MRI Trading AG v Erdenet Mining Corporation LLC

A contract is not necessarily void for uncertainty merely because important matters are expressed to be agreed later. The court must construe the agreement and its commercial context to determine whether the parties intended to be bound and whether the outstanding matters can be determined by objective criteria.

Where the parties intended an enforceable commercial bargain, the court should strive to preserve it. It may imply reasonable terms where this is consistent with the agreement. An arbitration clause may provide a mechanism for determining outstanding matters. A tribunal errs in law if it treats terms requiring subsequent agreement as automatically destroying the bargain without properly considering the surrounding settlement transaction and the contract as a whole.

MRI Trading AG appealed under section 69 of the Arbitration Act 1996 against an award concerning a contract for the delivery of copper concentrates by Erdenet Mining Corporation LLC. The tribunal held that the delivery obligation was non-existent because the treatment and refining charges and shipping schedule were to be agreed later.

The contract had been entered into as part of a settlement agreement resolving earlier disputes, alongside two other contracts which were performed. The appeal concerned whether the contract should be construed solely from its wording and whether the outstanding terms made the delivery obligation unenforceable.

1. Question 1. Construction and implication were not to be based solely on the wording of the 2010 Contract. The Settlement Agreement and the two related contracts formed part of the relevant factual matrix and should be taken into account.
2. Question 2. The principles in Mamidoil-Jetoil Greek Petroleum Company SA v Okta Crude Oil Refinery AD [2001] 2 Lloyd’s Rep 76 and BJ Aviation Ltd v Pool Aviation Ltd [2002] 2 P & CR 25 were not rigid rules. The question depended on the construction of the particular agreement and its circumstances.
3. The Settlement Agreement, the language of the 2010 Contract, the parties’ objective intention to create binding obligations, the future date for performance, the partial performance of the overall settlement transaction, and the arbitration clause all supported enforceability. The provisions stated that the parties “shall agree” the relevant matters. They were not expressed as conditions precedent to the existence of the contract.
4. The tribunal’s finding that the treatment and refining charges were commercially significant did not establish that the contract was unworkable or incapable of performance. A reasonable treatment charge, refining charge and shipping schedule could be determined. Implying such terms was not inconsistent with the parties’ agreement.
5. The tribunal had therefore erred in law. The 2010 Contract was legally binding, and EMC’s delivery obligation was enforceable and was to be performed on the basis of reasonable treatment and refining charges and a reasonable shipping schedule if no agreement was reached.
6. It was inappropriate to remit the award under section 69(7) of the Arbitration Act 1996 on the basis of speculative reasons not stated in the award. The award was set aside. Question 1 was answered “No” and Question 2 was answered in favour of enforceability.

• Arbitration tribunal: The tribunal held that the delivery obligation under the 2010 Contract was non-existent because material terms remained agreements to agree.
• High Court (Commercial Court): Leave to appeal was granted by Christopher Clarke J. Mr Justice Eder allowed the section 69 appeal and set aside the award.