In a reserved judgment handed down on 17 November 2022, Mr Justice Foxton dismissed challenges brought pursuant to section 67 of the Arbitration Act 1996: see Aiteo Eastern E&P Company Ltd v. Shell Western Supply & Trading Ltd [2022] EWHC 2912 (Comm).
The underlying dispute and arbitral process concerned a facility agreement governed by English law pursuant to which the defendant / arbitral claimant (SWST) lent US$512m to the claimant / arbitral respondent (Aiteo). Clause 41 of the facility contained an asymmetric dispute resolution or forum selection regime whereby SWST could elect to refer disputes to ICC arbitration in London (clause 41.1) or provide notice to Aiteo that any dispute must be heard in the English Court or elsewhere (clauses 41.2 & 41.3). Aiteo commenced proceedings and without notice obtained interim injunctive relief against SWST and other financing parties in the Federal High Court of Nigeria in October 2019. SWST and others brought an appeal against such interim injunction in the Nigerian Court of Appeal seeking inter alia the setting aside of the interim injunction and dismissal of the Nigerian court proceedings on jurisdictional grounds.
SWST commenced arbitration in December 2020 and obtained interim anti-suit injunctive relief against Aiteo from Mrs Justice Cockerill in the Commercial Court. Sir Nigel Teare granted final injunctive and declaratory relief in April 2022: see [2022] EWHC 768 (Comm); [2022] 3 WLUK 529 see here. In the meantime, the tribunal appointed in the arbitral reference concluded that it had substantive jurisdiction. It subsequently issued an award ordering consolidation with a parallel arbitration commenced by other lenders to Aiteo at the same time. Both awards were subject to curial challenge by Aiteo.
Mr Justice Foxton dismissed the challenge to the jurisdiction award, with the consequence that he also dismissed the (parasitical) challenge to the consolidation award.
In summary, Mr Justice Foxton held that:
- The arbitration option in clause 41.1 could be exercised by an unequivocal request or insistence upon arbitration in respect of the relevant dispute on the part of SWST. This did not need to be a formal request for arbitration or an application to stay any first-seised court proceedings. The decision of the Privy Council in Anzen Ltd v. Hermes One Ltd [2016] 1 WLR 4098 laid down a general principle applicable to optional arbitration clauses: see [17]-[31].
- The notice of appeal filed in the Nigerian court proceedings in November 2019, construed objectively and in the context of other court filings at the time, was an effective election by SWST of its right to refer the relevant disputes to arbitration, thereby crystallising a mutually-binding arbitration agreement and the negative covenant (not to sue in court) which was the corollary to such positive covenant to arbitrate: see [32]-[38].
- There was no basis for implying into clause 41.1 any requirement for SWST to exercise its arbitration option within a reasonable time or in circumstances not otherwise engaging the doctrine of waiver at common law: see [40]-[41].
A link to the judgment can be found here.
Ben Juratowitch KC and Catherine Jung (with Belinda McRae of Twenty Essex) acted for SWST, instructed by Christopher Pugh, Will Thomas KC, Eid-Daniel Jadon and Guy MacInnes-Manby of Freshfields Bruckhaus Deringer LLP.
Stephen Houseman KC acted for Aiteo, co-instructed by Daniel Wilmot of Stewarts Law LLP and Cherie Blair KC of Omnia Strategy LLP.
