Destin Trading Inc v Saipem SA

The case of Destin Trading Inc v SAIPEM SA [2025] EWHC 668 (Ch) concerns an application for a stay under section 9 of the Arbitration Act (the Act), by Saipem SA on the basis that certain parts of the particulars of claim ought to be stayed in the High Court as they fell within the scope of the Arbitration Agreement

The judgment, delivered by Andrew Lenon KC, addresses whether an exclusive jurisdiction clause contained in a settlement agreement could override an earlier arbitration agreement. The primary legal issues in the matter are competing dispute resolution clauses and which dispute resolution clause should take effect.

What happened

Destin Trading Inc and Saipem SA were engaged in a longstanding partnership where the companies jointly delivered services to clients in the oil and gas industries in Africa. In September and October 2012, they concluded three frame agremenets concerning portions of these projects. Each of the said frame agreements provided that the parties were bound to Saipem’s General Terms and Conditions for Agreement Documents (GTC) and these incorporated ICC arbitration clauses. A dispute arose in respect of amounts which were alleged to be owed by Destin, which were related to a project referred to as the Congo River Crossing Project (Congo Frame Agreement).

On 5 November 2013, the parties entered into the settlement agreement which terminated the frame agreements. the settlement agreement also provided for the courts of England and Wales to have exclusive jurisdiction to settle any dispute arising out of or in connection with the settlement agreement.

On 17 July 2024, Destin filed its particulars of claim and contended that the settlement agreement had been entered into as a result of a fraudulent or negligent misrepresentations by Saipem. Destin further contended that as a result the settlement agreement should be rescinded and it should be allowed to pursue its claim under the Congo Frame Agreement and argued that it would have been entitled to the sum of US $7,006,003.66 (or approximately £5,372,743.39 at the date hereof).

Saipem disagreed and sought an application for a stay pursuant to section 9 (1) of the Act. Saipem submitted that certain parts of the particulars of claim (monetary claims) ought to be stayed in the High Court as the monetary claims arose out of or in connection with the frame agreements, and as such fell within the scope of the arbitration agreements.

Arguments by the parties 

Saipem’s arguments

Saipem further contended that the clause in the settlement agreement referring the matter to the courts of England and Wales was inapplicable as it contended that the clause could not survive the recission of the agreement. In addition, Saipem argued that “in connection with this agreement” in the settlement agreement only referred to the settlement agreement and could not be binding on the agreement documents. Saipem relied on the cases of Deutsche Bank AG v Sebastian Holdings Inc [2010] EWCA Civ 998, [2011] 2 All ER (Comm) 245, AmTrust Europe Ltd v Trust Risk Group SpA [2015] EWCA Civ 437 and BNP Paribas SA v Trattamento Rifuti Metropolitani SpA, [2019] EWCA Civ 768 to substantiate its position that where there are competing jurisdictional clauses, there are to be interpreted to deal exclusively with its own subject matter.

Sapiem further submitted that the dispute resolution clauses in the frame agreements survived the termination of the frame agreements as a result of the incorporation by its general terms and conditions and by virtue of section 7 of the Act. Saipem further argued that experienced commercial parties in the position of the parties would have intended that technical and detailed aspects concerning the frame agreements would be submitted to arbitration due to confidentiality and the requirement for technical expertise.

Saipem submitted that the construction and language of the dispute resolution clause would determine whether a dispute resolution clause in a settlement agreement would supersede a prior dispute resolution clause. Saipem submitted that although one stop adjudication was presumed, this presumption could be rebutted where the overall contractual arrangements contain two or more different jurisdictions in different agreements.

Saipem further argued that the monetary claims did not concern the settlement agreement but rather the monetary claims depended on the position of the parties under the frame agreements and as such the said monetary claims were within the scope of the arbitration agreement. Saipem in support of its contention relied on the dicta of Lord Hodge in Mozambique v Privinvest [2023] UKSC 32 and Lord Leggatt in Unicredit Bank GmbH v RusChemAlliance LLC [2024] UKSC which confirmed that the interpretation and construction of the dispute resolution clause had to be viewed in light of the construction of the language used by the parties. He also examined Mozambique (supra) for the two stage process to determine whether the matter should be sent to arbitration. He submitted that Court should consider:

1. what were the matters which have been or will be raised in the court proceedings, and
2. whether those matters fall under the scope of any arbitration agreement.

Saipem contended that the monetary claims are all matters which were connected to or arising out of the frame agreements and thus the arbitration agreements would be applicable to the said matters.

Destin’s arguments

Destin in response to the application, contended that the monetary claims fell within the exclusive jurisdiction clause of the settlement agreement, as the claims were for damages in deceit arising out of the representations made by Saipem to induce it into entering into the settlement agreement. It further contended that the monetary claims would fall under the ambit of the exclusive jurisdiction of the courts of England and Wales. Destin further submitted that the settlement agreement superseded the arbitration agreements in the frame agreements as the settlement agreement had been entered into, subsequent to the arbitration agreement.

Destin relied on the authority of Monde Petroleum v Westernzagros Limited [2015] 1 Lloyd’s Rep 330, which confirmed that where an agreement contains a new and competing dispute resolution clause to the prior agreement, the clause should be construed in light of the fact that the parties were more likely than not intended that the specific clause should supersede the clause in the earlier agreement and apply to all disputes arising out of any agreement. The case of Monde (supra) was supported by the presumption in favour of one-stop adjudication which was established in Fiona Trust & Holdings v Privalov [2007] UKHL 40.

Destin’s position was also supported by the case of C v D1, D2, D3 [2015] EWHC 2126 (Comm) where the Court noted that there is a strong presumption that parties to a contract which contained a dispute resolution clause intended all disputes arising out of the contract to be resolved in the forum designated by the dispute resolution clause. As a result, Destin submitted that the clause in the settlement agreement was the applicable dispute resolution clause.

In addition, Destin submitted that by virtue of the language in the settlement agreement terminating the frame agreements, it illustrated that the parties intended to be bound by the settlement agreement alone.

Court’s decision

The court dismissed the application by Saipem, concluding that the monetary claims were within the scope of the dispute resolution clause of the settlement agreement. The following observations are relevant:

• The presumption in favour of one-stop adjudication under Fiona Trust is reinforced by the parties entering into a Settlement Agreement which contain a dispute resolution clause. By entering into the settlement agreement, it was inferred that the parties intended to be bound by the dispute resolution clause in the settlement agreement, and this would supersede the dispute resolution clause in the frame agreements.
• The clause in the settlement agreement which was expressed as having exclusive jurisdiction would exclude arbitration. It was noted that the prior contractual arrangements would fall under the ambit of the clause as the widest scope was created when the clause stated “any dispute” would be settled in the courts of England and Wales.
• By binding itself to the settlement agreement, Saipem could not rely on the frame agreements as the settlement agreement had expressly terminated the frame agreements and the dispute resolution clause did not survive the termination.
• The commercial rationale for including the exclusive jurisdiction clause in a relationship-ending agreement was to ensure that there was not a fragmented dispute resolution process.
• The monetary claims were within the scope of the settlement agreement, and the arbitration agreements were inoperative for the purposes of section 9 (4) of the Act. 

Conclusion 

The judgment is significant as it confirmed the principle that where a dispute resolution clause is in a subsequent settlement agreement, it is presumed that it will supersede an earlier and inconsistent dispute resolution clause. This affirms the principle in Monde (supra). It solidifies the importance of proper drafting of clauses for agreements. Due to the construction of the settlement agreement, it was capable of complete ouster of the arbitration clause.

From a practical standpoint, one must ensure that when drafting any agreement, one should verify that the choice of dispute resolution is consistent with any other agreement which was in existence. This requires that every document is meticulously scrutinised and assessed before any drafting is done, and before the documents are sent to clients for execution.