[2025] EWHC 1368 (Comm)

Fecha: 05-Jun-2025

An implied term

An implied term

139.

Any implied term analysis usually best starts with a formulation of the term to be implied. In this case, the closest the hearing came to that was Males LJ’s comment (which was clearly not an attempt at formulation, but a mere outlining of a potential argument) at [78] of Renaissance Securities, where he refers to “a term that the Respondents would not circumvent the arbitration clause in this way” and “to artificial claims against one party's affiliate by the other party, whose only purpose is to circumvent the obligation to arbitrate.”

140.

I share Males LJ’s instinctive attraction to an implied term analysis, and if a term could appropriately be formulated, it might well be one which would fall to be implied as a matter of law to reflect the important English public policy referred to at [112]. I also doubt that the provisions referred to at [137] would themselves be capable of precluding that implication. Like quasi-contractual anti-suit injunctions, I can also see the benefits of giving relief in the appropriate circumstances a contractual foundation (cf [111]).

141.

However, despite my best efforts, I have been unable to formulate an acceptable term, reflecting the very nuanced nature of the issue, and the very real risk of any formulation “over-reaching” and extending to conduct of a kind which most English lawyers would regard as legitimate, or which would at least offer scope for debate. By way of a non-exhaustive list of some of the difficulties which arise:

The width of the concepts of “circumventing” an arbitration agreement or the “artificiality” of a claim are inherently disputatious. A litigating party may carefully choose which claims to advance in court proceedings in an effort to avoid a s.9 stay application. There are many species of claim which involve bringing proceedings against someone who is not the natural defendant – “parent trap” cases, or those rare cases in which a corporate veil can be pierced, or where a director can be made liable for the torts of a company.

ii)

The attempt to use the purpose of the foreign proceedings, and in particular a requirement of “sole” purpose, to determine which claims against third parties can and cannot be pursued presents a number of potential difficulties, particularly when other credible reasons can be offered for the desire to sue the third party including deeper and more readily accessible pockets or a more favourable applicable law. Mr Fenwick KC advanced a number of similar arguments here.

iii)

It is very difficult within an implied term analysis to allow for the extent to which the basis of liability in the foreign proceedings is or is not consistent with generally accepted principles of civil liability, and yet the court’s sense of this matter is likely to be a significant factor in framing its response.

iv)

The concept of who and who does not constitute an “affiliate” (if that is to be an element in the implied term) is also inherently disputatious, and may also overreach where different companies in the same group are performing different functions and there are legitimate criticisms to be made of each (e.g. where one corporate group includes a marketing entity which makes pre-contractual statements but other entities who sell products or provide services).

There is also the complexity of how the implied term operates in the context of agreements to arbitrate on arbitral institution rules which include “forced joinder” provisions. Are there implied obligations on the parties to seek to facilitate the joinder to the arbitration of their affiliates against whom the other party wishes to claim?

142.

Ultimately, the question of whether to order relief in these circumstances is one which inherently requires a multi-factorial assessment, reflecting the interplay of different factors which may have more or less weight in different combinations. An exercise of that kind can readily be performed if the court is asked to grant relief on the vexatious and oppressive basis, but I have found it too difficult to capture it within the constraints of an implied term. An implied term which amounted to no more than an obligation not vexatiously and oppressively to sue third parties would simply dress up the court’s evaluation of any particular case in contractual clothing. It would also turn what in conception and execution is a discretionary jurisdiction into an absolute contractual obligation, with all that follows, and make the availability of such injunctions depend on the applicable law of the arbitration agreement.

143.

It follows that I have been unable to conclude that any of the Arbitration Agreements in this case include some form of Third Party Claim Obligation as an implied term.