Peterson Farms Inc v C & M Farming Ltd

A challenge to an arbitral tribunal’s substantive jurisdiction under section 67 of the Arbitration Act 1996 is a re-hearing of the jurisdiction issue. The court must determine whether the tribunal was correct, rather than merely whether its decision was open to it.

The law governing identification of the parties to an arbitration agreement is the substantive law chosen for the underlying agreement. Separability does not permit a tribunal to apply an autonomous international doctrine inconsistent with that choice of law. A non-signatory group company cannot rely on a group of companies doctrine, agency or estoppel without a proper legal basis and supporting evidence.

Peterson Farms Inc challenged part of an ICC arbitration award under section 67 of the Arbitration Act 1996. The award required Peterson to pay damages attributed to companies within the C&M group which were not named as parties to the written agreement or its arbitration clause.

The agreement provided for disputes to be referred to ICC arbitration and was governed by Arkansas law. The tribunal accepted jurisdiction on the basis of the group of companies doctrine and, alternatively, agency. C&M also relied before the court on equitable estoppel and alleged ad hoc consent to jurisdiction. The central issues were the nature of the section 67 hearing, the effect of the chosen law, and whether any alternative basis sustained jurisdiction.

1. Nature of the hearing. The application under section 67 was a re-hearing. Following Gulf Azov v Baltic Shipping [1999] 1 Lloyd’s Rep 68, the court had to decide whether the tribunal was correct. The same approach had received approval in the authorities cited at paragraph 20, while Ranko Group v Antartic Maritime SA [1998] LMLN 492 represented the contrary view.
2. Delay. The tribunal had dealt with the jurisdiction objection in its award under section 31(4)(b). On the wording of sections 31 and 73, the objection was duly taken and Peterson had not lost its right to challenge jurisdiction. In any event, the objection had been raised promptly once the basis of the claim by other group companies became clear.
3. Applicable law. Identifying the parties to the agreement was a question of substantive law. Clause 19 expressly selected Arkansas law. The tribunal therefore had no basis for applying the group of companies doctrine as an autonomous body of international arbitration law. Section 46(1)(a), rather than section 46(1)(b), required the tribunal to decide in accordance with the parties’ chosen law.
4. Alternative grounds. The group of companies doctrine formed no part of English law and was not shown to be recognised by Arkansas law. Agency failed because there was no evidence that C&M contracted as agent, and the agreement and commercial dealings were consistent with separate buyer-and-seller relationships. Estoppel failed for want of evidence of representation, reliance or detriment. Peterson’s participation in the arbitration and agreement to have jurisdiction issues determined did not amount to consent to jurisdiction over claims by non-parties.
5. The part of the award relating to losses suffered by other C&M group entities was set aside for want of jurisdiction. The award of costs and expenses was remitted to the tribunal for further consideration.

Not an appeal from a lower court decision. The judgment concerned a statutory challenge to an ICC arbitral award under section 67 of the Arbitration Act 1996.