appeal (Alberta)
• Case Date: October 06, 2011
• Citations: (2011), 515 A.R. 14;2011 ABCA 291

Karaha Bodas v. Perusahaan Pertambangan (2011), 515 A.R. 14; 532 W.A.C. 14 (CA)

MLB headnote and full text

Temp. Cite: [2011] A.R. TBEd. OC.049

Karaha Bodas Company, L.L.C. (respondent on appeal/appellant on cross-appeal/plaintiff) v. Perusahaan Pertambangan Minyak Dan Gas Bumi Negara and P.T. PLN (Persero)

(appellants on appeal/respondents on cross-appeal/defendants)

(1003-0107-AC; 2011 ABCA 291)

Indexed As: Karaha Bodas Co. L.L.C. v. Perusahaan Pertambangan Minyak Dan Gas Bumi Negra et al.

Alberta Court of Appeal

Côté, McFadyen and O'Brien, JJ.A.

October 17, 2011.

Summary:

In 2002, Karaha Bodas Co. (KBC) issued a statement of claim, seeking recognition and enforcement in Alberta of a foreign arbitral award for approximately $260,000,000 made against the defendants in Switzerland in 2000. Also in 2002, KBC applied ex parte for a garnishee order against the defendants. Garnishment was attempted but no assets of the defendants were found in Alberta. The statement of claim was then served. In 2004, KBC applied for summary judgment.

A Master of the Alberta Court of Queen's Bench (Master Breitkreuz), in a decision reported (2004), 364 A.R. 272, allowed the application for summary judgment with costs. The defendants filed an appeal on March 11, 2005; however, there were delays in the appeal proceeding. By October 2006, the award (and the amount reflected in the summary judgment granted by the master) had been satisfied in full through garnishment in the United States by KBC. An issue arose as to whether the appeal from the master's decision was moot.

The Alberta Court of Queen's Bench (Graesser, J.), in a decision reported (2007), 435 A.R. 58, allowed the defendants' appeal to proceed on its merits. While the court found that the dispute between the parties was moot, there remained a live issue between the parties with respect to costs. On July 30, 2008, KBC filed and served a discontinuance and satisfaction piece respecting the Alberta action because the entire judgment had been recovered in the United States proceedings. One result of having done so was that KBC was precluded from taking any steps to enforce the costs ordered in its favour by Master Breitkreuz. The defendants moved for an order allowing the appeal to be set down for hearing notwithstanding the filing of the discontinuance and satisfaction piece. The defendants sought that remedy because they wished to undermine the arbitral award and ultimately overturn it on the basis of fraud.

The Alberta Court of Queen's Bench (Clackson, J.), in a decision reported (2010), 478 A.R. 390, dismissed the defendants' motion. The court declined to exercise its jurisdiction to compel the proceeding to continue notwithstanding the filed satisfaction. The court stated that the discontinuance of action and satisfaction piece were of full force and effect and the action and judgment had expired. The defendants appealed, arguing that they were entitled to continue with their appeal of the order made by Master Breitkreuz in 2004.

The Alberta Court of Appeal dismissed the appeal.

Practice - Topic 9802

Discontinuance - Effect of - A master granted summary judgment with costs in favour of KBC on its claim for enforcement in Alberta of a foreign arbitral award against the defendants - The defendants filed an appeal; however, before the appeal was heard, the award had been satisfied in full through United States garnishment proceedings by KBC - An applications judge allowed the appeal to proceed on its merits despite its mootness because there remained a live issue as to costs - KBC filed and served a discontinuance and satisfaction piece respecting the Alberta action - As a result, KBC was precluded from taking any steps to enforce the costs ordered in its favour by the master - The defendants moved to have the appeal be set down for hearing notwithstanding the filing of the discontinuance and satisfaction piece, hoping to ultimately overturn the arbitral award on the basis of fraud - An applications judge declined to exercise jurisdiction to compel the proceeding to continue notwithstanding the filed satisfaction - The court stated that the discontinuance of action and satisfaction piece were of full force and effect and the action and judgment had expired - The defendants appealed - The Alberta Court of Appeal dismissed the appeal.

Counsel:

S.J. Livingstone and J.M. Patterson, for the respondent/appellant on cross-appeal/plaintiff;

J.E. Redmond, Q.C., and T.J. Williams, for the appellants/respondents on cross-appeal/defendants.

This appeal was heard on October 6, 2011, before Côté, McFadyen and O'Brien, JJ.A., of the Alberta Court of Appeal. The following memorandum of judgment was filed by the court, in Edmonton, Alberta, on October 17, 2011.