Rqp v Zyx

JurisdictionEngland & Wales
JudgeMr Justice Butcher
Judgment Date14 November 2022
Neutral Citation[2022] EWHC 2949 (Comm)
Docket NumberCase Nos: CL-2021-000196 & CL-2022-000529
CourtQueen's Bench Division (Commercial Court)

In the Matter of Arbitration Claims

Claimant in CL-2021-000196
Defendant in CL-2021-000196
And Between:
Claimant in CL-2022-000529
Defendant in CL-2022-000529

[2022] EWHC 2949 (Comm)


THE HON Mr Justice Butcher

Case Nos: CL-2021-000196 & CL-2022-000529





Royal Courts of Justice

Strand, London, WC2A 2LL

Jonathan D.C. Turner and Mark Baldock (instructed by Richard Slade & Co) for RQP

Chris Aikens (instructed by Pinsent Masons LLP) for ZYX

Hearing date: 31 October 2022

Additional Submissions 1 November 2022

Approved Judgment

Mr Justice Butcher

There are three applications before the court arising out of a dispute between two companies RQP and ZYX.



The dispute relates to rights and obligations arising out of the successful development of a certain product (‘Product 1’) and of modifications thereof.


In brief, RQP contends that Product 1 was developed by a Mr X in conjunction with ZYX pursuant to the terms of two consultancy agreements, under the second of which (‘the Second Consultancy Agreement’) ZYX was obliged to pay Mr X royalties. RQP says that the benefit of the Second Consultancy Agreement was assigned to it by an assignment dated 21 December 2018. Product 1 had ultimately been released in June 2014.


RQP contended that Product 1 had been developed while Mr X was working for RQP. RQP contended that Mr X had incorporated some of its assets into Product 1, and asserted claims against ZYX, inter alia for infringement of intellectual property rights. The parties compromised claims that they had against each other in relation to Product 1 by a License Agreement dated 2 August 2016 (‘the License Agreement’). Under the License Agreement ZYX granted RQP a right to develop ‘enhancements’ to Product 1 in return for which RQP was required to pay ZYX a royalty. RQP developed an ‘enhancement’ of Product 1 (‘Product 2’) and, ZYX contends, other downloadable content related to Product 2, in respect of which ZYX alleges that RQP owes it royalties.


The License Agreement contained, as its Clause 17, an arbitration agreement. It was in the following terms:

‘DISPUTE RESOLUTION: Any controversy, claim, or dispute arising out of or relating to this Agreement or this agreement to arbitrate, including, without limitation, the interpretation, performance, formation, validity, breach, or enforcement of this Agreement, and further including any such controversy, claim, or dispute against or involving any officer, director, agent, employee, affiliate, successor, predecessor, or assign of a party to this Agreement (each, a “Dispute”), shall be fully and finally adjudicated by binding arbitration to the fullest extent allowed by the law (the “Arbitration”). The seat of the Arbitration shall be the London Court of International Arbitration.’


ZYX commenced arbitration by filing a Request for Arbitration on 31 January 2020. The tribunal is composed of a single arbitrator (‘the Arbitrator’). ZYX's principal claim in the arbitration was for breach of contract. It specified that there had been breaches of Clauses 2 and 13 of the License Agreement. Clause 2 required RQP to pay a royalty and provide royalty statements; Clause 13 provided that if the License Agreement was terminated due to RQP's breach, RQP must cease all development of console ports and enhancements to Product 1. ZYX claimed that, based on sales information as at January 2020, RQP owed ZYX US$10,902,576.


RQP served a Response to Arbitration on 15 April 2020, and an Amended Response to Arbitration on 7 May 2020. One feature of the Response was that RQP contended that certain alternative claims which ZYX had advanced, for trade mark, passing off and copyright infringement were not within the arbitration clause. Another was that it was said that a further sequel to Product 2 (‘Product 3’), which ZYX contended was an enhancement of Product 1, had been developed, not by RQP, but by another company, E.


On 21 August 2020 ZYX filed its Statement of Case. This included an allegation that if Product 3 had been developed by E, this had been the result of a breach by RQP of Clause 4 of the License Agreement, which prohibited the assignment of rights under the Agreement without the consent of the other party.



Following the close of pleadings in the arbitration, the Arbitrator scheduled a Mid-Stream Case Management Conference (or ‘MSCMC’) for 15 February 2021. It was relisted by consent and heard on 3 March 2021. The Arbitrator circulated an agenda for the MSCMC on 9 February 2021, which included ‘Jurisdictional Objections/Bifurcation’. In the pleadings and in the skeleton arguments for the MSCMC there were the following jurisdictional issues raised: (1) an objection by RQP to ZYX's claim under Clause 4 of the License Agreement on the basis that it was not within the scope of the Request for Arbitration; (2) an objection by RQP to an alternative claim by ZYX, to the effect that if Product 3 was not an enhancement of Product 1 and thus not within the scope of the License Agreement, Product 3 nevertheless infringed ZYX's registered trade marks for a device (which has been called the ‘second alternative trade mark claim’), on the basis that such a claim was neither within the scope of the arbitration clause in the License Agreement, nor within the scope of the Request for Arbitration; and (3) an objection by ZYX to a claim made by RQP in its Statement of Defense and Counterclaims whereby it sought to set off against any sums it owed to ZYX sums owing from ZYX to it under the Second Consultancy Agreement, on the basis that it did not fall within the scope of the arbitration clause in the License Agreement.


At the MSCMC submissions were made by both parties in respect of the other's jurisdictional objections. Mr Aikens, on behalf of ZYX, referred to the fact that the Arbitrator had the power to rule on his own jurisdiction, and, pursuant to Article 23.4 of the LCIA Rules, might do one of two things, namely decide the objection to jurisdiction now in an award, or postpone a decision on jurisdiction until the final award in the case. The Arbitrator then proposed that there should be a 30-minute break after which he would give his ‘preliminary comments on these jurisdictional issues’. After that break, the Arbitrator said that he ‘would like to give you my comments with regard to the jurisdictional objections briefly’. He then said:

(1) In relation to the objection to the Clause 4 claim, that given the ‘rather broad’ requirement as to a Request for Arbitration in Article 1.1(iii) of the LCIA Rules, that claim fell within ‘the nature and circumstances of the dispute’ and ‘I don't see any need for a remedy of the Request for Arbitration with regard to that’; but that questions of which entity actually developed [Product 3] and whether there had been an assignment were factual issues which would be considered in the arbitration;

(2) In relation to the objection to the claim regarding the trade mark in respect of the [device], that ‘claims regarding [Product 3] are set out in the Statement of Claim and are covered by the language included in Claimant's Request for Arbitration, so also there I don't see any need for a remedy of the Request for Arbitration’; but that whether the claims in respect of trade marks were outside the scope of the arbitration agreement was an issue intertwined with the merits of the dispute and could not be decided at that stage;

(3) In relation to the objection to RQP's counterclaim, the Arbitrator referred to the fact that it had been intimated on behalf of RQP that proceedings would be commenced in this court to claim sums due under the Second Consultancy Agreement pursuant to a jurisdiction clause therein whereby the parties submitted to the non-exclusive jurisdiction of the English courts. He continued that ‘obviously the Arbitral Tribunal would not have any jurisdiction with regard to that because that would be an interference with those proceedings and would create a risk of contradicting decisions, which wouldn't make any sense at all’, and that ‘definitely in that sphere I do not see jurisdiction of this Tribunal’.

The email of 22 March 2021


After the hearing of the MSCMC, on 22 March 2021, the Arbitrator sent an email to the parties, enclosing a copy of the transcript of the hearing. The Arbitrator stated:

‘Because of the many intertwined issues, I made a point not to decide on jurisdictional objections at this stage and restricted myself to comment, and to a statement that the issues of jurisdiction will be dealt with as the arbitration continues.

For the sake of good order, I hereby confirm the following:

Concerning the Claimant's contractual claims regarding [Product 3], the Claimant's claims as set out in the Statement of Claim do not fall outside the scope of the dispute referred to the Sole Arbitrator by the Request for Arbitration and are deemed covered by the language included by the Claimant in its Request for Arbitration. There is no need for the Claimant to amend its Request for Arbitration pursuant to Article 22.1 of the LCIA Rules. Furthermore, which entity developed [Product 3], and whether [Product 3] is an enhancement of [Product 1], are factual issues too intertwined with the merits of the dispute to be decided at this stage. The Sole Arbitrator reserves the right to decide whether he has jurisdiction over the Claimant's contractual claims with a decision on the merits pursuant to Article 23.4 of the LCIA Rules.

As to the Claimant's trade mark claims regarding [Product 3], the Claimant's claims as set out in the Statement of Claim do not fall outside the scope of the dispute referred to the Sole Arbitrator by the Request for Arbitration and are deemed covered by the language...

To continue reading

Request your trial
1 firm's commentaries
  • The High Court Shows Support For Arbitral Process
    • United Kingdom
    • Mondaq UK
    • 2 February 2023
    ...ensure parties cannot take advantage of less stringent arbitral proceedings to delay (or thwart entirely) due process. Footnotes 1. [2022] EWHC 2949 (Comm) 2. [2009] EWHC 1 (Comm) The content of this article is intended to provide a general guide to the subject matter. Specialist advice sho......

VLEX uses login cookies to provide you with a better browsing experience. If you click on 'Accept' or continue browsing this site we consider that you accept our cookie policy. ACCEPT