Midgulf International Ltd v Groupe Chimique Tunisien
| Jurisdiction | England & Wales |
| Judge | Mummery,Toulson,Patten L JJ |
| Judgment Date | 10 February 2010 |
| Court | Court of Appeal (Civil Division) |
| Date | 10 February 2010 |
Court of Appeal (Civil Division).
Mummery, Toulson and Patten L JJ.
Stewart Shackleton (solicitor advocate, Eversheds LLP) for the appellant.
Michael Nolan (instructed by Salans LLP) for the respondent.
The following cases were referred to in the judgment:
Allianz SpA v West Tankers Inc (The Front Comor)ECAS (Case C-185/07) [2009] 1 CLC 96; [2009] ECR I-663.
Dornoch Ltd v Mauritius Union Assurance Co LtdUNK [2006] EWCA Civ 389; [2006] 1 CLC 714.
Islamic Arab Insurance Co v Saudi Egyptian American Reinsurance CoUNK [1987] 1 Ll Rep 315.
Tombstone Ltd v RajaUNK [2008] EWCA Civ 1444; [2009] 1 WLR 1143.
Arbitration — Contract — Offer and acceptance — Proper law — Anti-suit injunction — Sale of sulphur to state-owned entity in Tunisia — Terms put forward containing London arbitration clause — Application for appointment of arbitrator — Proceedings in Tunisia for declaration that contract not governed by arbitration agreement — Offer accepted by telephone conversation or subsequent exchange of faxes — Contract incorporated draft terms including London arbitration clause — Putative proper law for determining whether parties entered into arbitration agreement English law — Order made for appointment of arbitrator — Anti-suit injunction granted to restrain proceedings in Tunisia — Arbitration Act 1996, s. 18.
This was an appeal against the dismissal of claims for the appointment of an arbitrator under s. 18 of the Arbitration Act 1996 and for an anti-suit injunction to restrain proceedings in Tunisia.
The appellant, Midgulf, was a Cypriot company. The respondent, GCT, was a Tunisian state-owned entity. In June 2008 the parties entered into a contract for a sale of 23,000 mt of sulphur for delivery at Gabes, Tunisia. The contract contained an English law and London arbitration clause.
At the beginning of July 2008 the parties negotiated another sale, Midgulf putting forward the terms of a draft June agreement containing the English law and London arbitration clause. On 21 July GCT raised a complaint about the quality of the sulphur delivered under the June contract and on the following day it raised a similar complaint about the first shipment under the July contract.
The dispute about the June contract was referred to English arbitration. In relation to the July contract, Midgulf served a notice of arbitration but GCT disputed that the contract was governed by English law or by an English arbitration agreement, and so Midgulf issued its application for the appointment of an arbitrator under s. 18 of the Arbitration Act.
GCT issued proceedings in Tunisia seeking a declaration that the July contract was not governed by an arbitration agreement. GCT then issued further proceedings in Tunisia for damages under the July contract based on non-compliance of the sulphur with agreed quality specifications.
Midgulf applied for an anti-suit injunction to restrain the Tunisian proceedings and obtained a temporary injunction pending the hearing of its application for the appointment of an arbitrator.
The Tunisian court gave judgment in the declaratory action, dismissing GCT's application. GCT appealed.
In the English proceedings the judge held, in favour of GCT, that the July contract did not contain an arbitration clause, but continued the anti-suit injunction pending an appeal.
GCT submitted that it would not be a breach of the arbitration agreement for GCT to continue to pursue the declaratory action in Tunisia, because that action did not involve directly asking the Tunisian court to determine the parties' rights and liabilities under the July contract.
GCT further submitted, first, relying on Dornoch Ltd v Mauritius Union Assurance Co LtdUNK [2006] EWCA Civ 389; [2006] 1 CLC 714, that a Tunisian court would consider that the July contract was governed by Tunisian law and did not include an English arbitration clause and that it would not be just to grant an anti-suit injunction when the English court's assumption of jurisdiction was not based on a reasoned comparison of the alternative possible governing laws but on a default rule; secondly that since the decision of the ECJ in The Front Comor (Case C-185/07) [2009] 1 CLC 96; [2009] ECR I-663 the English court should refrain from granting anti-suit injunctions, at least if the foreign country concerned was a party, as Tunisia was, to the New York Convention.
Held , allowing the appeal, making an order under s. 18 for the appointment of an arbitrator and granting an anti-suit injunction to restrain GCT from seeking to continue with the Tunisian proceedings:
1. The arbitration clause in the draft June contract was incorporated in Midgulf's offer of 2 July 2008 and the judge was wrong to reject the arguments that that offer had been accepted orally by GCT by telephone on 4 July or by GCT's fax dated 7 July but sent on 8 July. By “confirming the purchase” orally, without any reservation as to its terms, GCT would have been understood by the hypothetical bystander to be accepting Midgulf's offer. The natural interpretation of GCT's subsequent fax was that it was a confirmation of the purchase agreement, as it was expressed to be. Thus GCT accepted Midgulf's offer dated 2 July, whether by the telephone conversation of 4 July as confirmed by the subsequent exchange of faxes or simply by the exchange of faxes. It followed that the contract included the English law clause and English arbitration clause from the draft June agreement.
2. Where there was a valid English arbitration agreement, it was repudiatory conduct for one of the parties to ask a foreign court to declare that there was no such agreement. Even if the Tunisian action did not technically amount to breach of the English contract, under English law the court could restrain a defendant over whom it had personal jurisdiction from instituting or continuing proceedings in a foreign court when it was necessary in the interests of justice to do so. The sole purpose of the Tunisian declaratory action was to undermine the efficacy of the English arbitration agreement, either by paving the way for preventing the enforcement of an arbitral award or by paving the way for continuing with its damages claim in Tunisia or both. Subject to any other objection, Midgulf was properly entitled to say that it was necessary in the interests of justice to prevent GCT from attempting to bypass or derail the arbitration agreement in that way.
3. The judge did not consider on the evidence that Midgulf had consented to the Tunisian court deciding the question of the validity of the arbitration agreement (its argument before the Tunisian court being that it ought not to do so), nor did he consider that either Midgulf's timing in making its application or the extent of its participation in the Tunisian proceedings were such as to make the grant of an anti-suit injunction inappropriate. There was no error in the way in which the judge approached those matters, and the appeal court considering the matters afresh would come to the same conclusion.
4. This was not a case, like Dornoch, where the court was unable to identify with any degree of confidence the relevant putative proper law. There was only one possible law for determining whether the parties entered into an arbitration agreement by 9 July, namely English law, as the court had concluded that they did. On that premise, there was no plausible case to the effect that the parties nevertheless entered into a subsequent Tunisian agreement by which Midgulf became contractually bound not to enforce its rights under the prior arbitration agreement but to submit instead to arbitration in Tunisia. It was therefore unnecessary to consider what might have been the appropriate course for the court to take in such an unlikely situation.
5. The English courts had long taken the view that the grant of an anti-suit injunction was not incompatible with the New York Convention and the decision of the ECJ in The Front Comor did not provide a good reason for taking a different view.
Toulson LJ:
1. The appellant, Midgulf, seeks two orders: an order under s. 18 of the Arbitration Act 1996 for the appointment of an arbitrator to determine a dispute between itself and the respondent, GCT, relating to a contract made in July 2008 for the sale by Midgulf to GCT of 150,000 mt of sulphur, and an anti-suit injunction to restrain GCT from pursuing parallel proceedings in Tunisia. Both parties contend for the existence of a sale contract, but they differ in their analyses of what were the offer and acceptance and whether the dispute is governed by an English arbitration agreement. The jurisdiction dispute depends on the proper interpretation of a small number of communications between the parties. Teare J ([2009] EWHC 1684 (Comm); [2009] 1 CLC 1000) concluded that there was no arbitration agreement but he gave Midgulf permission to appeal.
2. Midgulf is a Cypriot company. GCT is a Tunisian state-owned entity. The origins of the present dispute go back to an earlier contract made between them in June 2008. On 25 June 2008 Midgulf sent to GCT a written offer for sale of 23,000 mt of sulphur for delivery at Gabes Tunisia. The terms of the offer included the following:
“Buyer to guarantee the draft at Gabes Tunisia to be 32 feet
…
Arbitration. English law to govern. Venue in London.
…
All other terms and conditions as per Midgulf Saudi Arabia standard sales contract.”
3. On 26 June 2008 GCT wrote to Midgulf:
“Further to the above mentioned offer and our subsequent phone exchanges, we are pleased to confirm our agreement to purchase the offered cargo provided the following amendments to your offer:
…
The origin of the cargo is the Kingdom of Saudi Arabia produced by Saudi Aramco quality of which shall comply with GCT standard specifications as per annex 1 herewith attached.
…
The max guaranteed...
To continue reading
Request your trial
-
BNP Paribas SA v Open Joint Stock Company Russian Machines and another
...Aviation v Finrep GmbH [2006] 2 CLC 402. Midgulf International Ltd v Groupe Chimiche Tunisien [2009] 1 CLC 984; [2010] EWCA Civ 66; [2010] 1 CLC 113 (CA). Niagara Maritime SA v Tianjin Iron & Steel Group Co LtdUNK [2011] EWHC 3035 (Comm). OT Africa Line Ltd v Magic Sportswear CorpUNK [2005]......
-
Board of Governors of Loreto Grammar School’s Application
...deprecated by the English Court of Appeal: see Midgulf International Limited –v- Groupe Chimique Tunisien [2010] EWCA. Civ 66 and [2010] 1 CLC 113, paragraphs [71] – [75] (per Toulson LJ). I would add that, to the credit of both parties’ legal representatives, these infirmities did not perv......