Key takeaways
Unilateral arbitration agreement
Can be binding so long as in writing or recorded in writing.
One-stop shop presumption
Parties presumed to intend all their disputes to be resolved in one forum.
Separability of arbitration agreement
Arbitration provision is independent of underlying contract.
A & others -v- E [2026] EWHC 2590 (BP)
The Court has dismissed an argument that a unilateral agreement to arbitrate contained in a deed was invalid and unenforceable.
In doing so, the Court made clear that what constitutes a valid and binding arbitration agreement under the Arbitration Act 1996 (1996 Act) is a binding obligation, recorded in writing, to refer a dispute to arbitration. Such agreements under the 1996 Act were not limited to bilateral contracts. Nor did they have to be signed.
The background facts
The claimants (respondents in the arbitration) are members of Family F and resident in Country G.
The defendant (claimant in the arbitration) is the parent company of a substantial private group of companies owned by Family F, either directly or through corporate entities. The companies in the Group operated in various sectors, including shipping, energy, travel, investments, real estate and oil and gas.
Although individual family members were listed as directors or shareholders of record of individual operating companies of the Group, the defendant contended that they held those positions on behalf of the Group and as nominees for the defendant.
With the exception of the fourth claimant, the claimants were also nominee shareholders for various subsidiaries established by the defendant in Country G (Country G Entities). The defendant contended that the claimants held their shares in the Country G Entities on trust for the defendant.
The nominee arrangement was expressly confirmed in a deed dated 21 June 2021 (Deed) as well as documents pre-dating the Deed. The Deed was signed by the claimants.
The Deed was governed by English law. Clause 4 provided among other things that each claimant
‘agrees to settle any dispute or claim arising in relation to this Deed, any questions relating to its exitance [2ic], validity or termination, shall be referred to and finally resolved by arbitration, London Court of International Arbitration, which rules are deemed to be incorporated by reference to this clause.’
Disputes arose. Among other things, the claimants denied the existence of the nominee arrangement and contended they were the true beneficial owners of the Country G Entities. There was also an issue regarding significant withdrawals made by the first claimant, A, prior to the Deed, from the Country G Entities. The withdrawals were used for A’s personal purposes. In addition, since July 2022, the claimants were paying themselves salaries through the Country G Entities.
The arbitration proceedings
The defendant commenced LCIA arbitration. Pursuant to the Tribunal’s Award, the defendant obtained wide ranging relief from the claimants, including declarations, injunctions and orders for accounts.
The claimants had unsuccessfully sought to challenge the LCIA Tribunal’s jurisdiction in the arbitration. They argued that:
Clause 4 of the Deed conferred on the defendant a unilateral right to refer disputes arising from the Deed to arbitration and was not, therefore, a valid arbitration agreement because it lacked mutuality as part of a wider bilateral agreement.
The Deed was subject to conditions precedent that had not been met. Therefore, both the Deed and the arbitration agreement in clause 4 were unenforceable.
The claimants also contended that even if the Tribunal had jurisdiction, it had exceeded its jurisdiction in two ways:
Under clause 4, the Tribunal did not have jurisdiction to determine matters pre-dating the Deed and could not, therefore, determine matters relating to the nominee arrangement before then.
Clause 4 did not confer jurisdiction to determine matters relating to the withdrawal of moneys from and payment of salaries by the Country G Entities belonging to the defendant Group.
The Tribunal rejected these arguments. It found as follows:
The Deed was legally binding and enforceable. It incorporated a valid arbitration agreement for the purposes of the 1996 Act and complied with the only formality requirement, namely that it be in writing pursuant to ss.5 and 6(1) of the 1996 Act. The lack of a wider bilateral agreement was irrelevant.
There were no conditions precedent in the Deed. Even if there were, the arbitration agreement was separable and enforceable.
The Deed expressly confirmed that the nominee arrangement existed before the Deed and the Tribunal had jurisdiction to determine whether that confirmation was true and whether the claimants were bound by it.
Applying the one-stop shop presumption, the arbitration agreement was intended to apply to all disputes between the parties arising out of the underlying agreement, including the withdrawals and payments of salaries.
The claimants appealed under s.68 of the 1996 Act, alleging lack of jurisdiction.
They also appealed under s.67, alleging serious irregularity in the Tribunal’s definition of the Country G Entities in their Award, which they said was too broad. The defendant disagreed but was prepared to only pursue enforcement against the Country G Entities as per the agreed definition.
The Commercial Court decision
Existence of arbitration agreement
The Court recognised that an agreement to arbitrate could be unilateral. It was also well established that an arbitration agreement was independent of and separable from the underlying agreement.
Therefore, clause 4 of the Deed was a valid unilateral agreement to arbitrate under the 1996 Act and it was immaterial that the underlying agreement was a deed. In any event, there were contemporaneous exchanges between the parties in writing that comprised a request for the Deed and its subsequent delivery, as well as an agreement to arbitration, which were recorded or evidenced by the Deed.
The word ‘agreement’ in ss.5 and 6(1) of the 1996 Act had a broad meaning that was wider than a bilateral contract. It indicated consent to be bound, which could include agreements to be bound that were enforceable by deed. This was consistent with the purpose and objective of the 1996 Act, which was to uphold the parties’ arbitration agreements.
The Court found that, on the evidence, the Deed was unconditional. The Court further held that the Tribunal had not decided matters pre-existing the Deed. Rather, it had looked at pre-Deed material to determine its evidentiary weight but had limited its declaration to the effect of the Deed.
The Court also agreed with the Tribunal that the parties should be presumed to have intended all their disputes to be decided in one forum.
Finally, the Court dismissed the contention that the definition of the Country G Entities was too wide. There was, therefore, no serious irregularity on the part of the Tribunal in using that definition.
Therefore, both the s.67 and s.68 challenges were dismissed.
Comment
The decision highlights the Court’s view that agreements to arbitrate must be kept and that those who enter into them will be bound by them.
Interestingly, the unilateral arbitration clause in this case was in favour of the claimants, who sought to challenge it. Normally, it is the other party that will seek to challenge a one-sided arbitration provision.
Find out more about our International Arbitration expertise or contact us today to discuss how we can support you.
