The High Court’s decision in Destin Trading Inc v Saipem SA [2025] EWHC 668 (Ch) underscores the vital role of careful drafting, as an exclusive jurisdiction clause in a settlement agreement superseded prior arbitration provisions and rendered them inoperative.

Background

Under three Frame Agreements entered into in 2012, Destin was tasked with providing marine vessels and other equipment and services to Saipem in relation to offshore oil projects. These agreements incorporated ICC Arbitration clauses. 

The partnership between Destin and Saipem in joint delivery of services to oil and gas industry clients in Africa turned sour when a dispute arose over an alleged payment shortfall, with Destin asserting it had been paid US$15,353,097.48 but had delivered services worth US$22,158,118.47 for the Congo River Crossing Project. 

The parties settled this dispute in November 2013 and entered into a settlement agreement documenting the terms (the Settlement Agreement). The Settlement Agreement provided a mutual release of claims and terminated the Frame Agreements. Clause 10 of the Settlement Agreement provided that:

“The Parties irrevocably agree that the Courts of England and Wales shall have exclusive jurisdiction to settle any dispute arising out of or in connection with this Agreement (including a dispute regarding the existence, validity or termination of this Agreement).”

In July 2024, Destin filed a claim before the High Court in England, alleging it had been induced to enter the Settlement Agreement by misrepresentations made by Saipem.

Saipem applied for a stay pursuant to section 9(1) of the Arbitration Act 1996 (the Act), on the basis the matter should be determined by arbitration under the dispute resolution provisions in the Frame Agreements. Destin resisted this application, arguing its claim was covered by Clause 10 of the Settlement Agreement, which superseded the arbitration agreements in the Frame Agreements.

What did the Court decide?

The core of the dispute turned on the correct construction of the parties’ contractual provisions, as opposed to any fixed rule that a dispute resolution clause in a termination or settlement agreement always replaces such clauses in earlier agreements. 

Further, the decision in Monde Petroleum v Westernzagros Limited [2015] 1 Lloyd’s Rep 330 strongly indicated that usually a dispute resolution clause in a settlement or termination agreement will be construed as having been intended to supersede or override prior dispute resolution clauses. In such a situation, the parties are agreeing a dispute resolution clause in the context of disputes having arisen under a previous agreement – they are terminating that previous agreement and replacing it with new rights and obligations such that the “centre of gravity” of their relationship is now the settlement agreement.

In this case, the judge determined that the parties had clearly intended that this would happen, so the Settlement Agreement displaced the Frame Agreements and the arbitration clauses therein. Clause 10 of the Settlement Agreement provided for exclusive jurisdiction, there was an entire agreement clause in the Settlement Agreement, and the Settlement Agreement expressly stated that the Frame Agreements were terminated.

It is also well-recognised that there is a clear commercial benefit to having all disputes resolved in one forum to avoid inconsistent decisions and fragmented proceedings, which could undoubtedly arise if inconsistent dispute resolution clauses survived in the Frame Agreements and the Settlement Agreement.

Destin’s claim therefore fell within the jurisdiction clause in the Settlement Agreement and the application for a section 9 stay was dismissed. The arbitration clauses in the original Frame Agreements had been superseded by the Settlement Agreement. As a result, those provisions were deemed to be inoperative for the purposes of section 9(4) of the Act. 

Comment

Careful drafting is key. A broad dispute resolution clause in a settlement agreement is likely to displace dispute resolution provisions in earlier agreements unless expressly carved out. Clarifying the intentions and expectations of all parties will help to avoid future surprises and ambiguity. In this case, Destin and Saipem appear to have held different understandings of how the Settlement Agreement would interact with the Frame Agreements. If this had been fully explored when the Settlement Agreement was negotiated, the section 9 challenge might have been avoidable. 

The Court’s indication that the inclusion of an entire agreement clause was relevant serves as a reminder that this clause, whilst often thought of as boilerplate, is an important indication of the parties’ true intentions when it comes to contractual interpretation.

This is also a further decision demonstrating the English court’s tendency to favour the ‘one stop shop’ approach – when interpreting dispute resolution provisions, the courts will start with the assumption that inconsistent outcomes are undesirable, and so far as possible clauses should be interpreted such that all disputes arising from the same matter will be determined in the same tribunal.  

This article was prepared with assistance from Sanshi Kaur, Trainee Solicitor.