Destin v Saipem: a cautionary tale on the interplay of settlement agreements and arbitration agreements

By Jonathan Clarke, Associate

Destin Trading Inc v Saipem SA [2025] EWHC 668 (Ch)

In a tale told far too often, two parties fell out over an alleged payment issue and then disagreed over what was covered by their subsequent settlement agreement.

This disagreement led to Destin Trading Inc (“Destin”) commencing English High Court proceedings alleging that Saipem SA (“Saipem”) had made false promises amounting to fraudulent and/or negligent misrepresentation. As a result, Destin claimed that the settlement agreement had been rescinded, and it now wanted to be paid the original outstanding sums. Saipem denied any wrongdoing and submitted a stay application to the High Court for the dispute to be resolved by ICC arbitration in accordance with the arbitration agreements in the underlying commercial contracts.

On 24 March 2025, Mr Andrew Lenon KC dismissed Saipem’s stay application and held that the exclusive jurisdiction clause in the parties’ settlement agreement superseded the underlying arbitration agreements.

Background

The dispute arose from the Congo River Crossing Project in Angola. Saipem is a French engineering company and provides project management, infrastructure and plant services to the offshore oil and gas industries and activities in Africa. Destin is a Panamanian company which provides management and logistical services, including the chartering of vessels and related equipment, to partners engaged in the offshore oil and gas industry.

In September and October 2012, Destin and Saipem entered into three Frame Agreements (each with ICC arbitration clauses incorporated into them) where Destin agreed to provide marine vessels and other equipment and services to Saipem. As is usually the case, all was going well until a payment dispute arose. Destin claimed that it had been underpaid by US$6,805,020.99 for services relating to the Congo River Frame Agreement.

The parties temporarily resolved their differences and entered into a settlement agreement (with an exclusive jurisdiction clause for English Courts) on 5 November 2013 where Destin’s payment dispute was resolved, and the three Frame Agreements were terminated (the “Settlement Agreement”). However, another dispute has now emerged, and Destin has asked the English Courts to rescind the Settlement Agreement and order payment of the original outstanding sums due to Saipem’s false promises/misrepresentations. Destin claims that it was promised new contracts and work for years to come in exchange for entering into the Settlement Agreement. Saipem denies this.

Destin commenced its claim before the English Courts pursuant to the dispute resolution clause in the Settlement Agreement. Saipem applied for a stay under section 9 of the Arbitration Act 1996 arguing that the most appropriate forum was ICC arbitration in line with the dispute resolution clauses in the three Frame Agreements.

The Clauses

The Frame Agreements’ dispute resolution clause provides:

“50.2    Unless otherwise stated in the AGREEMENT, all disputes arising out of or in connection with the AGREEMENT DOCUMENTS which are not settled amicably under the preceding paragraph of this Clause within forty-five (45) Calendar Days after receipt of the above-mentioned written request, shall be submitted by either PARTY to arbitration in accordance with the Rules of Arbitration of the International Chamber of Commerce by three (3) arbitrators appointed in accordance with the said rules.

50.3      Unless otherwise stated in the AGREEMENT, the arbitration proceeding shall be held in London (United Kingdom) and conducted in the English language.”

The Settlement Agreement’s dispute resolution clause provides:

“10.      The Parties irrevocably agree that the Courts of England and Wales shall have exclusive jurisdiction to settle any dispute arising out of or in connection with this Agreement (including a dispute regarding the existence, validity or termination of this Agreement).”

Saipem’s position

In the stay application, Saipem submitted that Destin’s monetary claims were disputes arising out of or in connection with the Frame Agreements, because on Destin’s own case the Settlement Agreement had allegedly been rescinded. Further, all of Destin’s monetary claims depended on the position of the parties under the Frame Agreements if they were reinstated and so fell within the jurisdiction of the ICC arbitration agreement. The Settlement Agreement dispute resolution clause could not reach back to events pertaining to the Frame Agreements.

Saipem referred to a variety of cases, but principally relied upon Mozambique v Privinvest1 in support of its position, which stated:

“the court in considering such an application [to stay proceedings pursuant to Section 9] adopts a two-stage process. First, the court must determine what the matters are which the parties have raised or foreseeably will raise in the court proceedings, and, secondly, the court must determine in relation to each such matter whether it falls within the scope of the arbitration agreement.”

Destin’s position

Destin submitted that the monetary claims were essentially for damages in deceit arising out of misrepresentations made in relation to the Settlement Agreement and so fell within the “arising out of or in connection with” wording in the Settlement Agreement.

Destin argued that the dispute resolution clause in the Settlement Agreement superseded the dispute resolution clause in the Frame Agreements. In support of its position, Destin heavily relied upon the case of Monde Petroleum v Westernzagros Limited,2 which shared near-identical facts to its own case. In Monde, the parties had operated a consultancy agreement containing an ICC arbitration clause. A dispute arose with Monde seeking payment of outstanding invoices. The parties settled those disputes under a termination agreement, which terminated the consultancy agreement and stated that any disputes should be resolved before the English Courts. Similar to this case, Monde then subsequently brought a court claim to rescind the Termination Agreement for misrepresentation and for damages representing what it would have earned under the terminated consultancy agreement.

Ultimately, Popplewell J (as he then was) reasoned that:

“Where parties to a contractual dispute enter into a settlement agreement, the disputes which it can be envisaged may subsequently arise will often give rise to issues which relate both to the settlement agreement itself and to the previous contract which gave rise to the dispute. It is not uncommon for one party to wish to impeach the settlement agreement and to advance a claim based on his rights under the previous contract. In such circumstances rational businessmen would intend that all aspects of such a dispute should be resolved in a single forum. Where the settlement/termination agreement contains a dispute resolution provision which is different from, and incompatible with, a dispute resolution clause in the earlier agreement, the parties are likely to have intended that it is the settlement/termination agreement clause which is to govern all aspects of outstanding disputes, and to supersede the clause in the earlier agreement, for a number of reasons”3 [Emphasis added].

Decision

The judge favoured Destin’s position and concluded that the dispute resolution clause in the Settlement Agreement prevailed over the arbitration agreements in the Frame Agreements. On this basis, the judge dismissed the stay application and noted that:

“The authorities relied on by Saipem […] were concerned with the allocation of disputes between competing dispute resolution provisions. They were not concerned with the construction of a dispute resolution clause in a settlement or termination agreement. Such a dispute resolution clause is in a special category, as explained in Monde. For this reason, these authorities did not provide any real support for Saipem’s application”4 [Emphasis added].

Comment

Destin v Saipem should serve as a cautionary tale for parties to always include any promises made in the actual settlement agreement rather than leave certain aspects of the bargain to chance. If it isn’t written down in the agreement, then you are just causing problems for yourself.

This case also provides a harsh reminder that dispute resolution clauses shouldn’t be treated as a simple boilerplate at the bottom of a settlement agreement and that parties need to think carefully about the scope and interplay of their dispute resolution clauses across agreements. In the words of this judge, “a [settlement agreement] dispute resolution clause is in a special category”.

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• 1. [2023] UKSC 32 at [72].
• 2. [2015] 1 Lloyd’s Rep 330.
• 3. Ibid at [38].
• 4. [2025] EWHC 668 (Ch) at [38].