SEA2011 Inc v ICT Ltd

Factual and Procedural Background

This claim concerns a jurisdictional challenge under section 67 of the Arbitration Act 1996 related to an arbitration initiated by the Defendant against the Plaintiff pursuant to an arbitration agreement in a Sales Agency Agreement dated 28 January 2011. The arbitration was commenced by the Defendant through a Notice of Arbitration dated 20 April 2016. The Arbitrator issued two partial awards on 29 June 2017 rejecting the jurisdictional challenges, which are now under review in this court.

The Plaintiff challenges the Arbitrator's jurisdiction on three grounds: first, that the Defendant was not a party to the Sales Agency Agreement as the named company did not exist at the time of the agreement; second, that the Plaintiff itself was not a party to the agreement as it was a different legal entity from the named Principal; and third, that the Arbitrator was precluded from considering an implied contract argument not raised in the original Notice of Arbitration.

The Sales Agency Agreement involved a UK company (initially named IN Ltd, later ICT Ltd) as Agent and a Canadian company as Principal. The Defendant is a UK company incorporated initially as IN Ltd and renamed ICT Ltd after the agreement date. The Plaintiff was incorporated later and took over distribution business from the original Principal company.

Following the arbitration, the Plaintiff issued court proceedings challenging the Arbitrator's jurisdiction. The hearing in this court was a rehearing of the jurisdiction issues with witness evidence and legal submissions.

Legal Issues Presented

1. Whether the Defendant was a party to the Sales Agency Agreement despite the company name discrepancy at the time of signing.
2. Whether the Plaintiff, a different legal entity from the named Principal, is bound by the Sales Agency Agreement or an implied contract on the same terms.
3. Whether the Arbitrator had jurisdiction to consider an implied contract argument not expressly raised in the Notice of Arbitration.

Arguments of the Parties

Plaintiff's Arguments

• The Defendant was not a party to the Sales Agency Agreement because the company named ICT Ltd did not exist at the time; only IN Ltd existed, and the agreement specifically named ICT Ltd as a UK incorporated company.
• The doctrine of misnomer could not apply to correct the name to IN Ltd as this would produce commercial absurdity and potential criminal offences due to failure to display the correct registered name.
• The Plaintiff was not a party to the Sales Agency Agreement as the named Principal was a different legal entity incorporated earlier; the Plaintiff was incorporated later and did not sign the agreement.
• The Arbitrator could not consider an implied contract argument as it was not raised in the Notice of Arbitration, which relied on an assignment theory now abandoned.
• Implied contracts require clear conduct showing consent to the arbitration clause; here, the Plaintiff submitted there was no such conduct.

Defendant's Arguments

• The Defendant contended that the name discrepancy was a clear mistake and could be corrected by construction to reflect that IN Ltd was trading as ICT, the intended contracting party.
• The Defendant argued that the Plaintiff had impliedly agreed to be bound by the Sales Agency Agreement terms through conduct, continuing the agency relationship seamlessly after incorporation.
• The Defendant maintained that the implied contract argument was properly included within the scope of the Notice of Arbitration despite the abandonment of the assignment argument.
• The Defendant relied on established principles that arbitration clauses are ancillary and form part of any implied contract continuing the parties' relationship.

Table of Precedents Cited

Court's Reasoning and Analysis

The court carefully examined the three jurisdictional challenges.

Regarding the first challenge, the court found a clear mistake in the company name in the Sales Agency Agreement, as no UK company named ICT Ltd existed at the time. The company IN Ltd, which later changed its name to ICT Ltd, was the intended contracting party trading under the name "ICT". The court applied established principles of contract interpretation and correction by construction, considering the commercial context, background knowledge, and the parties' conduct. The correction involved substituting "ICT Ltd" with "IN Ltd trading as ICT" and amending references to incorporation and registered office accordingly. The presence of a separate Isle of Man company named ICT Ltd was deemed legally irrelevant as it was unknown to the Plaintiff and did not fit the contract context.

On the second challenge, the court concluded that the Plaintiff, though not named in the original agreement, had impliedly agreed to be bound by the Sales Agency Agreement terms through conduct after incorporation. The parties' continued dealings, references to the agreement, and consistent commercial relationship supported the inference of an implied contract including the arbitration clause. The court rejected the Plaintiff's argument that no specific conduct referred to the arbitration clause, highlighting that such clauses are ancillary and incorporated by implication in ongoing contractual relations.

For the third challenge, the court found that the implied contract argument was properly within the scope of the Notice of Arbitration despite the abandonment of the assignment argument. The court reasoned that the parties implicitly agreed to widen the scope of the arbitration reference, and the Notice's language, read in context, encompassed the implied contract claim. The court emphasized that arbitrators' jurisdiction is confined by the reference but can be extended by implied agreement and ordinary principles of construction.

Overall, the court dismissed all jurisdictional challenges, upholding the Arbitrator's awards and jurisdiction.

Holding and Implications

The court's final decision is to DISMISS the Plaintiff's challenge and UPHOLD the Arbitrator's awards confirming jurisdiction.

The direct effect is that the arbitration proceedings may continue on the basis that the Defendant is a party to the Sales Agency Agreement (corrected by construction), the Plaintiff is bound by an implied contract containing the arbitration clause, and the Arbitrator had jurisdiction to consider all relevant claims. No new legal precedent is established beyond the application of settled principles to the facts of this case.