China Export & Credit Insurance Corporation v Emerald Energy Resources Ltd

Where proceedings are brought on a negotiable instrument containing an English non-exclusive jurisdiction clause, a separate arbitration clause in related agreements does not necessarily capture the claim. The court must identify the contractual source and centre of gravity of the dispute by commercially minded construction of the relevant agreements. Under section 9 of the Arbitration Act 1996, the court decides whether an arbitration agreement exists and whether the proceedings concern a matter within its scope. A defence based on a separate contract containing an arbitration clause does not convert a claim under the instrument into a matter agreed to be arbitrated. An inherent-jurisdiction stay remains exceptional and requires rare and compelling circumstances.

Emerald, a Nigerian company, issued a promissory note governed by English law and containing a non-exclusive English jurisdiction clause. The note was assigned to Standard Chartered and later to Sinosure after Sinosure paid under an insurance policy. Sinosure brought proceedings in England to recover the outstanding balance.

Emerald sought a declaration that the English court lacked jurisdiction, alternatively a stay under section 9 of the Arbitration Act 1996 or the court’s inherent jurisdiction. It relied on arbitration clauses in related Nigerian-law farm-in agreements and contended that correspondence between the parties had produced a compromise agreement. The issues were whether there was a binding compromise and whether Sinosure’s claim fell within the arbitration clauses.

1. The court refused Emerald’s jurisdiction challenge and both applications for a stay. The exchange of letters did not create a binding compromise. Sinosure’s letter was a counter-offer, the parties did not agree the total debt, their positions on interest differed, and Emerald did not accept Sinosure’s reservation of rights. Alternatively, the reference to taking legal action meant proceedings on the Note, and non-payment would revive liability on it.
2. Under section 9 of the Arbitration Act 1996, the court determines two thresholds: whether an arbitration agreement was concluded and whether the issue in the proceedings is a matter which that agreement requires to be referred to arbitration. The court, rather than the tribunal, decides those questions in the first instance and does so bindingly.
3. The question whether a later contractual process superseded arbitration for a particular matter concerns the scope of the arbitration agreement under section 9(1), not whether the agreement was inoperative under section 9(4). The court must construe potentially overlapping dispute-resolution clauses carefully and commercially, recognising that contractual fragmentation may be intended.
4. The relevant matter was Emerald’s liability in English law on Sinosure’s claim under the Note. The Note’s jurisdiction clause applied to Sinosure as assignee, and its promise to pay without set-off supported that conclusion. Defences arising under the separate farm-in agreements did not alter the character of the claim or bring it within the Arbitration Clause.
5. The inherent jurisdiction could be used to grant a temporary stay in rare and compelling circumstances, with regard to orderly dispute resolution and the avoidance of inconsistent decisions. Those circumstances were absent. No arbitral tribunal was constituted, any arbitral declaration would not dispose of the English claim, and the dispute might return to the English court under sections 67 or 69 of the 1996 Act. The claim should instead proceed expeditiously.

Not stated in the judgment.