SEA2011 Inc. v ICT Ltd
| Jurisdiction | England & Wales |
| Judge | Sir Ross Cranston |
| Judgment Date | 14 March 2018 |
| Neutral Citation | [2018] EWHC 520 (Comm) |
| Court | Queen's Bench Division (Commercial Court) |
| Date | 14 March 2018 |
| Docket Number | Case No: CL-2017-000479 |
[2018] EWHC 520 (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, 7 Rolls Building,
Fetter Lane, London, EC4A 1NL
Sir Ross Cranston
Case No: CL-2017-000479
Henry Byam-Cook (instructed by Stevens & Bolton LLP) for the Claimant
Oliver Segal QC (instructed by Fieldfisher LLP) for the Defendant
Hearing dates: 7 th February 2018
Judgment Approved
Introduction
This is a claim brought to determine a jurisdictional challenge under section 67 Arbitration Act 1996. The challenge relates to an arbitration which the defendant, ICT Ltd, brought against the claimant, SEA2011 Inc, pursuant to an arbitration agreement in clause 10.1 of a written Sales Agency Agreement dated 28 January 2011. These underlying arbitration proceedings were commenced by ICT Ltd by a Notice of Arbitration dated 20 April 2016. The Arbitrator has issued two partial awards dated 29 June 2017 rejecting the jurisdictional challenges. This judgement has been anonymised in accordance with CPR 62.10(3).
In outline, SEA2011 Inc's challenge to the Arbitrator's jurisdiction is threefold. First, it contends that ICT Ltd is not a party to the Sales Agency Agreement and thus not a party to clause 10.1 because there was no English company of that name in existence at the time of the agreement. Therefore the Arbitrator's jurisdiction, as defined by the Notice of Arbitration, does not extend to determining the disputes ICT Ltd has raised. Secondly, SEA2011 Inc argues that it, too, was not a party to the Sales Agency Agreement. The named “Principal” in it was SEA Inc, a separate legal person from SEA2011 Inc, which was only incorporated after the agreement was concluded. Thirdly, SEA2011 Inc submits that the Arbitrator was precluded from considering ICL Ltd's submission that the issue of the separateness of SEA Inc and SEA2011 Inc could be overcome by finding an implied contract between it and SEA2011 Inc on the same terms as the Sales Agency Agreement. That was because in the Notice of Arbitration ICL Ltd had sought to address the point by an argument, now abandoned, that the Sales Agency Agreement was assigned by SEA Inc to SEA2011 Inc. There was no mention of implied contract.
Background
The parties and associated companies
SEA Inc was incorporated in Canada on 15 April 2004. Its president was Mr BY, and Mr JZ was one of its directors. Its shareholders were Mr BY (17%), Mr JZ (17%), Mr ST (17%) and Mr CS (49%). It was a distributor of electronic components manufactured by a Chinese company, DA Ltd, under a contract dated 10 January 2005.
The claimant, SEA2011 Inc, was incorporated on 10 December 2011. Its president was Mr JZ. Its shareholders were originally DA Ltd (55%), Mr JZ (25%) and Mr ST (20%), but are now DA Ltd (60%) and Mr JZ (40%). DA Ltd terminated the original agreement with SEA Inc and appointed SEA2011 Inc as its distributor with effect from March 2012. The Arbitrator characterized these changes as amounting to an internal reorganization in all likelihood for DA Ltd's and Mr JZ's purposes.
The defendant, ICT Ltd, was incorporated in England on 10 July 1998. At the date of its incorporation its registered name was IN Ltd. Its shareholders and directors were Mr JW and Mr S. Mr S is a Dutch national and someone with no connection to the present dispute. The company was dormant from about 2004 and filed dormant accounts with Companies House for the years ending 31 July 2010, 2011 and 2012. It changed its name from IN Ltd to ICT Ltd on 20 January 2012. At incorporation its registered address was at Mr S's home address in West Sussex. That was changed on 17 August 2010 to Mr and Mrs JW's home address in Kent, and that remains the registered address.
On 17 August 2010 there was a change of director registered at Companies House: Mr JW replaced Mr S. In addition Mrs JW became company secretary. However, the annual return for the company in July 2011 recorded that the company's sole director was Mr S although the accounts filed at that time are signed on its behalf by Mr JW as director. On 26 January 2012 a termination of Mr S's appointment as director was filed with Companies House. In the annual return dated 30 July 2012, the sole director was named as Mr JW. He and his wife held one share each. In my view Mr JW became the sole director in August 2010 and there was a mistake in the annual return for 2011 in naming Mr S.
ICT Ltd is an Isle of Man company incorporated on 26 November 2010, described in this judgment as ICT (IOM). Mr DH and Mr JW were instrumental in its formation. There is little publicly available information about this company because of the confidentiality the Company Registry in the Isle of Man offers. ICT (IOM)'s annual returns for the years 2011 to 2013 were presented by a registered agent in the Isle of Man. The director was listed as a company, “Castle Directors Ltd” in the Isle of Man. The relevant box if the company were dormant was not ticked. The company was struck off the register in 2016. The company was not mentioned to Mr JZ before the Sales Agency Agreement was signed. Indeed it seems that Mr JZ and SEA2011 Inc did not know of it until November 2016, when ICT Ltd disclosed its existence after the current dispute arose.
The Sales Agency Agreement
In 2010 Mr DH decided to enter the technical and sales agency business together with his previous colleague, Mr JW, with a view to representing manufacturers of electronic components. Mr DH and Mr JW met Mr JZ of SEA Inc at a major electronics exhibition in Munich held between 9 and 12 November 2010. They discussed the possibility of their acting as a sales agent in Europe for SEA Inc. Following that meeting Mr JZ accompanied Mr DH and Mr JW to the UK for further discussions, and on 13 November 2010 they took him on a tour of a warehouse at a trading estate in Kent. In his witness statement Mr JW stated that the warehouse and its location were important from Mr JZ's perspective as a distribution centre. SEA2011 Inc accepted Mr DH's explanation that the Kent warehouse was chosen for its close proximity to major motorways, channel tunnel and trade links to Europe.
On the visit Mr JZ saw signage at the warehouse with a logo which read “ICT” without “Ltd”. He took a photograph of this, which was in evidence at the hearing. The description “ICT” without “Ltd” appears in emails in December 2010/January 2011 and the logo and that description appear in at least one email in evidence in January 2011. In my view “ICT” without “Ltd” was the trading name of the business.
At the end of the visit, Mr DH gave Mr JZ a draft sales agency contract. I infer from what followed that the party named in this was ICT Ltd. There was negotiation over the terms. One point was the termination period. Mr DH explained in an email dated 9 December 2010 that as a UK company operating in Europe the contract had to comply with European law. Agreement was finally reached.
The Sales Agency Agreement was dated 28 January 2011. The parties were named as SEA Inc with a Canadian address as “the Principal”, and ICT Ltd as “Agent”, “a company incorporated in the United Kingdom”, with a registered office identified as the warehouse at the trading estate in Kent already mentioned. Under the agreement, the agent was given an exclusive sales agency in Europe for promoting and selling the principal's products. Commission was dealt with in clause 6 and Appendix B. In broad terms commission was generally 5.5%, but might be split between two regional agents when design-in, the purchase order and delivery came from different locations. Clause 10.1 provided:
“Any dispute arising out of or in connection with this agreement shall be referred to the arbitration in London of a single arbitrator appointed by agreement between the parties or, in default of agreement, nominated on the application of either party by The Law Society”.
Clause 13 of the agreement provided for the service of notices by hand or sending to the other party at the address given. The agreement was signed by Mr JZ for SEA Inc as the “General Manager” of “S Relays” and Mr DH as “Director” for ICT Ltd.
Events post-agreement
On 12 March 2012, an email was sent from a person in “Sales/Accounting” at SEA Inc. It read that SEA had moved to a new address, which was given. The next line read: “Our company name registered as: SEA2011 Inc”. The email continued that all letters should be sent to the new address and cheques should be payable “to the NEW Title in the future. If your company used to wire payment to us every month (sic). Please contact us immediately for New Bank account information.” The email seems to have been sent to over 200 addressees. Later the new bank details were provided to ICT Ltd.
In April 2013 ICT Ltd wrote to Mr JZ of SEA2011 Inc about a new business opportunity with a German company. Mr JZ responded asking if ICT Ltd would accept commission at 1% in respect of two parts. Mr DH of ICT Ltd replied and referred to “our contractual 5.5% commission”, in other words referring to the commission rate in the Sales Agency Agreement. Mr JZ responded, asserting that SEA2011 Inc “couldn't support the project if we still pay [ICT Ltd] 5.5% commission”. In an email dated 25 April Mr DH disagreed, referring to the fact that SEA “signed the European Sales Representative Agreement with [us] in 2011 agreeing to a 5.5% commission” and concluded: “We trust you appreciate the seriousness of our contractual obligations and the fact we are prepared to accept an extraordinary one year reduction in our commissions …” After a further response by Mr JZ, Mr DH wrote “we cannot agree to a reduction of our legally obligated commissions of 5.5% …”.
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