“Law and Jurisdiction – This contract shall be governed by and construed in accordance with English law. Any controversy, dispute or claim whatsoever arising out of or in connection with this contract, or the breach therefore, shall be subject to the exclusive jurisdiction of the High Court in London…”
“The overall purpose of clause 41 is identified in the two opening paragraphs. These are the choice of law and jurisdiction clauses. There is no sign here – leaving aside the question of arbitration for a moment – that the parties intended that the disputes which were to be determined in accordance with the Laws of England, and be decided by the English courts, were not to include disputes about the charters validity. The simplicity of the wording is a plain indication to the contrary. The arbitration clause which follows is to be read in that context. It indicates to the reader that he need not trouble himself with fussy distinctions as to what the words “arising under” and “arising out of” may mean. Taken overall, the wording indicates that arbitration may be chosen as a one stop method of adjudication for the determination of all disputes. Disputes about validity after all are no less appropriate for determination by an arbitrator than any other kind of dispute that may arise. So I do not think that there is anything in the appellant’s point that it must be assumed that when the charters were entered into one party was entirely ignorant that they were induced by bribery. The purpose of the clause is to provide for the determination of disputes of all kinds whether or not they were foreseen at the time when the contract was entered into. Then there are consequences that would follow if the appellants are right. It is not just that the parties would be deprived of the benefit of having all their disputes decided in one forum, the jurisdiction clause does not say where disputes about the validity of the contract will be determined if this is not to be in the forum which is expressly mentioned. The default position is that such claims would have to be brought in the jurisdiction where their opponents were incorporated, however unreliable that might be, while claims for breach of contract had to be brought in England. But why, it may be asked, would any sensible businessman wish to agree to this. As Bingham LJ said in Ashville Investments Limited v Elmer Contractors Limited [1988] 2 LR 73,[1989] QB 488 at p.517: One should be slow to attribute to reasonable parties an intention that there should in any foreseeable eventuality be two sets of proceedings. If the parties have confidence in their chosen jurisdiction for one purpose why should they not have confidence in it for the other? Why, having chosen their jurisdiction for one purpose, should they leave the question which court is to have jurisdiction for the other purpose unspoken, with all the risks that this may give rise to. For them everything is to be gained by avoiding litigation in two different jurisdictions. The same approach applies to the arbitration clause”
“11. … I turn to the question of construction. Your Lordships were referred to a number of cases in which various forms of words in arbitration clauses have been considered. Some of them draw a distinction between disputes “arising under” and “arising out of” the agreement. In Heyman v Darwins[1942] AC 356 at p.399 Lord Porter said that the former had a narrower meaning than the latter, but in Union of India v EBA Aabys Rederi AS[1975] AC 797 , Viscount Dilhorne, at page 814, and Lord Salmon, at page 817, said that they could not see the difference between them. Nevertheless, in Overseas Union Insurance Limited v AA Mutual International Insurance Company Limited[1988] 2 Lloyd’s Rep 63 at page 67 Evans J. said that there was a broad distinction between clauses which referred to: “…only those disputes which may arise regarding the rights and obligations which are created by the contract itself” and those which “show an intention to refer some wider class or classes of disputes”
“if any businessman did want to exclude disputes about the validity of a contract it would be comparatively easy to say so”. 16. Ms. Clarke recognised that where parties had entered into a number of connected transactions containing jurisdiction clauses nominating different fora the approach in the Fiona Trust did not apply. She made this concession in light of the decision of the Court of Appeal in UBS AG v HSH Nordbank AG[2009] EWCA Civ 585 . There, there were five separate contracts between the parties, all concerned with a deal under which different financial instruments would be issued. One set of those instruments incorporated by reference an English law and jurisdiction clause. Disputes arose between the parties. The claimants issued proceedings in England, the defendant issued proceedings in New York. There were different jurisdiction clauses contained in the other agreements entered into, or at least some of them. 17. Collins LJ, having identified the claims that the claimants made in their pleadings, said: “82. Are these claims within the Dealers’ Confirmation jurisdiction clause? I accept UBS’ submission that the proper approach to the construction of clauses agreeing jurisdiction is to construe them widely and generously, Donohue v Armco Inc. [2002] 1 LR 425 at para.14. I also accept that in the usual case the words “arising out of” or “in connection with” apply to claims arising from pre-inception matters such as misrepresentation: Fiona Trust & Holding Corporation v Privalov[2007] 2 Lloyd’s Rep 267 ; Deutsche Bank AG v Asia Pacific Broadband Wireless Communications Inc.[2008] 2 Lloyd’s Rep 691 ; Ashville Investments Limited v Elmer Contractors Limited[1989] 2 QB 488 . 83. But the essential task is to construe the jurisdiction agreement in the light of the transaction as a whole, as I suggested in Satyam Computer Services Limited v Upaid Systems Limited[2008] EWCA Civ 487 , at para.93, whether a dispute falls within one or more related agreements depends on the intention of the parties as revealed by the agreements. 84. Plainly the parties did not actually contemplate at the time of the conclusion of the contracts that there would be litigation in two countries involving allegations of misrepresentation in the inception and performance of the agreements, but in my judgment sensible business people would not have intended that a dispute of this kind would have been within the scope of two inconsistent jurisdiction agreements. The agreements were all connected and part of one package, and it seems to me plain that the result for which UBS contends would be a wholly uncommercial result and one that sensible business people cannot have intended. 95. …. Whether a jurisdiction clause applies to a dispute is a question of construction. Where there are numerous jurisdiction agreements which may overlap the parties must be presumed to be acting commercially and not to intend that similar claims should be the subject of inconsistent jurisdiction clauses. The jurisdiction clause in the dealers’ confirmation is a “boiler plate” bond issue of jurisdiction clause and is primarily intended to deal with technical banking disputes. Where the parties have entered into a complex transaction it is the jurisdiction clauses in the agreements which are at the commercial centre of the transaction which the parties must have intended to apply to such claims as are made in the New York complaint and reflected in the draft particulars of claim in England.” 18. Ms. Clarke sought to distinguish UBS on the basis that here there is no inconsistency as to jurisdiction between the sales contracts and the JVA since, for the purposes of this submission, the JVA contained no jurisdiction clause. In my judgment, it is plain from UBS that the jurisdiction clauses in the two physical sales contracts must be construed against the background of the other related contracts entered into by the parties. Here we have a JVA and two sales contracts which are legally quite distinct from one another. Thus it is that the claim for profit share is brought under the JVA and not under the sales contracts. 19. The disputes likely to arise under the JVA are of a quite separate character than those likely to arise under a contract for the sale of a cargo of fuel oil. In this situation, both parties being based in Geneva, it is not, in my judgment, to be presumed that because the parties have not nominated a forum for disputes under the JVA they intended that such disputes should be governed by jurisdiction clauses in such subsequent sales contracts as might be nominated to the JVA. Accordingly, I find that the jurisdiction clauses in the sales contracts do not apply to claims made under the JVA but only to claims in contract or in tort in respect of the rights and obligations created by those contracts. I would add that in any event I have considerable doubt whether the application of the particular English rules of construction relied on by Ms. Clarke is appropriate when considering whether the autonomous concept of consensus has been established. 20. The next claim made in the Particulars of Claim is a claim for damages in respect of the further ten physical sales that Choil says would and should have been nominated to the JVA but for Addax’s repudiation thereof. This claim is made in paragraphs 21(b)(ii) and 22 of the particulars of claim. Ms. Clarke submitted that this claim too was governed by the jurisdiction clauses contained in the Argironisis and Maersk Rugen contracts, on the basis that the claim was “connected with” with those sales contracts for the following reasons: (1) It arises out of the same legal relationship between the parties as the claims for profit share under the Argironissos and Maersk Rugen contracts. (2) It is connected to the two earlier contracts because the parties intended that the profit share would be the balance on a running account that reflected the outturn profit or loss under those earlier contracts. (3) Proof of the profits lost by reason of Addax’s repudiation of the contract involves reliance on the prices achieved in earlier contracts performed under the JVA, as pleaded in paragraphs 15 and 16 of the particulars of claim. (4) The parties intended that all sales contracts made under the JVA would contain English jurisdiction clauses. 21. In support of this fourth ground Ms. Clarke relied on: (1) A witness statement signed by a solicitor, Mr. McCunn, who has many years experience in legal work in the oil industry, and a witness statement from Mr. Andrew Choynowski, the Administrator, i.e. the Managing Director of Choil, who has been involved in the international oil business for 22 years. Both of these witnesses say that a very large part of international oil trading is done on terms that the deals are governed by English law and subject to English jurisdiction. (2) Choil always contracts on English law on jurisdiction terms. (3) Addax does not deny that it too routinely contracts under English law and jurisdiction. (4) The pre JVA trades made by Choil with a company in the Addax group, Addax BV, which is also based in Geneva, contain Choil’s standard English law on jurisdiction clause. (5) The un-commerciality of having disputes under different aspects of the JVA determined in different jurisdictions under different laws, especially when all aspects under the JVA are subject to global accounting. 22. My finding that the profit share claims in respect of the Argironissos and Maersk Rugen contracts are not governed by the jurisdiction clauses in those contracts is fatal for Ms. Clarke’s submissions on the claim now under consideration. But even if I were of the view that those claims were governed by the jurisdiction clauses in the physical sales contracts, I would hold that the reasons advanced by Ms. Clarke come nowhere near to establishing that the lost sales profits claim is “connected with” the Argironissos and Maersk Rugen contracts. 23. The next claim made by Choil is in respect of lost profits on speculative derivative trades that were not hedges relating to the Argironissos and Maersk Rugen contracts. Ms. Clarke accepted that this claim does not arise under the physical sales contracts. Her submission was that the claim is connected with those sales, and thus within the jurisdiction clauses contained in those contracts, because the claim, like the profit share claim, is made under the same agreement, namely, the JVA. She also relied on paragraph 21 of the second witness statement of Mr. Farr, an employee of Choil, where he says: “It would be unreasonable to expect that different parts of the global accounting deal would have to be sorted out, if a dispute arose, in different countries; the accounting under the physical deals in one, and derivatives and overall accounting in another. I am sure that both Addax and Choil as commercial companies would want any disputes under the JV whether under the physical sale, the derivatives, or generally to be decided in the same place by the same court. To do otherwise is risky, expensive and uncommercial”. 24. Again, my conclusion that the profit share claim in respect of the Argironissos and Maersk Rugen contracts is not within the jurisdiction clauses contained in those agreements is fatal to Ms. Clarke’s submission. But even if I was with her on the profit sharing claim, I would still be of the view that the grounds she advanced did not render the speculative derivative trading “connected with” the physical sales contracts. 25. All of Ms. Clarke’s submissions that I have so far considered have proceeded on the basis that the JVA did not itself contain, whether expressly or by implication, an English jurisdiction clause. Ms. Clarke’s final submission was advanced in the alternative, and it was this: it was expressly agreed that the JVA should be subject to English law on jurisdiction, alternatively, it contained an implied term to that effect. 26. The evidence as to whether the JVA contained an express jurisdiction clause is as follows. In his first witness statement, Mr. Farr, an employee of Choil, says in paragraph 4: “Choil’s claim sets out what I believe was agreed as to the form of the joint venture. I understand there to be disputes with Addax about exactly what was agreed. However, I am confident that an English law and jurisdiction basis for the contracts to be performed was agreed. This is very much standard practice in the international oil trade, and the fact that both parties were based in Geneva is of no relevance. We trade with other counter-parties in Geneva and always on the basis of English law and jurisdiction. I agree with what Andrew Choynowski says in his statement about this”. 27. Secondly, reliance was placed on an exchange between Mr. Jim Fleet of Choil and Mr. James Robins, then employed by Addax, on20th June 2008 , by which time the JVA had foundered. This document records Mr. Fleet, who attended the meeting of30th April 2008 , as saying: “Jim Fleet: “Cancel the deal, he’s out of his mind”