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Challenge To A Partial Arbitration Award On Jurisdiction: Emirates Trading Agency LLC Vs Sociedade De Fomento Industrial Private LTD

In the recent case of Emirates Trading Agency LLC v Sociedade de Fomento Industrial Private Limited [2015] EWHC 1452 (Comm) the Commercial Court dismissed an application to set aside an ICC award on grounds of lack of substantive jurisdiction.

The Claimant and Defendant were parties to a contract for the sale and purchase of iron ore fines. The contract contained an arbitration clause providing for ICC arbitration in London. Alongside this the contract provided that “the parties shall seek to resolve any dispute … by friendly discussion” for a 3 month period prior to commencing arbitration.

The Tribunal made a partial award on jurisdiction but shortly after the tribunal was reconstituted and the majority of arbitrators were replaced. The Claimant sought to challenge the final award issued by the reconstituted tribunal on the ground that it did not have jurisdiction. The Claimant argued that the Defendant had failed to undertake friendly discussions for a continuous period of 3 months prior to commencing arbitration so the jurisdiction award was not valid.

The Court held that the partial award on jurisdiction had not been challenged within the relevant time limit and had become final so any objections on jurisdiction were time-barred.

Notwithstanding the dismissal of the challenge on that basis, the case demonstrates the importance of drafting clear and unequivocal dispute resolution clauses. It also demonstrates the need to challenge arbitration awards in a timely manner.

If you require further information about dispute resolution clauses and arbitrations, please speak to Rachel Brown, Charles Spragge or Julian Johnstone, of Druces LLP commercial litigation team.

This note is not intended as legal advice. It is guidance only and reflects the law as at 3 August 2015.