Dreymoor Fertilisers Overseas PTE Ltd v Eurochem Trading GmbH

Challenges to arbitral jurisdiction under the Arbitration Act 1996 are confined to substantive jurisdiction. Broad arbitration clauses covering disputes arising out of a contract may extend to non-contractual claims, including allegations of antecedent bribery, unless contractual claims in the relevant area would have been wholly implausible.

Where related contracts contain different dispute-resolution provisions, the court must construe the agreements commercially and give effect to clear clauses. The possibility of fragmented proceedings does not justify disregarding an agreed arbitration clause. A party named, signing and given contractual functions under a multi-party contract may be bound by its arbitration clause, and procedural machinery should be construed to give effect to that intention.

Dreymoor challenged jurisdiction in two related arbitrations concerning allegations that it had bribed former employees of EuroChem Trading GmbH. The first challenge was under section 67 of the Arbitration Act 1996 to a partial final award in an LCIA arbitration. The second was an application under section 32 concerning an ICC arbitration.

The disputes arose from agency agreements, individual fertiliser sales contracts and third-party sales contracts. Dreymoor argued that the claims concerned the agency arrangements, that the relevant arbitration clauses were too narrow, and that it was not bound by the ICC clauses. The central issues were whether the disputes fell within the arbitration agreements and whether Dreymoor was a party to, and bound by, the third-party contracts’ arbitration clauses.

1. Disposition. The section 67 challenge failed and was dismissed. The section 32 claim failed. The ICC Tribunal had jurisdiction over the claims.
2. Under sections 67(1)(a) and 32(1) of the Arbitration Act 1996, the court may consider only substantive jurisdiction: whether there is a valid arbitration agreement, whether the tribunal was properly constituted, and what matters were submitted to arbitration. A section 67 challenge requires a full judicial determination on the evidence, rather than appellate review. The applicant is generally confined to objections raised before the tribunal.
3. The words “any dispute or claim arising out of this Contract” were sufficiently broad to include contractual and non-contractual claims concerning bribery which allegedly induced the relevant sales contracts. The court should adopt a liberal and generous construction and avoid narrow distinctions. The possible exception for claims which would have been wholly outlandish or unarguable did not apply.
4. The related agency agreements did not alter that conclusion. A commercially rational construction gave effect to the arbitration clauses in the individual sales contracts, even though this could produce some fragmentation. The parties could not sensibly be taken to have intended disputes to fall under neither an agreed arbitration clause nor a specified forum, leaving them to an unidentified court system. The “centre of gravity” of the bribery dispute was not necessarily in the agency agreements.
5. The Urea Agency Agreements’ clause also applied. Claims were capable of being claims “on” those agreements even though damages were particularised by reference to individual sales contracts.
6. Dreymoor was a party to the DAP Third Party Sales Contracts. It was named as an agent, signed the contracts and had express contractual functions. The wide arbitration clause therefore applied to disputes involving Dreymoor. The arbitrator-appointment machinery had to be construed so as to give effect to the parties’ intention that Dreymoor should be bound by the arbitration agreement.