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You are here: BAILII >> Databases >> England and Wales High Court (Commercial Court) Decisions >> Golden Ocean Group Ltd v Humpuss Intermoda Transportasi Tbk Ltd & Anor [2013] EWHC 1240 (Comm) (16 May 2013) URL: https://www.bailii.org/ew/cases/EWHC/Comm/2013/1240.html Cite as: [2013] 2 All ER (Comm) 1025, [2013] 2 Lloyd's Rep 421, [2013] 1 CLC 929, [2013] EWHC 1240 (Comm) |
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QUEEN'S BENCH DIVISION
COMMERCIAL COURT
Rolls Building Fetter Lane London, EC4A 1NL |
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B e f o r e :
____________________
Golden Ocean Group Limited |
Claimant |
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- and - |
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(1) Humpuss Intermoda Transportasi Tbk Ltd (2) Genuine Maritime Ltd |
Defendants |
____________________
Nicholas Craig (instructed by Lipman Karas LLP) for the Second Defendant
Hearing dates: 26 April, 1 May 2013
____________________
Crown Copyright ©
The Hon. Mr Justice Popplewell:
This agreement is entered into this 8th day of March 2010 between Genuine Maritime Ltd., SA of the first part and Golden Ocean Group Limited of the second part.
WHEREAS
1. The parties entered into a Charterparty for the "BARITO" on 18 March 2008.
2. Owners have commenced legal proceedings in Indonesia in respect of disputes arising out of or in connection with the Charterparty.
3. Charterers have commenced arbitration proceedings in London in respect of their claims/counterclaims and have made an application to the English High Court of Justice to have their arbitrator appointed as the sole arbitrator.
4. The parties now wish to have all disputes determined in arbitration in Singapore and thus wish to amend the arbitration clause in the Charterparty.
NOW IT IS HEREBY AGREED
1. Clause 17 of the Charterparty be amended ab initio so as to provide for all and any disputes arising under the Charterparty to be determined by arbitration in Singapore under English law with each party appointing their own arbitrator, and those two arbitrators appointing a third arbitrator as umpire if they consider it necessary.
2. All and any current legal proceedings in Indonesia in respect of disputes under the Charterparty as may have been brought by Genuine Maritime Ltd., SA against Golden Ocean Group Limited and/or any other company in the same beneficial or associated ownership shall be discontinued forthwith on terms that there be no order as to costs. To the extent necessary, Golden Ocean Group Limited shall consent to such terms.
3. All and any current arbitration and court proceedings in London/England in respect of disputes under the Charterparty as may have been brought by Golden Ocean Group Limited against Genuine Maritime Ltd., SA shall be discontinued forthwith on terms that there be no order as to costs. To the extent necessary, Genuine Maritime Ltd., SA shall consent to such terms."
The relief sought in these proceedings
(1) A declaration that the charterparty is between Golden Ocean and HIT.
(2) Enforcement of the Award, including judgment for sums due to Golden Ocean under the Award, and the granting of such declarations and injunctions to enforce the Award as may be just. This would include a declaration in the terms of the Award that Golden Ocean contracted with HIT. This relief is sought by an action on the Award and/or pursuant to section 66 Arbitration Act 1996.
(3) Enforcement of the Award, including granting of declarations and injunctions to enforce the Award. Golden Ocean contends that the Award implicitly declares that Genuine is not a party to the charterparty and that there is no arbitration agreement between Golden Ocean and Genuine, as well as explicitly declaring that the charterparty was between Golden Ocean and HIT; and that notwithstanding that Genuine was not formally a party to the reference or named in the Award, Genuine had a privity of interest with HIT in the arbitration and is therefore bound by the Award by an estoppel.
(4) A declaration that Genuine is not a party to the charterparty.
(5) A declaration that there is no arbitration agreement between Golden Ocean and Genuine.
(6) An injunction under Section 37 of the Senior Courts Act 1981 to restrain Genuine from pursuing the Singapore arbitration.
The present application against HIT
"71 On an application for permission to serve a foreign defendant (including an additional defendant to counterclaim) out of the jurisdiction, the claimant (or counterclaimant) has to satisfy three requirements: Seaconsar Far East Ltd v Bank Markazi Jomhouri Islami Iran [1994] 1 AC 438, 453-457. First, the claimant must satisfy the court that in relation to the foreign defendant there is a serious issue to be tried on the merits, i e a substantial question of fact or law, or both. The current practice in England is that this is the same test as for summary judgment, namely whether there is a real (as opposed to a fanciful) prospect of success: e g Carvill America Inc v Camperdown UK Ltd [2005] 2 Lloyd's Rep 457, para 24. Second, the claimant must satisfy the court that there is a good arguable case that the claim falls within one or more classes of case in which permission to serve out may be given. In this context "good arguable case" connotes that one side has a much better argument than the other: see Canada Trust Co v Stolzenberg (No 2) [1998] 1 WLR 547, 555-557, per Waller LJ affirmed [2002] 1 AC 1; Bols Distilleries BV v Superior Yacht Services (trading as Bols Royal Distilleries) [2007] 1 WLR I2, paras 26-28. Third, the claimant must satisfy the court that in all the circumstances [England] is clearly or distinctly the appropriate forum for the trial of the dispute, and that in all the circumstances the court ought to exercise its discretion to permit service of the proceedings out of the jurisdiction."
The present application against Genuine
The Issues
(1) Is there a serious issue to be tried that Genuine had a privity of interest with HIT such that it is bound by the Award?
(2) Is there a serious issue to be tried that Golden Ocean is entitled to a declaration from the English court that Genuine was not a party to the charterparty, and that Golden Ocean is not party to an applicable agreement to submit the disputes to Singapore arbitration?
(3) If the answer to (1) or (2) is yes, is England clearly the appropriate forum for the resolution of such claims?
(4) If so, is there a serious issue to be tried that the court would grant a final anti-arbitration injunction?
(5) If so, should the court exercise its discretion to grant an interim anti-arbitration injunction?
Issue 1: Privity
"It seems to me to be essential that the person now to be estopped from defending himself must have had some kind of interest in the previous litigation or its subject-matter. …
There does, however, seem to me to be a possible extension of the doctrine of privity as commonly understood. A party against whom a previous decision was pronounced may employ a servant or engage a third party to do something which infringes the right established in the earlier litigation and so raise the whole matter again in his interest. Then, if the other party to the earlier litigation brings an action against the servant or agent, the real Defendant could be said to be the employer, who alone has the real interest, and it might well be thought unjust if he could vex his opponent by relitigating the original question by means of the device of putting forward his servant."
"Privity for this purpose is not established by having 'some interest in the outcome of litigation'...
First, I do not think that in the phrase 'privity of interest' the word 'interest' can be used in the sense of mere curiosity or concern...
Second...a man ought not to be allowed to litigate a second time what has already been decided between himself and the other party to the litigation...But I cannot see that this provides any basis for a successful defendant to say that the successful defence is a bar to the plaintiff suing some third party or for that third party to say that the successful defence prevents the plaintiff from suing him, unless there is a sufficient degree of identity between the successful defendant and the third party. I do not say that one must be the alter ego of the other: but it does seem to me that, having due regard to the subject matter of the dispute, there must be a sufficient degree of identification between the two to make it just to hold that the decision to which one was party should be binding in proceedings to which the other is party...
Third...for privity with a party to the proceedings to take effect it must take effect whether that party wins or loses."
"73. As stated above, the basic rule is that, before a person is to be bound by a judgment of a court, fairness requires that he should be joined as a party in the proceedings, and so have the procedural protections that carries with it. This includes the opportunity to call any evidence he can to defend himself, to challenge any evidence called by the claimant and to make any submissions of law he thinks may assist his case. Although there are examples of cases in which a person may be found to be bound by the judgment of a court in litigation in relation to which he stood by without intervening, in my judgment those cases are illustrations of a very narrow exception to the general rule. The importance of the general rule and fundamental importance of the principle of fair treatment to which it gives expression indicate the narrowness of the exception to that rule."
"i) The test for privity of interest is whether, having due regard to the subject of the matter of the dispute, there is a sufficient degree of identification between the relevant persons to make it just to hold that the decision to which one is party should be binding in the proceedings to which the other is party: Gleeson v Wippell approved in Johnson v Gore Wood.
ii) Where someone who has knowledge of the earlier proceedings and a legal interest in their outcome sits backs and allows another person with the same legal interest in the outcome to fight his battle, he will be a privy with the other person: House of Spring Gardens. But this is a narrow exception to the general rule that a person will not be bound by the outcome of proceedings to which he is not a party: Skyparks v Marks, Powell v Wiltshire, Seven Arts v Content.
iii) A direct commercial interest in the outcome of the litigation is insufficient to make someone a privy: Kirin-Amgen v Boehringer Mannheim.
iv) Whether members of the same group of companies are privies or not depends on the facts: Special Effects."
"Arbitration is in contrast [to litigation] a consensual, private affair between the particular parties to a particular arbitration agreement. The resulting inability to enforce the solutions of joinder of parties or proceedings in arbitration, or to try connected arbitrations together other than by consent, is well-recognised - though the popularity of arbitration may indicate that this inability is not often inconvenient or that perceived advantages of arbitration, including confidentiality and privacy are seen as outweighing any inconvenience. Different arbitrations on closely inter-linked issues may as a result lead to different results, even where, as in the present case, the evidence before one tribunal is very largely the same as that before the other. The arbitrators in each arbitration are appointed to decide the disputes in that arbitration between the particular parties to that arbitration. The privacy and confidentiality attaching to arbitration underline this; and, even if they do not lead to non- parties remaining ignorant of an earlier arbitration award, they are calculated to lead to difficulties in obtaining access, and about the scope of any access, to material relating to that award."
Issue 2: Is there a serious issue to be tried that Golden Ocean is entitled to a declaration from the English court that Genuine was not a party to the charterparty, and that Golden Ocean is not party to an applicable agreement to submit the disputes to Singapore arbitration?
The effect of the Addendum
"…For both parties the guarantee of obligations under a lease with non-existent machines was essentially different from a guarantee of a lease with four machines which both parties at the time of the contract believed to exist. The guarantee is an accessory contract. The non-existence of the subject matter of the principal contract is therefore of fundamental importance. Indeed the analogy of the classic res extincta cases, so much discussed in the authorities, is fairly close. In my judgment the stringent test of common law mistake is satisfied: the guarantee is void ab initio."
"26. In approaching the arguments addressed to us, we have considered the analysis of the law set out in Bell v Lever Brothers [1932] AC 161, National Carriers Ltd v Panalpina (Northern) Ltd [1981] AC 675 and Great Peace.
27. It is clear from these decisions that the first task of a court is to examine the nature of the agreement made by the parties and in particular the allocation of risk. The judgment of Steyn J in Associated Japanese Bank (International) Ltd v Crédit du Nord [1989] 1 WLR 255 and of Hoffman LJ in William Sindall plc v Cambridgeshire County Council [1994] 1 WLR 1016 (referred to at paragraphs 80 and 81 of Great Peace) are illustrations of this approach which is also set out in Chitty on Contracts (29th edition) at paragraphs 5-015 and 5-041. As Steyn J said in Associated Japanese Bank :
"Logically, before one can turn to the rules as to mistake, whether at common law or in equity, one must first determine whether the contract itself, by express or implied condition precedent or otherwise, provides who bears the risk of the relevant mistake. It is at this hurdle that many pleas of mistake will either fail or prove to have been unnecessary. Only if the contract is silent on the point, is there scope for invoking mistake.""
"76. If one applies the passage from the judgment of Lord Alverstone CJ in Blakeley v Muller & Co 19 TLR 186, which we quoted above to a case of common mistake, it suggests that the following elements must be present if common mistake is to avoid a contract: (i) there must be a common assumption as to the existence of a state of affairs; (ii) there must be no warranty by either party that that state of affairs exists; (iii) the non-existence of the state of affairs must not be attributable to the fault of either party; (iv) the non-existence of the state of affairs must render performance of the contract impossible; (v) the state of affairs may be the existence, or a vital attribute, of the consideration to be provided or circumstances which must subsist if performance of the contractual adventure is to be possible."
The Threshold question
"9(1) A party to an arbitration agreement against whom legal proceedings are brought (whether by way of claim or counterclaim) in respect of a matter which under the agreement is to be referred to arbitration may (upon notice to the other parties to the proceedings) apply to the court in which the proceedings have been brought to stay the proceedings so far as they concern that matter.
…..
(4) On an application under this section the court shall grant a stay unless satisfied that the arbitration agreement is null and void, inoperative, or incapable of being performed. "
"The structure of the Act
31. The Act requires the court first to examine whether or not there is a written arbitration agreement (defined as an "agreement to submit to arbitration present or future disputes (whether they are contractual or not)"), which covers the subject matter of the action. If there is such an agreement a stay is mandatory unless the court is "satisfied that the arbitration agreement is null and void, inoperative, or incapable of being performed". The onus of satisfying the court lies on the party resisting a stay.
32. In Albon Lightman J observed that there was a distinction to be drawn, in this field, between whether an arbitration agreement had been "constituted", ie brought into existence, and whether it "exists" (which may mean that it has been brought into existence or that it still subsists) and as to its "validity", ie whether it is legally binding. The court must determine whether an agreement was concluded before considering the application of section 9(4).
33. It is apparent from the dichotomy inherent in sections 9(1) and (4) that a party seeking a stay may establish that an arbitration agreement has been concluded which the other party says is null and void, inoperative or incapable of being performed. There are a number of grounds upon which one or more of these matters might be established, eg that the agreement was induced by fraud, misrepresentation or mistake or by bribery or other vitiating cause, or that it was illegal or cannot legally be performed. It is inconsistent with the scheme of the Act that the party who proves a written arbitration agreement and seeks a stay must establish that the agreement is not null and void or inoperative or incapable of being performed. The onus in that respect is on the party resisting the stay. If the applicant shows that it is arguable that the arbitration agreement is not "null and void etc", a stay will be granted.
34. In Albon Lightman J observed:
"In this context 'null and void' means 'devoid of legal effect'. This is made clear by the decision in 1983 of the US 3rd Circuit Court of Appeals in Rhone Mediterranee v Achille Lauro 712 F.2d 50. The court in that case had to determine the construction of identical wording in article 11.3 of the 1959 New York Convention. On this issue the court said:
'We conclude that the meaning of Art 11 section 3 which is most consistent with the overall purpose of the Convention is that an agreement to arbitrate is 'null and void' only (a) where it is subject to an internationally recognised defence such as duress, mistake, fraud or waiver or (b) when it contravenes fundamental policies of the forum State. The 'null and void' language must be read narrowly for the signatory nations have jointly declared a general policy of enforceability of agreements to arbitrate.' (Pages 3 to 4.)
Likewise in this context for an arbitration agreement to be 'inoperative' it must have been concluded but for some legal reason have ceased to have legal effect; eg by reason of acceptance of a repudiation as in Downing v Al Tameer Establishment [2002] BLR 323 (`Downing') at paras 26 to 35."
35. The obligation on the party seeking a stay is to establish an agreement in writing, which is defined by the Act in the following terms:
"5 Agreements to be in writing
(1) The provisions of this Part apply only where the arbitration agreement is in writing, and any other agreement between the parties as to any matter is effective for the purposes of this Part only if in writing.
The expressions 'agreement', 'agree' and 'agreed' shall be construed accordingly.
(2) There is an agreement in writing:
(a) if the agreement is made in writing (whether or not it is signed by the parties);
(b) if the agreement is made by exchange of communications in writing; or
(c) if the agreement is evidenced in writing.
(3) Where parties agree otherwise than in writing by reference to terms which are in writing, they make an agreement in writing.
(4) An agreement is evidenced in writing if an agreement made otherwise than in writing is recorded by one of the parties, or by a third party, with the authority of the parties to the agreement.
(5) An exchange of written submissions in arbitral or legal proceedings in which the existence of an agreement otherwise than in writing is alleged by one party against another party and not denied by the other party in his response constitutes as between those parties an agreement in writing to the effect alleged.
(6) References in this Part to anything being written or in writing include its being recorded by any means."
36. This wide definition allows, in appropriate cases, considerable scope for argument as to whether an agreement has been concluded. There may be dispute as to whether, in English law terms, the written communications establish the making of an offer which was accepted; or whether there was an agreement otherwise than in writing which is evidenced in writing by an accurate record made with the authority of the parties; or whether there has been an oral agreement by reference to written terms (eg an oral agreement on LMAA terms); or whether an alleged agreement which was recorded on tape amounted to one.
37. There may, also, be a dispute as to whether or not an apparent written agreement is the act of the party resisting a stay, as where there is a plea of forgery or non est factum or the equivalent, or because the agreement is said to have been made by someone who had no authority to make it so that no arbitration agreement came into existence."
"67. As Lightman J made clear in Albon v Naza Trading Sdn Bhd (No 3) [2007] 2 Lloyd's Rep 1, section 9(1) requires a concluded arbitration agreement before the court can order a stay, and not merely an arguable case that there was such an agreement. Mr Tregear submitted that the same standard did not apply to all the requirements of section 9: in particular it did not apply to the requirements of section 9(4). In particular he submitted that it was enough if the applicants could show an arguable case that the agreement was not null and void or inoperative.
68. Mr Tregear's submission gains support from the judgment of Potter LJ in Downing v Al Tameer Establishment [2002] BLR 323. In that case he said at that:
"The burden of proving that any of the grounds in s 9(4) has been made out lies upon the claimant and, if the defendant can raise an arguable case in favour of validity, a stay should be granted: Hume v AA Mutual International Insurance Co Ltd [1996] LRLR 19."
69. The question at issue in Downing was whether the claimant had accepted a repudiation of the arbitration agreement. The Court of Appeal, disagreeing with the first instance judge, came to the very clear conclusion that he had repudiated the agreement: see paras 38 and 39. It follows that the dictum of Potter LJ was not necessary for the decision which he reached.
70. Neither side was able to point me to anything in Hume v AA Mutual International Insurance Co Ltd, the case cited by Potter LJ in Downing, which supported the proposition that an arguable case of validity under section 9(4) was enough. Moreover Mr Tregear did not put forward any reason why the court should adopt such a radically different approach under the two limbs of the section.
71. In Albon, Lightman J was faced with an argument which sought to build on Potter LJ's dictum, saying that it was sufficient if the defendant could raise an arguable case as to the existence of the agreement. Lightman J rejected that argument, and expressly left open the question of whether Potter LJ's dictum in Downing as to the sufficiency of an arguable case under section 9(4) was supported by the authority cited.
72. In A v B [2007] 1 Lloyd's Rep 237, Colman J said this about the approach to section 9(4) at para 137:
"The structure of section 9 of the 1996 Act leaves no doubt that once the existence of an arbitration agreement has been established by the applicant, a stay will be granted unless one of the section 9(4) matters is established. The respondent to the application must therefore make good the existence of one of those matters. If the court is unable to determine whether it is so satisfied on the witness statements before it, consideration has to be given to whether to order a trial of the issue or whether a stay should be granted and the question of substantive jurisdiction under section 9(4) left to the arbitrators. Whether the latter course is adopted may in many cases depend heavily on the extent to which the resolution of that issue will involve findings of fact which impact on substantive rights and obligations of the parties which are already in issue and whether in general the trial can be confined to a relatively circumscribed area of investigation or is likely to extend widely over the substantive matters in dispute between the parties. If the latter is the case the appropriate tribunal to resolve the jurisdictional issues is more likely to be the arbitration tribunal, provided it has Kompetenz-Kompetenz."
73. In my judgment the correct approach is that the burden of establishing the matters identified in section 9(4) rests on the party asserting them, namely the claimant. Beyond that, I am prepared to accept that the use of the word "satisfied" in subsection (4) is an indication that the court must come to a clear conclusion that the agreement is null and void, inoperative or incapable of performance. However I am unable to go as far as accepting that the existence of a mere arguable case to the contrary would be sufficient for the court to give effect to the arbitration agreement.
74. CPR 62.8(3) provides that:
"Where a question arises as to whether:
(a) an arbitration agreement has been concluded; or
(b) the dispute which is the subject matter of the proceedings falls within the terms of such an agreement, the court may decide that question or give directions to enable it to be decided and may order the proceedings to be stayed pending its decision."
75. Apart from the two ways forward indicated under that rule (deciding the question or giving directions for trial) the court may decide to stay the court proceedings to allow the arbitrator to rule on his own jurisdiction: see Al-Naimi v Islamic Press Agency Inc [2000] 1 Lloyd's Rep 522. Such a stay is not ordered under section 9 of the Act, because that section requires, as a pre-condition of the jurisdiction to grant the statutory stay, a conclusion that an arbitration agreement has been made. Instead the court exercises its inherent jurisdiction: Al-Naimi at page 525, col 2. In Al-Naimi Waller LJ endorsed a passage from the judgment of HHJ Humphrey Lloyd QC in Birse Construction Ltd v St David Ltd [1999] BLR 194 in which he said that the course of leaving the issue of whether there is an arbitration agreement to the arbitrator was a course to be followed only where the court is "virtually certain that there is an arbitration agreement or if there is only a dispute about the ambit or scope of the arbitration agreement". However, in the course of his own judgment, Waller LJ suggested that "a stay under the inherent jurisdiction may in fact be sensible in a situation where the court cannot be sure of those matters, but can see that good sense and litigation management make it desirable for the arbitrator to consider the whole matter first". Waller LJ gives the example of a case where a trial was necessary to decide the scope of the arbitration clause, where the court thought it likely that it would turn out that the matters were within the clause, that there were matters which would fall within the clause anyway and it would only be a short step to deciding the real issues. In short he was suggesting a case where there was little risk that the matter would have to return to the court following a decision by the arbitrator. Thus, Lightman J said in Albon:
"The court may in exercise of its inherent jurisdiction in its discretion order such a stay both where the issue is as to the conclusion or as to the scope of the arbitration agreement. But the court should only exercise its inherent jurisdiction to order such a stay and decline to decide the issue of the conclusion of the arbitration agreement or of the scope of the arbitration agreement in an exceptional case. The inherent jurisdiction should be exercised with particular caution where the issue is as to the conclusion of the arbitration agreement. The court may very exceptionally order such a stay eg if virtually certain that the arbitration agreement was concluded. Exceptional but less compelling circumstances (eg overwhelming considerations of convenience and cost) may justify such a stay where the issue of the scope of the arbitration agreement is in issue eg when the issue is closely bound up with the issues in the arbitration: see Al-Naimi at page 525 and El Nasharty v J Sainsbury plc [2004] 1 Lloyd's Rep 309 at paras 28 to 29."
76. Where the court takes the course of deciding the matter, the Court of Appeal, again in the Al-Naimi case, indicated that the court should direct a trial where there are triable issues on the facts material to the jurisdiction question on which there were requests for cross-examination. However this principle may give way to the agreement of the parties that the matter should be decided on witness statements alone. Waller LJ expressly stated that there may be situations where, even with the parties' agreement, the court "may simply feel it cannot resolve the issue without hearing the witnesses"."
"3. In my judgment there should be permission to appeal ……. ………….in essence the underlying ground is opposition to Gloster J's decision that she was entitled, by reason of what she considered to be a binding decision of this court in Ahmad Al-Naimi -v- Islamic Press Agency [2000] 1 Lloyd's Rep 522, to exercise her jurisdiction to decide whether or not there was a binding arbitration agreement between the parties rather than to leave that question, provided there was a good arguable case for such an arbitration agreement, to the Kompetenz Kompetenz jurisdiction of the arbitrators concerned.
4. In my judgment there is an arguable issue suitable for appeal as to the effect of the Ahmad Al-Naimi judgment in circumstances where Waller LJ appears to have left it open at 525 in the right hand column as to whether section 9 of the Arbitration Act 1996 does require a decision on the existence of an arbitration clause, and in circumstances where the critical point in that case (see the turn of the page 525/526) is that the parties there had agreed that the issue whether the arbitration clause applied should be determined by the English court. In the present case there was no such common ground. TXM submitted that it was contrary to the philosophy of arbitration pursuant to both the New York Convention and the Arbitration Act 1996 and to the importance of Kompetenz Kompetenz jurisdiction in the role of arbitrators that this court should go beyond establishing whether there was a good arguable case for an arbitration agreement."
(1) The court's jurisdiction to grant a stay may arise under section 9 Arbitration Act 1996 or under its inherent jurisdiction.
(2) Section 9(1) permits the grant of a stay under the section only if D is party to a written arbitration agreement which has agreed to refer to arbitration the matters in respect of which C has brought the proceedings. Section 9(1) is concerned with whether an agreement to arbitrate was concluded. It is not concerned with whether such agreement is valid or enforceable or continues in existence, which is the subject matter of s. 9(4). It is also concerned with whether the scope of the agreement to arbitrate extends to the matters in issue between the parties in their substantive dispute. To bring himself within the scope of section 9, D must establish that such an agreement was concluded, and that its terms apply to the underlying dispute. Examples of disputes which will engage this subsection are where C alleges that the written communications do not establish the making of an offer which was accepted; or that any agreement was otherwise than in writing; or that the agreement was forged or made by someone who had no authority; or that the agreement does not cover the subject matter of the underlying dispute.
(3) If s. 9(1) is fulfilled, s. 9(4) requires the court to grant a stay unless satisfied that the arbitration agreement is null and void, inoperative or incapable of having effect. Examples of disputes which will engage this subsection are where C alleges that the arbitration agreement is vitiated by fraud or misrepresentation, or that the agreement is void for illegality, mistake or duress.
(4) Disputes which engage s. 9(1) or s. 9(4) must relate to the distinct arbitration agreement, not merely the matrix contract in which it is contained. If the arbitration clause has been agreed, the parties will be presumed to have intended the question of whether there was a concluded main agreement to be decided by arbitration, although it will be a question of construction of the arbitration agreement in each case.
(5) It is for D to satisfy the court that he comes within s. 9(1) before the court can grant relief under that section. It is not enough for him to show merely an arguable case that he is party to a concluded arbitration agreement which has agreed to refer to arbitration the matters in respect of which C has brought the proceedings. Unless the court is satisfied that that is so, there is no jurisdiction under the section to stay proceedings. The court must therefore determine the dispute if it affects the question whether D comes within s. 9(1). If it cannot do so on the written evidence at the hearing of the application, it must direct a trial of that issue before granting a stay under s. 9. It may, however, decline to direct a trial of the issue and grant a stay under its inherent jurisdiction without resolving the issue.
(6) If D has brought himself within s. 9(1), it is for C to satisfy the court that the arbitration agreement is null and void, inoperative or incapable of having effect under s. 9(4). If it is not clear on the evidence before the court whether the agreement is "null and void etc", the court may order the trial of that issue, but is not bound to do so. If it declines to do so, it will be sufficient for D to show an arguable case that the arbitration agreement is valid and effective because in such circumstances C will have failed to discharge the burden imposed on him by s. 9(4) of satisfying the court that the agreement by which he agreed to refer the matters in dispute is "null and void etc".
(7) In deciding whether to order the trial of the arbitrability issue under s. 9(1) or s. 9(4), or whether to grant a stay under the inherent jurisdiction to permit the arbitrability issue to be resolved by the tribunal, the court will consider all the circumstances of the case. Factors which are likely to be of significance include the following:
(a) Whether the arbitrability issue is likely to fall to be resolved by the court in any event, for example in the context of enforcement of an award. If so, this will be a powerful factor in favour of the court deciding the issue rather than leaving it in the first instance to the arbitral tribunal.
(b) Whether the resolution of the arbitrability issue will involve findings of fact or law which impact on the substantive rights and obligations of the parties in relation to their underlying dispute, or only affects the question whether such rights and liabilities are arbitrable. In the latter case, the court can conduct the inquiry without risk of interfering with D's right to have his chosen tribunal decide the disputes, because if the issue is resolved in D's favour, there will be a stay in favour of the tribunal without the court having trespassed into considering issues which affect the merits of the underlying dispute. On the other hand where, as is not uncommon, the determination of the issue whether there is an effective agreement to arbitrate is bound up with the issues which arise in relation to the underlying dispute, there is a balance of prejudice to each party to be taken into consideration. It may be more efficient and just to leave the arbitrability issue to be dealt with by the tribunal where, if the issue is resolved in D's favour, he can at the same time obtain an award on the merits from his chosen tribunal. Against this is to be weighed the risk of any prejudice to C in being subjected to the process and decision of a tribunal on which he may not have agreed to confer jurisdiction.
(c) The length and cost of the inquiry into the arbitrability issue and how quickly it will be resolved. Where the issue cannot be resolved without a lengthy investigation, the court will be reluctant to order the issue to be tried in advance of the arbitration. This will be especially so where the trial of the issue is likely to extend widely over the substantive matters in dispute between the parties, in which case considerations of cost and convenience may be decisive: ordering a trial of the arbitrability issue will normally be inappropriate where the trial cannot be confined to a relatively circumscribed area of investigation.
(d) Whether there have been or will be related proceedings addressing the arbitrability issue between the same or other parties. If the arbitrability dispute has been or will be addressed or resolved in other proceedings, the court will be anxious to do what it can to minimise the risk of inconsistent judgments and provide for orderly case management.
(e) The degree of connection between the arbitrability dispute and England. In this context the law applicable to the arbitrability issue may be of significance. Where the law governing the issue of the existence, effectiveness or applicability of the agreement to arbitrate is English law, that will be a factor in favour of the issue being resolved by the English court rather than a foreign tribunal, unless it is clear that there is no real dispute as to the legal principles, or that the foreign tribunal is as well placed to apply those principles as an English court. Other relevant factors in this context will include the relative convenience for the parties of contesting the arbitrability question before the English court, on the one hand, or the arbitral tribunal on the other. Factors such as the location and language of witnesses and documents and other factors commonly taken into account when considering the Spiliada discretion will here be relevant. Also relevant in this context would be the potential applicability of an English jurisdiction clause if the agreement to arbitrate did not exist or was ineffective or inapplicable, as in Claxton.
(f) The strength of the arguments on the arbitrability issue. The court will not conduct a mini trial in determining whether to direct a trial of the issue. But as in other interlocutory contexts, if the court can determine on a brief perusal of the materials before it that one party has a very strong case on the arbitrability issue, the court will take this into account.
(g) The nature and quality of the arbitral tribunal and arbitral process, including the supervisory jurisdiction of the curial court. Where the English court declines to resolve the issue and leaves it to the Kompetenz-Kompetenz of the tribunal in the first instance, C has the comfort that if he is right in his contention that there is no applicable or effective agreement to arbitrate, he will have the opportunity to establish that before the tribunal, which will then decline jurisdiction. The degree of comfort will depend upon the quality of the tribunal and of the arbitral process, supported by resort to the courts having supervisory jurisdiction over the arbitral process. The degree of prejudice to C in requiring him to entrust the issue to a tribunal with whom it may transpire he has not agreed that it should be entrusted will depend upon the degree to which the tribunal can be trusted to reach the correct answer.
Issue 3: Is England clearly the appropriate forum for the resolution of Golden Ocean's declaratory claims?
Issue 4: Is there a serious issue to be tried that the court will grant a final anti-arbitration injunction?
"27. The grant of an anti-arbitration injunction is a matter of debate and controversy in the international arbitration community - see, for example, the article by Professor Lew in AMU International Law Review 2009, 489, "Does national court involvement undermine the international arbitration process?"; - see also Shearer and Jaynel 2009 International ALR: "Anti-suit and anti-arbitration injunctions".
28. It is nevertheless clear that the English courts have jurisdiction to grant such injunctions. See, for example, lntermet FZCO v Ansol Limited [2007] EWHC 226; Elektrim SA v Vivendi Universal SA Number 2 [2000] 2 Lloyd's Rep 8; J Jarvis and Sons Limited v Blue Circle Dartford Estates Limited [2000] BLRep 439; Albon v Naza Motor Trading SDN BHD [2002] Lloyd's Rep 420 [2008] 1 Lloyd's Rep 1; Cetelem SA v Roust Holdings Limited [2005] 2 Lloyd's Rep 494 per Clarke LJ at paragraph 74; Weissfisch v Julius [2006] 1 Lloyd's Rep 716 per Lord Phillips CJ at paragraph 33; Republic of Kazakhstan v Istil Group Inc (No 2) [2008] 1 Lloyd's Rep 382.
29. Modern examples of the English court granting such injunctions are the Republic of Kazakhstan v Istil Group Inc case and, in respect of an arbitration outside the jurisdiction, the Albon case. The authorities indicate that such injunctions will generally only be granted in exceptional circumstances - see Weissfisch v Julius at paragraph 33; Republic of Kazakhstan v Istil paragraph 48.
30. This is consistent with the doctrine of Kompetenz Kompetenz and with the "principles of the law of international arbitration, agreed under the New York Convention and recognised by this country in the 1996 Act" - see Weissfisch v Julius paragraph 33.
31. The significance of the provisions of the 1996 Act was addressed in some detail by Aikens J in Elektrim at paragraphs 67 to 73; see also the decision of Coleman J in A v B [2001] Lloyd's Law Rep 237, paragraph 124.
32. The need for caution in the grant of such injunctions is all the greater in relation to arbitrations outside the jurisdiction because such matters are generally best left to the relevant supervisory courts being the courts of the country of the seat of the arbitration.
33. As stated in Naviera Amazonica Peruana SA v Cia International De Seguros Del Peru [1988] 1 Lloyd's Report 116, at page 118 (Kerr LJ):
" ... every arbitration must have a 'seat or locus arbitri or forum which subjects its procedural rules to the municipal law which is there in force. ... Prima facie, i.e. in the absence of some express and clear provision to the contrary, it must follow that an agreement that the curial or procedural law of an arbitration is to be the law of X has the consequence that X is also the law of the 'seat' of the arbitration. The lex fori is then the law of X and accordingly X is the agreed forum of the arbitration. A further consequence is then that the courts which are competent to control or assist the arbitration are the courts exercising jurisdiction at X."
34. In order to establish exceptional circumstances, it will usually be necessary, as a minimum, to establish that the applicant's legal or equitable rights have been infringed or threatened by a continuation of the arbitration, or that its continuation will be vexatious, oppressive or unconscionable, these being the principles which govern the grant of injunctions to restrain proceedings in a foreign court — see Elektrim at paragraph 56. However this may not be sufficient as the Elektrim decision illustrates – see paragraphs 74 and 75."
Issue 5: Should the Court grant an interim anti-arbitration injunction?
Conclusion