The contract between the parties said both that any disupte should be referred to arbitration, and that ‘The Courts in England shall have exclusive jurisdiction over it to which jurisdiction the parties hereby submit.’ The plaintiffs said the clauses were ineffective since they conflicted irreconcileably.
Held: The argument failed. Steyn J described that as an unattractive result. ‘It involves the total failure of the agreed method of dispute resolution in an international commercial contract. An incidental further result of such a conclusion would be that art. 9 (force majeure), which provides for a modification of the terms of the agreement by an arbitrator, will be deprived of all legal effect. On the other hand, if the arbitration agreement is valid, there is no legal difficulty in giving effect to the so-called hardship clause.
Fortunately, there is a simple and straight forward answer to the suggestion that cll. 13 and 14 are inconsistent. Clause 13 is a self-contained agreement providing for the resolution of disputes by arbitration. Clause 14 specifies the lex arbitri the curial law or the law governing the arbitration, which will apply to this particular arbitration. The law governing the arbitration is not to be confused with (1) the proper law of the contract, (2) the proper law of the arbitration agreement, of (3) the procedural rules which will apply in the arbitration. These three regimes depend on the choice, express of presumed, of the parties. In this case it is common ground that both the contract and the arbitration agreement are governed by English law. The procedural rules applicable to the arbitration are not rules derived from English law. On the contrary, the procedural regime is the comprehensive and sophisticated ICC rules which apply by virtue of the parties’ agreement.
What then is the law governing the arbitration? It is, as Martin Hunter and Alan Redfern, International Commercial Arbitration, page 53, trenchantly explain, a body of rules which sets a standard external to the arbitration agreement, and the wishes of the parties, for the conduct of the arbitration. The law governing the arbitration comprises the rules governing interim measures (e.g. Court orders for the preservation or storage of goods), the rules empowering the exercise by the Court of supportive measures to assist an arbitration which has run into difficulties (e.g. filling a vacancy in the composition of the arbitral tribunal if there is no other mechanism) and the rules providing for the exercise by the Court of its supervisory jurisdiction over arbitrations (e.g. removing an arbitrator for misconduct).
If cl 14 is read as specifying the law governing the arbitration, there is no inconsistency between cll. 13 and 14. Admittedly, the language is not felicitous: it provides for the exclusive jurisdiction of the English Courts ‘over it’, i.e. the agreement. Strictly, it should refer to the law governing the arbitration. This incongruity pales into insignificance, however, when compared to the unfortunate consequences of treating the arbitration clause in a non-domestic commercial agreement as pro non scripto.
In my view there is no inconsistency between cll. 13 and 14, and both clauses are valid and binding.’
Steyn J
[1991] 2 Lloyds Rep 127
England and Wales
Cited by:
Cited – McNicholas Plc v AEI Cables Limited TCC 25-May-1999
The claimant had subcontracted to supply cabling on the defendant’s project. The contract provided both for the exclusive jurisdiction of the English courts but also for arbitration. The defendant applied for the action to be stayed and referred to . .
Lists of cited by and citing cases may be incomplete.
Arbitration
Updated: 06 December 2021; Ref: scu.238326