BUSINESS AND PROPERTY COURTS
OF ENGLAND AND WALES
COMMERCIAL COURT (QBD)
Strand, London, WC2A 2LL
B e f o r e :
| Dreymoor Fertilisers Overseas PTE Ltd.
|- and -
|Eurochem Trading GMBH
Justin Fenwick QC and George Spalton (instructed by Salisbury & Ryan LLP) for the Defendant
Hearing date: 11 April 2018
Crown Copyright ©
MR JUSTICE BUTCHER
(1) First, Dreymoor's challenge to Mr Ali Malek QC's Partial Final Award dated 16 November 2017 in LCIA Arbitration 173598 ("the LCIA Arbitration") under s. 67 of the 1996 Act. As sole arbitrator Mr Malek held that he had jurisdiction over all the claims advanced by EuroChem Trading GmbH ("ECTG") in its Amended Statement of Case dated 24 August 2017.
(2) Secondly, Dreymoor's s. 32 application relating to ICC Arbitration 23181/TO ("the ICC Arbitration").
A. Factual background
(1) First, Dreymoor was a principal and direct trading partner with ECTG when buying fertiliser under certain contracts in countries other than India ("the RoW Contracts"). These contracts are not at issue in either arbitration.
(2) Secondly, in relation to sales of fertiliser to India Dreymoor acted as:
(i) ECTG's sales agent in respect of certain direct sales from ECTG to end-users in India (these contracts are relevant to the ICC Arbitration); and
(ii) on terms that it bought fertiliser from ECTG to re-sell to third parties but acting as ECTG's agent and receiving commission for its role (these contracts are relevant to the LCIA Arbitration).
The Contracts and Arbitration Clauses
(1) The DAP/MAP Agency Agreement, pursuant to which ECTG appointed Dreymoor as its sales agent for the sale of Di-Ammonium Phosphate ("DAP") and Mono-Ammonium Phosphate ("MAP") to end-users in India.
(2) The Urea Agency Agreements, pursuant to which ECTG appointed Dreymoor as its sales agent for the sale of Urea to end-users in India.
(3) The DAP CFR Sales Contracts, by which ECTG sold DAP to Dreymoor for re-sale to third parties.
(4) The MAP CFR Sales Contracts, by which ECTG sold MAP to Dreymoor for re-sale to third parties.
(5) The Urea CFR Sales Contracts, by which ECTG sold to Dreymoor Urea for re-sale to third parties.
(6) One Urea FOB Sales Contract, by which ECTG sold to Dreymoor Urea for re-sale to third parties.
(7) The DAP Third Party Sales Contracts, by which DAP was sold by ECTG to two Indian companies, Zuari Industries Limited ("Zuari") and Paradeep Phosphates Limited ("Paradeep") to which ECTG contends that Dreymoor is also a party.
The LCIA Arbitration
(1) ECTG appointed Dreymoor as agent for DAP/MAP sales in India under what may be described as an "umbrella" agreement (i.e. the DAP/MAP Agency Agreement) which was dated 31 March 2010, and was later extended by two addenda.(2) That DAP/MAP Agency Agreement itself did not have an arbitration clause but the individual DAP/MAP CFR Sales Contracts each contained what I will refer to as the Long Form LCIA Clause, which is considered below.(3) No sales were made directly under the DAP/MAP Agency Agreement. Rather, each sale was made under a separate DAP/MAP CFR Sales Agreement.Urea(4) ECTG also appointed Dreymoor as its agent in respect of Urea sales. The contractual framework again comprised an "umbrella" agreement (i.e. the Urea Agency Agreements) and individual contracts.(5) Unlike the DAP/MAP Agency Agreement, the Urea Agency Agreements contained what I will refer to as the Short Form LCIA Clause, considered below. Further, each of the individual Urea CFR and FOB Sales Contracts contained the Long Form LCIA Clause.
The ICC Arbitration
a) ECTG contends that it, Dreymoor and the ultimate buyer of the fertiliser were all parties to each DAP Third Party Sales Contract.
b) Each individual DAP Third Party Sales Contract contained what I will refer to as the ICC Clause.
c) Dreymoor does not accept that it was a party to the DAP Third Party Sales Contracts or at least was not a party to the arbitration clauses contained in them.
The Long Form LCIA Clause
"The Seller and the Buyer shall do their best to solve any dispute or claim arising out of this Contract by way of negotiation.
If the parties fail to reach settlement of their dispute, controversy or claim by means of negotiations, such dispute, controversy or claim shall be referred to arbitration under the rules (the Rules) of the London Court of International Arbitration. The Rules are deemed to be incorporated by reference into this section. Subject to the Rules, the tribunal will consist of a sole arbitrator agreed between the parties or, if no agreement is reached within 21 days of the contestant party notifying the other party that it intends to initiate arbitration proceedings by registered mail, a sole arbitrator will be appointed under the Rules. The place of any arbitration must be London and the language to be used in proceedings English.
The award of the Arbitration is made by majority of votes on the basis of the terms of the present contract. The applicable law in force hereto is English law.
The award of this arbitration is final and binding upon both parties".
The Short Form LCIA Clause
"In case of any disagreement both the parties shall strive to discuss and settle the issues amicably. This agreement is governed exclusively by English law. Disputes on this agreements [sic] shall be settled by LCIA (London Court of International Arbitration)".
The ICC Clause
"This contract shall be governed by law of England and Wales without reference to its conflict of laws rules. … Any dispute, controversy or claim arising out of or relating to this contract, or the breach, termination or validity thereof, shall be referred to the arbitration of three persons in London, one to be appointed by Seller, one to be appointed by Buyer and the third by the two so chosen, who shall be chairman. The language of the arbitration shall be English.
Forum: Disputes which cannot be settled amicably within 10 days of their having arisen shall be submitted for decision by arbitration under the Arbitration Rules of the International Chamber of Commerce. Unless otherwise agreed between the parties, the arbitration shall take place in London".
B. Procedural background
The BVI Proceedings
"In case of sales of UREA and DAP in India, Dreymoor acted in the capacity of an agent in assisting [ECTG] to sell UREA and DAP to other buyers in India. Those contracts … are not the subject matter of this Amended Statement of Claim."
The LCIA Arbitration
"Recitals 4 and 6, recording (respectively) that ECTG and Dreymoor 'agree[d], save to the extent and for the limited purpose set out below, that an arbitration was validly commenced in respect of each arbitration agreement relied upon by the Claimant in its Statement of Case (save as set out below in relation to the DAP Third Party Agreements), and further agreeing that the Tribunal has been validly constituted in respect of each arbitration' and 'agree[d] that this arbitration shall be governed by the LCIA Rules of Arbitration 2014.'
Paragraph 5, directing ECTG to file and serve an Amended Statement of Case.
Procedural provisions dealing with how Dreymoor's challenge to the jurisdiction of the arbitrator was to be dealt with."
(1) Breach of contractual duties.
(2) Breach of equitable and/or fiduciary duties.
(3) Dishonestly assisting Mr Rogalskiy and/or Mr Pomytkin.
(4) Unlawful means conspiracy with Mr Rogalskiy and/or Mr Pomytkin.
(5) Inducing breaches of Mr Rogalskiy's and/or Mr Pomytkin's contractual and/or fiduciary duties owed to ECTG.
(6) Interference with Mr Rogalskiy's and/or Mr Pomytkin's contractual relationship with ECTG.
(7) Unjust enrichment at ECTG's expense.
The ICC Arbitration
APPROACH TO S. 67 AND S. 32 CHALLENGES
THE PARTIES' POSITIONS
"as agent for [ECTG] throughout the material time (for example under the [DAP/MAP and Urea Agency Agreements] and/or under the individual [DAP/MAP and Urea Sales Contracts] Dreymoor owed the following implied contractual, equitable and/or fiduciary duties to [ECTG] when acting as agent under the individual agreements which are the subject of this arbitration:
A duty of good faith;
And/or a duty to 'actively and in good faith promote the interest of [ECTG] in India and do its best to secure the favourable market position for DAP and MAP…' (pursuant to clause 2 of the [DAP/MAP Agency Agreement] which was implied into each of the [DAP/MAP CFR Sales Contracts] which are the subject of these proceedings);
And/or a duty to 'actively and in good faith promote the interest of [ECTG] in India and do its best to secure the favourable market position for Urea…' (pursuant to clause 2 of the [Urea Agency Agreements] which was implied into each of the [Urea CFR and FOB Sales Contracts] which are the subject of these proceedings) …"
"Where the overall contractual arrangements contain two or more differently expressed choices of jurisdiction and/or law in respect of different agreements, however, the position differs in that one does not approach the construction of those arrangements with a presumption. So, the fourteenth edition of Dicey, Morris and Collins on the Conflict of Laws stated:
'[T]he decision in Fiona Trust has limited application to the questions which arise where the parties are bound by several contracts which contain jurisdiction agreements for different countries. There is no presumption that a jurisdiction (or arbitration) agreement in contract A, even if expressed in wide language, was intended to capture disputes in contract B; the question is entirely one of construction…'"
"The current (sixteenth) edition of Dicey, Morris and Collins states … that:
'Where a complex financial or other commercial transaction is put in place by means of a number of interlinked contracts, and each has its own provision for the resolution of disputes, the point of departure will be that it is improbable that a jurisdiction clause in one contract, even expressed in ample terms, was intended to capture disputes more naturally seen as arising under a related contract … Even if the effect is that there will be a risk of fragmentation of the overall process for the resolution of disputes, this is not by itself sufficient to override the construction, and consequent giving of effect to, the complex agreements for the resolution of disputes which the parties have made.'
In short, what is required is a careful and commercially-minded construction of the agreements providing for the resolution of disputes. This may include enquiring under which of a number of inter-related contractual agreements a dispute actually arises, and seeking to do so by locating its centre of gravity and thus which jurisdiction clause is 'closer to the claim'. In determining the intention of the parties and construing the agreement, some weight may also be given to the fact that the terms are standard forms plainly drafted by one of the parties."
" Are these claims within the dealer's confirmation jurisdiction clause? I accept UBS's submission that the proper approach to the construction of clauses agreeing jurisdiction is to construe them widely and generously … I also accept that in the usual case the words 'arising out of' or 'in connection with' apply to claims arising from pre-inception matters such as misrepresentation: see Fiona Trust and Holding Corp v Privalov  EWCA Civ 20,  2 Lloyd's Rep 267, Deutsche Bank AG v Asia Pacific Broadband Wireless Communications Inc  EWCA Civ 1091,  2 Lloyd's Rep 619 and Ashville Investments Ltd v Elmer Contractors Ltd  QB 488.
 But the essential task is to construe the jurisdiction agreement in the light of the transaction as a whole. As I suggested in Satyam Computer Systems Ltd v Upaid Systems Ltd  EWCA Civ 487,  All ER (Comm) 465, at , whether a dispute falls within one or more related agreements depends on the intention of the parties as revealed by the agreements.
 Plainly the parties did not actually contemplate at the time of the conclusion of the contracts that there would be litigation in two countries involving allegations of misrepresentation in the inception and performance of the agreements. But in my judgment sensible business people would not have intended that a dispute of this kind would have been within the scope of two inconsistent jurisdiction agreements. The agreements were all connected and part of one package, and it seems to me plain that the result for which UBS contends would be a wholly uncommercial result and one that sensible business people cannot have intended."
DISCUSSION AND CONCLUSION
|No.||Contract||Jurisdiction / Arbitration Clause|
|1||27 April 2010, ET/2010/04/Dreymoor/DAP/3207||Clause 9 of the "STANDARD CONDITIONS of Sale CFR" ("Long Form LCIA Clause")|
|2||17 May 2010, ET/2010/05/Dreymoor/DAP/3224||Long Form LCIA Clause|
|3||11 June 2010, ET/2010/06/Dreymoor/DAP/3316||Long Form LCIA Clause|
|4||27 July 2010, ET/2010/07/Dreymoor/DAP/3354||Long Form LCIA Clause|
|5||13 April 2010, ET/2010/04/Dreymoor/DAP/3155||Long Form LCIA Clause|
|6||13 April 2011, ET/2011/04/Dreymoor/DAP/3843||Long Form LCIA Clause|
|7||5 October 2011, ET/2011/10/Dreymoor/DAP/4171||Long Form LCIA Clause|
|8||6 April 2010, ET/2010/04/Dreymoor/MAP/3143||Long Form LCIA Clause|
|9||5 May 2010, ET/2010/05/Dreymoor/MAP/3206||Long Form LCIA Clause|
|10||12 April 2011, ET/2011/04/Dreymoor/MAP/3837||Long Form LCIA Clause|
|11||13 April 2011, ET/2011/04/Dreymoor/MAP/3842||Long Form LCIA Clause|
|12||11 October 2011, ET/2011/10/Dreymoor/URG/4183||Long Form LCIA Clause|
|13||11 October 2011, ET/2011/10/Dreymoor/UR/4184||Long Form LCIA Clause|
|14||11 October 2011, ET/2011/10/Dreymoor/URG/4189||Long Form LCIA Clause|
|15||11 October 2011, ET/2011/10/Dreymoor/UR/4200||Long Form LCIA Clause|
|16||7 December 2011, ET/2011/12/Dreymoor/UR/4293||Long Form LCIA Clause|
|17||7 December 2011, ET/2011/12/Dreymoor/URG/4297||Long Form LCIA Clause|
|18||15 April 2013, ET/2013/04/Dreymoor/UR/5400||Long Form LCIA Clause|
|19||12 October 2011 Urea Agency Agreement||Clause 5 of the Urea Agency Agreement ("DISAGREEMENT") ("Short Form LCIA Clause")|
|20||7 December 2011 Urea Agency Agreement||Short Form LCIA Clause|
|21||7 December 2011 Urea Agency Agreement||Short Form LCIA Clause|
|22||23 March 2010 with Zuari Industries Limited, ET 2010/03/Zuari/DAP/3126||Clause VIII of the DAP Third Party Sales Contract ("ICC Clause")|
|23||6 April 2011 with Zuari Industries Limited, ET 2011/04/Zuari/DAP/3814||ICC Clause|
|24||10 June 2011 with Paradeep Phosphates Limited. ET/2011/06/Paradeep/DAP/3952||ICC Clause|
|25||31 March 2010, DAP/MAP Agency Agreement||Clause 5 of the Agency Agreement ("DISAGREEMENT"): "This Agreement is governed exclusively by English Law", but no jurisdiction / arbitration clause|