Broda Agro Trade (Cyprus) Ltd v Alfred C Topefer International GmbH
| Jurisdiction | England & Wales |
| Judge | Lord Justice Stanley Burnton,Lord Justice Lloyd,Lord Justice Mummery |
| Judgment Date | 11 October 2010 |
| Neutral Citation | [2010] EWCA Civ 1100 |
| Docket Number | Case No: A3/2010/0148 |
| Court | Court of Appeal (Civil Division) |
| Date | 11 October 2010 |
[2010] EWCA Civ 1100
Mr Justice Teare
Before: Lord Justice Mummery
Lord Justice Lloyd
and
Lord Justice Stanley Burnton
Case No: A3/2010/0148
IN THE HIGH COURT OF JUSTICE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
COMMERCIAL COURT
Vernon Flynn QC and Niamh O'Reilly (instructed by Elborne Mitchell) for the Appellant
Sara Masters (instructed by Reed Smith LLP) for the Respondent
Hearing date: 16 July 2010
Lord Justice Stanley Burnton :
Introduction
In these proceedings, the Appellant (“Broda”) seeks:
i) a declaration at common law, or alternatively under section 72 of the Arbitration Act 1996 (“the Act”), that there is no valid arbitration agreement as between it and the Respondent (“Toepfer”) such that the interim arbitration award dated 3 July 2008 by the GAFTA Arbitration Tribunal is not binding on it; or, alternatively,
ii) pursuant to section 80(5) of the Act, an extension of time to make an application under section 67 and an order setting aside the interim award by reason of the arbitration tribunal having lacked substantive jurisdiction.
On 17 December 2009 Teare J dismissed Broda's claims, but granted permission to appeal.
The appeal raises a short but interesting point on the interpretation and effect of section 72 of the Arbitration Act 1996, which surprisingly has not been the subject of previous judicial authority.
The facts in summary
On 31 October 2007 the Respondent (“Toepfer”) commenced GAFTA arbitration proceedings against Broda claiming damages for breach of an alleged contract, which included a GAFTA arbitration agreement providing for arbitration in London, said to have been concluded in February 2007 and varied in July 2007, for the supply by Broda to Toepfer of a quantity of milling wheat.
Broda maintains that no concluded contract was made.
On 3 January 2008, Toepfer presented its Claim Submissions to GAFTA claiming damages against Broda in the sum of US$5,462,668.35. Broda responded on 31 January 2008 by letter of that date from Argyrou & Co, described as Advocates and Legal Consultants, of Larnaca in Cyprus and signed by “Christos Konstantinou LL.B. (Hons), Dipl., Barrister”. It denied there was a contract, and the letter gave brief reasons for that contention. It stated that Broda had its principal place of business in Russia, and had therefore commenced legal proceedings in its courts seeking a declaration that no binding contract had been concluded.
By letter dated 15 February 2008, GAFTA informed Broda and Toepfer that the chairman of the arbitral tribunal had decided that they would make a separate decision on its jurisdiction, and gave directions for submissions on this issue. Toepfer submitted and served its Reply Submissions, addressing Broda's contentions, on 3 March 2008.
By letter dated 14 March 2008, the chairman of the tribunal offered Broda the opportunity to submit Rejoinder Submissions. Argyrou & Co responded by letter dated 23 March 200It emphasised that its letter did not constitute a reply to Toepfer's submissions; it stated that the Russian Courts were the most appropriate jurisdiction to determine whether the arbitrators had jurisdiction, and requested GAFTA not to accept jurisdiction.
Argyrou & Co wrote again on 7 June 2008. They informed GAFTA that the Court of the Russian Federation had decided that Broda and Toepfer had never entered into a binding contract. In paragraph 5 of the letter they stated that the judgment of the Russian Court would be presented to GAFTA and that the reasoning of the Russian Court “should play an integral part in a decision by GAFTA to decline jurisdiction in this case”.
As mentioned above, on 3 July 2008 the arbitral tribunal issued their Interim Award on jurisdiction. They concluded that there was a binding contract. The tribunal noted the decision of the Russian court but disagreed with it. They therefore ruled that they had jurisdiction to determine the substantive dispute and gave directions for submissions by both parties on the substantive dispute.
On 3 September 2008 Broda served and filed Respondents' Submissions in Response to those of Toepfer dated 3 January and 3 March 2008. In those Submissions, Broda reiterated its case that there had been no binding contract. Their Conclusions stated:
1. The Respondents deny that the Claimants are entitled to the damages sought since no valid and binding contract was made between the Parties, there is no ground for recovery of alleged damages and no evidences were presented before the Tribunal in order to confirm the contract or the breach of the contract.
2. The Respondents request the Tribunal to recognise the alleged contract as non-concluded.
…
On 23 September 2008 Toepfer presented Reply Submissions.
On 29 October 2008 Broda wrote to GAFTA seeking removal of the tribunal on the grounds that, since the tribunal had determined in the interim award that there was a contract, “it renders any attempt of Broda to defend the substantive claim futile”. Doubts were also expressed as to the impartiality and competence of the tribunal. GAFTA replied on 31 October 2008 to the effect that the request for removal was denied.
On 10 November 2008 Broda presented a Respondents' Rejoinder. It again contended that there had been no concluded contract.
As mentioned above, the arbitral tribunal's Final Award is dated 19 February 2009. In it, the tribunal stated that it had read the judgment of the Russian Court and “having given careful consideration to the judgment … the Tribunal continues to hold that it reached the correct decision on jurisdiction as set out in our Interim Award”. The tribunal addressed the substantive dispute and found that Broda had acted in breach of contract. Damages in the sum of US$5,462,668.25 were awarded together with interest and costs.
On 31 July 2009 Teare J gave permission to Toepfer to enforce the Final Award subject to an application by Broda to set aside his order within 28 days of service.
On 12 August 2009, Argyrou & Co presented Broda's Appeal Submissions. They included reference to the Act. They contended that there had been no binding contract. They asked the Board of Appeal to set aside the award dated 19 February 2009 and to recognise the contract “as non-concluded and void”.
On 7 September 2009 Broda applied to the Commercial Court to set aside Teare J's order giving permission to enforce the award and wrote to GAFTA requesting a stay of the appeal pending the application to this court. On 17 September 2009 a stay was refused. On 8 and 10 November 2009 Broda and Toepfer served further submissions in the GAFTA appeal.
Meanwhile, on 2 October 2009 Broda issued its application for the relief summarised at paragraph 1 above. As mentioned above, on 17 December Teare J dismissed its claims.
The statutory provisions
The Arbitration Act 1996 was enacted following the Report on The Arbitration Bill of the Departmental Advisory Committee on Arbitration Law (“the DAC Report”) chaired by Lord Saville (who was then a judge of the Court of Appeal). The Act was intended to modernise our arbitration law in line with modern international practice. The long title of the Act states that its object is “to restate and improve the law relating to arbitration pursuant to an arbitration agreement, …”. The Act is essentially a code of our consensual arbitration law.
Section 67 is as follows:
67. —Challenging the award: substantive jurisdiction
(1) A party to arbitral proceedings may (upon notice to the other parties and to the tribunal) apply to the court—
(a) challenging any award of the arbitral tribunal as to its substantive jurisdiction; or
(b) for an order declaring an award made by the tribunal on the merits to be of no effect, in whole or in part, because the tribunal did not have substantive jurisdiction.
A party may lose the right to object (see section 73) and the right to apply is subject to the restrictions in section 70(2) and (3).
(2) …
(3) On an application under this section challenging an award of the arbitral tribunal as to its substantive jurisdiction, the court may by order—
(a) confirm the award,
(b) vary the award, or
(c) set aside the award in whole or in part.
(4) The leave of the court is required for any appeal from a decision of the court under this section.
Section 73, referred to in subsection (1), provides that a party loses the right to object to (among other matters) the tribunal's lack of substantive jurisdiction if he knew or should have known of that matter but took part in the proceedings without making his objection. It has no application to the present case. Section 70, so far as material to the present case, is as follows:
70. —Challenge or appeal: supplementary provisions.
(1) The following provisions apply to an application or appeal under section 67, 68 or 69.
(2) …
(3) Any application or appeal must be brought within 28 days of the date of the award or, if there has been any arbitral process of appeal or review, of the date when the applicant or appellant was notified of the result of that process.
Section 72 provides:
72.—Saving for rights of person who takes no part in proceedings.
(1) A person alleged to be a party to arbitral proceedings but who takes no part in the proceedings may question -
(a) whether there is a valid arbitration agreement
……………
………...
To continue reading
Request your trial
-
The London Steam Ship Owners Mutual Insurance Association Ltd v The Kingdom of Spain
...1, L Brown & Sons Limited v Crosby Homes (Northwest) Limited [2008] BLR 366, Broda Agro Trading v Alfred C Toepfer International [2011] 1 Lloyd's Rep. 243, and Nestor Maritime v Sea Anchor Shipping [2012] 2 Lloyd's Rep. 144, from which I derive the following principles: (1) Section 70(3) of......
-
Sovarex SA v Romero Alvarez SA [QBD (Comm)]
...invoked the jurisdiction of the tribunal. 24 Sovarex sought to rely upon the obiter comment made in Broda Agro v Alfred C. Toepfer [2011] 1 Lloyd's Rep. 243 at 250, at [50](Stanley Burnton LJ), where he said: "It may be difficult to distinguish between a letter that does no more than inform......
-
Tenke Fungurume Mining S.A. v Katanga Contracting Services S.A.S.
...[2003] 2 CLC 1, L Brown & Sons Ltd v Crosby Homes (North West) Ltd [2008] EWHC 817 (TCC), [2008] BLR 366, Broda Agro Trade (Cyprus) Ltd v Alfred C Toepfer International GmbH [2010] EWCA Civ 1100, [2011] 2 All ER (Comm) 327, and Nestor Maritime SA v Sea Anchor Shipping Co Ltd [2012] EWHC......
-
Interflora, Inc. and Another v Marks and Spencer Plc and Another
...of granting general injunctions. He cited what Jacob and Etherton LJJ said in Grimme Landmaschinenfabrik GmbH & Co KG v Scott [2010] EWCA Civ 1100, [2011] FSR 7 in the context of injunctions to restrain infringement under section 60(2) of the Patents Act 1977: "134. First, the form of inju......
-
Case Law Update 2011 - Issue 2
...success for the challenge. Party who takes no part in proceedings Broda Agro Trade (Cyprus) Ltd v Alfred C Toepfer International GmbH [2010] 132 Con LR 1 Court of In (non-construction) GAFTA arbitration proceedings, the appellant Broda denied that there was a contract and stated that procee......
-
Court Of Appeal Upholds GAFTA Jurisdiction Finding
...Agro Trade (Cyprus) ltd v Alfred C Toepfer International GmbH [2010] EWCA Civ 1100 Background The background to this litigation arose out of a claim in GAFTA arbitration proceedings by Toepfer against Broda for alleged breach of a contract for the supply of milling wheat. Broda had initiall......