PEC Ltd v Asia Golden Rice Company Ltd
2014
COMMERCIAL COURT
United Kingdom
CORAM
- MR JUSTICE ANDREW SMITH
Areas of Law
- Alternative dispute resolution
- Conflict of Laws
- Contract Law
- Commercial Law
- Civil Procedure
2014
COMMERCIAL COURT
United Kingdom
CORAM
AI Generated Summary
The High Court (Mr Justice Andrew Smith) heard PEC Limiteds section 67 Arbitration Act challenge to GAFTA tribunal jurisdiction arising from an alleged rice purchase with Asia Golden Rice Company Limited. AGR said Pawan Jain of PJS orally committed PEC on 15 May 2008 to buy 25,000mt and the contract was confirmed in writing on 16 May 2008, signed by PECs Chief General Manager, Ravi Kumar, and calling for London as per GAFTA 125 arbitration. PEC denied Jain or Kumar had authority. After reviewing PECs Articles, delegation Schedule, committee practices, and prior AGR/PEC dealings through PJS, the court found Ravi Kumar lacked actual or implied authority; COM/Board did not approve; and PECs conduct did not represent that Jain had apparent authority to conclude or to communicate acceptance of the contract. Applying English law to apparent authority, the court held PEC did not enter any arbitration agreement; the section 67 challenge succeeded.
Judgment
Mr Justice Andrew Smith:
This is an application under section 67 of the Arbitration Act 1996, the central issue being whether the claimants, PEC Limited (“PEC”), entered into an arbitration agreement in relation to a contract to buy rice. Asia Golden Rice Company Limited (“AGR”) contend (i) that on 15 May 2008 a Mr Pawan Jain of Pawan Jain & Sons (“PJS”) made an oral agreement committing PEC to buy 25,000 mt of rice from them and that the contract included an arbitration agreement, and (ii) the contract was confirmed by a written agreement dated 16 May 2008 that provided for arbitration “London as per GAFTA 125” and that was signed by a Mr Ravi Kumar, then Chief General Manager (“CGM”) at PEC, and sent by email to AGR by Mr Jain. PEC’s case is that neither Mr Jain nor Mr Kumar had authority to enter into the contract to buy the rice (the “Purchase Agreement”), and therefore they deny that they are party to any arbitration agreement.
The question whether the parties concluded an arbitration agreement is distinct from the question whether they concluded the Purchase Agreement: see Lord Hoffmann in Fiona Trust & Holding Corp and ors v Privalov and ors , [2007] UKHL 40 at para 17. But AGR do not argue that PEC and AGR concluded a discrete arbitration agreement if neither Mr Jain nor Mr Kumar had PEC’s (actual or apparent) authority to make the Purchase Agreement (and so no Purchase Agreement was made by PEC): they considered that this argument was precluded by an order of Hamblen J made on 12 October 2012 that the jurisdiction question be decided “by reference to all the issues relating to the conclusion and terms of the alleged contract”, and so they accepted that “the questions whether there was a binding matrix contract and whether there was an arbitration agreement stand or fall together”. They maintain (i) that Mr Jain had apparent authority (or PJS had apparent authority: it makes no different whether the arguments are considered on the basis that Mr Jain personally or PJS had apparent authority and for convenience I shall refer simply to Mr Jain in this judgment) to conclude the oral Purchase Agreement on PEC’s behalf; (ii) that Mr Ravi Kumar had their actual authority to conclude the Purchase Agreement in writing; and (iii) that Mr Jain had apparent authority to communicate PEC’s acceptance of the written Purchase Agreement. AGR expressly conceded that they cannot present a claim on the basis that Mr Ravi Kumar had any relevant apparent a