Luxury Superyacht Arbitration Relaunched Following Rare Section 45 Application To The English Court

In a recent decision, Goodwood Investments Holdings Inc. v Thyssenkrupp Industrial Solutions AG [2018] EWHC 1056 (Comm), the English court has considered a section 45 request for a ruling on a preliminary point of law. Requests of this nature are permissible under the Arbitration Act 1996, but are comparatively rare in practice. This was arguably a textbook example of a preliminary issue properly put before a court: did the parties' without prejudice correspondence - which the arbitrators should not review in any event - constitute a binding settlement agreement?

Context - potential settlement in "without prejudice save as to costs" correspondence

Goodwood Investment Holdings Inc. (the "Purchaser") and Thyssenkrupp Industrial Solutions AG (the "Builder") were in dispute regarding the workmanship on a luxury superyacht and certain Builder's warranties. The Purchaser commenced arbitration, seeking (i) declaratory relief and (ii) specific performance or, in the alternative, damages. A 5 week arbitration hearing was fixed.

The parties exchanged various without prejudice communications. The Purchaser's position was that a binding settlement had been reached. The Builder disagreed.

Section 45 application to the English court

The parties agreed to refer this issue to the court, but could not agree on the precise formulation of the issue to be determined. The Tribunal, therefore, formulated the issue and gave permission to approach the court under section 45(2)(b). The Purchaser then raised two further questions for the court's consideration, with which the Builder agreed. Notwithstanding the parties' agreement, the judge embarked on an independent assessment of whether he had jurisdiction to determine them and whether it would be appropriate to do so. He concluded that he had the necessary jurisdiction and that it was appropriate to proceed, since the reference to the court should finally dispose of the issue.

The court's analysis: no settlement

After setting out extracts of the relevant correspondence (while attempting to preserve the confidential nature - see below), the judge summarised the legal principles, which were uncontested between the parties.

On the facts, he found that the parties had not concluded a binding settlement. Instead of finding an instance of offer and acceptance, the judge held that the correspondence constituted various offers and counteroffers, with the introduction of additional and new terms, and "subject to" language...