Case: CAFI v. GTCS Trading DMCC [2025] EWHC 1350 (Comm)
Guest: Derek Yixin, Associate at Floyd Zadkovich
This week, Luke Zadkovich and Calum Cheyne explore overlapping arbitration agreements and thorny jurisdictional issues, as they are joined by Derek Yixin (Floyd Zadkovich LLP), to discuss the High Court decision in CAFI v. GTCS Trading DMCC [2025] EWHC 1350 (Comm).The background to this case arises out of a series of GAFTA arbitrations. The Claimant, CAFI (“Buyer”), and the Defendant, GTCS (“Seller”), entered into an agreement for the sale of 28,000 MT of Russian wheat to be delivered from Russia to Egypt (“First Contract”). As a result of sanctions-related issues, the Buyer refused to issue payment while the cargo was enroute. The Seller treated this as an anticipatory breach and terminated the First Contract.Following negotiations, the Parties entered into a second contract on materially similar terms, but at a lower price (“Second Contract”). The Second Contract contained a termination clause which stated that the First Contact was “terminated and void”. After delivery of the cargo, the Seller initiated claims under GAFTA arbitration seeking damages for the Buyer’s alleged breach of the First Contract. The Buyer argued that the termination clause in the Second Contract amounted to a waiver of the Seller’s right to claim damages under the First Contract.The First Tier Tribunal dismissed the Seller’s claims on the basis that by accepting the termination provision, the Seller indicated an intention to ‘waive’ its claim for damages. Importantly, the Tribunal held that it had no jurisdiction to consider the effect or validity of the Second Contract as it fell outside the scope of the arbitration agreement under the First Contract. The Seller successfully appealed to the Appeal Board which accepted the Seller’s claims and awarded USD 700,000 plus interest and costs. In doing so, the Appeal Board agreed with the First Tier Tribunal that it had no jurisdiction to interpret the terms of the Second Contract but that notwithstanding this, it remained ‘good evidence’ of what had happened post-termination.In the High Court, the Appeal Board’s award was challenged under sections 67, 68 and 69 of the Arbitration Act 1996. In what is reported to be the first judgment of its kind, Mr Justice Henshaw accepted all three grounds of challenge under the Arbitration Act and set aside the Appeal Board’s award.In this episode, Luke, Calum and Derek delve into the thorny question of what happens where there are overlapping arbitration agreements. In doing so, the trio consider the practical challenges that arise out of potentially competing (or inconsistent) arbitral awards.
