English Commercial Court upholds rare successful section 67 jurisdiction challenge to award

On 19 December 2025, Henshaw J handed down judgment in A1 and others v P, offering a rare example of a successful jurisdiction challenge to an arbitral award under section 67 of the Arbitration Act 1996 ("the Act").

The case turned on whether a US law firm ("C") entered into a contract with a third-party service provider ("P") as principal only or as agent for each of the Claimants. The court set aside the award in respect of two of the Claimants ("A1" and "A3"), finding that C did not have authority to bind them so they were not party to the arbitration agreement in the contract. The second Claimant ("A2") lost the right to challenge the award under s.73(1) of the Act. The case provides insightful takeaways regarding risk management for clients, law firms and third-party providers as well as the requirement to act promptly when seeking to challenge an arbitral tribunal's jurisdiction.

Background

P was engaged by C to provide intelligence and analysis services for a dispute involving the Claimants over a new shipping container terminal. P was tasked with investigating whether the Port Authority operating an existing shipping container terminal in the country had sabotaged the project by terminating a concession agreement with A3 relating to the construction of a new terminal. The agreement with P, governed by English law and providing for English-seated arbitration, was signed by P and C only (the "P Agreement").

P's findings were included in a notice of dispute sent by A2 to the government of the Port Authority's country under a bilateral investment treaty and referenced in an arbitration brought by A3 against the Port Authority. Ultimately, A2 and A3 settled with the Port Authority. A2 paid P the amount due under the P Agreement in respect of its settlement with the Port Authority, however, A1 and A3 denied liability to pay P in respect of the settlement entered into by A3.

P therefore commenced arbitration against the Claimants for payment. In April 2024, the arbitral tribunal appointed under the London Court of International Arbitration ("LCIA") rules, found that as a matter of construction of the P Agreement, A1, A2 and A3 were all parties to it. Further, C had the authority of both A1 and A3 to bind them to the P Agreement: apparent authority in respect of A1, and implied actual and apparent authority in respect of A3. Accordingly, the tribunal found the Claimants jointly and severally liable to pay P its claimed sum plus interest and costs

The Claimants applied to the Commercial Court under s.67 of the Act to set aside the tribunal's award as to its substantive jurisdiction. The s.67 challenge involved a de novo review i.e. a full rehearing of the matter.  Notably, the Arbitration Act 2025 introduced amendments into the 1996 Act with a view to limiting the arguments and evidence that can be heard by a court in a s.67 challenge.  Those provisions have not yet entered into force and will need to be introduced by rules of court.  See our previous blog post on the 2025 Act.

Grounds of challenge

A1, A2 and A3 challenged the award on two bases:

1. The tribunal did not have jurisdiction over A1 or A3 because they were not parties to the P Agreement, nor the arbitration agreement contained within it.
2. The tribunal did not have jurisdiction over A1 or A2 because neither company granted C authority to enter into an arbitration agreement in accordance with an authorisation requirement in their country's Civil Code.

Judgment

(1) C’s authority to bind A1 and A3

P argued that C had implied actual authority to bind A3 and ostensible authority for A1 because of C's ‘usual authority’ to do all the things ordinarily incident to acting as their lawyers.

Henshaw J found that this approach conflated the remit of a solicitors' firm entering into a contract as principal with a third party (and then passing the cost on to the client as a disbursement) with the authority to bind the client itself to a contract with a third party. He held that while solicitors do have usual authority to enter into a settlement agreement, case law has not recognised solicitors as having usual authority anywhere near as wide as would be necessary to bind A1 and A3. In his words, "it is true that solicitors commonly engage third-party service providers while acting for clients, but it does not follow that they have usual authority to place their clients into direct contractual relations with such service-providers".

(2) Did A3 ratify the arbitration agreement?

P argued that A3 ratified the arbitration agreement in the P Agreement by directing a member of P's staff to draft a witness statement for the A3 arbitration and by attending meetings with P.

Henshaw J found that this may indicate A3’s approval of P being instructed. But it did not follow that A3 ratified C having bound A3, rather than C, to the P Agreement. The facts did not establish that A3 knew that C had purported to bind A3 to the P Agreement. Nor was there an unequivocal act by A3 consistent only with A3 having adopted that course of action.

(3) A2's loss of right to object

As A2 had not previously challenged the tribunal's jurisdiction, under s.73(1) of the Act, A2 had to establish that, at the time it took part in the arbitral proceedings, it did not know and could not with reasonable diligence have discovered the ground for objection it wished to raise  - i.e. that C had no mandate to represent the company in arbitration. The court found that it could not be seriously argued that a substantial company such as A2, with access to an in-house legal department, would have not discovered the ground of objection. Surprisingly, it appeared that A2 simply chose not to take local law advice at all.

Key takeaways

(1) Usual authority of solicitors does not extend to agency

In heavy commercial litigation, large third-party expenses, such as e-disclosure costs often arise and need to be managed. Often solicitors will engage a third party as principal and then pass the cost on as a disbursement. Clear and express authority from the client would be needed if a law firm wishes to act as agent on their client's behalf. The 'usual authority' of the solicitors' firm cannot be relied upon to create an agency relationship. Alternatively, the client could execute the contract with the service provider directly.

(2) Right to object to an award can be lost

Parties to an arbitration should be alive to all possible grounds of jurisdictional challenge early on and run these arguments before the arbitral tribunal to avoid losing the right to object under s.73 of the Act.

A1 and others v P [2025] EWHC 3372 (Comm)