Hashwani & Ors v OMV Maurice Energy Ltd

Where related commercial agreements contain different arbitration clauses, each clause must be construed in its contractual setting. A clause concerning disputes to be resolved “hereunder” will ordinarily be confined to disputes under that agreement, absent clear language extending it to disputes under another agreement. A direction to apply an arbitration clause mutatis mutandis permits the substitutions needed to give effect to the parties’ objectively ascertained intention.

Separate claims between different parties remain separate arbitral disputes even if they raise the same facts and legal issues. On an application under section 72(1) of the Arbitration Act 1996, the court should ordinarily decide jurisdiction itself. An inherent stay to await the tribunal’s view is exceptional.

The parties held working interests in a Pakistani petroleum concession. The Petroleum Concession Agreement and Joint Operating Agreement provided for ICSID or ICC arbitration in specified circumstances. A later Farmout Agreement between the private working-interest owners contained a Pakistan arbitration clause.

Following a dispute about operating costs, OMV referred claims against Ocean Pakistan Ltd (OPL) and Zaver Petroleum Corporation Ltd (Zaver) to ICC arbitration. OPL and Zaver applied under section 72 of the Arbitration Act 1996 for declarations that the ICC lacked jurisdiction.

Burton J, in the Commercial Court, held that the ICC had jurisdiction over OMV’s dispute with OPL, but stayed the proceedings concerning Zaver: [2015] EWHC 1811 (Comm). OPL and Zaver appealed. OMV cross-appealed against the stay. The central issues were the proper construction of the arbitration clauses, whether there were one or two disputes, and whether the court should defer the Zaver jurisdiction question to the arbitrators.

1. Appeal dismissed and cross-appeal allowed. The ICC had jurisdiction over both disputes. The stay of Zaver’s section 72 application was set aside.

2. The Farmout Agreement was an agreement to transfer interests and did not create independent operating-cost obligations collateral to the Joint Operating Agreement. Its Article 7.2 applied only to disputes under the Farmout Agreement. The reference to the parties’ relationship affected the governing-law provision only. It did not displace the arbitration arrangements governing disputes under the Joint Operating Agreement.

3. Article 17 of the Joint Operating Agreement required Article XXVIII of the Petroleum Concession Agreement to be applied mutatis mutandis. Initially, that enabled Government Holdings to be substituted for the President. Read with the agreements as a whole, it also permitted substitution of a Pakistani working-interest owner for the President. Therefore, a Joint Operating Agreement dispute between OMV, a foreign working-interest owner, and Zaver, a Pakistani working-interest owner, fell within the ICC arbitration arrangements rather than the default domestic-arbitration position in Rule 73.

4. OMV’s claims against OPL and Zaver for their respective operating costs arose under the Joint Operating Agreement. Although they involved the same factual and legal issues, they were legally independent claims. Settlement of one would not affect the other. They were therefore two disputes for Article XXVIII. OMV and OPL were both foreign working-interest owners, so their dispute fell directly within Article 28.3 and Articles 28.1–28.2.

5. Under section 72(1) of the Arbitration Act 1996, the court must ordinarily determine whether the tribunal has jurisdiction. The tribunal’s power to rule on its own jurisdiction does not give it the final word, because its award may be challenged under section 67. A stay under the inherent jurisdiction to allow arbitrators to decide first is appropriate only exceptionally. This construction issue could and should have been decided by the court; any arbitral ruling would have risked further litigation. OMV’s separate section 9 application was misconceived because no substantive proceedings said to be subject to an arbitration agreement had been brought.

• Court of Appeal (Civil Division): Dismissed the appellants’ challenge to ICC jurisdiction and allowed OMV’s cross-appeal, setting aside the stay concerning Zaver.
• High Court, Queen’s Bench Division, Commercial Court: Burton J held that the ICC had jurisdiction over the OMV–OPL dispute, but stayed the proceedings concerning OMV and Zaver: [2015] EWHC 1811 (Comm).