English Court sets aside ICC award in dispute between Saudi companies

In a dispute between two Saudi companies, the English court sets aside an ICC Arbitral Award applying literal interpretation of the contractual documents and rejecting more holistic approach of the ICC Arbitral Tribunal

This blog concerns the judgment of the English High Court dated 14 July 2025 (“the Judgment”) on an application under s.67 of the UK Arbitration Act 1996 to set aside an ICC jurisdictional award and raises several issues often encountered by arbitration practitioners.

Background

The contract in issue related to a gas programme project in Saudi Arabia. Saudi Aramco, who run the project, appointed Technicas Reunidas Saudia For Services & Contracting Co. Ltd (“Technicas”) as the head EPC contractor in respect of various packages of work. Technicas, in turn, subcontracted certain electrochemical elements of the works to Petroleum Chemicals and Mining Company Limited (“PCMC”) (“Sub-Contract”). Both Technicas and PCMS are Saudi companies.

The Sub-Contract included a series of documents executed by parties over the course of two days. The parties expressly agreed that these documents “are listed in order of precedence”. One of them, the Purchase Order, set out the order of precedence as follows: The Purchase Order, the Deviation List to the GTCCS, Purchase Order Requisitions, and General Terms and Conditions for Construction Subcontracts (GTCCS). It is a perceived mismatch in these documents regarding the arbitration agreement which led to the jurisdictional dispute between the parties.

Arbitration agreement

The Purchase Order provided for an ad hoc arbitration in England under English law. To that extent, it said (at Clause 11): “11.1 The validity, interpretation, construction and performance of the SUBCONTRACT and all aspects derived therefrom will be governed by the laws of England and Wales. 11.2 The arbitration proceedings shall take place in London (England) and the arbitration shall be held in English, and will be governed by the laws of England and Wales”.

Clause 32 of GTCCS, on the other hand, pointed to ICC arbitration under Saudi law, providing that “the validity, interpretation, construction and performance of the SUBCONTRACT and all aspects derived therefrom will be governed by the laws of Saudia Arabia. If at any time any question, dispute or difference (a “Dispute”) arises … such Dispute shall be finally settled by Arbitration administered by the International Chamber of Commerce by three Arbitrators appointed in accordance with those Rules”.

PCMC proposed that the Sub-Contract be governed by Saudi law, with any arbitration taking place in Saudi Arabia. Technicas disagreed. As a result, it was recorded in the Deviation List that PCMC “accepts clause 11.1 and 2: English and Wales law and Arbitration under ICC Laws in London and held in English”. The item was described as ‘closed’.

ICC Arbitration

In October 2023, PCMC started arbitration proceedings before the ICC. The tribunal bifurcated the proceedings and considered first the issue of the ICC’s jurisdiction over the dispute. A year later, in October 2024, the tribunal rendered a Partial Award (“Award”) finding that it did have jurisdiction.

In the arbitration, PCMC argued that Clause 11 of the Purchase Order is to be read in conjunction with Clause 32 of the GTCCS, submitting that “[o]n a true construction of the [Sub-Contract] the arbitration clause provides for arbitration in London (England) under ICC Rules subject to English law” [135]. The tribunal agreed, effectively picking and matching different provisions from different contractual documents.

S.67 challenge

Technicas challenged the Award under s.67 of the UK Arbitration Act 1996, with reference to s.31 and s.73, the latter two sections dealing with the timeliness of the objection to the jurisdiction. S.67 of the UK Arbitration Act 1996 (in the version in force at the time of the application) provided that “a party to arbitral proceedings may apply to the court challenging any award of the arbitral tribunal as to its substantive jurisdiction” (emphasis added).

Court Judgment

In seeking to resist the s.67 challenge, PCMC ran two objections, the first procedural and the second substantive.

Procedural objection to s.67 challenge

As to the procedural objection, PCMC asserted that Technicas’ s.67 application should be rejected as Technicas allegedly objected to the jurisdiction of the ICC tribunal too late, in breach of s.31 and s.73 of the UK Arbitration Act 1996. The Court disagreed.

PCMC discussed the jurisdiction issue in the arbitration

The Court first noted that PCMC itself actively discussed the issue of jurisdiction: “The reality is that far from making any timely objection [as regards Technicas’ allegedly late jurisdiction argument], PCMC actively bought into the Ad Hoc vs ICC Arbitration challenge, and addressed it substantively on the merits. Notably, and in contrast to Technicas, PCMC actively participated in the jurisdiction issue centred on the Ad Hoc vs ICC Arbitration challenge, and made detailed substantive submissions running to some 26 pages of analysis, addressing the issues as to the Tribunal’s jurisdiction, the capacity and authority of PCMC’s representatives, and the governing law of the Subcontract” [168].

Appointment of an arbitrator is not a submission to the arbitral jurisdiction

The Court also rejected PCMC’s argument that appointment by a party of an arbitrator would show its agreement with the jurisdiction of the tribunal: “Section 67 contemplates that a party will, if it wishes to challenge jurisdiction, take a jurisdiction objection in front of the tribunal. In order for the tribunal to rule upon such jurisdictional issue there has to be a constituted tribunal. So, the act of nominating an arbitrator is not a bar to challenging jurisdiction – that would be against the ethos of the Arbitration Act 1996. The mere fact that the party wishing to challenge jurisdiction appoints an arbitrator, then constitutes the tribunal in accordance with, and in adherence with, ICC Rule 12, does not subsequently deprive it of the opportunity to submit that the tribunal does not have any jurisdiction”, [175], (emphasis as per original).

Technicas reserved its rights at an early stage of the arbitration

Finally, Technicas reserved its rights at an early stage of the arbitration, saying that “[n]othing in this letter should be construed as a submission to the jurisdiction of the ICC International Court of Arbitration or of any arbitral tribunal appointed in the present matter, nor as a waiver of any of [Technicas’] rights”.

Substantive objection to s.67 challenge

Substantive v. procedural jurisdiction of the tribunal

As regards the substantive objection, PCMC argued that as s.67 allowed challenges only in relation to the tribunal’s substantive jurisdiction, and because, on PCMC’s case, the Ad Hoc vs ICC Arbitration issue was a ‘procedural matter’, the challenge should have been brought under s.68 of the Arbitration Act 1996 (serious irregularity).

The Court discarded this argument saying there existed “fundamental differences” between an ad hoc arbitration under English law in England and an ICC arbitration. In that vein, the Court pointed to the right of appeal to an English court, where “… parties who agree to ad hoc arbitration in England have such a right of appeal (in relation to points of law in accordance with section 69 of the Arbitration Act 1996). Whether a party has submitted to an ICC arbitration or an ad hoc arbitration is therefore jurisdictional: it goes to the nature and extent of the parties’ agreement to contract out of the court process. It is not simply a question of some “irregularity” of procedure adopted by a tribunal to which the dispute has been validly referred under the arbitration agreement; it is that under the parties’ agreement the dispute ought not to have been referred to that particular tribunal in the first place. That is the essence of jurisdiction” [188]. The Court also referred to different means of formation of the tribunal in an ICC arbitration as opposed to an ad hoc arbitration in England.

Proper construction of the arbitration agreement

The Court then considered the essence of the dispute, namely – how the arbitration agreement should be interpreted. To that extent, the Court ruled that the text of the arbitration agreement contained in the Purchase Order should be given precedence over other contractual documents: “221. The short point is that Clause 32 of the GTCCS is simply inconsistent with clause 11.1 of the Purchase Order, and the Purchase Order being higher in the order of precedence prevails. Clause 32 is inconsistent in all three respects identified above namely in terms of governing law, seat, and ad hoc versus institutional rules. As such, Clause 11.1 of the Purchase Order prevails. . . . 223. This is not a case where (for example) a clause in another document is consistent with what was agreed in the contractual document with greater precedence. 224. What the parties agreed in the Purchase Order, in terms of governing law was English law (not Saudi Arabian law); what the parties agreed in the Purchase Order in terms of seat was London (not Riyadh); and what the parties agreed in the Purchase Order was an ad hoc arbitration not an institutional arbitration under ICC Rules. It is notable that all three distinctions were floated in Item 18 of the Deviation List but none of them were agreed in the Purchase Order, which contains what was contractually agreed between the parties. 225. PCMC’s “pick and mix” approach is itself inappropriate. . . .” [221, 223-225].

Finally, the Court rejected the notion that “for an arbitration to be subject to “ICC Rules” is a mere procedural matter” [226] and listed the following five differences between an ICC arbitration and ad hoc arbitration under English law in England [228]: right of appeal under the UK Arbitration Act 1996; existence of rules in an ICC arbitration; power to replace arbitrators in an ICC arbitration; more expensive proceedings in an ICC arbitration; and the scrutiny of the award by the ICC court.

Conclusion

The judgment should be of great interest for arbitration practitioners. In addition to some interesting procedural history – PCMC seemed to be unsure how to approach Technicas’ application under s.67, eventually leading to their arguments being heard on a de bene esse basis, i.e. provisionally – the judgment touches on many issues of arbitration and s.67 set-aside proceedings. There have recently been several applications to challenge commercial or UNCITRAL investor-State awards under s.67 of the UK Arbitration Act 1996. Therefore, to avoid a ‘dog’s breakfast’ in the conduct of such proceedings (in the words of one of the Counsel in this dispute), arbitration practitioners need to know all the ins and outs of arbitration practice and proceedings.

The judgment can be found here.

How Gherson can assist

Gherson’s Litigation and Arbitration Team are highly experienced in advising on international commercial litigation and arbitration. If you have any questions arising from this blog, please do not hesitate to contact us for advice, or send us an e-mail. Don’t forget to follow us on X, Facebook, Instagram, or LinkedIn to stay-up-to-date.

The information in this blog is for general information purposes only and does not purport to be comprehensive or to provide legal advice. Whilst every effort is made to ensure the information and law is current as of the date of publication it should be stressed that, due to the passage of time, this does not necessarily reflect the present legal position. Gherson accepts no responsibility for loss which may arise from accessing or reliance on information contained in this blog. For formal advice on the current law please do not hesitate to contact Gherson. Legal advice is only provided pursuant to a written agreement, identified as such, and signed by the client and by or on behalf of Gherson.

©Gherson 2025