Hussmann (Europe) Ltd. v Pharaon

Where arbitration is commenced against the original contractual party, confusion about its trading name or a later business reorganisation does not necessarily alter the respondent’s identity. The reference must be construed in context, considering the contract, the named respondent, registration details and the parties’ knowledge.

An award made without substantive jurisdiction and declared of no effect does not ordinarily exhaust the tribunal’s jurisdiction. The reference may continue or revive. Arguments based on election, waiver or abuse of process concern the tribunal’s willingness to act, rather than its substantive jurisdiction.

Hussmann commenced arbitration under a distributorship agreement made with Ahmed Pharaon trading as Al Ameen Development and Trade Establishment. After Mr Pharaon incorporated Al Ameen Development & Trade Co and transferred the business to it without Hussmann’s consent, the parties became confused about the respondent’s identity.

The arbitrators first awarded in favour of the Company. Thomas J held that the Company lacked jurisdictional standing and declared the award of no effect: [2000] 2 Lloyd’s Rep 83. The arbitrators then made a second award in favour of Mr Pharaon trading as the Establishment. Mr Brindle QC dismissed Hussmann’s challenge under the Arbitration Act 1996. The appeal concerned whether Mr Pharaon had been respondent throughout and whether the tribunal was functus officio after the first award.

1. Appeal dismissed. The Establishment, namely Mr Pharaon trading as the Establishment, was the respondent to the reference and remained so throughout. The contract identified the Establishment as Hussmann’s contractual partner. The reference named it as respondent and used its commercial registration number. References to the Company and to limited liability status were mistakes as to status, not identity.
2. The lack of Hussmann’s knowledge of, or consent to, the reorganisation supported that conclusion. The Company’s separate registration, Mr Pharaon’s confused evidence and correspondence, and opposition to Hussmann’s amendment did not substitute the Company for the Establishment. Hussmann consistently maintained, once the distinction was clarified, that Mr Pharaon was the only possible respondent.
3. The tribunal was not functus officio. A valid final award on the merits exhausts the tribunal’s jurisdiction, subject to remission. An invalid award exceeding substantive jurisdiction, once set aside or declared of no effect under section 67, does not have that consequence. The arbitration reverts to, or continues from, the position before the invalid award. Section 67 contains no express remission power because remission is unnecessary on that analysis.
4. The second-bite argument was properly characterised as election, waiver or abuse of process, including the rule in Henderson v Henderson and its broader formulation in Johnson v Gore Wood & Co. Those matters concern substantive law or procedure and the tribunal’s willingness to act. They do not concern substantive jurisdiction and cannot be challenged under section 67.
5. The appeal was dismissed with costs summarily assessed at £24,694. Leave to appeal to the House of Lords was refused.

• Court of Appeal (Civil Division) — The appeal was dismissed on both issues. The court held that Mr Pharaon trading as the Establishment was respondent throughout and that the tribunal was not functus officio.
• Queen’s Bench Division, Commercial Court — Thomas J held that the arbitrators lacked jurisdiction to award in favour of the Company and declared the first award of no effect.
• Queen’s Bench Division, Commercial Court — Mr Michael Brindle QC, sitting as a Deputy High Court judge, dismissed Hussmann’s challenge to the second award in the third judgment, handed down on 16 April 2002.