High Court Clarifies Arbitration Jurisdiction and Contractual Waiver in CAFI v GTCS

In the landmark case of CAFI – Commodity & Freight Integrators DMCC v GTCS Trading DMCC, decided on 3rd June 2025, the High Court of Justice in England examined the complex interplay of arbitration jurisdiction, contract validity, and waiver of rights. This dispute arose from two contracts concerning the sale of a cargo of Russian milling wheat, highlighting crucial principles of contract law and arbitration under the Arbitration Act 1996.

The origins of the dispute lie in two separate contracts between the claimant, CAFI, and the defendant, GTCS. The first contract, established in March 2022, outlined the sale of 28,000 metric tons of wheat at a specified price and included an arbitration clause invoking GAFTA rules for dispute resolution. Complications arose due to US sanctions on Russia, hampering CAFI’s payment capabilities. Consequently, GTCS alleged that it had terminated the contract, citing anticipatory breach by CAFI.

CAFI contested the termination, asserting that external impediments, particularly financial restrictions from geopolitical factors, prevented it from fulfilling its obligations. Subsequently, a new agreement, termed the “Second Contract,” was reached, featuring a revised price and an express termination clause that declared the first contract void.

Conflict escalated when GTCS pursued arbitration, seeking damages for what they claimed was a repudiatory breach by CAFI of the initial contract. The First Tier Tribunal dismissed GTCS’s claims, interpreting the termination clause of the Second Contract as evidence that GTCS had waived its right to damages under the First Contract. This view was challenged in higher arbitration appeals.

As the case proceeded to the Appeal Board, a significant contention emerged regarding the Board's jurisdiction in interpreting the Second Contract's impact on the First. The Board concluded it lacked jurisdiction, asserting it could not ascertain how the Second Contract influenced rights and liabilities established by the First Contract.

CAFI contested this on various grounds under sections 67 and 68 of the Arbitration Act, claiming that the Appeal Board exceeded its jurisdiction by ruling on damages related to the First Contract while refusing to interpret the Second Contract. The High Court, led by the Honourable Mr Justice Henshaw, found CAFI's challenge justified, ruling that the Appeal Board should have engaged with the Second Contract's provisions to determine if it truly represented a waiver of GTCS's right to claim damages from the First Contract.

The judgment underscored the necessity of thorough contractual analysis in arbitration proceedings, particularly concerning the interaction between subsequent agreements and earlier commitments. The final ruling mandated a re-evaluation of the arbitration determination, nullifying prior awards addressing the waiver issue while allowing for a more comprehensive discussion on the matters at hand.

This case serves as a vital reminder of the intricate legal frameworks surrounding trade contracts and arbitration, especially in the context of international trade and geopolitical complexities. The ruling reinforces the importance of clarity in contractual agreements and maintains the integrity of arbitration frameworks in resolving intricate commercial disputes. This judgement makes a significant contribution to legal discourse, establishing essential precedents for future arbitration cases involving intricate contractual relationships.