IS Prime Ltd v TF Global Markets (UK) Ltd
| Jurisdiction | England & Wales |
| Judge | Mr Justice Andrew Baker |
| Judgment Date | 09 December 2020 |
| Neutral Citation | [2020] EWHC 3375 (Comm) |
| Docket Number | Case No: CL-2020-000264 |
| Court | Queen's Bench Division (Commercial Court) |
| Date | 09 December 2020 |
[2020] EWHC 3375 (Comm)
IN THE HIGH COURT OF JUSTICE
BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES
QUEEN'S BENCH DIVISION
COMMERCIAL COURT
Royal Courts of Justice
Rolls Building, Fetter Lane, London EC4A 1NL
Mr Justice Andrew Baker
Case No: CL-2020-000264
Adam Al-Attar (instructed by Harbottle & Lewis LLP) for the Claimant
Jeff Chapman QC & Marianne Butler (instructed by Keystone Law Ltd) for the Defendants
Hearing date: 1 December 2020
Approved Judgment
This is a reserved judgment to which CPR PD 40E has applied. Copies of this version as handed down may be treated as authentic.
Introduction
The claimant is an English financial services company, part of the ISAM Capital Markets group. The defendants are associated companies that used the claimant for matched principal brokerage services. The first defendant is incorporated in this jurisdiction, the second defendant in the State of Victoria, Australia, and the third defendant in Bermuda.
IS Prime Risk Services Inc, now known as IS Risk Analytics Inc (“ISRA”), and Think Liquidity LLC (“Think”) are companies incorporated in the State of Delaware, USA. By a sale and purchase agreement dated 18 January 2017 (“the Sale Agreement”), ISRA agreed to buy and Think agreed to sell certain business assets, including the domain name thinkliquidity.com and proprietary software related to it, software and content databases, customer email lists and databases, and intellectual property rights. By Section 7.8 of the Sale Agreement, it is governed by Delaware law and the parties submitted to the exclusive jurisdiction of the courts of the State of Florida, sitting in Palm Beach County, in respect of it. Section 7.7 provides that any dispute, controversy or claim between the parties to the Sale Agreement arising out of or relating to it “ shall first be submitted to non-binding arbitration” in Palm Beach County, under and in accordance with the Commercial Arbitration Rules of the American Arbitration Association (“the AAA”; “the AAA Rules”).
Neither the claimant nor any of the defendants was or is party to the Sale Agreement. However, the Sale Agreement contemplated that there would be contracts between them for the provision of services, and the claimant says contracts were concluded on the basis of its primary terms of business, FX terms of business and trading conditions for index swaps and spot FX, and an exclusivity agreement dated 19 January 2017 entitled “Liquidity Addendum”. The claimant says that these are all governed by English law with provision for the courts of England and Wales to have jurisdiction (non-exclusively, in the case of the Liquidity Addendum).
In this Claim, the claimant alleges that from about 18 September 2018, in breach of the Liquidity Addendum, the defendants used the services of another broker or brokers for business they were obliged to give exclusively to the claimant until 17 January 2020. The claimant says it suffered loss of c.US$15 million as a result, and it claims damages, an account and inquiry as to damages, and/or declaratory relief.
The defendants applied for a stay of the Claim pursuant to either s.9 of the Arbitration Act 1996 or s.49(3) of the Senior Courts Act 1981.
I heard the applications, sitting remotely via MS Teams, on 1 December 2020. By my Order of that date, I dismissed the applications and gave directions for the exchange of statements of case and the scheduling of a case management conference. Since the application under s.9 of the Arbitration Act 1996 gave rise to a point of general application and importance, I stated only brief conclusions at the hearing and said I would take some time to prepare and hand down a fuller written judgment. This is that judgment.
Section 7.7 of the Sale Agreement
By Title V, Chapter 44 of the 2020 Florida Statutes, “Mediation Alternatives to Judicial Action”, provision is made for the reference of claims to various forms of procedure other than simply litigation to judgment before the Florida State Courts. For that purpose, by section 44.1011(1), '“Arbitration” means a process whereby a neutral third party or panel, called an arbitrator or arbitration panel, considers the facts and arguments presented by the parties and renders a decision which may be binding or nonbinding as provided in this chapter” (my emphasis). There is a definition of mediation in section 44.1011(b). Section 44.102 provides for mandatory reference to mediation in certain cases, if requested by one of the parties and if certain other conditions are satisfied; section 44.103 gives a general discretion in the court to “refer any contested civil action filed in a circuit or county court to nonbinding arbitration”; and section 44.104 provides for deferral in favour of “voluntary binding arbitration, or voluntary trial resolution”, with some management or supervision of the process, in the case of an agreement in writing between parties involved in a civil dispute to submit their controversy thereto.
Mr Chapman QC said he understood that this Floridian regime for alternative dispute resolution procedures is not new in 2020 but has been part of Florida State law for some time, and would have been when the Sale Agreement was concluded. After the hearing, Ms Butler kindly furnished a link to the Florida Statutes 2016, and Chapter 44 indeed appears to have been the same then. It is tempting to speculate that this Floridian legislation might have been known to those responsible for drafting Section 7.7 of the Sale Agreement, given that it refers, in a contract subject to the exclusive jurisdiction of the Florida State Courts, to “non-binding arbitration”. However, Section 7.7 did not provide for something akin to the ‘nonbinding arbitration’ of section 44.103 of the Florida Statutes. The latter is a creature of court order, not agreement, and is in fact conditionally binding, despite the terminology.
The ‘nonbinding arbitration’ provided for by section 44.103 is one in which any hearing must be conducted informally, with presentation of testimony and evidence kept to a minimum, and matters being presented primarily through statements and arguments of counsel; and then by section 44.103(5), the resulting “arbitration decision”, “shall be final if a request for a trial de novo is not filed within the time provided by rules promulgated by the Supreme Court”; and “If no request for trial de novo is made within the time period, the decision shall be referred to the presiding judge in the case who shall enter such orders and judgments as are required to carry out the terms of the decision, which orders shall be enforceable by the contempt powers of the court, and for which judgments execution shall issue on request of a party”.
Chapter 44 of the Florida Statutes, though interesting, was a distraction.
Returning to Section 7.7, as I have said already it provided for submission to ‘non-binding arbitration’ under and in accordance with the AAA Rules. The AAA Rules do not provide for non-binding arbitration (in name or substance). They are rules designed and drafted for use pursuant to what on any view would be an arbitration agreement within s.6(1) of the Arbitration Act 1996, namely an agreement that claims or controversies be determined by an arbitrator or panel of arbitrators, binding the parties to the outcome expressed in an arbitration award.
An issue raised in this case was, effectively, whether Section 7.7 is an arbitration agreement within the meaning of s.6(1). It was common ground (and I agree) that the fact the parties called the agreed process ‘arbitration’ rather than (say) ‘evaluation’ cannot determine that question (just as if they had called it ‘evaluation’, that could not determine that it was not arbitration within s.6(1)). Nonetheless, the fact that the word used in Section 7.7 is ‘arbitration’ means that in the main, the AAA Rules could be, and in this case have been, applied or operated meaningfully in a reference of disputes to ‘arbitrators’ under Section 7.7.
However, as was also common ground, any ‘award’ generated by a reference of disputes to ‘arbitrators’ under Section 7.7 will not be binding on the parties and so will not resolve the disputes. Provisions in the AAA Rules suggesting otherwise have to yield to that primary agreement. Thus, for example:
(i) In applying Rules R-21(b), R-23 and R-32(b), referring to the “ resolution of the dispute” or “ resolution of the case”, it would have to be understood that the ‘arbitrators’ would not be resolving the dispute, but issuing only a non-binding evaluation; or again the reference in Rule R-32(b) to a focus upon issues “ which could dispose of all or part of the case”, or the reference in Rule R-34(a) to evidence “ necessary to an understanding and determination of the dispute”, would not have its ordinary connotation, since the ‘arbitrators’ would not be disposing of any part of the case, respectively would not be determining the dispute.
(ii) Rule R-47(a) provides that “ The arbitrator may grant any remedy or relief that the arbitrator deems just and equitable and within the scope of the agreement of the parties, including, but not limited to, specific performance of a contract” (my emphasis). On one view, that is still capable of application, because of the emphasised limitation; but on the facts that is a very great limitation. The agreement of the parties under Section 7.7 limits the ‘arbitrators’ to...
To continue reading
Request your trial
-
Agreement on “non-binding” arbitration not an arbitration agreement
...of disputes: IS Prime Ltd v (1) TF Global Markets (UK) Ltd (2) TF Global Markets (AUST) PTY LTD (3) Think Capital Ltd (2020) [2020] EWHC 3375 (Comm) The claimant, an English financial services company, and the defendants, a group of associated companies, were parties to an exclusivity agree......
-
A Fantastic Beast Called "Non-Binding Arbitration"
...the English or the Chinese domain. According to the judgment of the English court in IS Prime Ltd v TF Global Markets (UK) Ltd & Ors [2020] EWHC 3375 (Comm) (9 December It is a necessary requirement, before an agreement between commercial parties relating to disputes between them as regards......
-
A Fantastic Beast Called "Non-Binding Arbitration"
...the English or the Chinese domain. According to the judgment of the English court in IS Prime Ltd v TF Global Markets (UK) Ltd & Ors [2020] EWHC 3375 (Comm) (9 December It is a necessary requirement, before an agreement between commercial parties relating to disputes between them as regards......