| ARBITRATION — Jurisdiction — Owners seeking court declaration as to validity of rescission of charterparties for bribery — Charterers seeking determination of issue by arbitrator pursuant to arbitration clause — Whether arbitration clause impeached by allegations of bribery— Arbitration Act 1996, s 7
Fili Shipping Co Ltd v Premium Nafta Products Ltd (on appeal from Fiona Trust and Holding Corpn v Privalov) [2007] UKHL 40
HL(E): Lord Hoffmann, Lord Hope of Craighead, Lord Scott of Foscote, Lord Walker of Gestingthorpe and Lord Brown of Eaton-under-Heywood: 17 October 2007
A dispute as to whether a charterparty contract could be rescinded for alleged bribery came within the scope of an agreement in the charterparty to submit to arbitration any dispute arising under the contract.
The House of Lords so held in dismissing an appeal by the owners, Fili Shipping Co Ltd and seven other shipowners, against the decision of the Court of Appeal (Tuckey, Arden and Longmore LJJ) [2007] Bus LR 686 whereby, in proceedings brought by Fiona Trust and Holding Corpn and 28 other claimants, including the owners, claiming damages for conspiracy, bribery and breach of fiduciary duty against 22 defendant individuals and companies, in which the owners had sought a declaration that they had validly rescinded charterparties entered into with the twentieth to twenty-second defendants (“the charterers”) as having been procured by bribery, whereupon the charterers had sought a determination of that issue under an arbitration clause in each of the charters, the Court of Appeal had reversed the decision of Morison J restraining the arbitration proceedings.
LORD HOFFMANN said that the owners had argued that the arbitration clause did not apply for two reasons. The first was that, as a matter of construction, the question of whether the charters were procured by bribery was not a dispute arising under the charter. The second was that the arbitration clause was liable to be rescinded and therefore not binding on them. On the first question, the time had come to draw a line under the previous authorities, where distinctions had sometimes been drawn between disputes “arising under” and “arising out of” an agreement, with the former having a narrower meaning. In his Lordship’s opinion, construction of an arbitration clause should start from the assumption that the parties, as rational businessmen, were likely to have intended any dispute arising out of the relationship into which they had entered or purported to enter to be decided by the same tribunal unless the language made it clear that certain questions were intended to be excluded from the arbitration. The language of the relevant clause of each charter contained nothing to exclude disputes about the validity of a contract on the ground that it was procured by fraud. As to the owners’ claim that if they were right about the bribery, they were entitled to rescind the whole contract, including the arbitration clause, the principle of separability in s 7 of the 1996 Act required that an arbitration agreement could be void or voidable only on grounds relating directly to that agreement. There were no grounds of challenge specific to the arbitration agreement so as to invalidate it. The claim that the main contract had been induced by bribery thus fell to be determined under the arbitration agreement.
LORD HOPE delivered a concurring opinion and LORD SCOTT, LORD WALKER and LORD BROWN agreed.
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