SEB Trygg Holding Aktiebolag v Manches & Ors

Arbitration proceedings issued in the name of a dissolved company are not necessarily a nullity. The court must determine objectively, by construing the arbitration notice and surrounding circumstances, whether the intended claimant was the company entitled to the contractual rights. If so, the error may be a misnomer capable of correction.

Universal succession is treated differently from an ordinary assignment or dissolution. An arbitration commenced by the predecessor may continue against or for the successor. Authority may be actual, implied or ostensible. A principal may also ratify unauthorised proceedings through clear conduct, including silence where the principal knows the material circumstances and allows others to proceed on the represented basis.

The claimant pursued preliminary issues arising from an arbitration concerning the sale of shares in Interlife Assurance Company Limited. The arbitration had been commenced in the name of Old Aachener Re, although that company had merged into AMB Generali Holding AG and had ceased to exist before the arbitration began.

SEB sought declarations that AMB was bound by the arbitration and claims against the solicitors who had acted for the named arbitration claimant. The central issues concerned misnomer, authority, ratification, estoppel, service of a counterclaim and the solicitors’ warranties of authority.

1. Misnomer. The arbitration was not a nullity merely because it was commenced in the name of Old Aachener Re. The agreements, correspondence and initiating documents objectively identified the intended claimant as the seller of the shares and the holder of the relevant rights. The error was therefore one of name, not identity. The proceedings were validly constituted from the outset and could be amended if necessary. Lazard Brothers v Midland Bank Ltd was distinguished by the misnomer principle recognised in The Sardinia Sulcis and supported by Unisys International Services Ltd v Eastern Counties Newspapers Ltd.
2. Universal succession. The merger transferred the predecessor’s rights and liabilities to AMB by operation of German law. Universal succession was a special case. Unlike an ordinary assignment followed by dissolution, it did not cause the pending arbitration to lapse. The approach in Eurosteel Ltd v Stinnes AG was applied.
3. Authority. The power of attorney was limited to completing the sale and did not itself authorise the arbitration. The original retainer also did not authorise commencement without further instructions. However, Professor Hauptmann had actual authority, express or implied, to continue handling the dispute and to instruct solicitors. His executive role and the task entrusted to him carried the authority necessary to instruct outside counsel and commence this modest litigation. The principles in Hely-Hutchinson v Brayhead and Daimler Company v Continental Tyre Company supported that conclusion.
4. Ostensible authority. Alternatively, AMB was bound by Professor Hauptmann’s ostensible authority. The company had held him out in a continuing matter and had not notified the relevant parties of the termination of his office or authority. Registration did not automatically give constructive notice. The reasoning in Official Custodian for Charities v Parway Estates Development Ltd was applied.
5. Ratification and estoppel. AMB’s confirmations in January and March 2002, its instructions to change the claimant’s name, and its subsequent silence while P&J continued to act objectively amounted to ratification. Ratification operated retrospectively. AMB knew, or assumed the risk of not knowing, the material circumstances, including the counterclaim and its potential significance. AMB was also estopped from denying that it was a party, since it allowed SEB and the tribunal to proceed on that basis while preserving the benefit of a favourable award. The principles in Suncorp v Milano were applied.
6. Other issues. Service of SEB’s counterclaim on unauthorised solicitors would not alone have made AMB a party, although the counterclaim was not itself a nullity. The solicitors warranted that the named claimant existed and bore the stated name. That warranty was breached. P&J also breached its wider warranty after 22 March 2002 by continuing to act as though it had an unrestricted retainer.
7. The preliminary issues were determined substantially in SEB’s favour. AMB was bound by any award and had lost the right to object to the tribunal’s substantive jurisdiction. The rights under the agreements were beneficially vested in New Aachener Re, while the legal claim and liabilities remained vested in AMB. AMB was ordered to bear the relevant costs, subject to the court’s limitation of the solicitors’ recoverable costs.

First-instance determination of preliminary issues. Permission to appeal was refused.