Petroleum Company of Trinidad and Tobago Ltd v Samsung Engineering Trinidad Co Ltd

INTRODUCTION

Pursuant to a Claim Form issued on 21 August 2017, the claimant (“Petrotrin”) seeks to set aside and/or vary the Partial Award dated 24 July 2017. That Award was issued in an arbitration brought by the defendant (“Samsung”) against Petrotrin for an extension of time, damages and sums due pursuant to the Onshore Agreement between the parties. Petrotrin’s challenge is brought pursuant to s.67 of the Arbitration Act 1996.

The Onshore Agreement was one of three written Agreements signed by Petrotrin on 15 December 2006 relating to the same works. There was also an Offshore Agreement (between Petrotrin and a different Samsung company, SECL) and a Linkage Agreement (signed by all three parties). All three Agreements related to the procurement, construction and commissioning of a CCR Platformer Complex and a new 66kV/12kV Substation at Petrotrin’s Pointe-a-Pierre refinery in Trinidad. It appears that the works were only split between the Onshore and the Offshore Agreements because that was tax efficient for Samsung and SECL. The purpose of the Linkage Agreement was to ensure that the splitting of the works in this way did not cause disadvantage to Petrotrin.

Samsung commenced the arbitration proceedings against Petrotrin under the Onshore Agreement. Petrotrin counterclaimed for liquidated damages. An issue arose as to whether their counterclaim for liquidated damages was the subject of a 10% cap based on the value of the Onshore Agreement, or whether the applicable cap was 10% of the total value of the Onshore and the Offshore Agreements, by reference to a provision in the Linkage Agreement. The Arbitral Tribunal decided that the operative cap was 10% of the value of the Onshore Agreement.

This finding is said to matter because the Tribunal found that Samsung was liable to Petrotrin for liquidated damages for a delay of 129 days. Applying the lower of the two caps, the Tribunal valued the counterclaim at US$9,337,009.60. If they had applied the higher cap, the sum awarded to Petrotrin would have been US$11,610, 000. Because of the application of the lower cap, Samsung was the overall winner in the arbitration, in the sum of US$1,115,482.39. If the higher figure for the cap had been taken, Petrotrin would have been the overall winner, in the sum of US$1,157,508.19.

I deal with the s.67 challenge in this way. In Section 2, I set out the relevant terms of the three Agreements. In Section 3, I address the Arbitral Tribunal’s Terms of Reference. In Section 4, I set out the parties’ pleadings and submissions in the arbitration. In Section 5, I set out the relevant terms of the Partial Award of 24 July 2017. Then at Section 6, I ask whether the challenge made by the claimant is a matter concerning the Tribunal’s “substantive jurisdiction” in accordance with s.67. At Section 7, on the assumption that the s.67 challenge was validly brought, I consider whether the Tribunal’s jurisdiction in respect of liquidated damages was limited to the lower cap in the Onshore Agreement. There is a short summary of my conclusions in Section 8. I am very grateful to leading counsel on both sides for their helpful written and oral submissions.

THE THREE AGREEMENTS

The Onshore Agreement

The contracting parties were Petrotrin and Samsung. Amongst the relevant definitions, ‘CONTRACT’ was defined as “the present instrument”; ‘CONTRACT PRICE’ was the price defined in Article 6.1 and any adjustments “in accordance with the “CONTRACT”; and ‘UNIT OF WORK’ was defined as meaning each of the CCR Platformer Complex and the Substation.

Article 3.1 of the Onshore Agreement identified the completion date for the CCR Platformer Complex as 5 November 2008, and the completion date for the Substation as 5 April 2008.

The relevant term as to liquidated damages was Article 3.6:

“(a)

CONTRACTOR acknowledges that a delay in completion of the WORK will cause damage to COMPANY, the amount of such damage being difficult to calculate with great precision. Therefore if any UNIT OF WORK has not achieved MECHANICAL COMPLETION on or before the relevant COMPLETION DATES, and may be extended pursuant to Article 3.5 CONTRACTOR shall pay COMPANY liquidated damages for each full calendar day of delay from 30 calendar days after the COMPLETION DATE until MECHANICAL COMPLETION in respect of each UNIT OF WORK is actually achieved, in the following per diem amounts:

UNIT OF WORK PER DIEM AMOUNT

CCR Platformer Complex US$ 90,000

New 66kV/12kV Substation US$ 15,000

(b)

Any such liquidated damages may be recovered by COMPANY against the irrevocable performance bank guarantee provided by CONTRACTOR in accordance with Article 7.4 hereof or by taking credit against payments otherwise due to CONTRACTOR, or by some other method mutually agreed.

(c)

In the event that CONTRACTOR does not attain the COMPLETION DATE set for each UNIT OF WORK then as the remedy for late completion COMPANY shall recover liquidated damages from CONTRACTOR at the applicable per diem amounts for each day until completion is attained as evidenced by MECHANICAL COMPLETION for each UNIT OF WORK, up to a maximum liability of ten percent (10%) of the CONTRACT PRICE.”

Article 33 set out the provisions relating to dispute resolution in the following terms:

“33.1

The Parties shall use their best efforts to settle amicably any dispute, controversy or claim arising out of related to the CONTRACT, or the breach, termination or invalidity of the said CONTRACT.

33.2

Any dispute, controversy or claim arising out of or related to the CONTRACT, or the breach, termination or invalidity of the said CONTRACT that cannot be settled amicably between the Parties shall be referred to mediation.

33.3

The mediator shall be appointed and approved by both Parties. The costs of mediation shall be borne by both Parties equally or as determined by the said mediator except that each Party will be responsible for its own expenses. The mediator shall determine the structure of the mediation process. Any opinion expressed by the mediator will be strictly advisory and will not be binding on the Parties. Any disputes not otherwise settled shall be referred to arbitration.

33.4

Disputes resolved by arbitration shall be binding and each Party irrevocably waives any right to trial by jury with respect to any such dispute. Arbitration shall be conducted in New York, USA in accordance with the rules of the International Chamber of Commerce.”

The Offshore Agreement

The contracting parties were Petrotrin and SECL. Article 3.1 of the Offshore Agreement contained precisely the same completion dates as set out in paragraph 7 above. Article 3.6, relating to liquidated damages, was also in the same terms as the equivalent clause in the Onshore Agreement; so too was the Article dealing with mediation and arbitration.

The Linkage Agreement

The relevant terms of the Linkage Agreement provided as follows:

“1.

Notwithstanding the dual contract approach to the Contracts, the operations of both the Onshore Contractor and the Offshore Contractor must be closely integrated for ensuring the success of the Complete Works. It is understood and agreed that if any aspect of the Complete Works has been omitted and is not clearly described as a result of the creation of the dual contract system, the Offshore Contractor shall assume responsibility for that portion of the Complete Works that is affected.

2.

That the dual contract approach shall not result in any additional cost to PETROTRIN nor result in any scheduling changes. It is understood and agreed that the cost and schedule for the Complete Works shall be strictly maintained in spite of implementation under the Contracts. It is understood and agreed that all additional responsibilities and liabilities with respect to PETROTRIN, the Offshore Contractor and the Onshore Contractor contained in either the Offshore Contract or the Onshore Contract shall be construed as if it were one agreement for the Complete Works instead of dual agreements.

3.

That any errors, omissions, negligence, or delays in performance by either the Onshore Contractor or Offshore Contractor shall be mutually attributable and shall not constitute grounds for schedule or price relief under the Onshore Contract or Offshore Contract.

4.

The Parties’ Rights And Obligations Under The Contracts

4.1

That notwithstanding the separation of the Onshore Contract and the Offshore Contract, it is recognized and agreed, for the purpose of determining the respective obligations and entitlement of PETROTRIN and Contractors that, the Onshore Contract and Offshore Contract shall be administered and interpreted as though they were one and notices received or issued under the Offshore Contract shall be valid under the Onshore Contract.

4.2

Where one or both of the Contractors is required to perform the same obligations under one or both of the Contracts and the performance of that obligation by any one Contractor under one Contract is capable of being the performance of that obligation under the other Contact, then the performance of that obligation by that Contractor in accordance with the relevant Contract shall mean that the other Contractor shall not have to perform the same obligation under the other Contact.

4.3

Where PETROTRIN is required to perform the same obligation under both Contacts and the performance of that obligation under one Contract is capable of being the performance of that obligation under the other Contract, then the performance of that obligation by PETROTRIN under one Contract shall mean that PETROTRIN shall not have to perform the same obligation under the other Contract.

5.

Liquidated Damages

5.1

Each Contractor shall be liable to pay liquidated damages under Article 3.6(a) of its respective Contract, provided that, if one of Contractors has paid liquidated damages in accordance with Article 3.6(a) of its respective Contract, the other Contractor, notwithstanding Article 3.6(a) of the other Contract, shall not be liable to pay the same liquidated damages in accordance with Article 3.6(a) of that Contract.

5.2

The maximum liquidated damages under each Contract and this Agreement shall be an amount equal to ten percent (10%) of the Total Agreement Amount.

5.3

For the purposes of this Clauses 5 and 6, ‘Total Agreement Amount’ shall mean the aggregate of the Contract Price payable under the Onshore Contract and the Contract Price payable under the Offshore Contract as each may be adjusted from time to time in accordance with the terms of the Contracts.

…

10.

The Parties agree that if there is any dispute as to the interpretation of this Agreement, the Onshore Contract and/or the Offshore Contract, this Agreement shall take precedence over such Contracts.

11.

This Agreement shall be governed by and construed in accordance with the laws of England and Wales. Any dispute or controversies pertaining to this Agreement or any breach thereof, which cannot be settled by amicable discussion by the Parties shall be finally submitted and settled by arbitration in New York, USA in accordance with the Rules of the International Chamber of Commerce.”

THE TERMS OF REFERENCE

In common with all ICC arbitrations, there were agreed Terms of Reference, signed by the parties and the Arbitral Tribunal. (Footnote: ¹) This was produced following Samsung’s Request for Arbitration and Petrotrin’s Answer, and included passages drafted by the parties themselves.

The Request for Arbitration is undated. It made it clear that Samsung was seeking arbitration pursuant to Article 33.4 of the Onshore Agreement (paragraph 3). Paragraph 6 of the Request referred to all three Agreements, and paragraph 7 then expressly stated that the Request for Arbitration was made pursuant to the Onshore Agreement only.

Petrotrin’s Answer was dated 13 August 2014. Much of it was concerned with a complaint that, contrary to Article 33, mediation had not taken place. There was no challenge to or debate about Samsung’s Request having being made under the Onshore Agreement only. Moreover, Petrotrin’s counterclaim was described in the following terms:

“If and insofar as the Request is valid (which is denied), the Respondent will counterclaim inter alia for damages for the Claimant’s failure to complete the Works by the Completion Date and also damages for any identified defects in the Works.”

‘The Claimant’ was of course a reference to Samsung, who were party to the Onshore Agreement. ‘The Completion Date’ was a term defined in the Onshore Agreement. There was no reference to SECL, or to the Offshore Agreement or to the Linkage Agreement.

The Terms of Reference were drafted by the Tribunal and then amended by the parties before being signed off. They expressly identified the relevant arbitration agreement between the parties as being the one in Article 33 of the Onshore Agreement. No other arbitration agreement was identified.

In the section of the Terms of Reference summarising the various claims and the relief sought (paragraphs 13-16), the Terms of Reference stated that “the dispute the subject of this arbitration has arisen under a contract… (the Onshore Agreement)…” (paragraph 13). At paragraph 14, the Terms said: “The following summaries of the claims of the Parties, and of the relief sought by each Party, are not intended to be exhaustive but are intended to satisfy the requirements of Article 23(1) of the ICC Rules and are subject to Article 23(4). The parties’ respective cases will be set out in appropriate detail in such pleadings or memorials as may be provided for by agreement of the parties or by order of the Arbitral Tribunal.”

The Terms of Reference went on to summarise Samsung’s claim in the arbitration (paragraph 15) and Petrotrin’s response (paragraph 16). At the end of that paragraph, in a passage added by Petrotrin, the Terms of Reference stated:

“In so far as may be relevant [Petrotrin] reserves the right to contend that it is entitled to rely upon the provisions of the Linkage Agreement made between the Claimant, the Respondent and [SECL] on 15 December 2006 and/or the Offshore Agreement made between the Respondent and [SECL] on 15 December 2006.”

No other information was given as to what this reservation of position might go to, or how or why either of the other Agreements might be relevant.

THE PARTIES’ PLEADINGS

Samsung’s Statement of Case set out its claim for an extension of time and damages by reference to the Onshore Agreement only. Petrotrin’s Statement of Case and Counterclaim defended that claim and brought a counterclaim for liquidated damages. Again, there was no reference in that pleading to either the Offshore Agreement or the Linkage Agreement. On the contrary, paragraph 15.1 of the counterclaim referred to “a cap at 10% of the Contract Price”. The Contract Price was a defined term in the Onshore Agreement. It was not a term set out in the Linkage Agreement, which instead referred to “the Total Agreement Amount”.

Samsung’s Reply and Defence to Counterclaim (“RADTCC”) expressly set out the operation of the cap on liquidated damages by reference to the value of the Onshore Contract. In Petrotrin’s Reply to Defence to Counterclaim (“RTDTCC”), at paragraph 94, Petrotrin asserted that it was “untenable” for Samsung to assert that the claim for liquidated damages was capped at 10% of the Onshore Agreement Contract Price, alleging that that was “incorrect and obviously so in light of the express wording of the Linkage Agreement at Article 5.2”. There was no suggestion of any claim under the Linkage Agreement, and there is no reference at all to the Offshore Agreement. I return to this important pleading at various paragraphs below.

THE PARTIAL AWARD

The relevant part of the Partial Award with which this application is concerned is section 18. That sets out the cap at Article 3.6(c) of the Onshore Agreement. At paragraph 18.6, the Partial Award refers to Petrotrin’s argument that the cap was at a higher amount, “being 10% of the aggregate price payable under both the Onshore and the Offshore Contracts.” The Partial Award at paragraphs 18.7-18.10 then records some of the Articles of the Linkage Agreement, set out above, on which the claimant relied.

Paragraphs 18.11 and 18.12 of the Partial Award set out the parties’ respective cases on the cap. For reasons which will become apparent below, it is appropriate to set out those summaries in full:

“The Claimant’s case on the cap

18.11

The Claimant deals with this issue in its Reply and Defence to Counterclaim at paragraphs 188-192, in Section 13 of its Closing Submissions, and in Section 13 of its Responsive Closing Submissions. It argues that the provisions of Article 5.2-5.3 of the Linkage Agreement can be effective only where a claim is made for liquidated damages and is referred to arbitration in respect of both Contracts, between the parties to both Contracts, and under the Linkage Agreement between the parties to the Linkage Agreement. However the present dispute and this arbitration arise only under the provisions of the Onshore Agreement, and concern only the parties to the Onshore Agreement. The provisions of the Onshore Agreement apply exclusively. Hence, the limit on the liquidated damages is defined in Article 3.6(c) of the Onshore Contract, and is 10% of the Contract Price of that Onshore Agreement. Petrotrin construes Article 5.2 of the Linkage Agreement in a manner which contradicts the provisions of both the Onshore and Offshore Contracts instead of in a manner which is consistent with them.

The Respondent’s case on the cap

18.12

Petrotrin deals with the cap on liquidated damages In its Counterclaim at paragraph 15.1, in its Reply to Defence to Counterclaim at paragraph 94, and in its Closing Submissions at Section 13. It says that, given the way in which the agreements were set up, it should not be a matter of surprise that there is a contradiction to be resolved by reliance on Article 10 of the Linkage Agreement. It characterizes the Claimant’s argument as relying only on a jurisdictional point, namely, that the matter referred to arbitration by the Claimant is purportedly brought pursuant to the Onshore Contract alone. However, Petrotrin has validly brought its counterclaim under all three agreements: Onshore, Offshore and Linkage: see paragraph 16 of the Terms of Reference, paragraph 2.1 of the Respondent’s Statement of Case and Counterclaim and paragraph 94 of the Reply to the Defence to Counterclaim. Moreover, even if Petrotrin were jurisdictionally confined to a counterclaim under the Onshore Contract, Articles 2 and 3 of the Linkage Agreement require the Tribunal to treat the Onshore and Offshore Contracts as a single contract, and the Linkage Agreement at Article 5.2 overrides and amends the cap. As to practicalities, the Respondent observes that the On and Offshore Contracts both have the same Mechanical Completion date and in reality the counterclaim spans both the On and Offshore Contracts in that the work which was late was carried out under both Contracts.”

The Tribunal’s decision on the cap was set out at paragraphs 18.13-18.18 of the Partial Award in the following terms:

“The Tribunal’s decision on the cap

18.13

The Tribunal’s understanding of the Claimant’s position differs from the Respondent’s submission. The Tribunal understands the Claimant to rely on both a construction argument and a jurisdiction argument.

18.14

As regards jurisdiction, while it is right to say that in paragraph 16 of the Terms of Reference the Respondent reserved the right to contend that it was entitled to rely upon provisions of the Linkage Agreement, in paragraph 17 of the Terms of Reference the relevant Arbitration Agreement was identified as being contained in Article 33 of the Onshore Agreement. This reflects paragraph 3 of the Request for Arbitration which states:

Although there is a network of inert-related [sic, means ‘inter related’] agreements which have a bearing on the disputes which the Claimant required to be referred to arbitration under the International Chamber of Commerce (ICC) Rules for Arbitration, 2012 edition, this Request for Arbitration is made pursuant to Article 33.4 of the On-shore Agreement … …

18.15

Moreover, paragraph 2.1 of the Respondent’s Statement of Case and Counterclaim and paragraph 94 of the Reply to the Defence to Counterclaim do not show that Petrotrin has brought its counterclaim under any agreement other than the Onshore Agreement.

18.16

In the Tribunal’s view it is plain that its jurisdiction in the present arbitration arises from Article 33.4 of the Onshore Agreement, and is limited thereby. Accordingly it is the provisions of the Onshore Agreement that govern the position.

18.17

As regards the question of construction, we accept the Claimant’s submission that a construction which interprets the three agreements as consistent with one another is to be preferred to a construction which regards them as being in conflict. The conflict relied on by the Respondent, which the Respondent resolves by reliance on the precedence of the
Linkage Agreement over the other two Contracts, only arises from reading clause 5.2 of the Linkage Agreement in the way that the Respondent proposes. Clause 5.2 does not in our view require to be read as being in conflict with clause 3.6(c) of the Onshore Agreement; it can be read as a long-stop limit for the aggregate of liquidated damages under all three agreements, which sits above the lower cap applicable under a single agreement. We acknowledge the Respondent’s argument that as a matter of practicality it could never apply, but, even if that were so, this would not change our view, since there is nothing unusual in provisions being inserted in contracts out of an abundance of caution.

18.18

Accordingly, we determine that the cap on liquidated damages is 10% of the Contract Price under the Onshore Contract.”

IS THIS A CHALLENGE CONCERNING THE TRIBUNAL’S “SUBSTANTIVE JURISDICTION”?

Section 67 of the Arbitration Act 1996 (“the 1996 Act”) is in the following terms:

“67.

- Challenging the award: substantive jurisdiction.

(1)

A party to arbitral proceedings may (upon notice to the other parties and to the tribunal) apply to the court—

(a)

challenging any award of the arbitral tribunal as to its substantive jurisdiction; or

(b)

for an order declaring an award made by the tribunal on the merits to be of no effect, in whole or in part, because the tribunal did not have substantive jurisdiction.

A party may lose the right to object (see section 73) and the right to apply is subject to the restrictions in section 70(2) and (3).

(2)

The arbitral tribunal may continue the arbitral proceedings and make a further award while an application to the court under this section is pending in relation to an award as to jurisdiction.

(3)

On an application under this section challenging an award of the arbitral tribunal as to its substantive jurisdiction, the court may by order—

(a)

confirm the award,

(b)

vary the award, or

(c)

set aside the award in whole or in part.

(4)

The leave of the court is required for any appeal from a decision of the court under this section.”

This follows on from sections 30 and 31 of the 1996 Act which are concerned with matters of substantive jurisdiction, such as whether there is a valid arbitration agreement, whether the tribunal is properly constituted, and what matters have been submitted to arbitration in accordance with the arbitration agreement.

I am not persuaded that the issue now raised by Petrotrin is a matter of substantive jurisdiction. The point raised by this challenge does not go to whether there is a valid arbitration agreement or whether the Arbitral Tribunal was properly constituted. Nor is there any dispute that the particular matter with which this challenge is concerned, namely the counterclaim for liquidated damages, was properly submitted to arbitration and fell within the Tribunal’s jurisdiction.

All that happened was that the Tribunal found that the relevant cap on liquidated damages was 10% of the Contract Price of the Onshore Agreement, and not 10% of the Total Agreement Amount. They did so on the basis of a mixture of construction points, findings of fact, and a consideration of one argument about their jurisdiction. The dispute as to which cap was the appropriate one was agreed by both parties to be in issue before the Tribunal and the Tribunal dealt with it accordingly. Neither party can therefore complain that the Tribunal dealt with it. Petrotrin may complain about the Tribunal’s answer to the question, but that is an entirely different matter.

Looked at in the round, therefore, I find it impossible to say that the Tribunal’s decision about the applicable cap was a matter that went to their substantive jurisdiction. The fact that the claimant made (or intimated that it might make) applications under section 57 of the 1996 Act (correcting an error) and section 68 (serious irregularity) in connection with the dispute about the appropriate cap only confirms my view that Petrotrin’s essential complaint is about the result, and it has been uncomfortably shoehorned into a jurisdictional challenge when, on a proper analysis, it is no such thing.

Another way of approaching the question as to whether the debate about the applicable cap is a matter of substantive jurisdiction is to look at how the point was dealt with in the arbitration itself. At paragraph 18.17 of the Partial Award, the Tribunal found that the lower cap applied on the basis of the true construction of the Onshore Agreement and the Linkage Agreement. The Tribunal found, contrary to Petrotrin’s submissions, that they had no freestanding right to claim under Article 5.2 of the Linkage Agreement. Of course, the Tribunal’s rejection of Petrotrin’s case as a matter of construction is a finding which cannot be interfered with on this application. That, therefore, is the end of the challenge.

What is more, Mr Acton Davis demonstrated to my satisfaction that the question of which cap was applicable was always regarded, by both parties, as primarily a point of construction. This can be seen from the following:

Accordingly, I find that the question of which cap was applicable was (and was treated by the parties as) primarily a question of construction. The Tribunal decided that question of construction against Petrotrin. That result cannot be impeached by this challenge.

Mr Diwan made two attempts to get round this difficulty. First, he said that paragraph 18.17 of the Partial Award (the paragraph that deals with construction) was linked to, or could somehow only be read together with, the earlier finding on jurisdiction. I disagree. There is nothing in paragraph 18.17 that makes that connection; indeed, it is quite clear that the Tribunal was dealing separately with the arguments of construction and jurisdiction. That is clear from paragraph 18.13 of the Partial Award. I agree with Mr Acton Davis that a feature of Petrotrin’s application under s.67 has been to elide construction and jurisdiction in precisely the same way as they did in the arbitration, which attracted the Tribunal’s comment at paragraph 18.13 of the Partial Award.

Secondly, in his reply, Mr Diwan suggested that, even if paragraph 18.17 was right, it did not necessarily preclude Petrotrin from making a claim for the Total Agreement Amount. But that is a different point which ignores how the construction argument was put by Petrotrin during the arbitration. Petrotrin argued that, as a matter of construction, the cap was not the lower of the two potential caps. The Tribunal rejected that submission. What the claimant might hypothetically have done about any other claims they might have had under other contracts is irrelevant to that question of construction.

Although it follows from the foregoing that I reject the s.67 application on the basis that it is not a substantive challenge to the Tribunal’s jurisdiction, it is appropriate for me to go on and deal with the jurisdictional issue, in case I am wrong and the application does raise a proper challenge to the Tribunal’s substantive jurisdiction.

WAS THE TRIBUNAL’S JURISDICTION IN RESPECT OF LIQUIDATED DAMAGES LIMITED TO THE CAP IN THE ONSHORE AGREEMENT?

Summary

For a variety of reasons, set out below, I am in no doubt that the Tribunal’s jurisdiction in respect of liquidated damages was limited to the cap in the Onshore Agreement. I should note at the outset that the first and only time that the jurisdiction point was raised at all by Petrotrin in the arbitration was at paragraph 13.15 of their written closing submissions, and even there they persisted in calling it a “matter of construction”.

The Terms of Reference

I have set out the Terms of Reference in paragraphs 12-17 above, which were agreed by both parties and the Arbitral Tribunal. They make clear that the disputes in this case arose under the Onshore Agreement only, and no other Agreement. Although paragraph 14 of the Terms of Reference indicated that the claims of the parties were summarised in the Terms of Reference, and were not intended to be exhaustive, it may be an open question as to whether the jurisdiction of the Tribunal was intended to be extended in any significant way by further pleadings. However, it is Petrotrin’s case that it was, and for present purposes I am prepared to assume that, as a matter of construction of the Terms of Reference, that submission is right. The next question is whether jurisdiction was so extended.

Petrotrin’s counterclaim at paragraph 15.1 (paragraph 18 above) was, on any view, a counterclaim brought under the Onshore Agreement only. The only pleaded reference to the party responsible for the delay was to “Samsung”, the defendant in these proceedings and the party to the Onshore Agreement. There was no reference to SECL, the party to the Offshore Agreement. The reference to the “Contract Price” is also a reference to the Onshore Agreement; if it had been a reference to the larger of the two caps it would have been to “the Total Agreement Amount”, as defined in the Linkage Agreement.

Mr Ali’s witness statement makes that last point graphically, by referring to the 10% of the Contract Price and then asking himself, rather forlornly, “(under the Linkage Agreement?)” The answer to Mr Ali’s question was plainly No; ‘the Contract Price’ is not a phrase used in the Linkage Agreement. Unsurprisingly, therefore, Mr Diwan accepted in the course of his submissions that the original counterclaim was made only under the Onshore Agreement. However, he said that Petrotrin’s RTDTCC fundamentally changed the nature of the counterclaim because of its reference to Article 5.2.

I reject that submission. As I have indicated at paragraph 19 above, all the RTDTCC did was to argue, as a matter of construction, that the liquidated damages were capped at 10% of the Total Agreement Amount. The pleading did not suggest that this was anything other than a point of construction. There was no indication that this argument went to, let alone extended, the Tribunal’s jurisdiction. It was not suggested that the Terms of Reference needed to be amended or even clarified. Most important of all, it was not suggested that Petrotrin’s counterclaim arose under anything other than the Onshore Agreement.

Accordingly, I find that the Tribunal’s Terms of Reference, which were based on the disputes arising under the Onshore Agreement only, did not vary and were not subsequently extended. Neither party sought to amend or extend those Terms of Reference, either expressly or by implication. On that basis, the Tribunal had no jurisdiction to consider any claims arising under any other Agreement.

The Absence of Any Other Claims

The Tribunal found at paragraph 18.15 of the Partial Award that the pleadings “do not show that Petrotrin has brought its counterclaim under any agreement other than the Onshore Agreement.” That is a finding of fact. It cannot be reviewed on this s.67 application.

But in any event, I confirm that this finding of fact was palpably correct. It was common ground that there had never been at any time a claim under the Offshore Agreement. I have found at paragraphs 29(b) and (c) above that the references to the Linkage Agreement in the RTDTCC were expressly designed to assist Petrotrin’s argument as to construction. They did not amount to the making of a separate claim under the Linkage Agreement.

What is more, confirmation of this can be found in the RTDTCC itself. At paragraph 14 of that pleading, when dealing with the Linkage Agreement, the claimant said:

“The effects of clause 4.1 inter alia for the purposes of Article 10 of the ICC rules of arbitration, is that in the event of Petrotrin having to issue a Request for Arbitration against SECL, all of the claims in that arbitration will be made under the same arbitration agreement as the instant arbitration. Further and in the alternative if (it is denied) the claims in the arbitrations are made under more than one arbitration agreement, the arbitrations are between the same parties, the disputes in the arbitrations arise in connection with the same legal relationship and the arbitration agreements compatible. Such arbitrations will be consolidated.” (Emphasis supplied)

That passage is important for two reasons. First, it makes plain that Petrotrin had not issued a Request for Arbitration against SECL: what is set out are the consequences if that ever happened. It never did. Secondly, the paragraph demonstrates that, in Petrotrin’s view, there would have been few, if any, practical difficulties if a Request for Arbitration had been made under the Offshore Agreement and the claims against Samsung and SECL were dealt with together. I agree with that. I cannot speculate as to why this course was not taken.

Accordingly, as to jurisdiction:

The Construction of Article 33

A part of Mr Diwan’s submissions relied on the general principles relating to the desirability of avoiding multiple arbitrations between the same parties on related disputes (Footnote: ²). He relied on the summary of those principles by Sue Carr J in C v D1 and Others [2015] EWHC 2126 (Comm) at paragraph 104:

“104.

Drawing this line of authorities together, the following relevant principles can be derived:

a)

the exercise of determining whether a dispute falls within an arbitration clause is one of interpretation requiring a careful and commercially-minded construction. It is a question of determining objectively the intention of the parties as revealed by the agreement or agreements;

b)

in construing an arbitration clause, a broad and purposive construction should be followed;

c)

in general, parties to an arbitration agreement do not intend that disputes under that agreement should be determined by different tribunals (“the Fiona Trust presumption”). This presumption may apply where there are multiple related agreements between the parties. If there are inconsistent arbitration agreements, it may be necessary to identify where the centre of gravity lies and which agreement lies at the commercial centre of the transaction (or is closer to the claim), or under which series of agreements the dispute essentially arises. It is the arbitration agreement in that agreement that will cover all issues. Fragmentation may of course occur if, on its true construction, the clear wording and inherent scheme leads to that conclusion;

d)

the Fiona Trust presumption may not apply where there are two or more agreements with separate and distinct arbitration clauses addressing parallel but different aspects of the overall continuing relationship between the parties. A dispute rising under one contract would not be intended to be caught by an arbitration clause in another contract. But I do not accept C's broader submission that the Fiona Trust presumption does not apply where the overall contractual arrangements between two parties contain two or more differently expressed choices of jurisdiction in respect of different agreements. The position is more subtle, as a proper reading of AmTrust reveals; and

e)

where there is an agreement subsequently entered into by the parties for the purpose of terminating the commercial relationship created by an earlier agreement, the Fiona Trust presumption may apply with particular potency.”

In similar vein, there are the transactional set-off cases, such as Norscot Rig Management PVT Ltd v Essar Oilfields Services Ltd [2010] EWHC 195 (Comm), where Burton J held that, if there was a sufficient connection between a claim under an earlier contract and a dispute under a later one for the former to amount to a defence of transaction set-off, then it was likely, if not inevitable, that it was caught by an arbitration clause covering disputes “relating to” the contract. But, on the face of it, that principle does require the same parties; ordinarily, A cannot set off as a defence to a claim made by B under a transaction between A and B, a claim which A has against C under a completely different transaction.

In most of these cases, the essential argument is whether the Tribunal could consider a claim or cross-claim which arose under a different (but potentially related) commercial agreement to that under which the original arbitration had commenced. The usual answer to that question is in the affirmative. Accordingly, as Mr Acton Davis acknowledged, if (for example) Petrotrin had issued a Request for Arbitration against SECL under the Offshore Agreement and/or sought to have two arbitrations consolidated, in an attempt to trigger the larger cap on liquidated damages identified in the Linkage Agreement, it might have been difficult to say that they were not entitled to do so.

But that simply did not happen. In contrast to the reported cases, where the issue was whether or not two claims or cross-claims between the same two parties under two different contracts could be dealt with in the same arbitration proceedings, that situation never arose here. As noted above, Petrotrin never at any time indicated a possible claim under the Offshore Agreement. In my view, that was the least that was required, particularly given that (unlike the reported cases) SECL was a separate company to Samsung. There being no such claim (or any intimation of a claim) as a matter of fact, the question of whether, theoretically, the arbitration clause in the Onshore Agreement would have been wide enough to cover both claims is redundant.

In essence, Petrotrin’s case now is that, notwithstanding the Terms of Reference and its repeated references to the Onshore Agreement as the only basis of the claim and cross-claim; notwithstanding the absence of any claim or intimated claim for liquidated damages under either of the other Agreements; and notwithstanding the fact that Samsung and SECL were separate companies, the fact that the Linkage Agreement had been referred to generally in the fourth and final pleading, coupled with the Fiona Trust principles, was enough to give the Tribunal the necessary jurisdiction to reach a decision on the cap that was outside the Onshore Agreement. For the reasons that I have given, I reject that case. There is no authority which comes close to supporting such a submission.

I make one final point. Throughout Mr Diwan’s submissions, there were complaints that some of the points raised by Samsung were new, and were raised now in contravention of s.73 of the 1996 Act (the loss of the right to object). I reject that submission unequivocally: the points taken were either the same as or a refinement of the arguments made by Samsung in the arbitration. Any confusion has arisen from Petrotrin’s failure to take the so-called jurisdictional point in the arbitration until well beyond the eleventh hour; their decision to run a completely new case at the hearing before me, coupled with their reluctance to allow Samsung a proper opportunity to respond to it; and the fact that, as set out in Section 6 above, this was not a challenge to substantive jurisdiction at all.

CONCLUSIONS

For the reasons set out in Section 6 above, I do not consider that this application properly arises under s.67 of the Arbitration Act 1996. The primary issue between the parties was not one relating to the Tribunal’s substantive jurisdiction. It was and remains primarily a dispute of construction. In those circumstances, the s.67 application must fail.

If I am wrong about that, for the reasons set out in Section 7 above, I conclude that the Tribunal was right to decide that, in the alternative to the construction argument, its jurisdiction in respect of liquidated damages was limited to the cap in the Onshore Contract. That was the effect of their Terms of Reference and the pleadings; and that was the consequence of there being – as a matter of fact - no claim or intimated claim under either the Offshore Agreement or the Linkage Agreement.

Accordingly, this application is refused. I will deal with all consequential matters at the handing down of this Judgment.