Orange Transgroup v Shein: High Court stays proceedings pending arbitration authority dispute

The High Court has granted an interim stay of proceedings brought by Orange Transgroup Ltd and IT Way Transgroup Clearance LLP against Shein Distribution UK Limited, pending determination by an arbitrator of whether a valid arbitration agreement exists between the parties.

The dispute centres on a service agreement allegedly executed in October 2021 by an individual known as Bill (Su Jing), which contained an ICC arbitration clause. Orange categorically denied entering into the agreement, asserting that Bill held no authority to bind the company. Shein sought repayment of £1,523,925.48 in overpayments for customs duties, whilst the claimants pursued damages of £5,750,000 for alleged fraud, misrepresentation and other misconduct.

Mr Justice Dexter Dias considered competing applications regarding jurisdiction. The claimants sought declarations that Shein had accepted High Court jurisdiction by failing to make a CPR Part 11 application, together with injunctive relief restraining arbitration. Shein applied for stays under section 9 of the Arbitration Act 1996 or the court's inherent jurisdiction.

Procedural framework and authority disputes

The court held that a section 9 stay application under CPR Part 62 was the appropriate procedural route, rendering a Part 11 application unnecessary. Alternatively, applying Pitalia v NHS [2023] EWCA Civ 657, any procedural error could be remedied under CPR 3.10. Shein had ticked the jurisdiction dispute box on its acknowledgement of service, and the substance of its application plainly contested jurisdiction based on the arbitration clause.

The evidential position proved decisive. Whilst Mr Du, Orange's director, provided witness evidence denying Bill's authority, Shein filed no witness statements from employees who dealt with Bill during the three-year commercial relationship. The court noted significant evidential gaps on both sides: Shein produced no correspondence from autumn 2021 regarding the service agreement's negotiation, whilst the claimants failed to obtain a witness statement from Bill himself.

Application of ostensible authority principles

Citing Ukraine v Law Debenture Trust Corp Plc [2024] A.C. 411 and The Ocean Frost [1986] AC 717, the court recognised that ostensible authority may be established through conduct, requiring both representation by the principal and reasonable reliance by the third party. Shein pointed to various indicators including Bill's signature on agreements, payment instructions from his IT Way email address, and references to him as "boss" and "partner".

However, the court concluded that the incomplete evidential record rendered determination on the papers inappropriate. Following Al-Naimi v Islamic Press Agency Inc [2000] C.L.C. 647, where triable issues exist on facts material to jurisdiction, the court should either direct a trial or, where appropriate, stay proceedings for the arbitrator to determine the matter first.

Interim stay and case management

Applying the inherent jurisdiction under CPR 3.1(2)(g), the court granted interim stays of both claimants' proceedings. The arbitrator had scheduled a jurisdictional hearing for 18 December 2025, with an anticipated award in February 2026. This provided an expeditious route for determining Bill's authority and avoiding duplication, inconsistent decisions and disproportionate costs.

The court emphasised the presumption in Fiona Trust v Privalov [2007] Bus LR 1725 that arbitral tribunals should determine their own jurisdiction first where possible. Should the arbitrator find no jurisdiction exists, the claimants' allegations—including disputed claims of customs fraud and tax evasion—could return to the High Court for case management.

The claimants' applications for declarations, strike-out and injunctive relief were dismissed, with IT Way's strike-out also stayed pending the arbitration outcome.

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