May, 2025 - Undisclosed but not unenforceable: MSH Ltd v HCS Ltd

Introduction

When drafting or reviewing commercial contracts, it’s easy to focus solely on the parties named in the agreement. But what happens when an unseen party steps in to enforce that contract? The recent Commercial Court decision in MSH Ltd v HCS Ltd [2025] EWHC 815 (Comm) serves as a practical reminder of the reach of the undisclosed principal doctrine under English law—and how it can impact the enforcement of contracts and arbitration clauses. This case highlights the importance of understanding agency relationships and ensuring that contracts are drafted with clarity to avoid surprises down the line.

Factual Background

On 28th September, 2020, MSH Ltd entered into a contract with CTW Ltd for the sale of Colombian nut coke. The contract was governed by English law and contained a London arbitration clause. Although CTW Ltd was named as the buyer in the sale contract, the financial arrangements were handled differently. The payment for the cargo was made through a letter of credit issued not by CTW Ltd, but by HCS Ltd, a separate legal entity.

Following issues with the cargo’s quality and delivery schedule, HCS Ltd commenced arbitration proceedings against MSH Ltd. HCS asserted that it had been the undisclosed principal behind CTW Ltd throughout the whole transaction, and as such, was entitled to enforce the terms of the sale contract—including the arbitration clause. It sought over USD 3 million in damages, claiming losses arising from the shipment delays and alleged non-conformities.

The arbitration tribunal upheld HCS Ltd’s position and issued an award in its favour. MSH Ltd challenged the tribunal's jurisdiction under section 67 of the Arbitration Act 1996, arguing that HCS Ltd was neither a party to the original contract nor the arbitration agreement. The matter came before the Commercial Court to determine whether HCS Ltd were entitled to enforce the contract and commence arbitration proceedings as undisclosed principal.

Judgment

The Commercial Court was asked to consider whether HCS Ltd, as an undisclosed principal, could enforce the contract and whether it was bound by the arbitration clause. The court found that CTW Ltd had acted with actual authority on behalf of HCS Ltd, relying on the commercial relationship between the parties and the fact that HCS provided the letter of credit. This supported the existence of an agency relationship.

The court reaffirmed the traditional position under English law that an undisclosed principal can enforce a contract made by its agent unless the contract explicitly or implicitly excludes such a possibility. In this case, there was no indication in the contract that enforcement was limited to the named buyer. The absence of any clause excluding third-party rights or limiting enforceability to CTW Ltd meant that HCS could step in as principal.

The arbitration clause was also central to the dispute. The court confirmed that if an undisclosed principal chooses to enforce a contract, it must also accept the burden of all contractual terms, including any arbitration agreement. As such, HCS Ltd was entitled to rely on the arbitration clause but was also bound by it.

Comment

The decision in MSH Ltd v HCS Ltd reinforces a vital commercial lesson: legal obligations and rights under a contract can extend beyond the names on the document. English law continues to recognise and apply the doctrine of undisclosed principals, and this judgment makes it clear that such principals can enforce contracts—and be bound by them—when acting through authorised agents.

Practically speaking, parties must ensure that contracts are carefully drafted to reflect the true commercial relationships and to control who may enforce or be bound by the agreement. If a party wishes to exclude undisclosed principals or limit the scope of arbitration clauses, such exclusions must be expressly stated. Likewise, when engaging with intermediaries, it is important to investigate the commercial realities behind the transaction to avoid being caught off guard by claims from previously unidentified principals.

Ultimately, this case serves as a reminder to always draft with foresight, not just formality.

If Members have any questions in relation to the above issues they are invited to contact the Club for further information.