The High Court decides: Does a dispute resolution clause in a settlement agreement supersede an earlier inconsistent dispute resolution clause in a prior contract?

In Destin Trading Inc v Saipem SA [2025] EWHC 668 (Ch) the High Court recently confirmed the principle that a dispute resolution clause in a subsequent settlement agreement will generally supersede an earlier dispute resolution (‘DR’) clause. The case is a reminder that parties to settlement agreements should note whether the DR clause within that agreement differs from a DR clause in a prior contract and consider what that may mean if they later wish to challenge the settlement agreement. 

Background to the dispute - The Frame Agreements

In 2012 Destin, a Panamanian company providing management and logistical services, including the chartering of vessels and related equipment, to partners in the offshore oil and gas industry in Africa signed the Frame Agreements with Saipem, a French engineering company.  The Frame Agreements included specific dispute resolution provisions mandating that any disputes arising out of or in connection with the Frame Agreements, which were not settled amicably within forty-five days, were to be submitted to ICC arbitration seated in Switzerland. The Frame Agreements were terminated by the Settlement Agreement and with that all monies due under the Frame Agreements. 

The Settlement Agreement          

The Settlement Agreement contained a clause granting the Courts of England and Wales exclusive jurisdiction to settle any dispute under English Law arising out of or in connection with the Settlement Agreement, including disputes regarding its existence, validity, or termination. The Settlement Agreement also contained an entire agreement clause. 

The claim and application before the court

Destin filed a claim in the English High Court against Saipem, alleging that Saipem made fraudulent and/or negligent misrepresentations inducing Destin to enter into the Settlement Agreement. Destin sought rescission of the Settlement Agreement and restitution of the sums it claims were due to it. In response Saipem issued an application under s.9 Arbitration Act 1996 to stay the proceedings on the basis that as the monetary claims arose out of the prior Frame Agreements the arbitration clauses within those agreements should apply to stay the action.   

Decision of the Court

The Court refused the stay, confirming the principle that a DR clause in a subsequent settlement agreement will generally supersede an earlier DR clause.  Andrew Lenon KC, sitting as a High Court judge, said that there is “clear authority for the proposition that dispute resolution clauses in a settlement or termination agreement should generally be construed on the basis that they are intended to have a superseding or overriding effect”.

In its submissions Saipem proposed that the court should adopt a two-stage test. First, the court must determine what, in substance, the relevant matters are which the parties have raised or foreseeably will raise in the court proceedings. Secondly, the court must determine in relation to each such matter whether it falls within the scope of the arbitration agreement (Mozambique v Privinvest [2023] UKSC 32). The court rejected this test because in substance the “legal source” of the monetary relief claims was the Settlement Agreement and the general law of deceit, not the prior Frame Agreements. 

The court also noted that the Settlement Agreement expressly terminated the Frame Agreements and considered them null and void adding to the reasoning that the arbitration clauses in the Frame Agreements could not survive. This interpretation was consistent with the reasoning in previous cases, such as Monde Petroleum v Westernzagros Limited [2015] EWHC 67 (Comm), where a similar jurisdiction clause in a settlement agreement was found to supersede an earlier arbitration agreement. 

Practical Takeaways

Settlement agreements are often drafted after long hours of negotiation and the boiler plate provisions contained within them are often overlooked in the rush to sign the agreement. This case serves as a reminder that all clauses should be checked in relation to prior agreements to ensure the impact of subsequent DR clauses within those agreements are considered in the context of the prior agreement.

Sophie Eyre, Federico Valle and Harry Arnold acted for Destin