Emirates Trading Agency Llc v Sociedade De Fomento Industrial Private Ltd

A final and binding partial arbitration award creates an issue estoppel. A party that fails to challenge a jurisdiction award within the statutory time limit cannot reopen the same jurisdiction objection when challenging a later award. Reconstitution of the tribunal does not alter that result. A power to repeat prior proceedings permits reconsideration of matters still outstanding, but not review of a final decision. Where a contractual friendly-discussion clause is enforceable, the discussions need address the dispute, not every later legal argument or quantified claim. Commercial parties may pursue a practical settlement by reference to wider commercial interests. Discussions before termination may qualify where they concern the underlying dispute and the right to terminate.

Emirates Trading Agency LLC applied under sections 67 and 68 of the Arbitration Act 1996 to set aside an ICC tribunal’s final merits award in favour of Sociedade de Fomento Industrial Private Limited.

The parties’ long-term iron-ore contract required friendly discussions for three continuous months before arbitration could be commenced following substantial breach. The tribunal first issued a partial final award determining that it had jurisdiction. Emirates did not challenge that award within the statutory period. After changes in the tribunal’s membership, the reconstituted tribunal declined to rehear the jurisdiction objection and later awarded SFI damages.

The central issues were whether the unchallenged jurisdiction award barred the section 67 application, whether the reconstituted tribunal could reopen it, and whether the friendly-discussion requirement had been fulfilled.

1. The applications were dismissed. The tribunal’s partial final jurisdiction award was final and binding under sections 47 and 58 of the Arbitration Act 1996. Because Emirates did not challenge it under sections 67–69 within the permitted time, an issue estoppel arose. Section 73(2) separately prevented Emirates from objecting later to the tribunal’s substantive jurisdiction on grounds decided in that award.
2. The principles applied equally to a partial award on jurisdiction. A tribunal ruling on its own substantive jurisdiction under section 30 remains open to challenge only through the statutory arbitral appeal or court-review mechanisms. Once final, it binds the parties in later proceedings before the tribunal and in a challenge to a subsequent award.
3. The tribunal remained the same institutional tribunal despite changes in its membership. Article 12(4) of the applicable ICC Rules, and the equivalent power in section 27, allowed repetition of proceedings concerning matters still to be decided. They did not permit a newly constituted tribunal to review or alter a final and binding decision. The tribunal was therefore functus officio in relation to the jurisdiction issue.
4. Dallah Real Estate and Tourism Holding Co v Ministry of Religious Affairs of the Government of Pakistan [2011] 1 AC 763 did not assist Emirates. It concerned resistance to enforcement of a foreign award by a person denying that it was party to the arbitration agreement, not a section 67 challenge before the English supervisory court.
5. Although it was unnecessary to decide the legal enforceability or jurisdictional character of the friendly-discussion clause, the court found that it had been fulfilled. The discussions concerned the continuing default, accrued liquidated damages, termination and possible continuation of the contract. They lasted for more than three months and involved genuine attempts to find a commercial solution.
6. The clause did not require discussion of every legal defence later advanced in the arbitration, nor prior quantification of every monetary claim. The relevant subject was the dispute, which included consequential monetary claims. The notification provision was permissive because it used “may”, not compulsory.