Dreymoor Fertilisers Overseas PTE Ltd v Eurochem Trading GmbH [2018] EWHC 909 (Comm)

Case No CL-2018-000062Case No AD-2017-000158[2018] EWHC 909 (Comm)
IN THE HIGH COURT OF JUSTICE
BUSINESS AND PROPERTY COURTS
OF ENGLAND AND WALES
COMMERCIAL COURT (QBD)
Venue Royal Courts of Justice, Strand, London, WC2A 2LLDate 24/04/2018
Before
THE HONOURABLE MR JUSTICE BUTCHER
Between
Dreymoor Fertilisers Overseas PTE Ltd.ClaimantEurochem Trading GMBHDefendant
John Russell QC and Ruth Hosking (instructed by Kerman & Co LLP) for ClaimantJustin Fenwick QC and George Spalton (instructed by Salisbury & Ryan LLP) for DefendantHearing Hearing date: 11 April 2018
JudgmentMR JUSTICE BUTCHER
[1]There are before me two jurisdiction challenges by the Claimant (“Dreymoor”) under the Arbitration Act 1996 (“the 1996 Act”) in respect of two separate arbitrations: (1) First, Dreymoor’s challenge to Mr Ali Malek QC’s Partial Final Award dated 16 November 2017 in LCIA Arbitration 173598 (“the LCIA Arbitration”) under s. 67 of the 1996 Act. As sole arbitrator Mr Malek held that he had jurisdiction over all the claims advanced by EuroChem Trading GmbH (“ECTG”) in its Amended Statement of Case dated 24 August 2017. 2) Secondly, Dreymoor’s s. 32 application relating to ICC Arbitration 23181/TO (“the ICC Arbitration”).[2]The underlying subject matter of the claims is very similar (albeit based on different contracts). The parties therefore agreed that the jurisdiction challenges could and should be heard at the same time, which is what has happened. BACKGROUND A. Factual

BACKGROUND

[3]ECTG is a Swiss company. It was a wholly owned subsidiary of JSC MCC EuroChem (“EuroChem”), a company incorporated in Russia. Following a corporate re-organisation, however, ECTG has become a sister company of EuroChem.[4]ECTG and EuroChem sell fertiliser products. EuroChem is Russia’s largest mineral fertiliser trader and is also one of the largest fertiliser companies in the world with approximately US$7bn in annual group sales. ECTG purchases certain fertiliser products from EuroChem and its affiliates and resells them to third parties in a range of countries worldwide.[5]Dreymoor is an international trading company incorporated in Singapore in 2003. Dreymoor’s sole shareholder and beneficial owner is Mr Aleksandr (or Alexander) Shishkin.[6]It was not contentious that Dreymoor performed two separate roles in its relationship with ECTG:(1) First, Dreymoor was a principal and direct trading partner with ECTG when buying fertiliser under certain contracts in countries other than India (“the RoW Contracts”). These contracts are not at issue in either arbitration.(2) Secondly, in relation to sales of fertiliser to India Dreymoor acted as: (i) ECTG’s sales agent in respect of certain direct sales from ECTG to end-users in India (these contracts are relevant to the ICC Arbitration); and (ii) on terms that it bought fertiliser from ECTG to re-sell to third parties but acting as ECTG’s agent and receiving commission for its role (these contracts are relevant to the LCIA Arbitration).[7]ECTG’s claims in both arbitrations relate to what it alleges were corrupt arrangements between Dreymoor and two former senior employees of ECTG: Mr Valery Rogalskiy and Mr Pomytkin. ECTG’s case is that Mr Rogalskiy and Mr Pomytkin received substantial bribes relating to Dreymoor’s role as its agent. It contends that in return for bribes paid by Dreymoor, Mr Rogalskiy and Mr Pomytkin ensured that ECTG guaranteed certain volumes of high margin products to Dreymoor and arranged for Dreymoor to be appointed as agent for ECTG on sales to Indian buyers on much better terms than they would otherwise have been able to obtain.

The Contracts and Arbitration Clauses

[8]ECTG’s claims in the LCIA and ICC Arbitrations relate to 25 contracts which fall into 7 categories which are as follows and which are set out in the Annex to this judgment:(i) The DAP/MAP Agency Agreement, pursuant to which ECTG appointed Dreymoor as its sales agent for the sale of Di-Ammonium Phosphate (“DAP”) and Mono-Ammonium Phosphate (“MAP”) to end-users in India.(ii) The Urea Agency Agreements, pursuant to which ECTG appointed Dreymoor as its sales agent for the sale of Urea to end-users in India.(iii) The DAP CFR Sales Contracts, by which ECTG sold DAP to Dreymoor for re-sale to third parties.(iv) The MAP CFR Sales Contracts, by which ECTG sold MAP to Dreymoor for re-sale to third parties.(v) The Urea CFR Sales Contracts, by which ECTG sold to Dreymoor Urea for re-sale to third parties.(vi) One Urea FOB Sales Contract, by which ECTG sold to Dreymoor Urea for re-sale to third parties.(vii) The DAP Third Party Sales Contracts, by which DAP was sold by ECTG to two Indian companies, Zuari Industries Limited (“Zuari”) and Paradeep Phosphates Limited (“Paradeep”) to which ECTG contends that Dreymoor is also a party.[9]In the arbitrations ECTG relies upon the contracts and arbitration clauses in the following way: The LCIA Arbitration[10]There are two categories of contract in the LCIA Arbitration: DAP/MAP Contracts and Urea Contracts. DAP/MAP (i) ECTG appointed Dreymoor as agent for DAP/MAP sales in India under what may be described as an “umbrella” agreement (i.e. the DAP/MAP Agency Agreement) which was dated 31 March 2010, and was later extended by two addenda. (2) That DAP/MAP Agency Agreement itself did not have an arbitration clause but the individual DAP/MAP CFR Sales Contracts each contained what I will refer to as the Long Form LCIA Clause, which is considered below. (3) No sales were made directly under the DAP/MAP Agency Agreement. Rather, each sale was made under a separate DAP/MAP CFR Sales Agreement. Urea (4) ECTG also appointed Dreymoor as its agent in respect of Urea sales. The contractual framework again comprised an “umbrella” agreement (i.e. the Urea Agency Agreements) and individual contracts. (5) Unlike the DAP/MAP Agency Agreement, the Urea Agency Agreements contained what I will refer to as the Short Form LCIA Clause, considered below. Further, each of the individual Urea CFR and FOB Sales Contracts contained the Long Form LCIA Clause. The ICC Arbitration[11]The ICC arbitration is based on the same structure as the DAP/MAP claim in the LCIA arbitration (namely the same DAP/MAP Agency Agreement with no arbitration clause and separate sales contracts containing arbitration clauses), save that: a) ECTG contends that it, Dreymoor and the ultimate buyer of the fertiliser were all parties to each DAP Third Party Sales Contract. b) Each individual DAP Third Party Sales Contract contained what I will refer to as the ICC Clause. c) Dreymoor does not accept that it was a party to the DAP Third Party Sales Contracts or at least was not a party to the arbitration clauses contained in them.

The Long Form LCIA Clause

[12]The DAP/MAP CFR Sales Contracts, the Urea CFR Sales Contracts and the Urea FOB Sales Contract, each of which was executed by ECTG and Dreymoor, and to which as appropriate I will refer as “the Sales Contracts”, all contained the Long Form LCIA Clause which was headed “Arbitration” and was in the following terms:
“The Seller and the Buyer shall do their best to solve any dispute or claim arising out of this Contract by way of negotiation. If the parties fail to reach settlement of their dispute, controversy or claim by means of negotiations, such dispute, controversy or claim shall be referred to arbitration under the rules (the Rules) of the London Court of International Arbitration. The Rules are deemed to be incorporated by reference into this section. Subject to the Rules, the tribunal will consist of a sole arbitrator agreed between the parties or, if no agreement is reached within 21 days of the contestant party notifying the other party that it intends to initiate arbitration proceedings by registered mail, a sole arbitrator will be appointed under the Rules. The place of any arbitration must be London and the language to be used in proceedings English. The award of the Arbitration is made by majority of votes on the basis of the terms of the present contract. The applicable law in force hereto is English law. The award of this arbitration is final and binding upon both parties”
.

The Short Form LCIA Clause

[13]The Urea Agency Agreements (each of which was executed by ECTG and Dreymoor) contained the Short Form LCIA Clause. That clause provided that:
“In case of any disagreement both the parties shall strive to discuss and settle the issues amicably. This agreement is governed exclusively by English law. Disputes on this agreements [sic] shall be settled by LCIA (London Court of International Arbitration)”
.

The ICC Clause

[14]The DAP Third Party Sales Contracts contained the ICC Clause. That clause provided:
“This contract shall be governed by law of England and Wales without reference to its conflict of laws rules. … Any dispute, controversy or claim arising out of or relating to this contract, or the breach, termination or validity thereof, shall be referred to the arbitration of three persons in London, one to be appointed by Seller, one to be appointed by Buyer and the third by the two so chosen, who shall be chairman. The language of the arbitration shall be English. Forum: Disputes which cannot be settled amicably within 10 days of their having arisen shall be submitted for decision by arbitration under the Arbitration Rules of the International Chamber of Commerce. Unless otherwise agreed between the parties, the arbitration shall take place in London”
. B. Procedural background 16. The BVI Proceedings[15]ECTG and Eurochem brought proceedings in December 2014 in the British Virgin Islands against 18 defendants including Dreymoor (“the BVI Proceedings”).

B. Procedural background

[16]It is ECTG’s position that the BVI Proceedings relate only to the RoW Contracts where Dreymoor acted as a principal, not to the contracts relating to India which are the subject of the LCIA and ICC Arbitrations (where Dreymoor acted as ECTG’s agent). In that regard, ECTG’s Re-Amended Statement of Claim in the BVI Proceedings states that:
“In case of sales of UREA and DAP in India, Dreymoor acted in the capacity of an agent in assisting [ECTG] to sell UREA and DAP to other buyers in India. Those contracts … are not the subject matter of this Amended Statement of Claim.”
[17]Dreymoor challenged the BVI Court’s jurisdiction. Dreymoor was unsuccessful before Wallbank J and then appealed to the Eastern Caribbean Court of Appeal; that appeal was heard on 20 and 21 November 2017 and the decision is awaited. The LCIA Arbitration[18]ECTG filed a Request for Arbitration with the LCIA on 9 March 2017. Mr Ali Malek QC was appointed as sole arbitrator by the LCIA on 16 May 2017.[19]There was initially an issue as to whether the arbitration had been validly commenced because there had been only one Request, and because it is not possible to commence claims under two or more separate LCIA arbitration clauses in a single arbitration (A v B [2017] EWHC 3417 (Comm)).[20]Following the First Procedural Meeting on 31 July 2017, however, Mr Malek QC made a Procedural Order which included the following provisions:
“Recitals 4 and 6, recording (respectively) that ECTG and Dreymoor ‘agree[d], save to the extent and for the limited purpose set out below, that an arbitration was validly commenced in respect of each arbitration agreement relied upon by the Claimant in its Statement of Case (save as set out below in relation to the DAP Third Party Agreements), and further agreeing that the Tribunal has been validly constituted in respect of each arbitration’ and ‘agree[d] that this arbitration shall be governed by the LCIA Rules of Arbitration 2014.’ Paragraph 5, directing ECTG to file and serve an Amended Statement of Case. Procedural provisions dealing with how Dreymoor’s challenge to the jurisdiction of the arbitrator was to be dealt with.”
[21]ECTG’s Amended Statement of Case in the LCIA Arbitration advanced the following causes of action against Dreymoor:(1) Breach of contractual duties.(2) Breach of equitable and/or fiduciary duties.(3) Dishonestly assisting Mr Rogalskiy and/or Mr Pomytkin.(4) Unlawful means conspiracy with Mr Rogalskiy and/or Mr Pomytkin.(5) Inducing breaches of Mr Rogalskiy’s and/or Mr Pomytkin’s contractual and/or fiduciary duties owed to ECTG.(6) Interference with Mr Rogalskiy’s and/or Mr Pomytkin’s contractual relationship with ECTG.(7) Unjust enrichment at ECTG’s expense.[22]Following service of the Amended Statement of Case, Dreymoor challenged Mr Malek QC’s jurisdiction. After a one-day hearing on 3 November 2017, Mr Malek QC dismissed that challenge in a Partial Final Award dated 16 November 2017. The ICC Arbitration[23]As I have already said, the DAP Third Party Sales Contracts contain ICC arbitration clauses. On 5 May 2017, ECTG’s solicitors wrote to Dreymoor’s legal representatives inviting Dreymoor to agree that “all disputes relating to both the LCIA Agreements and the ICC Agreements be heard before the LCIA Tribunal”. Dreymoor did not do so.[24]ECTG accordingly filed a Request for Arbitration with the ICC on 24 October 2017. That Request for Arbitration advanced the same causes of action, mutatis mutandis, as had been advanced in the LCIA Arbitration Statement of Case.[25]ECTG appointed Mr Michael Brindle QC as its arbitrator and Dreymoor appointed Mr Alistair Schaff QC. ECTG and Dreymoor have agreed that Mr Malek QC should be appointed as President of the ICC Tribunal, which was constituted by the ICC on 29 January 2018.[26]Dreymoor informed ECTG that it would challenge the ICC Tribunal’s jurisdiction to hear the claims to which I have referred, and by an email dated 17 January 2018 ECTG consented to this issue being determined by the Court at this hearing.[27]In neither the LCIA nor the ICC Arbitration has Dreymoor yet served substantive defence submissions, but I was told that it denies all allegations of bribery or any improper conduct.

APPROACH TO S. 67 AND S. 32 CHALLENGES

[28]Dreymoor brings its challenge to Mr Malek QC’s Partial Final Award in the LCIA Arbitration under section 67(1)(a) of the 1996 Act. The challenge to the jurisdiction of the ICC Tribunal is brought pursuant to sections 32(1) and 32(2)(a) of the 1996 Act. I did not understand there to be any significant issue as to the proper approach of the Court on such challenges.[29]Specifically, the only matters which the Court can consider under sections 67(1)(a) and 32(1) are those which go to the Tribunal’s “substantive jurisdiction”, namely(i) whether there is a valid arbitration agreement;(ii) whether the Tribunal is properly constituted; and/or(iii) what matters have been submitted to arbitration in accordance with the arbitration agreement: sections 30(1) and 82(1) of the 1996 Act; and Union Marine Classification Services v Government of the Union of Comoros [2015] 2 Lloyd’s Rep 49, at [20]-[23].[30]Dreymoor has accepted that(i) there is a valid LCIA arbitration agreement; and(ii) the LCIA Tribunal was properly constituted. The only issue before the Court in relation to the LCIA Arbitration concerns the extent to which “matters have been submitted to arbitration in accordance with [the LCIA Long / Short Form Clauses]”.[31]In relation to section 67 specifically, the correct approach is for the Court to make a “full judicial determination on evidence” rather than a mere appellate review: Dallah v Ministry of Religious Affairs of Pakistan [2011] 1 AC 763, at [26]. An applicant is, however, restricted to objections which it raised before the Tribunal other than in very limited circumstances: section 73 of the 1996 Act and Russell on Arbitration (24th edn, 2015), at [8-070].[32]In relation to the ICC Arbitration, the s. 32 challenge involves Dreymoor’s contention(i) that there was no agreement to arbitrate between ECTG and Dreymoor, and alternatively if there was(ii) that the claims brought by ECTG did not fall within it. THE PARTIES’ POSITIONS 35. Dreymoor’s Case[33]In outline, Dreymoor’s position is that the arbitration agreement in each individual Sales Contract only embraces breaches of that contract of sale, and does not cover the bribery allegations which are the foundation of the claims ECTG makes, whether those claims are formulated in contract or tort. Furthermore, in relation to the ICC Arbitrations, the arbitration agreements do not cover claims by or against Dreymoor at all.[34]Dreymoor contends, in relation to the Sales Contracts which are relevant to the LCIA arbitration, that ECTG’s allegations of breach of these Sales Contracts are dependent on the Agency Agreements (i.e. the DAP/MAP Agency Agreement and the Urea Agency Agreements). Thus Dreymoor points to the fact that in paragraphs 74 of the Amended Statement of Case in the LCIA arbitration, ECTG pleads that it “was an implied term of the [DAP/MAP CFR Sales Contracts] that Dreymoor would comply with its obligations as an agent under the [DAP/MAP Agency Agreement] (such implied term being as a result of a course of dealing between the parties under the DAP/MAP Agency Agreement] and/or under the [DAP/MAP CFR Sales Contracts] and/or because the parties intended that the terms of the [DAP/MAP Agency Agreement] would be incorporated into the individual agreements.” There is in paragraph 88 a similar plea in relation to the Urea Sales Contracts.

THE PARTIES’ POSITIONS

[35]In further support of its contention that ECTG’s claims are dependent on the Agency Agreements, Dreymoor further points to paragraph 107 of the Amended Statement of Case where ECTG pleads that “as agent for [ECTG] throughout the material time (for example under the [DAP/MAP and Urea Agency Agreements] and/or under the individual [DAP/MAP and Urea Sales Contracts] Dreymoor owed the following implied contractual, equitable and/or fiduciary duties to [ECTG] when acting as agent under the individual agreements which are the subject of this arbitration: A duty of good faith; And/or a duty to ‘actively and in good faith promote the interest of [ECTG] in India and do its best to secure the favourable market position for DAP and MAP…’ (pursuant to clause 2 of the [DAP/MAP Agency Agreement] which was implied into each of the [DAP/MAP CFR Sales Contracts] which are the subject of these proceedings); And/or a duty to ‘actively and in good faith promote the interest of [ECTG] in India and do its best to secure the favourable market position for Urea…’ (pursuant to clause 2 of the [Urea Agency Agreements] which was implied into each of the [Urea CFR and FOB Sales Contracts] which are the subject of these proceedings) …”[36]Dreymoor contends that while the approach to arbitration clauses, involving what may be described as the ‘one stop presumption’, laid down by the House of Lords in Fiona Trust & Holding Corporation v Privalov [2007] UKHL 40 is applicable in cases in which there is only one contract, in cases where there are multiple contracts such as there are here, it has to be modified. In the present case, it is not applicable to a construction of the arbitration provisions in the various individual Sales Contracts. Alternatively, to the extent that it is applicable, its proper application should lead to the conclusion that the arbitration clauses in the Sales Contracts were not intended to be applicable to the present dispute, because if they were it would thwart rather than facilitate ‘one stop’ adjudication of all disputes between the parties.[37]Mr Russell QC for Dreymoor made reference to AmTrust Europe Ltd v Trust Risk Group SpA [2015] EWCA Civ 437, in particular paragraphs [44]-[49]. There it was said by Beatson LJ in paragraph [46]:
“Where the overall contractual arrangements contain two or more differently expressed choices of jurisdiction and/or law in respect of different agreements, however, the position differs in that one does not approach the construction of those arrangements with a presumption. So, the fourteenth edition of Dicey, Morris and Collins on the Conflict of Laws stated: ‘[T]he decision in Fiona Trust has limited application to the questions which arise where the parties are bound by several contracts which contain jurisdiction agreements for different countries. There is no presumption that a jurisdiction (or arbitration) agreement in contract A, even if expressed in wide language, was intended to capture disputes in contract B; the question is entirely one of construction…’”
[38]Reference was also made to paragraph [48] of the same case, where Beatson LJ said:
“The current (sixteenth) edition of Dicey, Morris and Collins states … that: ‘Where a complex financial or other commercial transaction is put in place by means of a number of interlinked contracts, and each has its own provision for the resolution of disputes, the point of departure will be that it is improbable that a jurisdiction clause in one contract, even expressed in ample terms, was intended to capture disputes more naturally seen as arising under a related contract … Even if the effect is that there will be a risk of fragmentation of the overall process for the resolution of disputes, this is not by itself sufficient to override the construction, and consequent giving of effect to, the complex agreements for the resolution of disputes which the parties have made.’ In short, what is required is a careful and commercially-minded construction of the agreements providing for the resolution of disputes. This may include enquiring under which of a number of inter-related contractual agreements a dispute actually arises, and seeking to do so by locating its centre of gravity and thus which jurisdiction clause is ‘closer to the claim’. In determining the intention of the parties and construing the agreement, some weight may also be given to the fact that the terms are standard forms plainly drafted by one of the parties.”
[39]Mr Russell QC for Dreymoor also drew attention to UBS AG v HSH Nordbank AG [2009] EWCA Civ 585, and in particular to paragraphs [82]-[84] where Lord Collins of Mapesbury said:
“[82] Are these claims within the dealer’s confirmation jurisdiction clause? I accept UBS’s submission that the proper approach to the construction of clauses agreeing jurisdiction is to construe them widely and generously … 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: see Fiona Trust and Holding Corp v Privalov [2007] EWCA Civ 20, [2007] 2 Lloyd’s Rep 267, Deutsche Bank AG v Asia Pacific Broadband Wireless Communications Inc [2008] EWCA Civ 1091, [2008] 2 Lloyd’s Rep 619 and Ashville Investments Ltd v Elmer Contractors Ltd [1989] 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 Systems Ltd v Upaid Systems Ltd [2008] EWCA Civ 487, [2008] All ER (Comm) 465, at [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.”
[40]The way in which the approach established by these authorities applies in the present case to the DAP/MAP Sales Contracts relevant to the LCIA Arbitration, Mr Russell QC contends, is this. The “centre of gravity” of the claims is for alleged breach of the DAP/MAP Agency Agreement and attendant non-contractual duties, not of the DAP/MAP Sales Contracts. All the allegations of breach of the express or implied terms of the DAP/MAP Sales Contracts would be breaches of the DAP/MAP Agency Agreement and duties thereunder and most naturally relate to it. It is to the jurisdictional arrangements established by the DAP/MAP Agency Agreement that the parties must have intended that such disputes should be referred.[41]The DAP/MAP Agency Agreement does not, in fact, contain an arbitration or jurisdiction provision, as opposed to a choice of law clause. That, however, Mr Russell QC contends, must be taken to be a deliberate choice. It was an agreed jurisdictional arrangement. That arrangement was, in effect, that jurisdiction should be established in whatever might be the appropriate court. Mr Russell QC said that to recognise that there was no applicable arbitration clause was consistent with a presumption that the parties would have wished for the resolution of all disputes between them in one forum. Only if all matters were litigated could there be the resolution of all disputes in a single place, while ECTG’s approach led to fragmentation. Mr Russell QC stated that it was Dreymoor’s position that the courts of Russia are the appropriate forum for the resolution of all disputes between the parties relating to the bribery allegations. (I should also mention, parenthetically, that he also indicated, in response to questions from me, that Dreymoor would not agree, for example, to the Courts of England and Wales having jurisdiction to decide all disputes, because Dreymoor contends that Russia is the appropriate forum.)[42]In relation to Urea, again, Mr Russell QC submitted that the terms of the Long Form LCIA arbitration provision in the Urea Sales Contracts were inapplicable, because the dispute was one which arose in relation to the agency arrangements between the parties. In the case of Urea, however, there is the Short Form LCIA Clause in the Urea Agency Agreements. Mr Russell QC accepted that if contractual claims were brought for breach of the Urea Agency Agreements they would be claims “on” those Agreements. He submitted, however, that there were no sums claimed for breach of the Urea Agency Agreements. In any event, he said that the bribery allegations which were made were not claims “on” the Urea Agency Agreements. Any bribery to procure the Urea Agency Agreements must have taken place before the Urea Agency Agreements were entered into and claims relating to any such bribery were not claims “on” the Agency Agreements. Accordingly, the position was that both the arbitration clauses in the Urea Sales Contracts and in the Urea Agency Agreements were inapplicable to the present dispute, though for somewhat different reasons. Once again, the parties must have intended that such a dispute should be dealt with in court, although they had not specified what that court should be. Mr Russell QC said that, here again, the appropriate courts were those of Russia.[43]In relation to the contracts relevant to the ICC Arbitration, Dreymoor submitted that the disputes, again, arose from the agency arrangements relating to DAP/MAP and not from the DAP Third Party Sales Contracts. Those DAP Third Party Sales Contracts were, moreover, between ECTG and the Indian purchaser (either Zuari or Paradeep). Dreymoor was not a party thereto, or if it was in some sense a party, it had no obligations / rights thereunder, and in any event it was not intended that any claims against it should be subject to the arbitration provision contained in those Third Party Sales Contracts. ECTG’s Case[44]For ECTG Mr Fenwick QC submitted that there were three points in dispute. The first, he said, which relates to the disputes said to have been referred to LCIA arbitration, is whether the claims made fell within the arbitration clauses of the DAP/MAP and Urea Sales Contracts. As to this, he submitted that they did. There were arguable cases of breach of each of those Sales Contracts. If it mattered, he said that the implied terms which were relied upon did not need to be implied from the DAP/MAP and Urea Agency Agreements: it would be possible to imply a term into each of the Sales Contracts that it should not be induced by bribery. While it might be correct that if no possible contractual claim arose the parties will not have intended that non-contractual claims should be subject to the arbitration clause, that was not the case here. Furthermore there is no doubt that an appropriately worded arbitration clause is apt to cover purely non-contractual claims, such as pre-contractual misrepresentation, or indeed claims involving bribery, as was the case in the Fiona Trust itself.[45]Secondly, there was the issue of whether there was a conflicting jurisdiction / arbitration clause or arrangement. This was particularly relevant to the DAP/MAP Sales Contracts. Mr Fenwick QC submitted that, if it was appropriate to ask what was the “centre of gravity”, it was the DAP/MAP and Urea Sales Contracts. It was only because of the existence of individual Sales Contracts resulting from the bribery that there were any breaches, or at least any actionable breaches, of the overarching agency arrangements. Mr Fenwick QC posited a case where there had only been one sale effected. There would, he said, be no doubt that a dispute as to whether it had been induced by bribery would fall within its arbitration clause. It made no difference that in fact a large number of Sales Contracts were induced by bribery.[46]Mr Fenwick QC submitted that, in any event, the “centre of gravity” test was not applicable in a case where there was no competing choice of arbitration / jurisdiction. In the present case, the absence of an arbitration / jurisdiction provision in the DAP/MAP Agency Agreement could not be taken as a deliberate choice of court proceedings to deal with any disputes which might arise out of the DAP/MAP Agency Agreement even if they also arose out of the individual DAP/MAP Sales Contracts. There might be various reasons why there was no choice of arbitration / jurisdiction in the DAP/MAP Agency Agreement. In any event, rational business people are not to be taken to have intended that disputes were to be resolved by the ‘free for all’ of establishing jurisdiction in an unidentified court system rather than pursuant to the arbitration clauses which they had agreed and incorporated into the DAP/MAP Sales Contracts.[47]Mr Fenwick QC referred in his Skeleton Argument to the decision of the Court of Appeal in Sebastian Holdings v Deutsche Bank[2011] 1 Lloyd’s Rep 106. In that case, Sebastian Holdings argued that the relevant contracts should be construed as referring the dispute to the jurisdiction chosen in the contract “at the commercial centre of the claim or the dispute” (at [35(ii)] and [35(iii)]). The Court of Appeal had rejected that submission, holding that the correct approach was to “find … the commercially-rational construction … giving effect to clear agreements, even if this may result in a degree of fragmentation in the resolution of disputes between parties to a series of agreements” (at [50]). Specifically, Thomas LJ had deprecated any approach which “require[d] the court to rewrite the agreements” (at [65]) and/or “to persuade a court to engage in case management under the guise of contractual interpretation” (at [64]).[48]Applying that to the present case, Mr Fenwick QC’s contention was that there was no basis for failing to give effect to the arbitration agreements in the DAP/MAP Sales Contracts. That was the commercially-rational construction, even if it resulted in a degree of fragmentation in the resolution of the parties’ disputes.[49]In relation to the Urea Agency Agreements, Mr Fenwick QC submitted that there was indeed a claim for damages under these contracts: the plea had simply specified the damages by reference to the individual Urea Sales Contracts. As to the suggestion that these claims were not claims “on” the Urea Agency Agreements because the bribery predated them, that was contrary to the approach in Fiona Trust of avoiding narrow verbal distinctions. The further argument, to the effect that there must be taken to have been a deliberate decision not to refer disputes such as the present either to arbitration under the arbitration clauses in the individual Urea Sales Contracts or that in the Urea Agency Agreements, was even less plausible than the argument in relation to the DAP/MAP position where there was no arbitration clause in the DAP/MAP Agency Agreement.[50]As to the contracts relevant to the ICC arbitration, Mr Fenwick QC submitted that Dreymoor was stated to be, and signed as, a party to the DAP Third Party Sales Contracts, and had a role under the contractual terms of each. There was no basis for saying that a dispute which arose between ECTG and Dreymoor, if it fell within the wording of the arbitration clause in the DAP Third Party Sales Contracts as to subject matter, should not be subject to that arbitration clause.

DISCUSSION AND CONCLUSION

[51]In my judgment, the submissions of ECTG are to be preferred. LCIA Arbitration[52]I will begin by considering the issues which arise in relation to the LCIA Arbitration. I consider that it is appropriate to start with the question of whether the disputes fall within the terms of the arbitration clauses in the individual DAP/MAP and Urea Sales Contracts. While I recognise that it will be necessary to consider whether the entirety of the contractual arrangements, including the other contracts and jurisdictional arrangements, affect any conclusion which might be reached by looking at those Sales Contracts in isolation, this appears an appropriate starting point if only because, if the disputes did not fall within those clauses even viewed in isolation, that would be an end of the matter.[53]I have no doubt that the answer to this question is that the disputes do fall within those arbitration clauses. In construing those clauses at this stage, I apply the liberal or generous interpretation, avoiding narrow distinctions, which was propounded in Fiona Trust. Each of the relevant contracts referred to LCIA Arbitration “any dispute or claim arising out of this Contract”. Those words, construed in the manner I have described, are wide enough to cover the disputes which ECTG has referred to LCIA Arbitration. A clause which refers disputes “arising out of” the contract is apt to refer disputes which relate to non-contractual claims, including for pre-contractual misrepresentation and antecedent bribery inducing the contract, as was confirmed by the Court of Appeal in paragraph [82] of the UBS v HSH Nordbank case, to which I was referred.[54]I recognise that there may be cases in which an arbitration clause will not be construed as extending to a tortious or other non-contractual claim if the parties would, at the time of conclusion of their contract, have considered that any possible contractual claim in the relevant area would have been outlandish or unarguable. If that were the case then it might be that they would not have expected “related” tortious claims to be subject to the arbitration clause (see Microsoft v Sony [2018] All ER (Comm) 419 especially at [45], [54] and [72]). I do not consider that the present is that type of case. In my judgment the parties as reasonable business people would have contemplated that there might be plausible contractual claims under the individual Sales Contracts if it emerged that they were induced by bribery, and, in any event, would have contemplated that non-contractual claims relating to such bribery would be capable of being resolved under the arbitration clauses provided for in those contracts.[55]I then turn to the question of whether the existence and terms – in particular as to jurisdiction/arbitration - of the other contracts between the parties mean that the proper construction of the arbitration clauses in the individual Sales Contracts is different from what I would have considered correct by looking at the DAP/MAP and Urea Sales Contracts in isolation. This involves taking into account the nature of the “umbrella” agency arrangements and the provisions of the DAP/MAP Agency Agreement and of the Urea Agency Agreements.[56]In my judgment consideration of those arrangements and of those Agency Agreements does not alter the conclusion I have reached. The issue is one of construction of the relevant agreements, and, as I have already indicated, in considering that issue it is relevant to consider what the parties, as reasonable business people, must be taken to have intended as to how and where disputes which might arise between them should be resolved.[57]I do not consider that reasonable business people would have intended, or are to be taken to have intended, that if there were to arise questions as to whether there had been bribery by Dreymoor which induced a number of different Sales Contracts, these were to be resolved only under the dispute resolution procedures of the DAP/MAP and Urea Agency Agreements, rather than under the dispute resolution procedure specified in the individual Sales Contracts which it was contended had been so induced.[58]Especially is this so in the present case. In the case of the DAP/MAP Agency Agreement, there was no jurisdiction or arbitration clause specified, leaving undetermined and uncertain where any dispute arising in relation to it should be resolved. I consider that reasonable business people would not have considered that this uncertain jurisdictional position should apply to a dispute such as the present as opposed to the specified dispute resolution mechanism in the individual contracts.[59]The position appears to me to be a fortiori in the case of the Urea Sales Contracts. Here the Urea Agency Agreements contained the Short Form LCIA Arbitration Clause. Deferring for the moment a decision as to the width of that clause, and assuming that it is as narrow as Dreymoor contends, the argument that the parties must be taken to have intended that disputes such as the present fall for resolution neither under the arbitration clauses in the individual Urea Sales Contracts – because the “centre of gravity” is the Agency Agreements - nor under the arbitration clause in the Urea Agency Agreements – because too narrow - but in an unspecified court, appears to me to be lacking in common sense or commercial reality. If business people include an arbitration clause in both the individual Sales Contracts and the umbrella Agency Agreement, I consider it unlikely, in the absence of clear indications to the contrary, that they intended that disputes such as the present should be resolved under neither. If it is right – as for present purposes I have assumed – that the arbitration clause in the Urea Agency Agreements is narrow, then the correct view, I consider, is that the parties intended such disputes to be resolved under the arbitration clauses in the individual Sales Contracts.[60]To attribute to the parties the intentions which Dreymoor attributes to them and which I have discussed in the two previous paragraphs would mean accepting an intention that there might arise anomalous results, such as those contended for by Dreymoor here. Its case is that the disputes between the parties must be decided in the courts of a country – Russia – which was not chosen as the jurisdiction for disputes under any of the contracts between the parties, where all those contracts specify that the governing law is English law, and where in all cases in which there is any specified choice of dispute resolution mechanism, it is a choice for arbitration in London. I cannot accept that the parties intended that resolution of their disputes might occur in such a forum, as opposed to there being arbitration under the arbitration clauses included in the individual Sales Contracts.[61]To the extent that it is necessary to consider where the “centre of gravity” of the dispute lies and which jurisdictional arrangement is ‘closer to the claim’, I consider that there is no reason for saying that the “centre of gravity” of the bribery dispute is located in the Agency Agreements or the umbrella agency arrangements as opposed to in the Sales Contracts which are alleged to have been induced by the bribery. To put it another way, the arbitration clauses in those individual Sales Contracts appear to me to be no more distant from the claim than the jurisdictional arrangements in the Agency Agreements.[62]Applying the approach of the Court of Appeal in Sebastian Holdings, I consider that the commercially-rational construction, which gives effect to the clear terms of the relevant agreements, is that the current disputes can and should be arbitrated under the LCIA Arbitration clauses in the individual Sales Contracts.[63]As to the question of whether the arbitration clause in the Urea Agency Agreements is applicable to the disputes to which ECTG contends it applies, I consider that it is. Mr Fenwick QC explained that claims are made under the Urea Agency Agreements, although the damages are particularised by reference to the individual Urea Sales Contracts. Those claims can be said to be claims “on” the Urea Agency Agreements. The contentions to the contrary appear to me to fall foul of the approach of the House of Lords in Fiona Trust by seeking to raise narrow linguistic distinctions between the wording of different arbitration provisions, in circumstances where there is no discernible commercial rationale for this arbitration agreement to have an unusually narrow scope. ICC Arbitration[64]I now turn to the issues relevant to the ICC Arbitration. The first point here is that, as I understood it, Dreymoor does not accept that it was a party to the DAP Third Party Sales Contracts, or at least contends that it was not a party in any relevant sense, and in any event that the arbitration clauses in those Third Party Sales Contracts do not apply to any disputes between Dreymoor and ECTG.[65]I do not consider this argument to be correct. In each of the DAP Third Party Sales Contracts there was a provision which specified the “Legal Addresses of the Parties”. It named each of the Seller (ECTG), the Buyer (Zuari or Paradeep) and Dreymoor, which is called the “Agent”. There was then a space for “Signature of the Parties”. Each agreement was signed by each of the three “Parties” whose names and addresses had appeared under provision “Legal Addresses of the Parties”, including Dreymoor. Furthermore in each of the DAP Third Party Sales Contracts, Dreymoor has a role which is specified in the express contractual terms. Under Clause V of each of the DAP Third Party Sales Contracts, the confirmed and irrevocable Letter of Credit is to be established in favour of Dreymoor. Under two of those contracts, 3814 and 3952, demurrage and dispatch is to be settled between the Buyer and Dreymoor. It was intelligible that Dreymoor should be made a party to the DAP Third Party Sales Contracts, and in my judgment it was.[66]The question still arises as to whether it was intended that any claims which might exist between ECTG and Dreymoor, and in particular any claims which related to the inducement of these DAP Third Party Sales Contracts by bribery, were subject to the arbitration clauses in those contracts. Dreymoor’s argument here is that the arbitration agreements only cover disputes between the Buyer (i.e. Zuari or Paradeep) and the Seller (i.e. ECTG), and do not cover disputes between Dreymoor and either of the other two.[67]The terms of the arbitration clause are very wide: “any dispute, controversy or claim arising out of or relating to this contract, or the breach, termination or validity thereof” is referred to arbitration. If a dispute falling within that category is one which involves the Agent, Dreymoor, which, as I have said, is a party to the contracts, then I consider that the arbitration clause applies to it.[68]Dreymoor contends, however, that the terms relating to the appointment of arbitrators demonstrates that this is not the case, because the clause specifies only that one arbitrator may be chosen by the Buyer and the other by the Seller, and there is no provision for the appointment of an arbitrator by Dreymoor. In my view, however, the governing intention of the contract is that Dreymoor should be a party and that all disputes arising out of or relating to the contract should be subject to arbitration. The mechanism for the appointment of arbitrators must be construed and applied to give effect to that intention.[69]Had it been necessary to do so, I would have decided that the way in which the arbitration clause functions is that, if only Dreymoor and one of the other parties are in dispute, then the clause is to be read as providing that those two parties can each appoint an arbitrator, the third arbitrator to be appointed by the two so chosen. If, on the other hand, all three of the parties are involved in the dispute, it is the Buyer and Seller who can each appoint, and Dreymoor has to accept the appointments made by the Buyer and Seller.[70]Accordingly I find that there was an agreement to arbitrate between Dreymoor and ECTG in each of the DAP Third Party Sales Contracts.[71]On this basis, the only other argument which is raised in connexion with the ICC Arbitration is that the “centre of gravity” is located in the DAP/MAP Agency Agreement, which does not have any arbitration or jurisdiction provision. This is the same argument as I have considered and rejected in relation to the MAP/DAP contracts relevant to the LCIA Arbitration.

DISPOSAL

[72]Dreymoor’s s. 67 challenge to Mr Malek QC’s Partial Final Award fails and is dismissed.[73]Dreymoor’s s. 32 claim fails. The ICC Tribunal has jurisdiction over the claims made in the ICC Arbitration. ----------------------------------- ANNEX 1 ---------------------------------- No. Contract Jurisdiction / Arbitration Clause 1 27 April 2010, ET/2010/04/Dreymoor/DAP/3207 Clause 9 of the “STANDARD CONDITIONS of Sale CFR” (“Long Form LCIA Clause”) 2 17 May 2010, ET/2010/05/Dreymoor/DAP/3224 Long Form LCIA Clause 3 11 June 2010, ET/2010/06/Dreymoor/DAP/3316 Long Form LCIA Clause 4 27 July 2010, ET/2010/07/Dreymoor/DAP/3354 Long Form LCIA Clause 5 13 April 2010, ET/2010/04/Dreymoor/DAP/3155 Long Form LCIA Clause 6 13 April 2011, ET/2011/04/Dreymoor/DAP/3843 Long Form LCIA Clause 7 5 October 2011, ET/2011/10/Dreymoor/DAP/4171 Long Form LCIA Clause 8 6 April 2010, ET/2010/04/Dreymoor/MAP/3143 Long Form LCIA Clause 9 5 May 2010, ET/2010/05/Dreymoor/MAP/3206 Long Form LCIA Clause 10 12 April 2011, ET/2011/04/Dreymoor/MAP/3837 Long Form LCIA Clause 11 13 April 2011, ET/2011/04/Dreymoor/MAP/3842 Long Form LCIA Clause 12 11 October 2011, ET/2011/10/Dreymoor/URG/4183 Long Form LCIA Clause 13 11 October 2011, ET/2011/10/Dreymoor/UR/4184 Long Form LCIA Clause 14 11 October 2011, ET/2011/10/Dreymoor/URG/4189 Long Form LCIA Clause 15 11 October 2011, ET/2011/10/Dreymoor/UR/4200 Long Form LCIA Clause 16 7 December 2011, ET/2011/12/Dreymoor/UR/4293 Long Form LCIA Clause 17 7 December 2011, ET/2011/12/Dreymoor/URG/4297 Long Form LCIA Clause 18 15 April 2013, ET/2013/04/Dreymoor/UR/5400 Long Form LCIA Clause 19 12 October 2011 Urea Agency Agreement Clause 5 of the Urea Agency Agreement (“DISAGREEMENT”) (“Short Form LCIA Clause”) 20 7 December 2011 Urea Agency Agreement Short Form LCIA Clause 21 7 December 2011 Urea Agency Agreement Short Form LCIA Clause 22 23 March 2010 with Zuari Industries Limited, ET 2010/03/Zuari/DAP/3126 Clause VIII of the DAP Third Party Sales Contract (“ICC Clause”) 23 6 April 2011 with Zuari Industries Limited, ET 2011/04/Zuari/DAP/3814 ICC Clause 24 10 June 2011 with Paradeep Phosphates Limited. ET/2011/06/Paradeep/DAP/3952 ICC Clause 25 31 March 2010, DAP/MAP Agency Agreement Clause 5 of the Agency Agreement (“DISAGREEMENT”): “This Agreement is governed exclusively by English Law”, but no jurisdiction / arbitration clause

Cited in 1 later judgment