In the recent case of Ganz v Petronz FZE and another [2024] EWHC 635 (Comm), the High Court upheld a tribunal’s decision to decline jurisdiction over a dispute, as the party challenging the award failed to prove the existence of an authentic and binding agreement to arbitrate.

The claimant argued that the respondent had agreed to buy shares in a company under a Share Purchase Agreement (SPA). The SPA provided for arbitration under the LCIA Rules. However, the arbitrator determined – in the context where a party to the SPA alleged its signature had been forged – that it had no jurisdiction on the available evidence to hear the substantive dispute. The claimant’s challenges under Section 67 (challenge to substantive jurisdiction) and Section 68 (serious irregularity causing substantial injustice) of the English Arbitration Act 1996 (the Act) both failed.

Section 67 Challenge

The High Court upheld the tribunal’s decision and found that the applicant failed to show that there was an authentic and binding SPA. The claimant relied on the Fiona Trust case (see our blog post here) arguing that even if the main contract was invalid, the arbitration agreement was valid as per the separability principle. While the Court acknowledged that principle, the claimant had failed to prove the existence of an authentic and binding agreement, including as to a valid arbitration agreement, in the face of allegations of forgery.

Section 68 Challenge

The claimant also challenged the award under section 68(2)(a) of the Act, i.e., on the basis the tribunal failed to comply with its general duty to act fairly and impartially between the parties or to adopt procedures suitable to the circumstances of the case under Section 33 of the Act. In support, the claimant argued that the arbitrator refused to permit the claimant to adduce evidence from a handwriting expert to determine the validity of the signatures in the SPA. However, the Court noted that the arbitrator had left open that question until receipt of the parties’ submissions, and the claimant had not made a further request at that stage although “there was clearly an opportunity for [the claimant] to make such proposals“. Based on this, the Court dismissed the challenge, noting that the claimant had the opportunity to pursue his application for expert evidence but failed to do so. Therefore, there was no breach of Section 33.

Comment

This decision confirms the common-sense position that an arbitration agreement contained in a document that has not been agreed between the relevant parties will not be enforced by tribunals or courts notwithstanding the “separability” principle (contrary to the position where the broader contract, or elements of it, may be invalid for reasons which do not affect the parties’ agreement to arbitrate disputes).

This decision also serves as a reminder that parties seeking to challenge an award for lack of procedural fairness need to show that they in fact took available steps in the arbitration to request the opportunity they allege to have been denied.

For more information, please contact Charlie Morgan, Partner, or your usual Herbert Smith Freehills contact.

Charlie Morgan
Charlie Morgan
Partner
+44 20 7466 2733
Maria Popova
Maria Popova
Associate
+44 2074663109