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The Court of Appeal judgment in Kabab-I SAL (Lebanon) v Kout Food Group (Kuwait)  EWCA Civ 6 was handed down 20 January 2020.
In this instance, the Court of Appeal refused to enforce an arbitration award against a non-party. A 'Franchise Development Agreement' (FDA) had been entered into between Kabab-ji SAL (Lebanon) (KJS) & Al Homaizi Foodstuff Co who, following corporate reorganisation, became Kout Food Group (Kuwait) (KFG). There was a dispute and the question arose whether KFG had become an additional party to the FDA and therefore to the arbitration agreement. It was held ‘No Oral Modification’ (NOM) clauses were effective in preventing contracting parties from being bound by variations unless all contractual formalities were complied with. In the current case, it was found KFG was not a party to the FDA or the arbitration agreement as the requirement for written notice had not been followed. The finding by the Court of Appeal also underlines the importance in including an express governing law provision within an arbitration clause otherwise this would (generally) follow the main contractual agreement.
The key points of interest for food business groups and other group business operators were
(1.) on the application of the 'No Oral Modification' clause and
(2.) choice of law governing the arbitration agreement:
For commercial contract queries please contact Simon Elsegood Tel: +44 (0) 1603 693449 (Ext 3449) Simon.Elsegood@Mills-Reeve.com
Associate (Food Law)
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