LOON ENERGY INC V INTEGRA MINING

[2007] EWHC 1876 (Comm), Queen’s Bench Division, Commercial Court, Mr Justice Langley, 31 July 2007

Arbitration – Series of agreements between the parties governed by English law relating to participation in oil exploration rights – Confidentiality agreement between the parties governed by Texas law and subject to arbitration  – Claimant seeking declarations that defendants had no interest in the rights – Defendants commencing arbitration in Texas under the Confidentiality Agreement – Whether declarations sought in England fell within the scope of the Confidentiality Agreement – Stay of proceedings – Arbitration Act 1996, section 9

The parties entered into a series of agreements, governed by English law, under which they initially agreed to act as joint bidders for mineral exploitation rights and then subsequently agreed to undo those agreements. There was also a separate Confidentiality Agreement, subject to arbitration in Texas. The claimants sought declaratory relief in England, asserting that the English law agreements were at an end and that the second defendant no longer had rights under them. The claimants also sought general declaratory relief to the effect that the second defendant had no rights whatsoever under the agreements. The defendants subsequently commenced arbitration in Texas under the Confidentiality Agreement: if successful, the second defendant would obtain mineral exploration rights. The claimants accordingly amended their application for a declaration that the Confidentiality Agreement had also been superseded. The Court held that: (1) the application for a declaration in respect of the Confidentiality Agreement was a matter falling within the scope of the arbitration clause and the action to that extent had to be stayed; (2) there was a “dispute” for the purposes of section 9 if the parties had not reached agreement on a matter, and it could not be said that there was no dispute under the Settlement Agreement just because it had not been raised at the time of the commencement of the English proceedings; (3) a general declaration could not be granted because the defendants might be able to establish claims outside the English agreements.