/>iIn the pantheon of arbitration appeals, achieving success under sections 67, 68, and 69 of the Arbitration Act 1996 in a single case is rather like scoring a hat trick in a World Cup final – theoretically possible but rarely achieved. Yet this is precisely what CAFI Commodity & Freight Integrators DMCC (CAFI) managed in its recent victory against GTCS Trading DMCC (GTCS).
The decision in CAFI v. GTCS Trading, EWHC 1350 (Comm) (2025) offers a masterclass in how arbitration can go spectacularly wrong when tribunals tie themselves in jurisdictional knots, and how the Commercial Court can untangle even the most byzantine of procedural tangles. More importantly for commercial parties, it provides welcome clarity on when disputes can span multiple contracts – and why arbitrators cannot simply blind themselves to inconvenient contractual provisions.
A Tale of Two Contracts (and Some Sanctions)
As so many modern commercial disputes do, our story begins with the inconvenient incursion of geopolitics upon the noble pursuit of profit.
GTCS agreed to sell CAFI 28,000 metric tonnes of Russian milling wheat at a rate of $465 per tonne under a contract concluded in March 2022. The timing, one might observe, was not ideal. With US sanctions against Russia creating payment difficulties, CAFI found itself in the uncomfortable position of wanting wheat it could not easily pay for.
What followed was a commercial pas de deux familiar to anyone who has ever tried to salvage a deal going sideways. Through the intervention of a broker, the parties negotiated a second contract for the same cargo at a reduced price of $440 per metric tonne. Crucially, this second contract contained what the court termed a “Termination Clause” stating that the first contract was “terminated and considered void.” The cargo was duly delivered and paid for under the second contract.
One might have thought this the end of the matter – a neat commercial solution to an awkward geopolitical problem.
One would have been wrong.
The Arbitration Imbroglio
GTCS, perhaps suffering from seller’s remorse over the $25 per tonne price reduction, commenced Grain and Feed Trade Association (GAFTA) arbitration claiming damages for CAFI’s alleged repudiatory breach of the first contract.
GTCS’s argument was simple: CAFI had breached the first contract, and the fact that CAFI had subsequently agreed to buy the same cargo at a lower price merely quantified the damages. CAFI’s response was equally straightforward: the second contract’s Termination Clause had rendered the first contract “void” and thereby extinguished any liability for damages. This presented the GAFTA tribunal with a mealy interpretive puzzle – what exactly did “terminated and considered void” mean?
The First-Tier Tribunal sided with CAFI, finding that GTCS had waived its right to claim damages. GTCS appealed to the GAFTA Board of Appeal, which is where our journey takes a turn.
The Appeal Board found itself faced with what it perceived as a jurisdictional conundrum. Having been appointed under the arbitration clause in the first contract, could it interpret provisions of the second contract? The board concluded it could not: the second contract had its own arbitration clause, and any disputes about its meaning would require a separate arbitration. No arbitration had been commenced under the second contract, and so neither the First-Tier Tribunal nor the board had “jurisdiction to interpret the terms of the [second contract] or how any of those terms impact on the [first] Contract.”[1]
Having reached this conclusion, the board then proceeded to do exactly what logic suggested it could not: it awarded GTCS damages of $700,000, in effect determining that the Termination Clause did not extinguish liability under the first contract. The board’s reasoning was that while it could not interpret the second contract as a contract, it could consider it as “evidence” of what happened after the first contract was terminated.
This approach created a raft of failings.
The Court’s Triple Victory
CAFI challenged the board’s award. Its challenge succeeded on all fronts, providing a neat demonstration of how the three appeal grounds under the Arbitration Act can work in practice.
Section 67 (jurisdiction): The court held that the Appeal Board was wrong to conclude it lacked jurisdiction to interpret the second contract as a contract.[2] The arbitration clause in the first contract was decidedly vanilla, covering “[a]ny dispute arising out of or under this contract.” That language was broad enough to encompass disputes about whether subsequent agreements affected rights under the first contract. As Henshaw J noted, rational parties would not intend that disputes about the continuing validity of their contract should be carved out and sent to a different tribunal.[3]
Worse still, having found (wrongly) that it lacked jurisdiction to interpret the second contract, the board then went on to exceed the jurisdiction it thought it did have. It followed from the board’s finding that it lacked jurisdiction in respect of the second contract that it also lacked jurisdiction to determine the question of waiver. But by awarding damages without determining whether the Termination Clause extinguished GTCS’s right to claim them, the board made an implicit determination as to the effect of the second contract, and, by purporting to do so, exceeded its jurisdiction.
Section 68 (serious procedural irregularity): The board’s failure to properly grapple with the waiver issue created other problems too. The court found that even if the board’s finding as to jurisdiction was correct, it was not possible to determine whether CAFI was liable under the first contract without first determining whether GTCS had, through the second contract, waived its claims. By finding CAFI liable for breach without considering the waiver issue, the board, in dereliction of duty under section 33, pre-emptively determined the waiver issue against CAFI – an irregularity so serious it was within the scope of section 68.
Section 69 (error of law): Cementing the hat trick, the court also found that the board, by concluding it could award damages where a live issue existed as to whether liability had been extinguished and that issue had not been resolved by a competent tribunal, had committed an obvious error of law.
Additionally, although ultimately unnecessary for the court to determine,[4] Henshaw J noted that CAFI would have had “a strong case” that the Appeal Board’s conclusion that CAFI needed to show the Termination Clause had been “freely negotiated” or was the subject of “clear discussion” before it could be effective was obviously wrong in law.[5] That dicta confirms that the terms of a written contract speak for themselves, regardless of the process by which they came to be agreed—that a contract means what it says, not what the parties discussed (or failed to discuss) beforehand, and courts and tribunals should not journey beyond the words used in a hunt for evidence of specific negotiation of particular clauses.
Lessons From the Wheat Wars
From forum selection strategies to drafting precision, the case highlights opportunities and pitfalls, and offers kernels of wisdom for commercial practitioners navigating the complexities of multi-contract disputes.
When arbitrators fear to tread: For all its virtues, arbitration is only as good as the arbitrators who conduct it. When tribunals tie themselves in jurisdictional knots and attempt to avoid difficult interpretive questions, they risk creating the very problems they seek to avoid. The Appeal Board’s attempt to split the difference, denying jurisdiction over the second contract and disclaiming ability to discern its meaning while effectively doing exactly that sub silentio, satisfied nobody – and achieved nothing except procedural chaos. Jurisdictional questions demand confidence, not excessive handwringing.
A commercial victory: Commercial parties need not launch multiple arbitrations when subsequent agreements might affect rights under earlier contracts. A single, properly appointed tribunal can – and should – interpret one contract through the lens of later agreements between the same parties. This streamlined approach saves both time and the headache of coordinating parallel proceedings.
Forum shopping made simple: Jurisdiction clauses are not always mutually exclusive.[6] When parties weave together related agreements, each sporting its own arbitration clause, disputes can legitimately fall within multiple jurisdictional nets. The result? Claimants likely get to pick their preferred forum, but they should do so with caution given the attendant risk of parallel proceedings.
The price of poor drafting: Beyond the jurisdictional confusion lies a sobering lesson in the need for clear contractual drafting. The phrase “terminated and considered void” may have seemed like belt-and-braces language to the parties, but it created sufficient ambiguity to spawn two arbitrations, an arbitration appeal, and a Commercial Court appeal. Greater drafting precision might have saved everyone considerable time and expense.
The case provides an exposition of arbitration law in action, and a reminder that even in the esoteric world of GAFTA wheat disputes, basic principles of fairness and logical consistency still matter. The Commercial Court’s willingness to deploy all three statutory appeal grounds demonstrates that when arbitrators get it wrong, they can get it comprehensively wrong—and that the courts retain both the power and the will to put things right.
[1] Section 9.8, extracted in section 28 of the judgment.
[2] Section 43.
[3] Section 38, section 42.
[4] The Appeal Board did not attempt to construe the second contract as a contract and accordingly it was unnecessary to determine CAFI’s alternative challenge (advanced on the basis of section 69) that the board’s approach to interpretation was an obvious error of law.
[5] Section 62.
[6] Section 36.
