Integra Petrochemicals Europe AG v BASF SE [2025] EWHC 2288 (Comm)

[2025] EWHC 2288 (Comm)

Case No CL-2025-000385

IN THE HIGH COURT OF JUSTICE

BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES COMERCIAL COURT (KBD)

AND

IN THE MATTER OF THE ARBITRATION ACT 1996 AND IN THE MATTER OF AN ARBITRATION CLAIM

Venue Royal Courts of Justice, Rolls Building Fetter Lane, London, EC4A 1NL

Date Thursday, 4 September 2025

Before

His Honour Judge Pelling KC

Between

BASF SEDefendant/Respondent

Between

Mr S Berry KC and Mr A Board (instructed by Hannaford Turner LLP) for theApplicant

Mr R Pillai KC and Mr S Pourghadiri (instructed by DLA Piper) for theRespondent

Hearing Hearing dates: 03/09/25 to 04/09/25

JUDGMENT

Thursday, 3 September 2025

[1]Introduction This is the hearing of an application by the claimant (“Integra”) for orders restraining the defendant (“BASF”) from continuing proceedings it commenced in Germany on 4 June 2025 (“German proceedings”) relating to an arbitration between the parties, or the first partial final Award dated 28 May 2024 (“Award”) made in the arbitration by Mr Mark Hamsher (“Arbitrator”) and/or for an order requiring BASF to discontinue the German proceedings. The grounds on which the order is sought are either that the German proceedings have been brought in breach of the arbitration agreement between the parties and/or that the German proceedings are frivolous and/or vexatious, and that there is no countervailing reason for not granting the orders sought. BASF maintains that the order sought should be refused because it is doing no more than asserting the rights available to it as a matter of German procedural law for the purpose of vindicating its rights under the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards1958 (“NYC”).

[2]The Facts The primary facts are not in dispute, nor is there any dispute as to the applicable principles of German procedural law at any rate for the purposes of this application.

[3]In September 2021, the claimant approached the defendant in the hope of purchasing 36,000 metric tonnes of bio methanol for onward sale to a third party on back-to-back terms. BASF maintains that there was never any binding agreement reached, notwithstanding those negotiations. Integra maintain and always has maintained that this is incorrect and, on a proper analysis of the emails and other communications between the parties, an agreement was concluded between the parties that was contained in or evidenced by its standard trade confirmation sent to BASF on 12 November 2021 and that it included terms making English law the governing law of the contract and provided for all disputes to be resolved by arbitration in London.

[4]Integra commenced an arbitration in London on that basis, maintaining there was a binding contract by which BASF had agreed to supply 36,000 metric tonnes of bio methanol, but that in breach of contract it had supplied only 16,500-odd metric tonnes.

[5]The arbitration was split into two phases with the first being concerned with jurisdiction and the second with liability and quantum. The arbitrator determined the jurisdiction phase of the reference by the Award by which he determined that(a) the parties had entered into a legally binding contract for the sale and purchase of 36,000 metric tonnes of bio methanol on the terms set out in Integra’s standard trade confirmation of 12 November 2021;

(b) the agreement was agreed to be governed by English law; and

(c) any disputes were to be resolved by arbitration in London. The arbitrator concluded that it followed that he had jurisdiction to determine the dispute. Since then, the arbitration has continued with the second phase, which is at the disclosure stage. Both parties are actively participating in the arbitration process.

[6]In the result, Integra succeeded in relation to all the relevant issues in the jurisdiction phase and BASF was unsuccessful. In principle, it was open to BASF to challenge these findings under s.67 to s.69 of the Arbitration Act 1996. However, any such challenge had to be brought within 28 days of the Award - see s.70(3) of the Arbitration Act 1996. BASF failed to do so in the following circumstances. The Arbitrator had notified the parties on 28 May 2024 that he had published the Award that day and that he would release it to the parties on payment of his outstanding fees. BASF paid 50 per cent of the sums outstanding on 29 May 2024, but only on 24 June 2024 did Integra pay or make available the balance whereupon the Award was released. The time for challenging the Award expired on 25 June 2024.

[7]On 24 June 2024, BASF applied for an extension of time in which to appeal, however that was refused by Cockerill J on the basis that BASF could have paid the outstanding fees in order to obtain the Award. Thereafter, BASF issued a s.67 challenge and an after the event application for an extension of time. That was refused by Dias J for the same reasons that the earlier application for an extension had failed before Cockerill J. On 4 December 2024, BASF issued an application to set aside Dias J’s order. That application too was dismissed. It is common ground, therefore, that the Award is final and binding on the parties as to(a) the formation of the contract between them,

(b) that the contract was governed by English law,

(d) the Arbitrator had jurisdiction to determine the dispute referred to him. Although, as I explain below, BASF does not accept any of these findings, BASF accepts that it has exhausted all options available to it in England to challenge those findings - see para.34 Mr Curle’s first witness statement.

[8]On 4 June 2025, BASF commenced the German proceedings. The document by which the German proceedings were commenced is entitled, “Application for declaration of non- recognition of the foreign arbitral Award.” BASF commenced the German proceedings at a time when Integra had not sought either recognition or enforcement of the Award either in Germany or elsewhere. Integra has not sought either recognition or enforcement of that Award either in Germany or elsewhere at any stage. It will seek recognition or enforcement only if and when it obtains an Award entitling it to recover damages and will not necessarily do so in or only in Germany.

[9]The relief sought in the German proceedings is summarised at the start of the document by which those proceedings were commenced as being a finding that all the material parts of the Award “… are not to be recognised domestically.” BASF relies on a decision of the German Federal Court of Justice of 9 March 2023 as in entitling a losing party in a foreign arbitration to apply to the German courts for a pre-emptive declaratory judgment that the foreign arbitral Award is not to be recognised. It is common ground, for the purposes of this application only, that this is an accurate statement of German procedural law.

[10]Under the heading “Grounds,” the basis of the application is set out. The grounds include an assertion at para.1 that the arbitration “… was involuntarily imposed on it and is grossly deficient,” and, at para.2 that the:

“Parties never concluded an arbitration agreement… No agreement was concluded, no foreign law was agreed on and the legal dispute was not removed from the German courts…”

In addition, there is a complaint that the Award was an “… unlawful usurpation of the state court’s decision-making power,” and that BASF was deprived of the legal remedy of review because the arbitrator refused to release the Award. This last mentioned allegations has been made without any attempt being made to inform the reader of the document that BASF had applied to this court for extensions of time in which to challenge the Award on three occasions, and had been refused on each occasion on the basis that it could have paid the fees outstanding and obtained the Award at any stage. There then follows a lengthy factual narrative that I need not set out here, but which sets out in essence the case BASF had advanced to the arbitrator which he had rejected. At para.72 of the German proceedings document, BASF sets out the reasons for bringing the German proceedings as being:

“…in the present case, the sole arbitrator appointed by the respondent has already issued arbitral Awards in the form of decisions on costs and substantive issues to be determined to the detriment of the applicant abroad without being authorised to do so by an arbitration agreement. Since the respondent continues to assert a claim against the applicant, the arbitrator, having affirmed his own jurisdiction, continues the arbitration proceedings on the merits. The applicant is therefore forced to disclose internal documents and prepare written witness statements in order to defend against the alleged claims within the framework of ‘document production.’ This causes considerable external and internal costs as well as time expenditure for the applicant. The applicant therefore has a legitimate interest in having the non-recognition established promptly.”

At para.73, BASF summarises the merits of its application as being:

“There is a ground for refusal of recognition pursuant to s.1061(1) ZPO in conjunction with Article V(1)(a) of the United Nations Convention on the recognition and enforcement of foreign arbitral Awards of 10 June 1958 UNC since the parties have not entered into an arbitration agreement. The arbitration proceedings opened in London and the resulting arbitration Awards are not eligible for recognition. This also follows from s.1061(2) ZPO in conjunction with Article V(1)(b) and (d) at UNC. The Arbitral Tribunal was constituted incorrectly by the unilateral appointment of Mr Hamsher as sole arbitrator, Article V(1)(b) UNC. In addition, by withholding the arbitral Award until expiry of the period for setting aside the Award, Mr Hamsher inadmissibly restricted the defendant’s means of challenge and defence Article V(1)(d) of the UNC.”

In my judgment, viewed as a whole the document initiating the German proceedings is a comprehensive challenge both to the findings in the Award as well as being at least a collateral attack on the judgments and orders of Cockerill J and Dias J.

[11]The Parties’ Submissions Integra submits that the German proceedings are an impermissible direct or collateral challenge to the arbitration proceedings, which has been made in breach of the arbitration agreement between the parties and contrary to English law, because it is an attempt to impugn the Award by a method not permitted by ss.67-69 of the Arbitration Act 1996. Whilst it is accepted that as a matter of English law, BASF would be entitled to defend any attempt by Integra to enforce the (or any) Award against BASF in Germany using any of the defences permitted by the NYC, it maintains that, as a matter of English law, BASF is not entitled to rely upon the NYC unless and until Integra seeks recognition or enforcement of an Award in Germany, since to do otherwise would be to undermine the role of the supervisory court in the primary jurisdiction, here, this court, in England. In any event, Integra admits that the German proceedings are vexatious because(a) they have been brought pre-emptively to determine whether BASF’s assets are at enforcement risk;

(b) any order in the German proceedings may be relied on in other jurisdictions where BASF may have assets and to pressurise Integra at a time when without prejudice, negotiations are taking place; and

(c) because the proceedings may be a waste of time and costs if Integra fails in its substantive claim in the arbitration and/or chooses to enforce any final substantive Award in its favour in a state or states other than Germany.

[12]BASF’s case is that the English court’s supervisory role does not oust the role of the courts in secondary jurisdictions available pursuant to the NYC, and that the English court has no jurisdiction to grant anti-suit injunctions that prevent legitimate proceedings commenced in other jurisdictions in accordance with the NYC. I do not understand Mr Berry KC, who appears on behalf of the claimant, to dispute that as a matter of abstract principle. His point is that, as a matter of English law, the German proceedings are not legitimate proceedings commenced in accordance with the NYC, since no recognition or enforcement proceedings have been commenced in Germany by Integra.

[13]Discussion BASF accepts, for the purposes of this application, the findings made by the arbitrator in the Award, see para.42 of Mr Curle’s first witness statement, and thus BASF does not challenge the finding that:(a) the contract was concluded between the parties;

(b) the contract was governed by English law; and

(c) the contract contained a London arbitration agreement the curial law of which is that of England and Wales. It also accepts that it is bound by the orders by which it was refused an extension of time in which to challenge the Award. As a matter of English law, by agreeing to English law as the curial law of the arbitration, the parties agreed that any challenge to the Award was to be made in the English courts save to the extent otherwise permitted by English law- see C v D

[2007] EWHC 1541 (Comm)

, [2007] 2 All E R (Comm) 557 per Cooke J at para.29 and C v D

[2007] EWCA Civ 1282

, [2008] 1 All E R (Comm) 1001 per Longmore LJ at para.16. Whilst a challenge in accordance with English law is not a breach of the arbitration agreement, an attempt to invoke the jurisdiction of another court save to the extent permitted by English law is a breach, see C v D ibid. at para.53 where Cooke J added:

“Such a challenge usurps the function of the English court, which has power to grant injunctions to protect its own jurisdiction and the integrity of the arbitration process. In such a case, there is an infringement of the legal rights of C (both contractual and statutory rights) under English law and an abuse of the process of this court in the usurpation of its exclusive jurisdiction to supervise arbitration with their seat in this country.”

This principle has no impact on any challenge BASF may be able to make to any attempted enforcement in Germany under Article V of the NYC, but that begs the question whether in the circumstances of this case, as a matter of English law, it is able to maintain such a challenge. I qualify this proposition by reference to English law because by choosing London as the seat of the arbitration, the parties must be taken to have agreed that proceedings on the Award should be only those permitted by English law - see C v D ibid per Longmore LJ at para.16. As to that, Integra submits that as a matter of English law the right to rely on the defences set out in Article V of the NYC arise only where the party is seeking to rely on those defences for the purposes of defending itself against an application for the enforcement or recognition of an Award.

[14]It is, at this stage, appropriate to turn to the terms of the NYC. Insofar as their material to this case, the NYC provides as follows, “Article I: This Convention shall apply to the recognition and enforcement of arbitral wards made in territory of a State other than the State where the recognition and enforcement of such Awards are sought, and arising out of differences between persons, whether physical or legal. It shall also apply to arbitral Awards not considered as domestic Awards in the State where their recognition and enforcement are sought….” Article III: Each Contracting State shall recognize arbitral Awards as binding and enforce them in accordance with the rules of procedure of the territory where the Award is relied upon, under the conditions laid down in the following articles. There shall not be imposed substantially more onerous conditions or higher fees or charges on the recognition or enforcement of arbitral Awards to which this Convention applies than are imposed on the recognition or enforcement of domestic arbitral Awards...” Article V: 1. Recognition and enforcement of the Award may be refused, at the request of the party against whom it is invoked, only if that party furnishes to the competent authority where the recognition and enforcement is sought, proof that:(a) The parties to the agreement referred to in article II were, under the law applicable to them, under some incapacity, or the said agreement is not valid under the law to which the parties have subjected it or, failing any indication thereon, under the law of the country where the Award was made; or

(b) The party against whom the Award is invoked was not given proper notice of the appointment of the arbitrator or of the arbitration proceedings or was otherwise unable to present his case; or

(c) The Award deals with a difference not contemplated by or not falling within the terms of the submission to arbitration, or it contains decisions on matters beyond the scope of the submission to arbitration, provided that, if the decisions on matters submitted to arbitration can be separated from those not so submitted, that part of the Award which contains decisions on matters submitted to arbitration may be recognized and enforced; or

(d) The composition of the arbitral authority or the arbitral procedure was not in accordance with the agreement of the parties, or, failing such agreement, was not in accordance with the law of the country where the arbitration took place; or

(e) The Award has not yet become binding on the parties, or has been set aside or suspended by a competent authority of the country in which, or under the law of which, that Award was made. 2. Recognition and enforcement of an arbitral Award may also be refused if the competent authority in the country where recognition and enforcement is sought finds that: (a) The subject matter of the difference is not capable of settlement by arbitration under the law of that country; or (b) The recognition or enforcement of the Award would be contrary to the public policy of that country...” Article III:

Article V:

[15]As a matter of English law, therefore, the starting point is that any challenge to an Award can only be those permitted by the Arbitration Act 1996 - see Star Hydro Power Ltd vNational Transmission and Despatch Co. Ltd

[2025] EWCA Civ 928

, per Philips LJ at [42], following and applying C v D, ibid., per Longmore LJ at [16] to [17]. Where that starting point is also the end of the enquiry, an English court will enforce that requirement by the grant of an anti-suit injunction and/or anti-suit orders - see Star Hydro Power Ltd, ibid., per Phillips LJ at [47] and [58] to [59] - since to do otherwise would be to fail to enforce its jurisdiction as the supervisory court for English-seated arbitrations. To the general principle identified above, there is an exception which enables a party to an arbitration seated in England to challenge Awards in the circumstances permitted by the NYC, but only to the extent recognised by English law for the reasons identified by Longmore LJ in C v D, ibid., at [16].

[16]However, as a matter of English law, the NYC is:

“...solely concerned with recognition and enforcement in a secondary jurisdiction (which is a Contracting State) of Awards made in the territory of another Contracting State, the latter being the primary jurisdiction. Each of Articles I and III to VII deals solely with the nature and extent of the obligation of the secondary jurisdiction to recognise and enforce such Awards (Article II referring to the recognition of written arbitration agreements more generally). The Convention neither imposes any other obligation nor confers any other jurisdiction in respect of foreign arbitral Awards. In particular, the various matters set out in Article V(1), which include proving that the underlying arbitration agreement is not valid under its governing law ... or that the Award deals with matters beyond the scope of the arbitration agreement ... are solely bases on which, ‘[r]ecognition and enforcement of the Award may be refused at the request of the party against whom it is invoked’.” see Star Hydro Power Ltd, ibid., per Phillips LJ at [49]. As he added at [50], challenges to an Award under the NYC are: “...a shield against applications for the recognition and/or enforcement of an Award, not a sword by which the Award may be [challenged] pre-emptively...”

As he further added at [53]:

“Free-standing challenges to an Award can only be made under section 67 ... section 68 ... or section 69 ... of the 1996 Act...”

[17]In summary, a party to an international arbitration the curial law of which is English law has two options: either to challenge the tribunal’s jurisdiction under one or other of ss.67 -69 of the Arbitration Act 1996 or resist enforcement or recognition in the court before which the Award is brought for recognition and enforcement – see Dallah Real Estate and TourismHolding Company v The Ministry of Religious Affairs, Government of Pakistan

[2009] UKSC 46

;

[2011] 1AC 763

per Lord Collins at [98] and Philips LJ in Star Hydro PowerLtd, ibid., per Phillips LJ at [49] – [53]. To permit such a party a third option of challenging jurisdiction ostensibly under Article V of the NYC in another court in some other jurisdiction, which is neither the seat of the arbitration or the courts of a state in which enforcement or recognition is being sought, would defeat both the purposes of seating the arbitration in England and the machinery for recognition and enforcement contained in the NYC. It would permit challenges to be made in any court jurisdictionally available to the challenging party anywhere in the world as long as the proceedings could be cloaked with a claim to be pre-emptively resisting recognition or enforcement of an Award that had not been, and may never be, sought in that jurisdiction.

[18]It was submitted on behalf of BASF that this position was altered by the procedural law of Germany as summarised above, which permits challenges to Awards before the commencement of any recognition or enforcement proceedings in Germany. Presumably this proposition would apply in any state the domestic law of which permitted pre-emptive challenges. In support of this proposition BASF relied upon Article III of the NYC, which it was submitted provides that the availability of the defences set out in Article V of the NYC is to be determined by the procedural rules of the relevant lex fori. On this submission, the two option analysis set out above is modified so as to permit pre-emptive applications where the lex fori of the relevant state permits a pre-emptive challenge. In my judgment, that is wrong. First, as I have said, if that was the effect of Article III, then it undermines the two option solution referred to both by Lord Collins in Dallah (ibid.) and Philips LJ StarHydro Power Ltd (ibid.) and would create precisely the problems identified by Cook J in C v. D (ibid.) at [53] quoted earlier. It would also undermine the principle identified by Longmore LJ in C v D ibid [16].

[19]Secondly, the premise of this submission, that this is the effect of Article III, is also wrong. In construing Article III, it is necessary to apply the principles set out in Articles 31 to 32 of the Vienna Convention on the Law of Treaties, 1969. This requires that a treaty be interpreted in good faith, in accordance with the ordinary meeting to be given to the terms of the treaty, in the context in which that language is used and in the light of its object and purpose.

[20]That being the approach, it is necessary to note first that the purpose of the NYC has been expressly identified in Article I as being “… the recognition and enforcement…” of an arbitral Award not considered to be a domestic Award “in the state where their recognition and enforcement are sought” Whilst Article III refers to “… the rules of procedure of the territory where the Award is relied on…” relying on those words without taking account of the rest of the article and indeed the rest of the Convention as a whole is contrary to the approach required by the Vienna Convention and is wrong in principle. Read in its correct context – that is, having regard to the NYC’s purpose as set out in Article I and the language used in Articles III and V – it is clear that the rules of procedure referred to in Article III are those which apply only to the recognition and enforcement of Awards. This is apparent from the language of Article III and also the opening words of Article V(1), which refers expressly to recognition and enforcement being refused at the request of the party against whom the Award has been invoked.

[21]The language of the NYC as a whole, in combination with the damaging (or at least the potentially damaging) effect of the construction for which BASF contends on the fundamental distinction that exists in English law between the role of the courts of the seat of an arbitration in relation to challenges to an Award, and the role of courts of all other jurisdictions, which arises only when recognition and enforcement is sought from those courts – in combination with the authorities referred to earlier in this judgment, means that BASF’s submission must necessarily be rejected. Integra has not sought either recognition or enforcement of the Award. As a matter of English law, free-standing challenges to an Award can be made only under ss.67 to 69 of the Arbitration Act 1996 or otherwise by objection to an application to recognise or enforce, and to decide otherwise would, as Phillips LJ put it in Star Hydro:

“...undermine the approach mandated in C v D and would enable parties to avail themselves of inapplicable domestic provisions in foreign jurisdictions which purport to...permit interference with foreign Awards...”

[22]I reject, too, BASF’s submission that adopting this approach is an affront to comity. It is not. It is the court exercising its supervisory powers over a party over whom it has in personam jurisdiction. Once it is accepted that, as a matter of English law, the only options available to a party in BASF’s position are to challenge an Award under ss.67 to 69 of the Arbitration Act 1996, or when resisting any attempt by Integra to have the Award recognised or enforced as a matter of English law, then the proceedings commenced by BASF in Germany are to be regarded as an impermissible attempt to challenge the Award in breach of the arbitration agreement between them. I reject too BASF’s submission that this is not so because it has not sought an anti-suit injunction in the German proceedings but only a declaration confined in its territorial scope to Germany. The latter is as objectionable as the former for the reasons identified by Integra and above.

[23]The challenge in this case therefore is as objectionable as it was in Star Hydro, because there is no material difference between the substance of what was being sought by paragraph (a)(ii) of the prayer in the State Court proceedings in Star Hydro and what is being sought here. The only difference is that German procedural law permits pre-emptive challenges. However, that is immaterial as a matter of English law, which is what matters, applying C v D, ibid., per Longmore LJ at para.16. The reality is that the German proceedings would almost certainly not have been brought by BASF, had BASF not lost its rights of challenge under ss.67 to 69 of the 1996 Act.

[24]In the result, I conclude that the German proceedings have been brought by BASF in clear breach of the arbitration agreement between it and Integra and, in consequence, Integra is entitled in principle to the relief it seeks. In those circumstances, it is not necessary for me to consider Integra’s alternative case concerning vexation.