Exportadora De Sal SA De CV v Corretaje Maritimo Sud-Americano Inc

A foreign administrative-law measure which retrospectively requires a contract to be treated as null does not necessarily concern contractual capacity. Where a valid contract and arbitration agreement were concluded, a later administrative intervention affecting their continued operation is ordinarily a question of discharge or contractual effect, governed by the contract’s governing law. It does not thereby deprive an arbitrator of substantive jurisdiction.

A party participating in an arbitration must object to a jurisdictional development as soon as possible. Under the Arbitration Act 1996, section 73(1) bars a later challenge where the party knew, or could with reasonable diligence have discovered, the ground of objection and failed to raise it promptly.

The claimant, a Mexican state-owned salt company, sought under section 67 of the Arbitration Act 1996 to set aside an arbitration award arising from an English-law shipbuilding contract and arbitration agreement.

After the contract had been terminated and the arbitration had substantially progressed, a Mexican administrative body declared the underlying tender process void. The claimant argued that this retrospectively nullified the contract and arbitration agreement, removing the arbitrator’s substantive jurisdiction. It had, however, participated fully in the arbitration without promptly objecting to jurisdiction.

The issues were whether the administrative resolution affected jurisdiction and, if so, whether the claimant’s objection was barred by sections 31 and 73(1) of the 1996 Act.

1. Claim dismissed. The claimant’s section 67 challenge failed in limine because the case advanced concerned a later alleged loss of jurisdiction, not an original lack of capacity to conclude the contract or arbitration agreement.
2. The contract and arbitration agreement were governed by English law. The Mexican administrative-law rules relied upon regulated how the claimant exercised its contracting power. They did not remove its substantive contractual capacity, which derived from its corporate constitution.
3. A later administrative decree requiring a contract to be treated as retrospectively null may operate as a doctrine of discharge or rescission-like effect. It does not establish that the contract, or the separable arbitration agreement, was never validly concluded. The decree therefore did not deprive the arbitrator of substantive jurisdiction.
4. The court accepted the distinction drawn in Haugesund Kommune et al. v Depfa ACS Bank [2012] QB 549 (C/A) between contractual capacity and limits governing the exercise of a contracting power.
5. Alternatively, any viable objection was barred by section 73(1). The alleged jurisdictional change fell within section 31(2), so it had to be raised as soon as possible. The claimant knew in advance that a nullity decree was likely and could have obtained advice and objected within days of receiving it. Its objection was first made over a month later, after continued participation in the merits hearing.
6. The court added procedural guidance that witness statements supporting section 67 or section 68 claims should generally prove disputed facts and identify exhibited documents, while argumentative case presentation belongs in the claim form, statement of case or skeleton argument.

The section 67 claim was dismissed.