[2025] EWHC 1368 (Comm)

Section 8 of the 1999 Act provides for the operation of arbitration agreements in relation to third party beneficiaries in two instances.

First, under s.8(1), where the third party is given a right under s.1 of the 1999 Act to enforce a term (which it will have if the contract expressly so provides or “the term purports to confer a benefit on him”) and the enforcement of that term is itself subject to a term providing for the submission of disputes to arbitration. In this case, the arbitration agreement takes effect not as a benefit in itself, but as a condition of the term which is intended to benefit the third party (see Mustill & Boyd, [3.87]).

Second, under s.8(2), where the right which the third party is entitled to enforce under s.1 is the right to arbitrate disputes with the promisor, in which case the third party can exercise the right to arbitrate, and, if it does so, is treated as a party to the arbitration agreement “in relation to the matter with respect to which the right is exercised” (ibid, [3.89]).

So far as s.8(1) is concerned, there are a number of provisions of the 2017 Terms which expressly confer benefits on Affiliates. By way of a non-exhaustive list: clause 7.1 (which confers a right of indemnity); clause 7.2 (which exclude liabilities in certain circumstances); clause 8.9 (rights relating to “own account” trading); clause 8.19 (the sufficiency and effect of any confirmation); clause 8.13 (the exclusion of an advisory duty); clause 8.16 (the provision as to trading venues); clause 10.7 (various provisions about the effect, and non-effect, of statements); clauses 10.9 and 11 (addressing potential conflicts of interest); clause 16 (contractual liens, charges and rights of set-off); clause 18.1 (exclusion of liability) and clause 29 (force majeure).

However, the argument before me was not advanced on a s.8(1) basis, but on the basis that the right to enforce the arbitration agreement was itself a benefit intended to be conferred on Affiliates. It is clear that the essentially procedural right to arbitrate can be conferred on a third party under the 1999 Act. The question is whether the 2017 Terms do so.

On balance, I am satisfied that they do. Specially, clause 32.5 of the 2017 Terms, which appears in the same clause as the 2017 Terms Arbitration Agreement, provides:

“Without prejudice to any other remedy, you (and/or, where applicable, any principal or principals on whose behalf you are acting) will indemnify us, any Affiliate and any of our or its respective directors, officers, employees or representatives against any costs, loss, liability or expense whatsoever which may be suffered or incurred by us and/or them directly or indirectly in connection with or as a result of any suit, action, proceeding or any step in any suit, action or proceeding taken by you (and/or, where applicable, your principal or principals) and/or any person connected or affiliated with you (and/or, where applicable, your principal or principals) otherwise than in accordance with this Clause 32 or in accordance with the MiFIR Election Letter where applicable.”

It seems implicit in that clause that Affiliates have a contractual right that claims will not be brought “arising out of, in relation to or in connection with our relationship” otherwise than in accordance with clause 32, and that this is a benefit conferred on Affiliates (and therefore enforceable under clause 36.1).

It is not necessary for present purposes to determine the width of any right to arbitrate conferred on Affiliates. However, I am persuaded that the negative covenant in any arbitration agreement is a benefit which the 2017 Terms confer on Affiliates, and that it would be open to the Affiliates to commence an arbitration to enforce the clause 32.5 indemnity and the negative covenant.