[2025] EWHC 1368 (Comm)

Fecha: 05-Jun-2025

What is the effect of the contractual hierarchy provisions on the status of the 2017 Terms Arbitration Agreement in relation to the various claims brought by VTB?

What is the effect of the contractual hierarchy provisions on the status of the 2017 Terms Arbitration Agreement in relation to the various claims brought by VTB?

90.

By way of a reminder, the relevant provisions are:

Clause 1.3 of the 2017 Terms:

“These Terms are without prejudice to and shall not supersede or amend any other contract(s) entered into by you … and JP Morgan (whether prior to or after our despatch of these Terms to you (each a ‘Product Contract’) including, without limitation, any contract(s) relating to specific, or specific types of, products, services or transactions … In the event of any conflict between any Product Contract(s) and these Terms, the provisions of the Product Contract(s) shall prevail.”

ii)

The second Recital to the Client Agreement:

“Where the Client has entered into Terms of Business with JPMSL, this Agreement, rather than the Terms of Business, shall govern the Client’s relationship with JPMSL for the execution and/or clearing of exchange listed or OTC cleared products and options accounts at JPMSL. However, the Terms of Business shall continue to govern all other investment business with JPMSL a defined by FSMA. In the event of any conflict between the clauses of this Agreement and the Terms of Business, the clauses of this Agreement shall prevail. This is a ‘Specific Product Contract’ for the purposes of the Terms of Business”.

91.

I accept that the 2017 Terms Arbitration Agreement will not displace:

the UMAA Arbitration Agreement so far as claims relating to the UMAA against JPMCB are concerned;;

ii)

the CA Arbitration Agreement so far as claims relating to the Client Agreement against JPMS plc are concerned; and

iii)

the ISDA Arbitration Agreement so far as claims relating to the ISDA Master Agreement against JPMS plc are concerned.

92.

However, Mr Fenwick KC went further, and argued that in so far as VTB had brought claims against non-parties to those three agreements (and non-parties to the three arbitration agreements) relating to the non-performance of those agreements, the hierarchy clauses prevented those non-parties from relying on the 2017 Terms Arbitration Agreement.

93.

I am unable to accept this argument, essentially because I cannot see how a clause giving rights to someone who is not party to an earlier agreement, while leaving the rights and obligations of those who are parties unchanged, can be said to “supersede”, “amend” or “conflict with” those earlier terms. The approach to be adopted when determining whether provisions “conflict” in a two-party context has been the subject of a number of Court of Appeal authorities:

In Pagnan SpA v Tradax Ocean Transportation SA [1987] 2 Lloyd's Rep 342, 350, Bingham LJ noted that “it is not enough if one term qualifies or modifies the effect of another; to be inconsistent a term must contradict another term or be in conflict with it, such that effect cannot fairly be given to both clauses.” Dillon LJ (at p.353) held “there is inconsistency where two clauses cannot sensibly be read together, but can it really be said that there is inconsistency wherever one clause in a document qualifies another?” (answering his rhetorical question in the negative).

ii)

In Alexander v West Bromwich Mortgage Co [2016] EWCA Civ 496, [62], Hamblen LJ said “one way of testing whether clauses can be 'fairly' or 'sensibly' read together is by seeking to put them together in a single clause”.

iii)

In Septo Trading Inc v Tinetrade Ltd (The NouNou) [2021] EWCA Civ718, [28], Males LJ stated that “the question is whether the two clauses can be read together fairly and sensibly so as to give effect to both,” a question to “be approached practically, having regard to business common sense, and is not a literal or mechanical exercise.”

94.

In this case, it is possible to give both terms effect, and a businesslike and common sense approach justifies doing so. It is far from uncommon for claims to be brought against affiliates in an effort to avoid dispute resolution provisions or exclusions or limitations in the contract. The 2017 Terms are fully alive to that danger, as is apparent from the numerous provisions conferring benefits on non-party affiliates. The inclusion, in the 2017 Terms, of a dispute resolution provision which protected Affiliates who did not benefit as a matter of contractual privity from dispute resolution provisions in specific contracts to which they were not parties from claims relating to those specific contracts, is obviously sensible. There is no difficulty in giving effect to this clause conferring a right to arbitrate disputes on Affiliates alongside the UMAA and CA Arbitration Agreements so far as the signatories to those agreements are concerned.