Mri Trading AG v Erdenet Mining Corporation LLC
| Jurisdiction | England & Wales |
| Judge | Lord Justice Tomlinson,Lord Justice McCombe,Lord Justice Pill |
| Judgment Date | 08 March 2013 |
| Neutral Citation | [2013] EWCA Civ 156 |
| Docket Number | Case No: A3/2012/2001 |
| Court | Court of Appeal (Civil Division) |
| Date | 08 March 2013 |
[2013] EWCA Civ 156
Lord Justice Pill
Lord Justice Tomlinson
and
Lord Justice McCombe
Case No: A3/2012/2001
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION, COMMERCIAL COURT
Mr Justice Eder
Royal Courts of Justice
Strand, London, WC2A 2LL
Alain Choo Choy QC and Matthew Cook (instructed by Watson, Farley & Williams LLP) for the Respondent
Stephen Moriarty QC and Clare Ambrose (instructed by Clyde & Co LLP) for the Appellant
Hearing date: 12 February 2013
Introduction
Two judges of the Commercial Court, very experienced in commercial disputes, have concluded that an arbitration award made by arbitrators pursuant to the rules and regulations of the London Metal Exchange, "the LME", is, in the words of Christopher Clarke J who gave permission to appeal against it, obviously wrong and, in the words of Eder J, who determined the appeal, somewhat surprising if not bizarre. For good measure, Eder J also concluded that no reasonable tribunal correctly applying the relevant legal principles could have reached such a conclusion. In the light of these trenchant views and of s.69(8) of The Arbitration Act 1996, it might be thought surprising that an appeal to this court has been permitted. Eder J rejected an argument that he should remit the award to the tribunal for reconsideration. He was of "the very strong view" that remission would be inappropriate. He varied the award in accordance with what he had concluded to be the correct legal principles, and otherwise set it aside. However, he was persuaded that there was at least a possibility that a different tribunal might take the view that the appropriate course was not to set aside the award but to remit the matter to the arbitrators. Eder J also took into account that the amount at stake is of the order of US$10M and that he had reached a conclusion different from that of the market tribunal chosen by the parties. So he granted permission to appeal generally so that the argument before this court should not be circumscribed. Hence this appeal.
The facts
We are only entitled to consider the facts found by the arbitrators in their award of 3 February 2012, although we have without objection by either party looked at the contractual documents to which reference is made in the award. They are four in number.
I shall call the Appellant "EMC" and the Respondent "MRI". EMC is a Mongolian mining company. MRI is a Swiss trading company. MRI and EMC were party to an amended and supplemented contract numbered E-2005/12-Cu dated 28 June 2005 for the sale of copper concentrates. We do not even know which was seller and which was buyer, although I can infer that EMC was seller and MRI buyer. Disputes arose between MRI and EMC concerning the performance of that contract. We know nothing about the nature of the disputes (although Mr Moriarty QC told us, impermissibly as it seems to me, that they related to enforceability of the contract) save that they were referred to arbitration at the LME. That arbitration was terminated by the parties agreeing a Settlement Agreement dated 30 January 2009.
The Settlement Agreement included the following terms:-
"WHEREAS
(1) MRI Trading and EMC are party to an amended and supplemented contract for the sale of Copper Concentrates numbered E-2005/12-Cu and dated 28 June 2005 ("the Original Contract");
(2) Disputes arose between MRI Trading and EMC, which were referred to arbitration at the London Metal Exchange ("the LME Arbitration");
(3) MRI Trading and EMC would like to resolve their disputes and terminate the LME Arbitration.
NOW IT IS AGREED AS FOLLOWS
1. Deliveries of Erdenet Copper Concentrates and Molybdenum Concentrates
EMC shall sell MRI Trading 40,000 WMT of EMC Copper Concentrates in each of 2009 and 2010, and 200 WMT of EMC Molybdenum Concentrates in 2009, all pursuant to new, separate contracts between EMC and MRI Trading in the forms agreed at Schedules 1, 2 and 3 to this Settlement Agreement.
2. Termination of the Original Contract
Following signature by authorised signatories of the new, separate contracts between EMC and MRI Trading in the forms agreed at Schedules 1, 2 and 3 to this Settlement Agreement, the Original Contract and all rights, obligations, claims and counterclaims of EMC and MRI Trading under or in connection with the Original Contract are terminated, and MRI Trading and EMC each irrevocably waive all their accrued rights and obligations arising in connection with the Original Contract.
3. The LME Arbitration and settlement of disputes
3.1 MRI Trading shall abandon and terminate the LME Arbitration within 2 business days from (1) execution of this Settlement Agreement AND (2) following signature by authorised signatories of the new, separate contracts between EMC and MRI Trading in the forms agreed at Schedules 1, 2 and 3 to this Settlement Agreement.
3.2 MRI Trading and EMC each shall bear their own legal or other costs in relation to the LME Arbitration. MRI Trading and EMC shall equally bear the costs of the Arbitration, as determined by the Tribunal. To the extent that more than 50% may be borne in the first instance by MRI Trading, then EMC will indemnify MRI Trading for all such Arbitrators' costs up to 50% of the total [of] those costs. Payment will be organised by way of offset against any payment otherwise due by MRI Trading under the contract set out at Schedule 1 to this Settlement Agreement.
3.3 MRI Trading and EMC each accept and agree that in (1) entering into this Settlement Agreement AND (2) signature by authorised signatories of the new, separate contracts between EMC and MRI Trading in the forms agreed at Schedules 1, 2 and 3 to this Settlement Agreement, that this shall be in full and final settlement of all claims and counterclaims under the Original Contract (including those that have arisen as at the date hereof)."
The Settlement Agreement was expressly governed by English law and contained a LME arbitration clause. It also contained a mutual warranty to the effect that the respective signatories to the Settlement Agreement and those to the new, separate contracts between EMC and MRI in the forms agreed in Schedules 1, 2 and 3 were fully authorised to sign the Settlement Agreement on their behalf.
It is the contract pursuant to which EMC sold 40,000 WMT of copper concentrates for delivery in 2010 which has given rise to the present dispute. The two contracts calling for performance in 2009 were, in the language of the award, executed, by which is meant, as is common ground, that they were fully performed.
All three contracts dated 30 January 2009 made pursuant to the Settlement Agreement are detailed written contracts in very similar form. It is suggested however by EMC that the third, 2010 contract, is unenforceable because it left three matters for agreement "during the negotiation of terms for 2010". Although there is nothing about this in the award, we were told by Mr Moriarty for EMC that the reference to "the negotiation of terms for 2010" is a reference to an annual round of negotiations which takes place during a stipulated period each year following an annual meeting of metal traders in London. I should stress that I should reach the same conclusion on this appeal whether I took that piece of information into account or not.
The judge summarised the content of the 2010 contract in this way:-
"The 2010 Contract consisted of 9 typewritten pages signed by both parties. In particular, it provided in material part as follows:
"WHEREAS [MRI] agrees to buy and [EMC] agrees to sell a copper flotation concentrate production of Erdenet Mining Corporation ("Concentrate") on the terms and conditions hereinafter contained:
2. Duration— This Contract shall enter into force from the date of the last signature and shall remain in force until completion of the Parties' obligations herein.
3. Quantity — The quantity of Concentrate to be delivered shall be 40,000 WMT plus or minus 10% at [EMC's] option.
6. Dispatch
6.1 Shipping schedule shall be agreed during the negotiations of terms for 2010.
9. Deductions
9.1 Treatment Charge shall be agreed between [MRI] and [EMC] during the negotiation of terms for 2010.
9.2 Refining charge shall be agreed between [MRI] and [EMC] during the negotiation of terms for 2010.
25. Prior Agreements— This Contract shall constitute the entire agreement between the Parties hereto and supersedes all prior agreements and understandings, whether oral or written, in relation to the subject matter hereof. Except the terms of the Settlement Agreement between Parties dated 30 January 2009."
In addition, the 2010 Contract contained detailed provisions with regard to the quality and description of the material to be supplied [clause 4], how the concentrate would be delivered [clause 5], when railway bill instructions would be provided [clause 6.3], how the purchase price would be calculated [see below], Quotational Period [clause 10], Payment [clause 11], Title and Risk [clause 12], Insurance [clause 13], Weighing, Sampling and Determination of Moisture [clauses 14 and 15]. It also expressly provided that it was governed by English law [clause 23] and subject to arbitration under the LME arbitration rules [clause 22]. [That provision reads:-
"22. ARBITRATION
All disputes arising in connection with this Contract which cannot be settled by a mutual accord between Buyer and Seller shall be settled by arbitration to be conducted in accordance with the rules and...
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