A clause in the contract refered to arbitration: ‘any dispute or difference as to the construction of this contract or as to any matter or thing of whatsoever nature arising thereunder or in connection therewith.’
Held: The court should adopt a ‘generous’ interpretation of a clause referring disputes between contracting parties to arbitration. One should be slow to attribute to reasonable parties an intention that there should in any foreseeable eventuality be two sets of proceedings. If the parties have confidence in their chosen jurisdiction for one purpose, why should they not have confidence in it for the other?
An arbitration clause which includes the words ‘in connection with’ should be given a wide interpretation and will cover related claims for rectification, negligent mis-statement and the like.
May LJ said: ‘The question whether a dispute between the parties to a contract falls within an agreement to arbitrate is primarily a question of construction of the arbitration clause itself in the circumstances of a particular case: ‘In seeking to construe a clause of a contract, there is not scope for adopting either a liberal or a narrow approach, whatever that may mean. The exercise which has to be undertaken is to determine what the words used mean. It can happen that in doing so one is given to the conclusion that the clause is ambiguous, that it has two possible meanings. In those circumstances the court has to prefer one above the other in accordance with settled principles. If one meaning is more in accord with what the court considers to be the underlying purpose and intent of the contract, or part of it, than the other, then the court would choose the former rather than the latter. In some circumstances the court may reach its conclusion on construction by applying the contra proferentem rule. These are however well recognised principles of construction; they are not the consequences or examples of adopting any particular approach to the question of construction, save to ascertain the true intention of the parties and the correct meaning of the words used.’
and ‘However, I do not think that there is any principle of law to the effect that the meaning of certain specific words in one arbitration clause in one contract is immutable and that those same specific words in another arbitration clause in other circumstances in another contract must be construed in the same way. This is not to say that the earlier decision on a given form of words will not be persuasive, to a degree dependent on the extent of the similarity between the contracts and surrounding circumstances in the two cases. In the interests of certainty and clarity a court may well think it right to construe words in an arbitration agreement, or indeed in a particular type of contract, in the same way as those same words have earlier been construed in another case involving an arbitration clause by another court. But in my opinion the subsequent court is not bound by the doctrine of stare decisis to do so.
If I were wrong, then in any event it must be necessary to compare the surrounding circumstances in each case to ensure that those in the latter case did not require one to construe albeit the same words differently when used in the different context.’
Bingham LJ: ‘I would be very slow to attribute to reasonable parties an intention that there should in any foreseeable eventuality be two sets of proceedings’.
Balcombe LJ said that a dispute about a mistake leading to rectification was not a matter ‘arising’ under the contract but also that all words should as far as possible be given a meaning.
Bingham LJ, May LJ, Balcombe LJ
[1989] 1 QB 488, [1988] 2 All ER 577, (1987) 37 BLR 55, [1988] 3 WLR 867
England and Wales
Cited by:
Cited – Fiona Trust and Holding Corp and others v Privalov and others ComC 20-Oct-2006
The parties disputed whether their claim should be arbitrated.
Held: A claim as to whether the contract itself had been made was not one which could be arbitrated by provisions in that contract. It does not arise ‘under’ the contract. The . .
Cited – Premium Nafta Products Ltd (20th Defendant) and others v Fili Shipping Company Ltd and others; Fiona Trust and Holding Corporation v Privalov HL 17-Oct-2007
The owners of a ship sought to rescind charters saying that they had been procured by bribery.
Held: A claim to rescind a contract by reason of bribery fell within the scope of an arbitration clause under which the parties had agreed to refer . .
Lists of cited by and citing cases may be incomplete.
Arbitration, Contract
Leading Case
Updated: 09 November 2021; Ref: scu.245559