Court Of Appeal Upholds GAFTA Jurisdiction Finding

Broda Agro Trade (Cyprus) ltd v Alfred C Toepfer International GmbH [2010] EWCA Civ 1100

Background

The background to this litigation arose out of a claim in GAFTA arbitration proceedings by Toepfer against Broda for alleged breach of a contract for the supply of milling wheat. Broda had initially argued that there was no validly concluded contract between Toepfer and themselves for the supply of milling wheat, so that they were not bound by the GAFTA arbitration clause in the alleged contract. The first tier GAFTA tribunal issued an Interim Award, concluding that there was a binding contract between Broda and Toepfer and that disputes thereunder were subject to GAFTA jurisdiction. Broda went on to participate in the arbitration proceedings in relation to Toepfer's claim for breach of contract and were found liable by the GAFTA tribunal in its Final Award on liability and ordered to pay damages.

In addition to appealing to the GAFTA Board of Appeal to set aside the Final Award on liability, Broda also sought relief from the Commercial Court under sections 72 and 67 of the Arbitration Act 1996. Section 72 allows a person to seek a declaration that an arbitral tribunal lacks jurisdiction but it can only be relied upon by a person who has taken no part in the arbitration proceedings. Section 67 allows a person to seek to set aside an arbitration award on the grounds of the tribunal's lack of jurisdiction but, pursuant to section 70(3) of the Arbitration Act 1996, an application under section 67 must be made within 28 days from the award and Broda were well out of that time-frame (by about 14 months) in making their application. They therefore sought an extension of time from the court under section 80(5) of the Arbitration Act 1996 to apply for relief under section 67.

Mr Justice Teare in the Commercial Court dismissed Broda's claims. He held that Broda had taken part in the arbitration proceedings and could not therefore seek relief under section 72. He also refused to exercise his discretion to grant Broda an extension of time to make their section 67 application. However, he granted Broda permission to appeal.

Court of Appeal decision

The Court of Appeal has dismissed Broda's appeal. Lord Justice Stanley Burton gave the leading judgment and his reasons for dismissing the appeal can be summarised as follows.

Application under section 72 of the Arbitration Act 1996

In the Commercial Court, the judge had held that Broda had taken no part in...