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Procedural Posture
This document is a judgment of the English High Court of Justice (Commercial Court) concerning a challenge brought by the Claimant under Section 67 of the Arbitration Act 1996. The Claimant sought to set aside an interim arbitral award on jurisdiction rendered by a sole arbitrator, which had concluded that the tribunal lacked substantive jurisdiction over the dispute.
Factual Background and Principal Issues
The underlying arbitration arises from a Concession Agreement governed by English law, under which the Respondent State granted a concession to construct and operate a container terminal. The Claimant, a sub-contractor, initiated arbitration seeking compensation for alleged politically motivated interference and seizure of equipment, relying on third-party rights to enforce tax and property protections under Article 12.1.3 of the Concession Agreement. The principal legal issue before the Court (the "addendum issue") was whether Article 1.2.5(a) of a subsequent Addendum extinguished the Claimant's statutory entitlement to enforce the original agreement under Section 1(1)(b) of the Contracts (Rights of Third Parties) Act 1999.
Court's Analysis and Reasoning
Conducting a de novo rehearing of the jurisdictional question, the Court analyzed the competing contractual interpretations of the Addendum's saving provision. The Respondent argued that the provision excluded all third-party rights except those expressly granted under Section 1(1)(a) of the 1999 Act. The Claimant contended that the saving provision preserved rights arising under Section 1(1)(b).
The Court observed that interpreting the contract is an objective exercise. It found the Respondent's interpretation untenable, as it would render the saving provision entirely devoid of purpose and irrationally strip away third-party rights—including those of project financiers—that had been intentionally conferred only months prior. While acknowledging that both proposed interpretations presented textual difficulties, the Court concluded that the Claimant's construction was the more commercially rational outcome and the lesser of two evils.
Decision
The Court ruled in favor of the Claimant, holding that Article 1.2.5(a) of the Addendum did not vary the Concession Agreement in a manner that extinguished the Claimant's right to enforce Article 12.1.3. Accordingly, the Court determined that the arbitral tribunal possesses substantive jurisdiction over the dispute.
