Aikens LJ explained: ‘It is necessary first to analyse the structure of section 9(1) and (4) of the AA 1996, to see where the burden lies and what standard of proof is required when there is an application for a stay of proceedings because one side asserts that two parties are bound by an arbitration agreement to submit the disputes being litigated to arbitration and the other side asserts that there was no concluded arbitration agreement or it is ‘null and void’. Section 9(1) and (4) are based on article II of the New York Convention 1958. That stipulates that each contracting state ‘shall’ recognise arbitration agreements in writing and it further obliges a court of a contracting state to refer the parties to arbitration if requested to do so by one of the parties in the context of an action in a matter which is the subject of an arbitration agreement, unless the court ‘finds that the said agreement is null and void, inoperative or incapable of being performed’.
That has been translated into the terms of section 9(1) so as to give a party the right to apply for a stay of proceedings ‘in respect of a matter which under the [arbitration] agreement is to be referred to arbitration’. Therefore, it seems to me in principle that there is a burden on the party asserting that there is: (a) a concluded arbitration agreement as defined in the 1996 Act; and (b) that it covers the disputes that are the subject of the court proceedings, to prove that this is the case. This is borne out by the authorities. If the party seeking a stay cannot prove both (a) and (b), then there is no jurisdiction to grant a stay under section 9(1) and (4) of the AA 1996. However, if the court considers that it cannot decide those issues for itself in a summary fashion on the written evidence, it has two other options, as this court made clear in Al-Naimi v Islamic Press Agency Inc.40 It can direct an issue to be tried, pursuant to CPR 62.8(3), or it can stay the proceedings (under its inherent jurisdiction) so that the putative arbitral panel can decide the issue of the existence of the arbitration agreement, pursuant to section 30 of the AA 1996. If the court decides that it will and can determine whether or not there was concluded arbitration agreement on the written evidence before it then, in my view, the authorities establish that it is for the party asserting the existence of the concluded arbitration clause to prove it on a balance of probabilities. As I point out below, the position appears to be different if the court decides, on an application for a stay, that it cannot, on the materials before it, determine whether there was a concluded arbitration agreement.
Under section 9(4) the court ‘shall grant a stay’ unless ‘satisfied’ that the arbitration agreement is ‘null and void, [or] inoperative . . .’. This means, in my view, that once the first party has established the existence of an apparently concluded relevant arbitration agreement and that it covers the matters in dispute in the proceedings, it is for the party resisting a stay to ‘satisfy’ the court apparently existing arbitration agreement is ‘null and void’.
. . .
As for the standard of proof that must be achieved by a party wishing to establish that an arbitration agreement is ‘null and void’ or ‘inoperative’, the starting point must be the wording of section 9(4). That stipulates that a stay will be granted unless the court is ‘satisfied’ that the arbitration agreement is ‘null and void’ or ‘inoperative’ or ‘incapable of being performed’. The wording in article II of the New York Convention is stronger: it states ‘unless [the court] finds that’ the arbitration agreement is ‘null and void’ and so forth. The words ‘satisfied’ and ‘find’ suggest that, in the context of civil proceedings in the English court, the standard of proof which must be attained in order that the court should refuse a stay is one of the balance of probabilities.
I think that this must be correct. After all, it is for the court finally to decide the issue of whether or not to refuse a stay because the arbitration agreement is ‘null and void’ or ‘inoperative’. No other tribunal has or can have this jurisdiction.
In theory I suppose the court could order that there be a trial of an issue to determine whether the arbitration agreement was ‘null and void’ or ‘inoperative’. But if the evidence and possible findings going to the issue of whether the arbitration agreement is ‘null and void’ or ‘inoperative’ also impinge on the substantive rights and obligations of the parties the court is unlikely to do so unless such a trial can be confined to ‘a relatively circumscribed area of ‘investigation’. Otherwise, in such a case, where the court is satisfied of the existence of the arbitration agreement and that the matters in dispute are within its scope, then logically it must be for the arbitral tribunal finally to decide the ‘section 9(4) matters’, assuming it has competence-competence to do so. In such a case, the right course for the court to take is to grant a stay under section 9(4) and let the arbitral tribunal get on with determining the dispute.’
Judges:
Lord Justice Laws
Lord Justice Aikens
And
Mr Justice Mann
Citations:
[2013] EWCA Civ 784, [2013] 2 Lloyd’s Rep 242, [2013] 2 CLC 206
Links:
Statutes:
Jurisdiction:
England and Wales
Citing:
Approved – Golden Ocean Group Ltd v Humpuss Intermoda Transportasi Tbk Ltd and Another ComC 16-May-2013
The ‘Barito’) Application for permission to serve an arbitration claim form out of the jurisdiction on the First and Second Defendants and for an interim ‘anti-arbitration’ injunction to restrain the Second Defendant from pursuing arbitration . .
Cited by:
Cited – Soleymani v Nifty Gateway Llc ComC 24-Mar-2022
Arbitration jurisdiction applications stayed
The claimant sought declaratory relief as to the basis of a purchase after he placed a bid for a blockchain-based non-fungible token (also known as an NFT) associated with an artwork by the artist known as Beeple titled ‘Abundance’. The court was . .
Lists of cited by and citing cases may be incomplete.
Arbitration, Jurisdiction
Updated: 03 April 2022; Ref: scu.512122
