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Validity Of Arbitration Agreement English Law

By December 19, 2020Uncategorized

6.1 Are there any laws or rules governing arbitration in your jurisdiction? If so, do these laws or rules apply to all arbitration proceedings that are in your jurisdiction? After much uncertainty, it is now a determined right that, if there is a challenge to the validity of the material contract between the parties, the arbitration clause survives such a challenge and arbitrators are free to determine the validity or not of the contract. It is only if the compromise clause is independently challenged that the court itself has the power to intervene. This is noted by Tomlinson J.A. in El Nasharty/J Sainsbury plc (No. 2) [2007] EWHC 2618 (Comm), where the assertion that the main agreement is tainted by duress does not violate the compromise clause it contains, thus, under the 1996 Arbitration Act, the suspension of judicial proceedings on the burden of coercion is far from inevitable. There are no formal conditions for the validity of an arbitration agreement. However, the 1996 Arbitration Act (the “1996 Act”), which governs arbitration procedures in England and Wales, applies only to written arbitration agreements (section 5, paragraph 1). The 1996 Act contains a number of mandatory and non-binding provisions to facilitate the arbitration process, and it is therefore strongly recommended that arbitration agreements be drawn up in writing. A party wishing to rely on an oral arbitration agreement could only rely on the old common law to settle its arbitration.

Under English law, arbitration agreements can be separated. This means that an arbitration agreement can be valid, even if the contract containing the arbitration agreement is invalid (z.B for misrepresentation) (Fiona Trust Corp/Privalov – Ors [2007] 4 All ER 951). In Fiona Trust`s version, the House of Lords also decided that parties to arbitration agreements generally intend that all disputes arising from their relationship be resolved by the same court, unless there is a contrary language. The issue is more complex when one party asserts that an arbitration agreement in one contract extends to claims arising from another contract between the same parties. In such cases, it is likely that courts and arbitration tribunals will carefully review contracts to determine the scope of the arbitration agreement (as can be seen in Trust Risk Group SpA/AmTrust Europe Ltd [2015] EWCA Civ 437). The Enka decision is a welcome decision to settle the long-running debate over the correct right of the arbitration agreement, in which no explicit choice has been made. However, the extent of the Tribunal`s useful clarification in this case should not be overstated. The court will begin with the first part of the Sulamerica test: whether the parties have made an explicit choice of law.

As the Court of Appeal shows in its recent Kabab-Ji SAL (Lebanon) v. Kout Food Group (Kuwait) [2020] EWCA Civ 6 (for which, see Stewarts` summary here), the court may use the principles of contractual interpretation in the search for such an express election, even if no explicit choice is clear at first sight. In other words, the parties should not move too quickly to questions two and three of the three-step test, as has sometimes been the case. We are now curious as to whether the Supreme Court agrees with the Court of Appeal`s approach, given that the leave to appeal and the stay of the injunction obtained by Enka were decided against the appeal.