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

FIRST TIER AWARD

GTCS then brought an arbitration claim seeking damages for repudiatory breach of the First Contract by CAFI.

CAFI defended the claim inter alia on the basis that the effect of the Termination Clause was to deem the First Contract void, so as to cancel any rights and liabilities arising under the First Contract, including any right to damages for wrongful termination. GTCS did not accept that that was the effect of the Termination Clause. The First-Tier Tribunal recorded at paragraph 9.10 that:

“Sellers’ view was that the meaning of “void” is when a contract is concluded and declared invalid from the moment of conclusion (rescinded). But in this case the Contract was concluded and performed by Sellers and therefore not voidable.” (First-Tier Award § 9.10)

GTCS also argued that the tribunal had no jurisdiction to consider the meaning of the Termination Clause (in the Second Contract) because the tribunal had been constituted only under the arbitration agreement in the First Contract:

“Sellers went further and claimed that the “Termination Clause” contained in the new contract was not subject of this dispute. Even if Sellers violated this clause, it is an independent agreement with a separate arbitration agreement and Buyers could apply for arbitration under the new contract to protect their rights.” (First-Tier Award § 9.8)

The First Tier Tribunal issued an award on 28 March 2023 dismissing the claim. It stated that “the new contract is a stand-alone contract with an arbitration clause, and this Tribunal has no jurisdiction under the new contract” (First Tier Award §12.1). However, the tribunal went on to consider the effect of the Termination Clause on the basis that it was “evidence in this arbitration which could not be ignored” (First Tier Award §12.1).

The First Tier Tribunal concluded that by entering into the Second Contract in terms which included the Termination Clause, GTCS had waived its claim for damages:

“WE THEREFORE FIND THAT the parties’ intention was to waive the right to claim damages under the Contract when cancelling it and accepting a Termination clause in the new contract” (First Tier Award §12.7)