Corporate Succession And Arbitral Claimant's Identity: Lessons From Energyen v HHI

In Energyen Corporation v HD Hyundai Heavy Industries Co Ltd and another [2025] EWHC 1586 (Comm), the English Commercial Court dismissed a jurisdictional challenge to an ICC arbitration award made under section 67 of the Arbitration Act 1996 (the Act).

The background to the challenge was a corporate succession under Korean law, which occurred before the arbitration commenced, raising interesting questions about the rightful party to the arbitration agreement, the identity of the arbitral claimant and relevant procedural requirements under the ICC Rules and English law.

Background

Energyen Corporation (Energyen) entered into a supply contract in 2014 with a Korean company, then called Hyundai Heavy Industries Co Ltd (Original HHI Signatory), to provide feed water heaters for a Saudi power plant. The contract included an ICC arbitration clause and both the contract and the arbitration clause were governed by English law.

In April 2019, Original HHI Signatory gave Energyen written notice of its intention to spin off its operational businesses into a new entity – which was to have the same name as the original signatory – in June 2019, with Original HHI Signatory to be renamed and remain in existence as a holding company. The same correspondence notified Energyen that the spin-off would transfer the supply contract to the new entity.

On 31 May 2019, the spin-off plan was approved by shareholders, and in June 2019 the restructuring was formalised under Korean law, with the new entity having been incorporated (HHI 2019 Company).

In October 2021, Hyundai Heavy Industries Co Ltd (then the name of HHI 2019 Company) filed a Request for Arbitration (RFA) against Energyen with the ICC, alleging defects in the feed water heaters supplied and seeking damages. In the RFA the arbitral claimant was described as the original signatory to the supply contract and as having been established in 1972. The Terms of Reference, agreed later, also referred to the claimant as the entity which had entered into the supply contract. The Tribunal issued its award in September 2024, ordering Energyen to pay over USD 17 million to HHI 2019 Company.

Court proceedings

Energyen challenged the award on the basis that the Tribunal lacked jurisdiction (defined in section 30(1) of the Act) to order an award in favour of HHI 2019 Company. Its principal arguments were:

• No valid arbitration agreement existed with HHI 2019 Company because Original HHI Signatory remained a party to the supply contract; and
• No claim was submitted to arbitration by HHI 2019 Company because Original HHI Signatory was actually the entity that had commenced the arbitration proceedings.

A challenge was also brought on the grounds of serious irregularity (under section 68 of the Act), premised on Original HHI Signatory being the arbitral claimant and alleging the Tribunal had been misled as to identity in two respects. However, these challenges were ultimately not pursued.

These issues regarding whether the correct party brought the arbitration did not arise during the arbitration.

The Court's Decision

The Court (Foxton J) dismissed the challenges. Key aspects of its analysis are set out below.

Legal Effect of Spin-Off

The Court recognised that the effect of a corporate succession of an overseas company on a contract governed by English law must be determined by the law of the company's domicile – here, Korean law. Although this conflicts of law principle seemed to have only been applied to universal succession, the Court saw no convincing reason not to apply it to partial succession (i.e., where the original company remains in existence) at least in circumstances such as this case where the partial succession by operation of statute had a similar practical effect in terms of the successor company succeeding to the predecessor company "within the scope of the partial transfer".

The Court found that under Korean law, the spin-off constituted a statutory succession, automatically transferring all relevant rights and obligations – including the supply contract and arbitration agreement – from Original HHI Signatory to HHI 2019 Company. It rejected Energyen's argument that the supply contract related to a part of the business retained by Original HHI Signatory.

The Court therefore dismissed Energyen's argument that HHI 2019 Company was not party to the arbitration agreement incorporated in the supply contract.

Arbitral Claimant's Identity

On the central issue of whether the arbitration was commenced by the correct party, the Court applied the objective test from SEB Trygg Holding AB v Manches [2005] EWCA Civ 1237, asking "who would reasonably have been understood by the party against whom the claim was asserted to be bringing the claim" (although it recognised that subjective intent may also be relevant in certain instances).

After noting that the authorities frequently discussed the issue of whether it was "objectively clear that the claim [was] intended to be brought by the party actually entitled to enforce the relevant contractual rights", the Court held that HHI 2019 Company was reasonably understood to be the claimant who commenced the arbitration. The key reasons were:

1. the Court's decision on the spin-off plan that under Korean law HHI 2019 Company became the party to the supply contract meant that the rights being asserted in the RFA were those of HHI 2019 Company;
2. it must have been obvious to Energyen that the RFA was served on behalf of the entity entitled to enforce the supply contract at that time;
3. the RFA was issued in HHI 2019 Company's name and gave its address, not the name and address at that time of Original HHI Signatory;
4. it was not (in substance) incorrect to describe HHI 2019 Company in the RFA as the party which entered into the supply contract given the effect of the spin-off under Korean law; and
5. although the RFA stated the arbitral claimant was founded in 1972, which was not strictly speaking correct, because the new company was effectively a continuation of the predecessor company this was "[a]t best for Energyen... a misdescription of one attribute" of the arbitral claimant.

This conclusion was reinforced by the Court's earlier finding that an Energyen representative had acknowledged notice of the spin-off in April 2019, as well as the fact that the spin-off plan was publicly accessible.

To the extent that subjective intent of those commencing arbitration might also be relevant, the Court was satisfied that the lawyers issuing the RFA would likely have intended to issue it in HHI 2019 Company's name.

The Court's conclusion on the identity of the arbitral claimant was sufficient to dispose of Energyen's jurisdictional arguments premised on the arbitral claimant being Original HHI Signatory; it could not credibly be argued that if HHI 2019 Company commenced the arbitration, a different entity was involved at the time the Terms of Reference were signed, among other reasons because such terms also incorporated the RFA, the "legal effect of which [the Court had] already set out". Its conclusion would also have been sufficient to dispose of the serious irregularity challenge, had it been pursued.

Compliance with ICC Rules

Energyen also alleged that even if HHI 2019 Company was the rightful arbitral claimant, the Tribunal's jurisdiction could still be challenged on the basis that there had been no valid reference to arbitration, because HHI 2019 Company's entitlement to enforce its rights arose by virtue of the spin-off plan which had not been mentioned in the RFA or the Terms of Reference. This argument was advanced by reference to Article 4(3) of the ICC Rules, which stipulates the basic information to be provided in an RFA to validly commence an ICC arbitration.

Energyen alleged the failure to mention or attach the spin-off plan in the RFA fell short of:

• Article 4(3)(c) of the ICC Rules, which required a description of "the basis upon which claims are made" to be included in the RFA; and
• Article 4(3)(e), which required "any relevant agreements and, in particular the arbitration agreement(s)" to be provided.

The Court rejected both arguments, having been satisfied that the basis of the claim was sufficiently described as a claim for breach of the supply contract and that there was no requirement to attach the spin-off plan in addition to the arbitration agreement. The Court acknowledged a degree of latitude afforded to parties as to how much detail to include when complying with Article 4(3) and that English pleading standards were not required. Although the Court was content that not every aspect of Article 4(3) created a "jurisdictional requirement" such that non-compliance would open up a challenge to the award, it did not wish to decide where the line would be drawn. In any event, it considered, obiter, that non-compliance with Article 4(3) may be better dealt with as an issue of admissibility rather than jurisdiction.

Energyen also alleged that the claimant's entitlement to enforce its rights by virtue of the spin-off plan was not a "matter... submitted to arbitration in accordance with the arbitration agreement" pursuant to section 30(1)(c) of the Act. This argument was rejected by the Court for similar reasons.

Notice of Succession

The Court also considered whether English law required HHI 2019 Company to give notice of its succession to the arbitration agreement before commencing arbitration. It concluded that English arbitration law – the law of the forum – did not impose such a procedural requirement when the corporate succession occurs before the arbitration begins, even if such requirement would seem to exist where the corporate succession occurs whilst arbitral proceedings are underway. The Court was clear that in the latter case this did not amount to a jurisdictional requirement.

This was separate from whether the relevant law applicable to the succession required notice as a precondition to the succession being effective. Under Korean law, there was no such requirement.

Comment

This decision provides helpful guidance on the English court's approach to jurisdictional challenges to arbitration awards arising from the corporate succession of overseas companies. It also grapples with the potential ramifications of non-compliance with RFA requirements in institutional rules, recognising that the parties have a degree of flexibility as to the way in which they present their RFA and in particular the level of detail they include. Although the decision is in keeping with English courts' general reluctance to overturn arbitral awards, it underscores the importance of clearly identifying the arbitral claimant and the basis for their entitlement to arbitrate at the beginning of the arbitration in order to avoid challenges of this nature.

The authors would like to thank Matti Brooks for their contribution to this blog post.

For more information, please contact Mike McClure KC, Partner, International Arbitration, Anuradha Agnihotri, Of Counsel, Elizabeth Kantor, Knowledge Counsel or your usual Herbert Smith Freehills Kramer contact.