A1 & Ors v P

On a challenge under section 67 of the Arbitration Act 1996, the court determines jurisdiction afresh. An arbitral award has no automatic legal or evidential weight, although the court may be persuaded by reasoning it finds convincing.

A solicitor’s usual authority to act for a client does not ordinarily extend to binding the client directly to a contract with a third-party service provider, particularly one providing for a contingent share of recoveries. Ratification requires knowledge that the agent purported to bind the principal and unequivocal conduct adopting that act. A party loses a jurisdictional objection under section 73 where it could have discovered the objection by reasonable diligence.

P challenged an LCIA arbitration award under section 67 of the Arbitration Act 1996. The tribunal had held A1, A2 and A3 jointly and severally liable under an agreement under which P supplied intelligence-gathering services to support disputes concerning a port project.

The agreement was signed by P and C, a US law firm acting for parties connected with the project. A1 and A3 argued that C lacked authority to bind them to the agreement or its arbitration clause. A2 raised a separate objection based on a Country 1 legal requirement for a special mandate, but had not challenged jurisdiction in the arbitration. The issues were whether A1 and A3 were parties, whether A3 had ratified the agreement, and whether A2 had lost its right to object.

1. De novo review. A section 67 challenge required the court to determine the jurisdictional issue afresh. The tribunal’s award had no automatic legal or evidential weight, although its reasoning could be accepted where persuasive, following Dallah Real Estate and Tourism Holding Co v Ministry of Religious Affairs of the Government of Pakistan [2011] 1 AC 763 and Republic of Korea v Dayyani [2019] EWHC 3580 (Comm).
2. A1 and A3. The court rejected the proposition that solicitors ordinarily have usual actual or ostensible authority to bind clients directly to contracts with third-party service providers. The recognised authority of solicitors to compromise litigation did not extend to this type of agreement. Nor did A1’s authorisation of C to engage P for a separate project amount to a representation that C could bind A1 or A3 to the agreement in issue. A1 and A3 were therefore not parties to the agreement or its arbitration clause.
3. Ratification. A3’s participation in meetings, use of P’s work and involvement in preparing a witness statement did not unequivocally adopt C’s purported act. Those matters were equally consistent with C having engaged P as principal. The agreement’s confused wording also did not establish that C had purported to bind A3, or identify which entities were encompassed by Client.
4. A2. A2’s objection was barred by section 73(1) of the Arbitration Act 1996. A substantial company with legal resources, whose articles had been amended to address arbitration authority, could with reasonable diligence have discovered the objection. The commencement of arbitration was a natural trigger for investigation. Uncertainty in Country 1 case law, and the possible prospects of ratification, did not prevent the objection from being raised.
5. A1 and A3’s challenges succeeded. A2’s challenge was precluded. The award stood in relation to A2 and was to be set aside or varied to that extent. The appropriate disposal was left for further submissions.

First-instance jurisdiction challenge to an LCIA arbitration award. No prior judicial decision is stated in the judgment.