Dreymoor Fertilisers Overseas Pte Ltd v Eurochem Trading GmbH
| Jurisdiction | England & Wales |
| Judge | Mr Justice Butcher |
| Judgment Date | 24 April 2018 |
| Neutral Citation | [2018] EWHC 909 (Comm) |
| Court | Queen's Bench Division (Commercial Court) |
| Docket Number | Case No: CL-2018-000062; AD-2017-000158 |
| Date | 24 April 2018 |
[2018] EWHC 909 (Comm)
IN THE HIGH COURT OF JUSTICE
BUSINESS AND PROPERTY COURTS
OF ENGLAND AND WALES
COMMERCIAL COURT (QBD)
Royal Courts of Justice
Strand, London, WC2A 2LL
THE HONOURABLE Mr Justice Butcher
Case No: CL-2018-000062; AD-2017-000158
John Russell QC and Ruth Hosking (instructed by Kerman & Co LLP) for the Claimant
Justin Fenwick QC and George Spalton (instructed by Salisbury & Ryan LLP) for the Defendant
Hearing date: 11 April 2018
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”).
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
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.
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.
Dreymoor is an international trading company incorporated in Singapore in 2003. Dreymoor's sole shareholder and beneficial owner is Mr Aleksandr (or Alexander) Shishkin.
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).
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
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:
(1) 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.
(2) The Urea Agency Agreements, pursuant to which ECTG appointed Dreymoor as its sales agent for the sale of Urea to end-users in India.
(3) The DAP CFR Sales Contracts, by which ECTG sold DAP to Dreymoor for re-sale to third parties.
(4) The MAP CFR Sales Contracts, by which ECTG sold MAP to Dreymoor for re-sale to third parties.
(5) The Urea CFR Sales Contracts, by which ECTG sold to Dreymoor Urea for re-sale to third parties.
(6) One Urea FOB Sales Contract, by which ECTG sold to Dreymoor Urea for re-sale to third parties.
(7) 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.
In the arbitrations ECTG relies upon the contracts and arbitration clauses in the following way:
The LCIA Arbitration
There are two categories of contract in the LCIA Arbitration: DAP/MAP Contracts and Urea Contracts.
DAP/MAP
(1) 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
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
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
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
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
The BVI Proceedings
ECTG and Eurochem brought proceedings in December 2014 in the British Virgin Islands against 18 defendants including Dreymoor (“the BVI Proceedings”).
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...
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Dreymoor Fertilisers Overseas Pte Ltd v Eurochem Trading GmbH
...jurisdiction under section 32 of the Act. Those challenges were dismissed by Butcher J in a judgment dated 11 April 2018 (see [2018] EWHC 909 (Comm)). 26 Statements of Defence and Replies have now been filed in both arbitrations. Both parties have also filed Requests for Further Informatio......