Broda Agro Trade (Cyprus) Ltd v Alfred C Toepfer International GmbH: Herbert Smith comment | Practical Law

Broda Agro Trade (Cyprus) Ltd v Alfred C Toepfer International GmbH: Herbert Smith comment | Practical Law

Ruth Byrne and Joanne Greenaway, Herbert Smith LLP

Broda Agro Trade (Cyprus) Ltd v Alfred C Toepfer International GmbH: Herbert Smith comment

Published on 03 Nov 2010England, Wales
Ruth Byrne and Joanne Greenaway, Herbert Smith LLP
In Broda Agro Trade (Cyprus) Ltd v Alfred C Toepfer International GmbH [2010] EWCA Civ 1100, the Court of Appeal confirmed that section 72 of the Arbitration Act 1996 is not restricted to arbitral proceedings concerning the substantive jurisdiction of the arbitrators. Section 72 entitles a person "who takes no part in [arbitral] proceedings" to challenge the tribunal's jurisdiction by proceedings in court.
This case has attracted comment because it raised a question of interpretation in respect of section 72 of the Arbitration Act 1996 (1996 Act) which, in the words of Lord Justice Stanley Burton, had "surprisingly…not been the subject of previous authority". Under section 72, a person alleged to be a party to an arbitration who takes no part in the proceedings may, amongst other things, question whether there is a valid arbitration agreement before the courts. The appellant in this instance sought to argue that while a party who participated in the jurisdictional phase of an arbitration would undoubtedly lose its rights under section 72, the same was not true of a party who did not participate in the jurisdictional phase but who subsequently took part in the merits phase.
While it is surprising that this argument has not been attempted in the past, it is not surprising that the Court of Appeal was unconvinced by it. In its view, the appellant's argument involved an implied restriction of the words "takes no part in the proceedings" for which there was no basis either in pre-existing case law or the DAC Report.
Moreover, the Court's decision is in keeping with the principle of kompetenz-kompetenz as adopted in the 1996 Act. Although not relied upon by the Court here, its previous decision in Fiona Trust & Holding Corp v Yuri Privalov & Ors [2007] EWCA Civ 20 (see Legal update, Bribery and arbitration agreements: new Court of Appeal guidance) is pertinent in this regard. In that instance, taking into account the regime of the 1996 Act as set out in sections 30 to 32 in particular (whereby it is for the tribunal primarily to determine its jurisdiction), the Court held that it should be "very cautious" about allowing parties to utilise its process under section 72 to question whether there is a valid arbitration agreement.