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STOCKMAN INTERHOLD SA V ARRICANO REAL ESTATE PLC

Lloyd's Law Reporter

STOCKMAN INTERHOLD SA V ARRICANO REAL ESTATE PLC

[2017] EWHC 2909 (Comm), Queen's Bench Division, Commercial Court, Christopher Hancock QC, 30 November 2017

Arbitration - Award set aside and remitted to arbitrator - Jurisdiction of arbitrator under a remitted arbitration - Jurisdiction to take account of facts arising after issue of first award - Jurisdiction of arbitrator - Whether agreement to extend jurisdiction - Waiver - Whether later award obtained by fraud - Serious irregularity - Arbitration Act 1996, sections, 67, 68 and 71

In 2009 and 2010 Stockman and Arricano entered into a series of agreements in respect of investments in various shopping centre projects in Ukraine, including the Sky Mall project. Under a Shareholders' Agreement, which provided for arbitration of disputes under the rules of the London Court of International Arbitration, the shares in Assofit, a joint venture, were owned 50.3 per cent by Stockman and 49.97 per cent by Arricano. By a separate Call Option Agreement, Arricano was granted an option to require Stockman to sell the shares within the period 15 March 2010 up to 15 March 2011 inclusive at a price to be calculated by reference to an agreed formula. By a separate Escrow Agreement an escrow agent was appointed to hold relevant documents. In May 2010 Arricano allowed a third party, DUPD, to acquire a stake in Arricano, with part of the proceeds to be used to fund the exercise of the call option in respect of StockmanÂ’s shares. On 5 November 2010 Arricano purported to exercise the call option. Stockman responded that Arricano had breached the Shareholders' Agreement by allowing control of Assofit to pass to DUPD, and commenced LCIA arbitration. The LCIA award was issued on 13 December 2011, the arbitrator ruling that the call option had not been validly exercised by reason of breaches of conditions in the escrow agreement. The award was successfully challenged by an application under section 68(2)(d) of the Arbitration Act 1996 on the ground that the arbitrator had not dealt with all of the issues put to him, namely, Arricano's contention that its breach of the Escrow Agreement could not have removed Stockman's liability under the Call Option Agreement because the two contracts were distinct. Field J remitted the award to the arbitrator in the following terms:

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