Sucessful Defence against Sellers’ application under Section 67(1) of the Arbitration Act 1996

In this reference Arizon Abogados SLP was instructed by the Buyers before a Tribunal of arbitration in London.

Following a positive Arbitration Award for the Buyers, the Sellers presented an application to the High Court under section 67(1) of the Arbitration Act 1996:

• (1) challenging an award dated the 27th August 2024 (“the Award”) of an arbitration tribunal to the effect that it had jurisdiction to determine the dispute between the parties;
• (2) for an order declaring that the Award made by the tribunal on the merits is of no effect because the tribunal did not have substantive jurisdiction because there was no arbitration agreement between the parties;
• (3) for an order setting aside the Award; and for an order permitting the Claimant to serve the Claim Form on the Defendant out of the jurisdiction in Spain.

Before the High Court the Sellers produced a witness statement by their solicitor Mr. Sleightholme. Mr. David Semark was the Barrister for the Buyers, Mills & Co the Buyers’ Solicitors.

Mr Justice Foxton,

UPON the application by the Claimant pursuant to the Arbitration Act 1996 s 67.

AND UPON the application of the Defendant to dismiss the Claimant’s s 67 application on the basis that it has no real prospect of success pursuant to paragraph O8.6 of the Commercial Court Guide:

AND UPON reading the material documents in the court file, including the skeleton arguments of the parties and the witness statements of Mr Sleightholme and Dr. Arizon.

REASONS

1. This application is hopeless, as the chronology makes clear.

1. On 12 June 203 at 08.30 CEST, Mr M (for the Defendant) asked Mr G (for the Claimant) if a previously circulated lot of 5,500mt of corn was still available for purchase, and was told it was.

1. Various exchanges followed in which quotes for different discharge options were discussed, culminating at 12.47 CEST in Mr M asking for a firm quotation for discharge at Seville.

1. At 12.53 CEST, Mr G sent out a firm offer for discharge Seville, valid for 2 hours.

1. At 13.04 CEST, Mr M sent Mr G a WhatsApp with a PDF of proposed terms and conditions, which included GAFTA form 48 and the GAFTA 125 arbitration clause. He asked Mr G to check those terms with the Claimant.

1. At 13.08 CEST, Mr M sent Mr G the Defendant’s counteroffer for discharge Seville, and at 13.22 CEST, Mr M asked Mr G whether he had checked the terms in the draft PDF, to be told that Mr G was awaiting a “final ok” from the Claimant.

1. At 13.46 CEST, Mr G passed on the Claimant’s counteroffer, “other terms as per buyer bid” (i.e. including the GAFTA arbitration agreement). At 14.00 CEST, Mr M forwarded a counteroffer, “other terms as per bid and pdf”. Mr M also asked Mr G to confirm the Claimant’s approval of the terms in the PDF.

1. At 14.16 CEST, Mr G asked “can we take validity for 30 minutes” (i.e. asking for 30 minutes to confirm the price).

1. Between 14.16 and 14.31 CEST, Mr M explained that the PDF terms were “standard terms we had with CHS” on another deal, but with a few changes, saying “if we book it, seller/buyer can propose minor changes but I do not think will be a big deal … important thing is being able to comply with at least the standard terms”.

1. At 14.34 CEST, Mr G gave that approval (“PDF contract draft if okay with additional clause to be added”), subject to the inclusion of an additional term addressing fumigation. Mr M replied at 14.35 CEST, “if agree on it can confirm?” Mr G replied at 14.44 CEST explaining his request for 30 minutes, saying the Claimant wanted 30 minutes to confirm the price. At 14.46 CEST, Mr M confirmed he was adding the fumigation clause. At 14.55 CEST, he asked Mr G for “any update”.

1. Between 14.55 and 14.57 CEST, Mr G said the Claimant was ready to close a deal subject to one further issue limiting the quantity by reference to a maximum draft of a carrying vessel. At 15.18 CEST, Mr G informed Mr M “booked for 5.5k. Please confirm with buyer” (i.e. providing the Claimant’s price confirmation).

1. Mr M provided the Defendant’s confirmation at 15.21, stating at 15.23 CEST “confirmation/contract sent”.

1. On that documented chronology, the suggestion that the contract (which the Claimant accepts was concluded) did not incorporate the GAFTA arbitration agreement is unarguable.

1. That is sufficient to determine the matter. However, there were subsequent exchanges between Mr M and Mr G in which an extension to the GAFTA shipment period was discussed – a discussion which only made sense if GAFTA form 48 had been incorporated. There is no arguable basis for the incorporation of GATFA form 48 but not the GAFTA 125 arbitration clause.

1. To the extent necessary, the time for the Defendant to bring this application is extended from 28 October 2024 to 11 November 2024, the extension being for a short period and involving no prejudice to the Claimant.