UK: Stay No More: English Commercial Court Reviews Section 9 Test (Again)

Last Updated: 10 August 2018
Article by Duncan Bagshaw

Parties to international contracts often agree to arbitrate their disputes. But what if one party decides that it is better off pursuing a claim in court? Normally the law of the country where the claim is brought, giving effect to Article II(3) of the New York Convention, will ensure that the court proceedings are halted in favour of arbitration.

However, national laws on this subject are worded in a variety of ways, and the approaches of different courts vary significantly.

The English Commercial Court has added little clarity to the picture in England in the recent judgment of: China Credit & Export Insurance Corporation v Emerald Energy Resources Limited [2018] EWHC 1503 (Comm).

Emerald is part of a consortium of Nigerian owners of OML141, a shallow-water oil block on the Niger delta. Under a farm-in agreement, the Claimant (known as "Sinosure") acquired an interest in OML141 in return for a payment plus the obligation to fully fund exploration costs, with a condition that Sinosure's recovery of its funding would only be from oil production revenues.

Having secured funding for the large (approximately US$50m) cost of seismic surveying of the block, Sinosure farmed-out of the block (relinquished its interest). Following lengthy negotiations, Sinosure sued Emerald in the English Commercial Court under a promissory note ("PN") (containing a non-exclusive jurisdiction clause) granted by Emerald to a bank as part of the funding structure arranged by Sinosure. The PN had been assigned to Sinosure when Sinosure satisfied the debt to the bank, pursuant to a credit insurance policy Sinosure had issued to the bank as part of its obligation to secure funding for exploration.

The Court decided that Sinosure was entitled to sue on the PN notwithstanding the arbitration agreement, because the non-exclusive jurisdiction clause, properly construed, bound Emerald not to dispute the jurisdiction of the English Court to hear claims brought under the PN, even if such a claim might also be caught by the arbitration agreement (as arising 'in connection with' the farm-in).

A significant issue was the approach of the Court under section 9 of the English Arbitration Act, which concerns stay of proceedings in favour of arbitration. Several past English cases have taken subtly different approaches to the issue of threshold. Must the Court be satisfied that there is a binding arbitration agreement, and that its scope encompasses the claim? Or should one or both of these issues be left to the arbitrators? What amounts to a matter going to section 9(1) of the Act (whether there is an agreement to refer to arbitration the matter in respect of which the claim is brought), and what is properly categorised as a matter which the Defendant may seek to establish under section 9(4) of the Act (whether the arbitration agreement is null and void, inoperative or incapable of being performed)?

The principal English cases on the point include Al-Naimi v Islamic Press Agency Inc [2000] 1 Lloyd's Rep 522; Fiona Trust & Holding Corp v Privalov [2007] 2 Lloyd's Rep 267 (in the Court of Appea); Albon v Naza Motor Trading [2007] 2 Lloyd's Rep 1; Hume v AA Mutual International Insurance [1996] LRLR 19; Lombard North Central PLC & Anr v GATX Corp [2012] 1 Lloyd's Rep 662; JSC Aeroflot Russian Airlines v Berezovsky [2013] 1 Lloyd's Rep 345; and The Barito [2013] 2 Lloyd's Rep 421.

The Court followed Lightman J's decision in Albon v Naza in holding that the Court should decide, bindingly, whether there is an arbitration agreement and whether its scope includes the claim brought in the court proceedings.

Internationally, there is support for an approach which does not require the Court to resolve bindingly whether there is an arbitration agreement which catches the particular matters raised in the court proceedings. In Tomolugen Holdings Ltd v Silica Investors Ltd (above), the Singapore Court of Appeal held that Singapore law only requires a prima facie assessment of the existence and scope of the arbitration agreement at the stage of considering a stay for arbitration. This approach was consistent with the spirit and purpose of Singapore's arbitration law, the UNCITRAL Model Law on which it was based, and the New York Convention from which most national laws on the subject derive.

As the Singapore Court of Appeal put it, under the prevailing English approach followed by the English High Court in the Emerald case, "if the claimant decides to pursue its claim by bringing proceedings in court the court will be obliged to make a full determination on the existence and scope of the arbitration clause; this will deprive the putative arbitral tribunal of its kompetenz-kompetenz."

The English High Court did not give permission to appeal in the Emerald case, notwithstanding that Rix LJ had done so in TXM Olaj-Es Gazkutato KTF v Claxton Engineering Services Ltd [2011] EWCA Civ 410 (in which the appeal was not pursued), and despite the fact that the Commercial Court in Lombard v GATX and the Court of Appeal in Al-Naimi both indicated that a binding decision may not be necessary on both the existence and scope of the arbitration agreement, and whether the disputes in the proceedings are caught thereby.

International arbitration purists will have to wait to see whether the English court will one day reconsider its rigid stance on this issue, and restore some of the kompetenz which the Act purports to bestow on arbitrators.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
Similar Articles
Relevancy Powered by MondaqAI
CMS Cameron McKenna Nabarro Olswang LLP
CMS Cameron McKenna Nabarro Olswang LLP
 
In association with
Related Topics
 
Similar Articles
Relevancy Powered by MondaqAI
CMS Cameron McKenna Nabarro Olswang LLP
CMS Cameron McKenna Nabarro Olswang LLP
Related Articles
 
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions