{"id":3566,"date":"2025-07-14T13:39:57","date_gmt":"2025-07-14T10:39:57","guid":{"rendered":"https:\/\/danil-hristich.com\/?p=3566"},"modified":"2026-05-28T10:57:32","modified_gmt":"2026-05-28T07:57:32","slug":"challenging-gafta-jurisdiction-in-the-english-courts-cafi-v-gtcs-trading-dmcc-2025-ewhc-1350-comm","status":"publish","type":"post","link":"https:\/\/danil-hristich.com\/en\/challenging-gafta-jurisdiction-in-the-english-courts-cafi-v-gtcs-trading-dmcc-2025-ewhc-1350-comm\/","title":{"rendered":"Challenging GAFTA Jurisdiction in the English Courts: CAFI v GTCS Trading DMCC [2025] EWHC 1350 (Comm)"},"content":{"rendered":"<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_71 counter-hierarchy ez-toc-counter ez-toc-transparent ez-toc-container-direction\">\n<div class=\"ez-toc-title-container\">\n<p class=\"ez-toc-title\" style=\"cursor:inherit\">\u0421\u043e\u0434\u0435\u0440\u0436\u0430\u043d\u0438\u0435<\/p>\n<span class=\"ez-toc-title-toggle\"><\/span><\/div>\n<nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/danil-hristich.com\/en\/challenging-gafta-jurisdiction-in-the-english-courts-cafi-v-gtcs-trading-dmcc-2025-ewhc-1350-comm\/#Factual_background_two_contracts_for_the_same_cargo\" title=\"Factual background: two contracts for the same cargo\">Factual background: two contracts for the same cargo<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/danil-hristich.com\/en\/challenging-gafta-jurisdiction-in-the-english-courts-cafi-v-gtcs-trading-dmcc-2025-ewhc-1350-comm\/#GAFTA_arbitration_two_tiers_two_decisions\" title=\"GAFTA arbitration: two tiers, two decisions\">GAFTA arbitration: two tiers, two decisions<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/danil-hristich.com\/en\/challenging-gafta-jurisdiction-in-the-english-courts-cafi-v-gtcs-trading-dmcc-2025-ewhc-1350-comm\/#Three_grounds_of_challenge_before_the_English_court\" title=\"Three grounds of challenge before the English court\">Three grounds of challenge before the English court<\/a><ul class='ez-toc-list-level-3' ><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/danil-hristich.com\/en\/challenging-gafta-jurisdiction-in-the-english-courts-cafi-v-gtcs-trading-dmcc-2025-ewhc-1350-comm\/#Ground_1_Jurisdictional_error\" title=\"Ground 1: Jurisdictional error\">Ground 1: Jurisdictional error<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/danil-hristich.com\/en\/challenging-gafta-jurisdiction-in-the-english-courts-cafi-v-gtcs-trading-dmcc-2025-ewhc-1350-comm\/#Ground_2_Excess_of_jurisdiction_serious_procedural_irregularity_and_error_of_law\" title=\"Ground 2: Excess of jurisdiction, serious procedural irregularity, and error of law\">Ground 2: Excess of jurisdiction, serious procedural irregularity, and error of law<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-6\" href=\"https:\/\/danil-hristich.com\/en\/challenging-gafta-jurisdiction-in-the-english-courts-cafi-v-gtcs-trading-dmcc-2025-ewhc-1350-comm\/#Ground_3_Error_of_law\" title=\"Ground 3: Error of law\">Ground 3: Error of law<\/a><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-7\" href=\"https:\/\/danil-hristich.com\/en\/challenging-gafta-jurisdiction-in-the-english-courts-cafi-v-gtcs-trading-dmcc-2025-ewhc-1350-comm\/#The_Courts_Decision\" title=\"The Court\u2019s Decision\">The Court\u2019s Decision<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-8\" href=\"https:\/\/danil-hristich.com\/en\/challenging-gafta-jurisdiction-in-the-english-courts-cafi-v-gtcs-trading-dmcc-2025-ewhc-1350-comm\/#Conclusion\" title=\"Conclusion\">Conclusion<\/a><\/li><\/ul><\/nav><\/div>\n\n<p>In June 2025, the Commercial Court in London (High Court of Justice) handed down an important judgment concerning a challenge to a decision of the GAFTA Board of Appeal. <a href=\"https:\/\/www.quadrantchambers.com\/sites\/default\/files\/2025-06\/250602_final_judgment_cafi_v_gtcs_cl-2024-000080_0.pdf\" target=\"_blank\" rel=\"noopener\"><em>CAFI \u2013 Commodity &amp; Freight Integrators DMCC v GTCS Trading DMCC<\/em> [2025] EWHC 1350 (Comm)<\/a>, demonstrates how arbitrators may exceed their jurisdiction and establishes an important precedent on overlapping arbitration agreements. The case offers a number of practical lessons for market participants.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Factual_background_two_contracts_for_the_same_cargo\"><\/span>Factual background: two contracts for the same cargo<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>The story began in March 2022 with a typical sale of Russian wheat. GTCS (the Sellers) and CAFI (the Buyers) entered into a <strong>first contract<\/strong> dated 11 March for the sale of 28,000 MT of Russian milling wheat at a price of USD 465\/MT on C&amp;F terms to an Egyptian port. The contract contained a standard GAFTA arbitration clause.<\/p>\n\n\n\n<p>The cargo was loaded aboard the vessel <em>NANA LEEN<\/em> on 14 March at Novorossiysk. While the vessel was en route to Egypt, CAFI informed GTCS that it could not pay for the cargo due to US sanctions on Russia. GTCS rejected this explanation and on 23 March declared the contract terminated, accusing CAFI of anticipatory breach.<\/p>\n\n\n\n<p>Following broker intervention, the parties agreed a <strong>second contract<\/strong> on 25 March at a reduced price of USD 440\/MT. A key feature of this agreement was a <strong>Termination Clause<\/strong> stating:<\/p>\n\n\n\n<blockquote class=\"wp-block-quote is-layout-flow wp-block-quote-is-layout-flow\">\n<p class=\"has-black-color has-pale-cyan-blue-background-color has-text-color has-background has-link-color wp-elements-716a34155a3dce4bfb65a828f1c4b2b9\">\u201cBoth parties have agreed that Contract No. RMW125<br>11032022-1 dd. 11.03.2022 [i.e. the First Contract] \u2026 is<br>terminated and considered void.<\/p>\n<\/blockquote>\n\n\n\n<p>The second contract was performed without issue\u2014CAFI paid, and the cargo was discharged in Egypt in April 2022.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"GAFTA_arbitration_two_tiers_two_decisions\"><\/span>GAFTA arbitration: two tiers, two decisions<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>One might have thought the matter resolved, but GTCS commenced GAFTA arbitration, seeking damages for breach of the first contract.<\/p>\n\n\n\n<p>The GAFTA first-tier tribunal rejected the claim in March 2023, holding that by entering into the second contract with the Termination Clause, GTCS had waived its right to claim damages under the first contract.<\/p>\n\n\n\n<p>However, the GAFTA Board of Appeal, comprising five arbitrators, reversed the award and ordered CAFI to pay damages of USD 700,000 plus interest and costs. Their reasoning was as follows:<\/p>\n\n\n\n<ol class=\"wp-block-list\">\n<li>Since the claim was brought under the first contract, the tribunal lacked jurisdiction to interpret the second contract or assess its impact on the first;<\/li>\n\n\n\n<li>The second contract could only be used as &#8220;evidence&#8221; of what had occurred;<\/li>\n\n\n\n<li>The second contract was insufficient to establish a waiver of rights by GTCS;<\/li>\n\n\n\n<li>Therefore, CAFI remained liable in damages under the first contract.<\/li>\n<\/ol>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Three_grounds_of_challenge_before_the_English_court\"><\/span>Three grounds of challenge before the English court<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>The English <a href=\"https:\/\/www.legislation.gov.uk\/ukpga\/1996\/23\/contents\" target=\"_blank\" rel=\"noopener\">Arbitration Act 1996<\/a> provides three distinct grounds for challenging arbitral awards:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>lack or excess of jurisdiction (section 67);<\/li>\n\n\n\n<li>serious irregularity (section 68);<\/li>\n\n\n\n<li>appeal on point of law (section 69).<\/li>\n<\/ul>\n\n\n\n<p>CAFI pursued all three \u2014 a rare \u201ccombo\u201d approach, as most challenges tend to focus on a single ground. Here, however, CAFI contended that the GAFTA Appeal Board\u2019s conduct engaged all three provisions.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Ground_1_Jurisdictional_error\"><\/span>Ground 1: Jurisdictional error<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>CAFI argued that the Appeal Board erred in concluding that it lacked jurisdiction to interpret the second contract and its effect on the first.<\/p>\n\n\n\n<p><strong>CAFI\u2019s case<\/strong>: The arbitration clause in the first contract (\u201cany dispute arising out of or in connection with this contract\u201d) was wide enough to encompass the issue of whether the parties had subsequently waived their rights to damages.<\/p>\n\n\n\n<p><strong>GTCS\u2019s response<\/strong>: The second contract contained its own GAFTA arbitration clause, and therefore any interpretation of its terms required a separate arbitration.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Ground_2_Excess_of_jurisdiction_serious_procedural_irregularity_and_error_of_law\"><\/span>Ground 2: Excess of jurisdiction, serious procedural irregularity, and error of law<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>CAFI constructed a layered argument:<\/p>\n\n\n\n<ol class=\"wp-block-list\">\n<li>If, as the Appeal Board stated, it had no jurisdiction to interpret the second contract, then it had no power to award damages under the first. Determining liability without considering the effect of the Termination Clause was a jurisdictional overreach (s. 67);<\/li>\n\n\n\n<li>The arbitrators effectively decided the waiver issue while claiming they had no power to do so \u2014 breaching the duty of fair hearing (s. 68);<\/li>\n\n\n\n<li>Finally, awarding damages without considering whether the Termination Clause extinguished the claim, in CAFI\u2019s view, contravened core principles of English contract law and amounted to a clear legal error (s. 69).<\/li>\n<\/ol>\n\n\n\n<p><strong>GTCS\u2019s counterargument<\/strong>: The Sellers contended that the arbitrators were entitled to consider the second contract as &#8220;evidence&#8221; of the parties\u2019 conduct without interpreting it as a legal instrument. That, they said, was sufficient to reach a decision under the first contract.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Ground_3_Error_of_law\"><\/span>Ground 3: Error of law<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>In the alternative, if it was found that the Board did in fact interpret the second contract, CAFI added a fallback argument: it applied the wrong principles of interpretation.<\/p>\n\n\n\n<p><strong>CAFI\u2019s position<\/strong>: The Appeal Board had required proof that the Termination Clause in the second contract was \u201cfreely negotiated\u201d or the subject of \u201cclear discussion,\u201d and on that basis held that \u201cvoid\u201d merely repeated \u201cterminated.\u201d This approach, CAFI said, was contrary to English law: where a contract is in writing, the starting point is the text \u2014 not the negotiation history.<\/p>\n\n\n\n<p><strong>GTCS\u2019s response<\/strong>: Even if the Board did interpret the clause, its conclusion was commercially reasonable: in context, \u201cvoid\u201d could be viewed as a repetition of \u201cterminated\u201d and did not preclude the Sellers\u2019 right to bring a claim.<\/p>\n\n\n\n<p>In summary, CAFI advanced three distinct but interwoven lines of attack: pure jurisdiction (s. 67); a combined challenge on procedure, jurisdiction and law (Challenge 2); and a fallback s. 69 challenge in case the second contract had indeed been interpreted.<\/p>\n\n\n\n<figure class=\"wp-block-image size-large\"><img loading=\"lazy\" decoding=\"async\" width=\"1024\" height=\"683\" src=\"https:\/\/danil-hristich.com\/wp-content\/uploads\/2025\/07\/nick-berger-D3kraYfGue0-unsplash-1024x683.jpg\" alt=\"CAFI v GTCS Trading DMCC [2025] EWHC 1350 (Comm)\" class=\"wp-image-3554\" title=\"\" srcset=\"https:\/\/danil-hristich.com\/wp-content\/uploads\/2025\/07\/nick-berger-D3kraYfGue0-unsplash-1024x683.jpg 1024w, https:\/\/danil-hristich.com\/wp-content\/uploads\/2025\/07\/nick-berger-D3kraYfGue0-unsplash-900x600.jpg 900w, https:\/\/danil-hristich.com\/wp-content\/uploads\/2025\/07\/nick-berger-D3kraYfGue0-unsplash-1536x1024.jpg 1536w, https:\/\/danil-hristich.com\/wp-content\/uploads\/2025\/07\/nick-berger-D3kraYfGue0-unsplash-270x180.jpg 270w, https:\/\/danil-hristich.com\/wp-content\/uploads\/2025\/07\/nick-berger-D3kraYfGue0-unsplash-770x515.jpg 770w\" sizes=\"auto, (max-width: 1024px) 100vw, 1024px\" \/><\/figure>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"The_Courts_Decision\"><\/span>The Court\u2019s Decision<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>Mr Justice Henshaw allowed the appeal on both the first ground (jurisdiction) and the second ground (excess of powers, serious procedural irregularity, and error of law), and accordingly set aside the relevant parts of the GAFTA Board of Appeal\u2019s award.<\/p>\n\n\n\n<p>First, the Court held that the dispute as to whether the Termination Clause in the second contract extinguished the Sellers\u2019 right to claim damages under the first contract fell within the scope of the arbitration clause in the first contract, even if it also came within the clause in the second. The judge noted that reasonable commercial parties would not expect interconnected disputes to be fragmented between two tribunals: the cargo was the same, the parties were the same, and initiating a separate arbitration simply to interpret the Termination Clause would be unjustified.<\/p>\n\n\n\n<p>Second, the GAFTA Appeal Board exceeded its powers: having declared that it lacked jurisdiction to interpret the second contract, it nonetheless awarded damages\u2014thereby resolving the very issue of whether the Termination Clause barred the claim under the first contract.<\/p>\n\n\n\n<p>This constituted a serious procedural irregularity under section 68: the tribunal determined an issue which, by its own admission, should have been resolved elsewhere, thereby breaching the duty to act fairly. It also amounted to an error of law within the second ground (section 69).<\/p>\n\n\n\n<p>The Court did not rule on Ground 3, as the arbitrators had explicitly stated that they had not interpreted the second contract. However, in obiter dictum, the Court added that had the tribunal\u2019s reasoning been based on the need to show \u201cfree negotiation\u201d or \u201cclear discussion\u201d outside the contract text, this too would have amounted to a clear error of law.<\/p>\n\n\n\n<p>This, the GAFTA Board of Appeal\u2019s decision was set aside; the issues of waiver and quantum were remitted for reconsideration.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Conclusion\"><\/span>Conclusion<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p><em>CAFI v GTCS<\/em> is an exceptional case\u2014believed to be the first in English legal history\u2014in which an arbitral award has been set aside on all three possible grounds under the <em>Arbitration Act 1996<\/em> (ss. 67, 68, and 69).<\/p>\n\n\n\n<p>The judgment serves as a reminder to GAFTA arbitrators: the broadly worded phrase <em>\u201carising out of or under\u201d<\/em> captures subsequent agreements that affect the original contract. Attempting to \u201csplit\u201d a single dispute between two arbitration clauses creates procedural deadlock and invites court intervention.<\/p>\n\n\n\n<p>The case illustrates that even experienced arbitrators can misjudge the limits of their mandate. Participants in the grain trade must be aware of these boundaries and should not hesitate to challenge them before the English courts when fairness requires a comprehensive approach.<\/p>\n\n\n\n<p>If you are working with GAFTA contracts and face questions of arbitral jurisdiction, want to assess the risks of challenging an award, or seek to safeguard yourself against procedural missteps, feel free to contact me by <a href=\"mailto:danil@danil-hristich.com\">email<\/a>, <a href=\"https:\/\/t.me\/danilhristich\" target=\"_blank\">Telegram<\/a>, or <a href=\"https:\/\/wa.me\/380632956265\" target=\"_blank\" rel=\"noopener\">WhatsApp<\/a> for a consultation.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>In June 2025, the Commercial Court in London (High Court of Justice) handed down an important judgment concerning a challenge to a decision of the GAFTA Board of Appeal. CAFI \u2013 Commodity &amp; Freight Integrators DMCC v GTCS Trading DMCC [2025] EWHC 1350 (Comm), demonstrates how arbitrators may exceed their jurisdiction and establishes an important<\/p>\n","protected":false},"author":1,"featured_media":3551,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"inline_featured_image":false,"rank_math_title":"","rank_math_description":"","rank_math_focus_keyword":"","footnotes":""},"categories":[1],"tags":[221,206,692,13,690],"class_list":{"0":"post-3566","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-main","8":"tag-appeal-en","9":"tag-arbitration-en","10":"tag-case-law-3","11":"tag-gafta","12":"tag-jurisdiction-3"},"_links":{"self":[{"href":"https:\/\/danil-hristich.com\/en\/wp-json\/wp\/v2\/posts\/3566","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/danil-hristich.com\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/danil-hristich.com\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/danil-hristich.com\/en\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/danil-hristich.com\/en\/wp-json\/wp\/v2\/comments?post=3566"}],"version-history":[{"count":1,"href":"https:\/\/danil-hristich.com\/en\/wp-json\/wp\/v2\/posts\/3566\/revisions"}],"predecessor-version":[{"id":3567,"href":"https:\/\/danil-hristich.com\/en\/wp-json\/wp\/v2\/posts\/3566\/revisions\/3567"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/danil-hristich.com\/en\/wp-json\/wp\/v2\/media\/3551"}],"wp:attachment":[{"href":"https:\/\/danil-hristich.com\/en\/wp-json\/wp\/v2\/media?parent=3566"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/danil-hristich.com\/en\/wp-json\/wp\/v2\/categories?post=3566"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/danil-hristich.com\/en\/wp-json\/wp\/v2\/tags?post=3566"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}