High Court of Justice of England and Wales, 24 April 2018, Dreymore Fertilisers Overseas PTE Ltd. v. Eurochem Trading GMBH [2018] EWHC 909

Dreymoor (plaintiff) is an international trading company based in Singapore and ECTG (defendant) is a production company in the field of phosphate mineral fertiliser production based in Switzerland. Both companies have Russian entities as final beneficiaries.

In this case, two jurisdictional challenges were brought by Dreymoor, on one hand, under section 67 of the Arbitration Act 1996 against the LCIA partial final award and, on the other hand, under section 32 of the ICC Arbitration Act 1996. The applications considered similar were analysed jointly by the judge.

Both proceedings concern contracts in which Dreymoor acted as ECTG’s commercial agent in fertilizer sales contracts in India. ECTG’s arbitration actions are based on suspicions of corruption between Dreymoor and two former ECTG senior executives, in individual contracts and resale master agreements to third parties in India.

In the LCIA arbitration, the judge first makes a broad interpretation of the wording of the arbitration clause which refers “any dispute or controversy arising under this contract” to the LCIA. According to him, this formulation is likely to submit disputes including non-contractual elements, such as allegations of corruption. Secondly, the judge considers that an interpretation of the clauses included in the agency contracts and those contained in the individual contracts did not result in exempting the examination of disputes from the LCIA in the event of allegations of corruption. In addition, some agency contracts did not include any specification as to the competent jurisdiction, others contained another LCIA arbitration clause. The judge therefore seeks the centre of gravity of the dispute and does not consider that the clause closest to the dispute was that of the framework contracts. Applying the approach of the court of appeal in Sebastian Holdings, he considers that the commercially rational interpretation, which gives effect to the clear terms of the relevant agreements, is that current disputes must be arbitrated in accordance with LCIA arbitration clauses in individual sales contracts.

In ICC arbitration, although the plaintiff considers that the clause contained in the framework contracts of sale to third parties is applicable only between the seller and the buyer, the court accepts that as a signatory of the agreements in its capacity as commercial agent, it is bound by the arbitration clause in the light, again, of the general and broad terms of the arbitration clause. In addition, the terms of the agreement expressly designate Dreymoor as the recipient of the letter of credit to be produced by the buyer as payment. Finally, the plaintiff validly argues that the arbitration clause does not provide a mechanism for appointing an arbitrator for a party other than the buyer or seller. The judge replies that the clause should be interpreted on this point so as to give it effect. Thus, if there are two parties to the dispute, each party may choose one arbitrator. But in the case where all 3 parties are involved, the commercial agent would be bound by the choice of arbitrators made by the buyer and seller. Finally, as with LCIA arbitration, the judge does not consider that framework contracts constituted the centre of gravity for applying their clause rather than that of individual contracts.

Thus, the judge ultimately dismisses the challenge to the LCIA partial final decision of the sole arbitrator based on section 67 and the motion made under section 32 of the Arbitration Act 1996 in the ICC arbitration proceedings.

2018-06-27T22:46:49+00:00 April 24th, 2018|England and Wales High Court, UK jurisdictions|0 Comments

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