SEA2011 Inc v ICT Ltd

This case was a section 67 challenge to an arbitrator's jurisdiction under the Arbitration Act 1996 in respect of disputes said to arise under a written Sales Agency Agreement dated 28 January 2011. The court addressed three principal issues: (i) whether the named agent "ICT Ltd" in the agreement was a misnomer and should be corrected to the English company IN Ltd trading as ICT so as to give the arbitrator jurisdiction; (ii) whether the claimant SEA2011 Inc, which was not the named principal in the agreement, became bound by an implied contract on the same terms as the Sales Agency Agreement; and (iii) whether the arbitrator exceeded the scope of the Notice of Arbitration by deciding an implied contract argument not pleaded in the notice.

The judge held that the agreement contained a clear mistake on its face in the description of the agent and that, applying ordinary principles of contractual interpretation and background knowledge, the reasonable meaning was that the contracting agent was IN Ltd trading as ICT; the contract should be corrected accordingly. The court also held that SEA2011 Inc and ICT Ltd had by their conduct impliedly agreed to be bound on the terms of the Sales Agency Agreement (including the arbitration clause), so the arbitrator had jurisdiction. Finally, the court found that the implied contract argument was properly within the scope of the Notice of Arbitration or at least was within the scope by the parties' conduct, so the arbitrator did not exceed his jurisdiction. The claim to set aside the arbitrator's partial awards was dismissed.

Background and parties: This was a first instance commercial claim under section 67 of the Arbitration Act 1996 challenging two partial arbitral awards that had rejected jurisdictional objections. The underlying Sales Agency Agreement of 28 January 2011 named SEA Inc (a Canadian company) as principal and "ICT Ltd" as agent. The claimant before the court was SEA2011 Inc (incorporated in December 2011), and the respondent was ICT Ltd (an English company whose name had previously been IN Ltd until it changed name on 20 January 2012). ICT Ltd had commenced arbitration by Notice of Arbitration dated 20 April 2016 and obtained partial awards from the arbitrator on 29 June 2017. SEA2011 Inc issued proceedings in the Commercial Court on 27 July 2017 under section 67.

Nature of the application and relief sought: SEA2011 Inc sought declarations that the arbitrator lacked substantive jurisdiction and orders setting aside the partial awards, advancing three jurisdictional challenges: (1) that ICT Ltd was not a party to the Sales Agency Agreement because the name in the agreement did not correspond to any company then incorporated in the United Kingdom; (2) that SEA2011 Inc was not a party to the Sales Agency Agreement and could not be bound by an implied contract on the same terms as that agreement; and (3) that the arbitrator had no jurisdiction to decide an implied contract argument because the Notice of Arbitration pleaded assignment, not an implied contract.

Issues framed and court reasoning:

• Misnomer and correction: The court applied established rules of contractual interpretation and the authorities on correction/misnomer. Having regard to the parties' background knowledge and factual matrix (including that the respondent had described the business as a United Kingdom company trading as "ICT", signage and email evidence, and the fact that IN Ltd had the relevant connection to the Kent warehouse and a change of director before the contract), the court concluded there was a clear mistake and that the reasonable meaning was that the reference to "ICT Ltd" denoted IN Ltd trading as ICT. The agreement could be corrected accordingly.
• Implied contract: Applying ordinary commercial principles, the court inferred from the conduct of the parties from March 2012 until termination in 2015 that SEA2011 Inc and ICT Ltd had adopted the terms of the Sales Agency Agreement by implication, including the arbitration clause. Continued dealings, references to the agreed commission and the termination email supported the inference of an implied contract.
• Scope of the Notice of Arbitration: The court held that the Notice, when read in context, was broad enough to encompass an implied contract argument or, alternatively, that the parties' conduct broadened the scope of the reference so the arbitrator could decide the point. Coleman J's dictum in Westland was considered but the court concluded it did not prevent the arbitrator deciding the matter here.

Subsidiary findings: The court considered and rejected submissions about the relevance of an Isle of Man company and about the criminal disclosure argument, and took account of the fact that a relevant witness for the respondent did not give oral evidence but nevertheless assessed his written evidence. The court affirmed that ordinary rules of construction apply to notices of arbitration and that arbitrators are not rigidly confined where the parties' conduct indicates an extended scope.

Conclusion and disposition: The Commercial Court refused to set aside the arbitrator's awards and dismissed the claimant's challenge.

This was a first instance judgment dismissing SEA2011 Inc's challenge. The court refused to set aside the arbitrator's partial awards and held that (i) the agent named in the Sales Agency Agreement was correctly corrected by construction to IN Ltd trading as ICT, (ii) SEA2011 Inc was bound by an implied contract on the same terms as the Sales Agency Agreement (including the arbitration clause), and (iii) the arbitrator was entitled to decide the implied contract point within the scope of the Notice of Arbitration and by the parties' conduct. For these reasons the arbitrator had substantive jurisdiction and the claimant's section 67 challenge failed.

The judgment records the underlying arbitration (Notice of Arbitration dated 20 April 2016), the appointment of an arbitrator by The Law Society on 1 August 2016, and two partial final awards dated 29 June 2017 dismissing jurisdictional challenges. The claimant issued an Arbitration Claim Form in the Commercial Court under section 67 on 27 July 2017 (amended 22 December 2017). The court reheard the jurisdictional issues and dismissed the challenge.