ENGLISH HIGH COURT RECOGNISES ARBITRAL TRIBUNAL’S JURISDICTION OVER SETTLEMENT AGREEMENT IN ABSENCE OF EXPRESS ARBITRATION
By Nicholas Peacock and Charlie Morgan
In the recent decision of Sonact Group Limited v. Premuda SPA [2018] EWHC 3820 (Comm), the English High Court confirmed its pro-arbitration approach to the interpretation of arbitration agreements. The Court held that an arbitration agreement contained in a charterparty contract could apply in relation to disputes arising out of a subsequent settlement agreement contained in correspondence between the parties relating to the sum allegedly due under the charterparty. The Court concluded the parties could be taken to have intended that the arbitral tribunal under the principal agreement would also have jurisdiction over disputes arising out of a settlement agreement between the same parties, despite the absence of an express arbitration clause in the settlement agreement.
Background
The defendant owned the “Four Island” tanker, which it chartered to the claimant. The charterparty included an arbitration clause and the parties elected London as the seat of arbitration.
The owner claimed demurrage of US $718,948.08 and heating costs of US $190,200 from the charterer under the charterparty. That claim was settled by means of an exchange of emails in which the charterer agreed to pay US $600,000. However, the charterer failed to make the payment.
The owner served a notice of arbitration on the charterer claiming payment of demurrage and heating costs, but ultimately pursued a claim for payment of the agreed sum of US$600,000, which the Tribunal in due course awarded. The charterer challenged the jurisdiction of the arbitral tribunal to decide a claim arising under the settlement agreement on the basis that the settlement agreement did not include an arbitration clause.
The tribunal concluded that it had jurisdiction as the nature of the negotiations and the manner in which they had been carried out suggested the parties intended, although they did not say so expressly, that the settlement agreement should be governed by the same provision for dispute resolution as the original charterparty.
Application under section 67 of the Arbitration Act
The charterer sought to challenge the arbitral award under section 67 of the Arbitration Act 1996. The charterer argued that the tribunal did not have jurisdiction to issue its award.
The Court re-affirmed that a challenge under section 67 of the Arbitration Act requires the question of