Disputes, disputed: The court’s approach to competing dispute resolution clauses in successive agreements

20 August 2020. Published by Parham Kouchikali, Partner

How are contradictory dispute resolution clauses resolved, where the agreements are entered into at different times? Intention and purpose is key, as set out in the test in BNP Paribas v Trattamento, where parties intended two agreements to perform separate roles as part of one transaction (even though the second is not contemplated at the time of the first).

The background facts 

On 31 January 2018, Albion agreed to sell a 20% interest in an oil firm to EIGL under a share purchase agreement (SPA) for $100m. EIGL paid the first two instalments but then made a claim and notified Albion that it intended to withhold the outstanding amount payable. Subsequently, EIGL agreed to pay $20m of the outstanding amount unconditionally, with the remaining $13.3m (Escrow Amount) to be held in escrow per an agreement dated 22 January 2019 (Escrow Agreement). 

The SPA contained a clause requiring the parties to submit to the exclusive jurisdiction of the courts of England and Wales. The Escrow Agreement, however, contained a jurisdiction clause stipulating that disputes must be settled by arbitration (Arbitration Agreement).

In the present claim, Albion issued proceedings for the Escrow Amount (the outstanding purchase price). EIGL applied for a stay under s.9 Arbitration Act 1996 (s.9)(1), stating that the dispute over the Escrow Amount arose out of the Escrow Agreement, which contained the Arbitration Agreement. If EIGL’s application succeeded, then Albion’s claim would be а matter for arbitration. Albion countered that the dispute arose out its entitlement to be paid under the SPA and therefore the Court had jurisdiction.

The approach to competing jurisdictional clauses

The Court has previously considered competing jurisdictional clauses in agreements entered into simultaneously (but to give effect to one overall transaction): BNP Paribas v Trattamento(2): (i) a jurisdiction clause in one contract was probably not intended to capture disputes more naturally seen as arising under a related contract(3); ii) a broad, purposive and commercially-minded approach is to be followed(4); (iii) the competing clauses should be interpreted in the light of the transaction as a whole(5); sensible businesspeople are unlikely to intend that similar claims should be the subject of inconsistent jurisdiction clauses(6); (v) competing clauses are to be interpreted on the basis that each deals with its own subject matter and they are not overlapping, provided the language and surrounding circumstances allow(7); and (vi) the language and surrounding circumstances may, however, make it clear that a dispute falls within both clauses (and the result may be that either clause can apply rather than one clause to the exclusion of the other(8)).

The present case involved competing clauses agreed in two separate contracts, spaced one year apart. The Court acknowledged that it would be possible to show that the second contract superseded the first, such that the parties intended it to displace the original for all purposes; in that case, bar some clear wording, it seems likely that the second contract’s jurisdictional clause would take precedence over the first(9).

 Here, the parties clearly contemplated that both agreements would subsist together and for different purposes, albeit that the Escrow Agreement was entered into a year following the SPA and was not anticipated at the time of the SPA. The Court therefore considered that the approach identified in Trattamento remains a helpful guide; applying this, it held that Albion’s claim did not fall within the Arbitration Agreement, and thus the application for a stay under s.9 by EIGL failed. This is because:

  •  There is nothing particularly surprising in parties stipulating different dispute resolution provisions in principal and security agreements, given the different purposes of those agreements. It was more likely that the Arbitration Agreement was intended to address the security and other ancillary obligations created by that agreement, rather than to displace (at least so far as the outstanding payment was concerned) the choice of jurisdiction under the SPA.
  •  The drafting of the Arbitration Agreement(10) suggested it was for obligations created by the Escrow Agreement (“this letter”) rather than disputes as to the interpretation or performance of the SPA. Moreover, payment into the Escrow Agreement was “without prejudice to [...] any other rights which Albion [...] may have under the SPA”
  • The Escrow Agreement concerned only 3 of the 6 parties to the SPA. The parties (as sensible businesspeople) likely intended the Arbitration Agreement to have a localised effect to avoid the position where claims between some of the parties to the SPA were subject to High Court jurisdiction, and other related claims under the SPA were subject to arbitration.


 This decision reminds us that care must, as ever, be taken in the drafting of jurisdictional clauses. In particular, parties must bear in mind that the Court will not adopt a blanket approach to jurisdiction but will, where appropriate, carve out disputes arising out of separate agreements into their respective jurisdictions even where disputes arise out of a later agreement not contemplated at the time of the first. The Court will look behind the intention of a later agreement and will determine whether the dispute is in relation to the second or the first. This is of particular importance where a party believes that a later arbitration agreement will supersede such that a dispute would be confidential: the present decision shows that is not necessarily the case.


 (1) S.9 allows a party to apply to stay the proceedings in favour of arbitration, and the Court is required to grant the stay unless “satisfied that the arbitration agreement is null and void, inoperative, or incapable of being performed” .

 (2) BNP Paribas v Trattamento Rifiuti Metropolitani SpA [2019] EWCA Civ 768.

 (3) Trust Risk Group at [48]; Dicey, Morris & Collins at § 12-110.

 (4) Trust Risk Group at [48]; Sebastian Holdings at [39] and [50].

 (5) UBS v Nordbank [2009] at [83]; Trust Risk Group at [47]; Sebastian Holdings at [40].

 (6) UBS v Nordbank at [84], [95]; Sebastian Holdings at [40]; Savona at [1].

 (7) Monde Petroleum at [35]-[36]; Savona at [1].

 (8) Savona at [4] and [31].

 (9) However, contrast this with the position in Satyam Computer Services Ltd v Upaid [2008] EWCA Civ 487 in which the Court held that claims under an underlying agreement that was preserved by a later settlement agreement did not “relate” to the settlement agreement and must therefore be subject to the underlying agreement’s jurisdictional clause.

 (10) In particular its reference to, “any dispute or difference […] arising out of or in connection with this letter (including any question regarding its existence, validity, interpretation, performance or termination)” [emphasis added].

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