Uttam Galva Steels Led v Gunvor Singapore Pte Ltd

A jurisdictional objection under an arbitration agreement must be raised within the time required by the applicable arbitration rules and section 73 of the Arbitration Act 1996. A plea that the tribunal lacks substantive jurisdiction includes an objection that the arbitration agreement does not cover particular claims. It is distinct from an objection that the tribunal has exceeded its powers. Where parties agree a wide arbitration clause in a sale contract providing for payment by bills of exchange, the clause may cover disputes between those same parties under the bills. The absence of an arbitration clause in the bills themselves is not decisive. The commercial presumption favours resolving related disputes in one forum, subject to the true construction of the agreement and any change of parties through assignment or endorsement.

Uttam applied under section 67 of the Arbitration Act 1996 to challenge a ruling made by a sole arbitrator in an arbitration concerning unpaid nickel transactions. The arbitrator had ruled that the challenge to jurisdiction was out of time and, alternatively, that the arbitration clause in the parties’ Master Sales Contracts covered claims under bills of exchange issued as the payment mechanism.

The arbitration clause referred all disputes arising out of or in connection with the contracts and incorporated terms to arbitration in London. The arbitrator also ordered an interim payment. The central issues were whether the ruling was an award for section 67 purposes, whether the jurisdictional objection was time-barred, and whether the arbitration agreement extended to the claims under the bills of exchange.

1. The application failed. The arbitrator’s formal ruling on jurisdiction was an award for the purposes of section 67(1)(a) of the Arbitration Act 1996. Its substance, formal language and final determination of the jurisdiction issue distinguished it from a merely procedural ruling: Michael Wilson Partners Ltd v Emmott [2009] 1 Lloyd’s Rep. 162.
2. Regulation 10.3 of the LME Arbitration Regulations contains distinct provisions. Its first sentence concerns pleas that the tribunal lacks jurisdiction, including subject-matter jurisdiction over particular claims. Its second sentence concerns a tribunal exceeding the scope of its authority after jurisdiction exists. The distinction corresponds to sections 67 and 68(2)(b) of the 1996 Act and to sections 30(1)(a)–(c) and 82(1): [2018] EWHC 1098 (Comm), paras [37]–[41].
3. The objection that the arbitrator lacked jurisdiction over claims under the bills of exchange was therefore subject to the first sentence of Regulation 10.3. Uttam had known from the Points of Claim that the bills were the primary basis of the claim, but raised the objection only later. No reasonable justification for the delay had been shown. The section 67 challenge consequently failed on the delay issue: [2018] EWHC 1098 (Comm), paras [31]–[42].
4. In any event, the arbitrator had jurisdiction. The clause covering all disputes arising out of or in connection with the contracts was wide. Applying the commercial presumption identified in Fiona Trust & Holding Corp v Privalov [2007] UKHL 40, rational commercial parties would ordinarily intend related disputes to be resolved by one tribunal. The contracts expressly contemplated bills of exchange as delivery documentation and the parties to the sale contracts remained the parties to the bills.
5. Nova (Jersey) Knit Ltd v Kammgarn Spinnerei GmbH [1977] 1 WLR 713 did not require a different result. It concerned the effect of German law, while Lord Russell’s observations about bills of exchange and arbitration were obiter. Rals International Pte Ltd v Cassa di Risparmio di Parma e Piacenza Spa [2016] SGCA 53 was not followed insofar as it treated the availability of court-based summary procedures and third-party endorsement as determinative. Its statement concerning claims by the original holder was obiter and the present case involved direct contracting parties.
6. The question whether the arbitrator had power to order an interim payment under Regulation 10.1(l) was not a section 67 jurisdiction issue. It concerned the tribunal’s powers and was therefore outside the scope of the application. The section 67 challenge was dismissed.

This was a first-instance application to the High Court under section 67 of the Arbitration Act 1996. The Court dismissed the challenge to the arbitrator’s ruling.