In Energyen Corp v HD Hyundai Heavy Industries Co Ltd [2025] EWHC 1586 (Comm). the Commercial Court (Foxton J) rejected a section 67 challenge to an arbitral award relating to the effects of the “spin-off” of a foreign company on an English law contract.

The judgement confirms the English law position that the law of the domicile of a foreign company determines whether contracts had been transferred to a third party as a result of a spin-off or partial succession. In this case, this meant accepting that the transfer of a contract (and the right to enforce it in arbitration) could take effect without need for notice or consent to the counterparty, as provided under Korean law.

The Commercial court also confirmed that non-compliance with Article 4(3) of the ICC Rules  would normally not meet the threshold for a challenge under section 67. This will give some reassurance to claimants that they do not need to include full details on their claims when initiating ICC proceedings, although as always trying to ensure your RFA contains all relevant details is best practice.

The Facts

The dispute arose out of a (Contract) between two Korean companies, Energyen Corp (Energyen) and HHI, to service a thermal power plant in Saudi Arabia. The Contract was governed by English law, and provided for ICC arbitration in London.

In 2019, HHI notified Energyen of the partial transfer of its business to HHI 2019, a newco within the HHI group, through a “spin-off” (the Spin-Off). The notice given to Energyen stated “all of [HHI’s] existing rights and obligations under all of your contract(s) […] [will] be comprehensively transferred to and assumed by [HHI 2019] by operation of Korean law”.

Disputes arose under the Contract and were referred to an ICC arbitration tribunal. The tribunal issued an award of damages in favour of HHI 2019.

The Section 67 challenge

Energyen applied to set aside the award pursuant to section 67 of the Arbitration Act. It argued that the tribunal lacked jurisdiction to issue its award with respect to HHI 2019 because:

1. HHI 2019 had no rights under the Contract (and therefore no rights to enforce it in arbitration);
2. The arbitration was initiated by HHI, not HHI 2019; and
3. the arbitration was not validly commenced because the RFA failed to comply with Article 4(3) of the ICC Rules.

The effect of the Spin-Off as a matter of Korean law

Under English conflict of laws rules, the effect of a corporate succession of a foreign company on an English law contract is determined by the law of the company’s domicile. While the rule had only been applied in cases of universal succession, Foxton J saw “no reason” not to apply it to a spin-off or partial succession, where parts of a company’s business only are transferred to another entity. Korean law, as the law of HHI’s domicile, applied, pursuant to English law which provides that the domicile of a corporation is the country under whose law it is incorporated.

Under Korean law, the Spin-Off plan took effect by operation of law from its adoption.  Even though HHI remained in existence, Foxton J found that the Spin-Off had “much more in common”with a universal succession. It was nonconsensual in nature, and therefore did not require notice or consent of third parties. This provided comfort that the conflict rules for an assignment of rights or reconstruction (where a company transfers assets to another company having substantially the same shareholding as the transferring company) should not apply.

Foxton J accepted that “within the scope of the partial transfer”, which included the Contract, HHI 2019 had succeeded to HHI, and the effect was akin to a universal succession. HHI 2019 had replaced HHI under the Contract and could enforce it against Energyen in arbitration.

Who was the claimant in the arbitration?

Under English law, the issue is determined objectively, by asking who the respondent had understood the claimant to be. The inquiry is broad, and requires an investigation of all circumstances, from the description of the claimant in the pre-dispute documents, RFA and pleadings to the nature of the rights being asserted.

Here, the RFA described the claimant as an industry leader “[e]stablished in 1972” as well as the entity which had entered into (rather than succeeded to) the Contract. Despite this, Foxton J found that Energyen would have reasonably understood that the claimant was HHI 2019 because:

• The Spin-Off had been notified to Energyen;
• The rights being asserted were now HHI 2019’s under the Contract; and,
• HHI 2019 was the entity entitled to enforce the Contract when the RFA was submitted.

HHI 2019 had the right to commence an arbitration against Energyen under the Contract, and it had done so with the RFA.

Had HHI 2019 validly commenced the arbitration?

Article 4(3) of the ICC Rules provides that a RFA “shall” contain certain specific information, including the “basis” upon which the claims are made and “any relevant agreements and, in particular, the arbitration agreement(s)”.

Energyen argued that the arbitration was not validly commenced because the RFA did not refer to HHI 2019’s succession to the Contract under the Spin-Off plan as a “basis” for its claims, and did not attach the Spin-Off plan.

Foxton J found that, while in appearance prescriptive, Article 4(3) of the ICC Rules was not intended to set “hard-edged jurisdictional requirements”. Instead, it allowed claimants “considerable discretion”in deciding“how much detail” to include in the RFA concerning the nature and circumstances of their claims. This was confirmed by the absence of sanction for non-compliance with Article 4(3) in the ICC Rules.

Foxton J expressed the view in obiter that the requirements of Article 4(3) might be better understood as criteria for the admissibility of the claims (rather than jurisdiction), a “more attractive outcome” given that it would prevent parties from raising its noncompliance after the arbitration had completed under section 67.

Comment

There is limited guidance on the extent and level of detail required for a RFA, the initiating document for ICC arbitration. It is generally understood that while a party is required to explain their claim at the RFA stage, the full details are set out in a subsequent filing, once the arbitral tribunal is formed. The RFA is therefore not intended to be equivalent to an English court style particulars of claim. However, it is not unreasonable to think that, in this scenario, the RFA would ideally include some information as to how HHI 2019 had stepped into HHI’s shoes. 

Foxton J’s comments on the nature of the requirements in Article 4(3) reveal a practical problem, namely whether parties to arbitration should be able to challenge an award on the basis of facts and arguments not raised in the arbitration. Section 73(1) of the Arbitration Act requires a party to an arbitration to act promptly if they consider there are grounds to object to the arbitral tribunal’s jurisdiction. A party that fails to do so, despite having knowledge of the relevant circumstances, may lose the right to raise a challenge under section 67.

On the facts however, Foxton J considered that the situation did not arise under section 73 because the section 67 challenge was unsuccessful. This confirms the nature of section 73 as a subsequent inquiry to section 67.

Enyo law represents parties in relation to the enforcement of their commercial contracts. We also act before the English courts to enforce or set aside arbitral awards, or secure urgent interim relief. If you would like to discuss the contents of the article further or the specificities of your dispute, please contact Jonathan Brook or Caroline Croft.