Cottonex Anstalt v Patriot Spinning Mills Ltd

Cottonex Anstalt v Patriot Spinning Mills Ltd

The contract only incorporated the ICA Arbitration Bylaws relating to arbitration procedure, not the substantive ICA Rules including the invoicing back provisions. The arbitral tribunal erred in law by failing to construe the incorporating clause in the contract and instead relying on the ICA Bylaws themselves. There was no ambiguity in the contract's wording to justify a broader interpretation or invocation of business common sense.

Parties
Claimant: Cottonex Anstalt; Defendant: Patriot Spinning Mills Ltd
Jurisdiction
England and Wales
Judgment Date
14 February 2014
Procedural Posture
Arbitration Appeal / Judgment on Appeal From Arbitral Award
Outcome
Appeal allowed
Legal Topics
Contract Construction, Incorporation of Terms, Arbitration Procedure, Invoicing Back Clauses
Commercial Law Arbitration Contract Construction Incorporation of Terms Arbitration Procedure Invoicing Back Clauses

Case Brief

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Parties

Cottonex Anstalt

Claimant

Patriot Spinning Mills Ltd

Defendant

Procedural Posture

Arbitration Appeal / Judgment on Appeal From Arbitral Award

Legal Issues

  1. 1 Whether the arbitration clause in the contract incorporated the ICA Rules relating to contract closure and invoicing back (Rules 225 and 226)
  2. 2 Whether the arbitral tribunal erred in law in its construction of the contract

Ratio Decidendi

The contract only incorporated the ICA Arbitration Bylaws relating to arbitration procedure, not the substantive ICA Rules including the invoicing back provisions. The arbitral tribunal erred in law by failing to construe the incorporating clause in the contract and instead relying on the ICA Bylaws themselves. There was no ambiguity in the contract's wording to justify a broader interpretation or invocation of business common sense.

Court Disposition

Appeal allowed

Orders

  • The question of law is answered in the negative: the ICA Rules on invoicing back were not incorporated.
  • The arbitral award is set aside and the matter is remitted to the Technical Appeal Committee to determine whether an alternative claim for damages for breach was before it and, if so, to determine that claim.