Behind the Curtain: Enforcing Contracts as an Undisclosed Principal in English Law
min readExecutive Summary
In MSH Ltd v HCS Ltd [2025] EWVH 815 (Comm), the English Commercial Court reaffirmed the ability of an undisclosed principal to enforce a contract under English law, including an arbitration clause. The Court upheld an arbitral award in favour of HCS Ltd, despite it not being named in the underlying contract, on the basis that one of named parties to the contract, CTW Ltd, acted with actual authority and intended to contract on HCS Ltd’s behalf.
The Court found that standard boilerplate clauses – such as entire agreement or confidentiality clauses – do not, without express wording, exclude the application of the undisclosed principal doctrine.
Factual Background
On 28 September 2020, MSH Ltd and CTW Ltd entered into a contract for the sale and purchase of a quantity of Colombian nut coke . Although CTW Ltd was the named buyer, the financial arrangements, including a letter of credit supporting the transaction, were facilitated by HCS Ltd .
HCS Ltd and CTW Ltd had a commercial relationship dating back to 2018. There was no written agency agreement, and their communications occurred primarily through phone calls, texts, WhatsApp, and occasional emails.
Following an alleged repudiatory breach of the contract, HCS Ltd initiated arbitration proceedings against MSH Ltd and was awarded a favourable decision on 5 April 2024. MSH Ltd challenged the majority arbitration award under s67 of the Arbitration Act 1996 for lack of substantive jurisdiction, arguing that HCS Ltd was not a party to the contract or the arbitration agreement within it.
The Court was asked to decide whether HCS Ltd could enforce the contract as an undisclosed principal under English law.
In a judgment dated 7 April 2025, Mr Justice Foxton dismissed the s.67 challenge. He found that CTW Ltd had actual authority and intention to act on behalf of HCS Ltd, establishing an agency relationship. As the contract did not exclude third-party rights, HSC Ltd was entitled to enforce the contract as an undisclosed principal. The Court also held that, by seeking to enforce the contract, HCS Ltd was bound by all its terms, including the arbitration agreement within it.
Key Legal Issues
The court identified a number of issues in coming to this decision, including the following:
Was CTW Ltd able to transact on HCS Ltd’s behalf?
The Court concluded that CTW Ltd intended to enter into the Contract on HCS Ltd’s behalf rather than as a principal. This was based on the established business model where CTW Ltd acted as an agent for HCS Ltd, with the latter providing the necessary financing and CTW Ltd receiving an agreed percentage of the profits of the transaction. This was supported by:
- Approval-seeking communication from CTW Ltd’s Head of Global Trading Solid Fuels to HCS Ltd before contracts were concluded;
- The absence of any sale contracts between CTW Ltd and HCS Ltd;
- Invoices describing CTW Ltd’s role as “facilitation of sale/purchase” or “share of proceeds”; and
- The fact that the funding came from HCS Ltd.
Did CTW Ltd have the authority to enter into this contract on HCS Ltd’s behalf?
The Court was satisfied that CTW Ltd intended to act as HCS Ltd’s agent in entering into the contract and was specifically authorised to do so by HCS Ltd. These requirements were satisfied by 28 September 2020 when the contract was entered into. Regular undocumented calls supported this inference, as did subsequent communications and HCS Ltd’s own conduct.
Had this not been the case, the Court would have accepted that HCS Ltd provided authority to CTW Ltd during WhatsApp exchanges on 12 and 13 October 2020, prior to formal execution of the written contract.
Did the terms of the Contract preclude HCS Ltd from enforcing it as an undisclosed principal?
The Court dismissed MSH Ltd’s reliance on four clauses to argue against the enforcement by an undisclosed principal. The Court held that:
- The reference in the contract to HCS Ltd providing the letter of credit made its role more, not less, likely a candidate for an undisclosed principal.
- The anti-assignment clause carried little weight in this context.
- The confidentiality clause did not preclude enforcement by someone already known to be involved, as the undisclosed principal is someone who is clearly within the “confidentiality club”.
- For the entire agreement clauseto be effective in these circumstances, it cannot be of a “boilerplate” nature (it was described as being of “the most vanilla kind”). The clause was not strong enough to exclude an undisclosed principal, especially without express wording.
Commentary
This case is a strong reaffirmation of the undisclosed principal doctrine under English law. While arbitration agreements typically bind only signatories, the Court confirmed that an undisclosed principal – if the legal criteria is satisfied – can enforce such agreements and be bound by them. To invoke the doctrine of undisclosed principal, three conditions must be met:
- The agent must have actual authority to act on behalf of the undisclosed principal;
- The agent must intend to contract on the principal’s behalf; and
- The contract or surrounding circumstances do not exclude this arrangement.
Mr Justice Foxton clarified that the doctrine of ratification did not apply to undisclosed principals and that the evidentiary burden for establishing that an undisclosed principal was entitled to enforce a contract was not inherently "heavy".
The judgment emphasises that boilerplate clauses (confidentiality, assignment, and entire agreement) are often insufficient to preclude the possibility of an undisclosed agency, unless expressly drafted to do so.
The judgment is a helpful reminder to practitioners of the need for clear drafting and robust due diligence. Identifying potential undisclosed principals early and addressing them in contract language is essential to avoid jurisdictional challenges and enforcement surprises down the line.
