CL-2024-000080 - [2025] EWHC 1350 (Comm)

APPEAL PROCEEDINGS AND AWARD

On appeal, CAFI again relied on the Termination Clause and GTCS again argued that the Termination Clause did not have the meaning for which CAFI contended.

As to the effect of the Termination Clause, the Appeal Award records a submission made by GTCS thus:

“Sellers also discussed the use of the word “void” in the Termination clause of the resale contract. Common law treats three types of contract as void on grounds of public policy: contracts to oust the jurisdiction of the courts, contracts prejudicial to the state of marriage, and contracts in restraint of trade. In addition, statute law can render void wagering contracts and agreements prohibited by competition law. The Contract did not meet any of these criteria.” (§ 6.11)

GTCS also took a point about the Appeal Board’s jurisdiction to consider the Second Contract. As part of its Appeal Submissions, GTCS said:

“(i)

CAFI refers to the new contract, but the Tribunal was not authorised to consider the new contract, since the dispute between the parties arose from the first contract, which has its own arbitration agreement, based on which the Tribunal was created.

…

(iv)

Having made a conclusion about the intentions of the parties, the Tribunal went beyond its powers, since the question of what the parties’ intentions were when concluding the new contract can be considered and decided only by the Tribunal, which has the authority and jurisdiction to consider the dispute (if any) under the second contract. In fact, everything that happened during the new contract (from 24 March to 1 April) should not have been of interest to our Tribunal, and even more so, this Tribunal had no authority and jurisdiction to examine the implementation of the new contract, documents related to it, payments, letters, and other things, including the wording of the new contract itself.”

Similarly, the Appeal Board recorded GTCS as having submitted as follows:-

“[The Termination Clause] appeared in the re-sale but not in the Contract, and Sellers’ damages claim arises under the Contract. The Tribunal had no authority to consider the re-sale as arbitration had been claimed only for the Contract. Sellers pointed out that the clause first appeared in the text only briefly before the end of the re-sale and was therefore not evidence of the parties’ intentions. Furthermore, by considering the term in relation to the Contract, the first-tier tribunal had exceeded their authority as the parties had not agreed to the term in the Contract (Ronaasen & Son v Arcos Ltd [1933] UKHL 1)” (Appeal Award § 4.8)

“Sellers stressed that the only contract before us was the Contract of 11 March, and it was important to note that the Contract did not contain the Termination Clause that was found in the re-sale, on which arbitration had not been claimed.” (Appeal Award § 6.1)

“The first-tier tribunal exceeded their authority when they considered the parties’ intentions when concluding the re-sale. Everything that happened after 23 March, when the Contract was brought to an end, was outside their authority.” (Appeal Award § 6.12)

“Sellers denied that the terms of the re-sale were relevant to the dispute. The re-sale contract was only negotiated after the Contract had been terminated. Sellers agreed with the first-tier tribunal who had found that the re-sale was a stand-alone contract, on which they had no jurisdiction (paragraph 12.1) and that the Contract did not become void retrospectively (paragraph 12.2).” (Appeal Award § 8.1)

The Appeal Board further recorded that:

“[a]s to jurisdiction, Buyers agreed [sic.] that the Board had jurisdiction because of the principle of separability between the contract terms and the arbitration agreement but noted that it had been expressly agreed that the Contract was void and unenforceable” (Appeal Award § 7.2).

It is necessary to set out the Appeal Board’s findings about its jurisdiction and the effect of Termination Clause in full:

“Jurisdiction

9.2.

We started by checking the original appointment of arbitrators. Sellers claimed arbitration on 28 July 2022 in respect of the Contract, and Buyers appointed their arbitrator on 4 August 2022 also in respect of the Contract. We were not shown any message claiming arbitration in respect of the re-sale; indeed, neither party contended that there was any such message.

9.3.

We then considered our position in respect of the claim under the Contract. Buyers admitted that we had arbitral jurisdiction under the separation principle, but that nevertheless the Contract was void. Sellers on the other hand contended three points:

(a)

that our jurisdiction was limited to the Contract only and we had no jurisdiction to consider anything arising out of the re-sale;

(b)

that the Contract was terminated before the negotiation of the re-sale and thus the Contract could not be terminated retrospectively; and

(c)

that they had not agreed to the term that the Contract was “void”.

9.4.

Insofar as our jurisdiction under the Contract is concerned, we are satisfied that such jurisdiction was conferred on us by the express terms of the Contract, and we have not seen anything in the parties’ subsequent communications modifying that position. WE THEREFORE FIND THAT we have jurisdiction to address all issues arising out of the Contract, including its validity and termination.

9.5.

As to the re-sale, we noted that Sellers had signed and stamped the re-sale confirmation and thereby had endorsed the Termination Clause. Sellers suggested that they had merely overlooked it. However, the resale contract was negotiated and concluded a few days after the Contract had been terminated, and we saw no suggestion in any of the contemporaneous correspondence that the parties had in fact freely negotiated the specific wording of the Termination clause. Mr Essawy’s messages referred only to the Contract being “cancelled”, and this message was sent after the Contract had already been terminated by Sellers.

9.6.

We discussed whether, as a matter of principle, there was any reason why the Contract could not be declared retrospectively as “void”. We saw no reason why not, if that was what the parties agreed. However, in that eventuality we would expect to see some clear discussion between the parties to that effect. On the facts, there was no suggestion that the Contract should be specifically considered “void” but only that the Contract should be “cancelled”, which we interpret as meaning that it was terminated.

9.7.

We also noted that the re-sale contained a separate arbitration agreement but no arbitration notice was ever given under the re-sale contract and so neither the first-tier Tribunal nor this Board were appointed to rule on any matters arising out of the re-sale contract.

9.8.

WE THEREFORE FIND AND HOLD that we have no jurisdiction to interpret the terms of the re-sale or how any of those terms impact on the Contract. It however remains good evidence of what happened after the termination of the Contract.

Liability

…

9.13.

WE FIND that Buyers were not excused from paying under the Contract.

9.14.

The Payment clause also stated that “payment is a condition of the contract”. Accordingly, WE FIND that Buyers’ failure to pay was a breach of contract entitling Sellers to terminate the Contract and that Sellers did validly hold Buyers in default.

Waiver

9.15.

The parties agreed that the test for waiver: the party seeking to rely on waiver must show a clear and unequivocal representation, by words or conduct, by the other party, that they would not seek to exercise their strict legal rights to treat the contract as repudiated.

9.16.

Buyers could not point to any message from Sellers stating that they would waive their rights. Buyers appeared to rely on the fact that Sellers had entered into the re-sale contract, but that, in our view, is not an indication of waiver in respect of Sellers’ position under the Contract, which had already been reserved and made clear earlier.

9.17.

WE FIND that Buyers’ case on waiver fails. ”

CAFI subsequently commenced a second GAFTA arbitration seeking a determination as to the effect of the Termination Clause, in case that further arbitration is needed following the outcome of the present claim. That arbitration has been stayed in the meantime.