OVERVIEW
Is it possible for a dispute to fall within the scope of two different arbitration clauses in different contracts? Or does a finding that a dispute is subject to one arbitration agreement necessarily mean that the same dispute cannot fall within an arbitration agreement in another contract?
The judgment in CAFI v. GTCS Trading DMCC [2025] EWHC 1350 (Comm), handed down today, confirms that a claim or issue may fall within two or more different arbitration clauses, with the consequence that the claimant has the choice of which clause to invoke. The case is also interesting because of its discussion as to when a question of law is "in play" before a tribunal for the purposes of an appeal under section 69. Benjamin Coffer acted for the successful appellants, instructed by Damian Honey and Joshua Prest at HFW.
The appeal arose out of an award of a GAFTA Board of Appeal concerning a contract for the sale of wheat. The seller alleged that the buyer had repudiated the contract. The buyer disagreed. Against the background of that dispute, the parties agreed a second contract of sale for the same cargo at a lower price. One of the terms of the second contract was that the first contract would be "terminated and considered void" (this clause was referred to as 'the Termination Clause'). The buyer's case was that the Termination Clause had the effect of negating any claim for damages for repudiation of the first contract.
In the arbitration, the seller argued that the GAFTA Board of Appeal had no jurisdiction to consider the Termination Clause, because it had been appointed solely under the arbitration agreement in the first contract. The Board accepted that argument, finding that it had no jurisdiction to consider the effect of the Termination Clause as a possible defence to the claim. The Board thought that the issue as to the meaning of the Termination Clause arose under the second contract and must therefore be determined in arbitration commenced under the second contract's arbitration clause.
The buyer challenged that decision under section 67 of the 1996 Act, arguing that the dispute as to the effect of the Termination Clause in the second contract on the seller's right to claim damages under the first contract was a matter which fell within the scope of the arbitration agreement in the first contract (even if it might also have fallen within the arbitration agreement in the second contract). The Court agreed. In upholding the buyer's appeal, Mr Justice Henshaw accepted that jurisdiction agreements are not always mutually exclusive. Despite the strong Fiona Trust presumption in favour of 'one-stop' adjudication, when faced with apparently competing jurisdiction clauses it is open to the Court to find that either clause can apply, rather than one clause to the exclusion of the other.
Such a possibility had been strongly suggested by dicta in Deutsche Bank AG v Comune di Savona [2018] 4 WLR 151 at [31] and Albion Energy Ltd v. Energy Investments Global BRL [2020] 1 Lloyd's Rep. 501 at [17]. But neither those cases, nor the judgment in CAFI v. GTCS, consider in any detail the practical consequences of a finding that two or more jurisdiction clauses apply to the same dispute. The claimant presumably has a choice as to which clause to invoke. But there is an obvious possibility of concurrent competing arbitral proceedings. There is no mechanism in the Arbitration Act 1996 (or its successor) for dealing with concurrent arbitral proceedings. A court or tribunal would presumably have to fall back on ordinary principles of issue estoppel and abuse of process.
The Board made a further significant error. Having found that it had no jurisdiction to determine the issue as to the meaning of the Termination Clause, the Board nevertheless went on to make an unconditional award of damages in favour of the seller. The Court agreed with the buyers that this was a serious procedural irregularity, an excess of jurisdiction and an obvious error of law: the full house of arbitral failings under the 1996 Act.
The Board's conduct involved a breach of its general duty under section 33 to act fairly because it pre-judged the buyer's defence. It was therefore a serious procedural irregularity. It was also a jurisdictional error because it effectively determined ("sub silentio and presumably without intending to do so") the dispute as to the effect of the Termination Clause, over which the Board had held it had no jurisdiction. And it was an obvious error of law.
The relevant question of law – whether it was appropriate to award the buyer damages if the Board concluded that it did not have jurisdiction – was not one which had been directly argued before the Board. That was because, as the buyer's solicitors explained in their evidence, "it did not occur to the Claimant that the Board might hold the Claimant liable in damages before the dispute as to the effect of the Second Contract had been determined".
However, the buyer argued that an issue can be "in play" in an arbitration even if it is not expressly argued by the parties. There is surprisingly little authority on this point: the buyer relied primarily on a passage from a judgment refusing permission to appeal in a case reported only in the Technology and Construction Law Reports: Gbangbola v. Smith & Sherrif (1999) 1 TCLR 136. In that case, HHJ Humphrey Lloyd QC held that "the question of law is admissible provided it was integral to the resolution of the dispute which was argued before the arbitrator". Henshaw J appears to have accepted and followed that approach: he held that it was sufficient that the parties' submissions "crystallised an issue" which had to be determined in order for the Board to reach their decision. That should make this a useful judgment for practitioners seeking permission to appeal under section 69 in future cases.
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