Topic 3 - UK Arbitration. Arbitration Agreement

LLM 228 Arbitration Law, Practice and Procedure Topic 3: UK Arbitration.
Arbitration Agreement
Topic 3: UK Arbitration. Arbitration

Agreement
Topic Preview
This topic begins an examination of the two main arbitral regimes in the
UK, namely those under the Arbitration Act 1996 (for England and Wales)
and the Arbitration (Scotland) Act 2010 (for Scotland) and this topic
includes:
• Introduction to UK arbitration
• Territorial application
• General Principles
• Mandatory and non mandatory provisions
• Form and Definition of arbitration agreement
• Interpretation of the arbitration agreement
• Stay of Proceedings
Topic Content
1. Introduction to Arbitration in the UK
The UK is split into three distinct legal systems: (1) Scotland; (2) England
and Wales and (3) Northern Ireland. For the purposes of arbitration law in
the UK, there are two jurisdictions:
(1) Scotland, regulated by the Arbitration (Scotland) Act 2010; and

(2) England, Wales and Northern Ireland, regulated by the
Arbitration Act 1996 (referred to from now as ‘England’ for
convenience).
This module concentrates on these two arbitral regimes in some detail. It
is useful to have close access to these Acts as you read through.
In addition, during the topic content, reference will be made to provisions
of the Model Law as well as the Scottish 2010 Act. Although the Model Law
is not dealt with until later in the module, the student is advised to have a
© Robert Gordon University 2020-21 1

LLM 228 Arbitration Law, Practice and Procedure Topic 3: UK Arbitration. Arbitration Agreement
copy available in order to refer to its terms while reading this topic
material. A copy of the Model Law (as amended in 2006) can be
downloaded from the UNCITRAL website at:
http://www.uncitral.org/uncitral/en/uncitral_texts/arbitration/1985Model_arbitration.html
English Arbitration
The English arbitration regime is probably the most developed anywhere

in the world. The Scottish regime largely follows this – with some
interesting tweaks.
As a result, many clauses in international contracts will nominate England

as the “seat” of the arbitration (mentioned earlier and explained further
later) as well as the place of the arbitration.
In addition, English law is often chosen as the substantive law to apply in
any arbitration. For this reason, the English courts have built up a
considerable level of jurisprudence and case law in resolving arbitration
disputes. For reasons which will become obvious later, the arbitral disputes
which reach courts normally revolve around procedural problems and not
substantive problems. This means that for commercial parties, England is
regarded as a jurisdiction in which an arbitral dispute will be decided in a
more predictable and reliable way. Along with this significant experience in
dealing with arbitrations, England has acquired a large number of
experienced arbitrators as well as reputable ‘nominating bodies’ (bodies
which will keep a list of arbitrators it can recommend for appointment).
This also makes England one of the favourite international choices – and
hence it is used as the model for examination in this module. Of course,
there are other particularly important international arbitral regimes and
some of these will be dealt with (albeit in less detail) in this module.
However, many of the issues (and some of the solutions) found in England
are duplicated in other arbitral regimes.
As far as Scotland is concerned, a new arbitral regime has very recently
been introduced, under the Arbitration (Scotland) Act 2010. This Act will
not be examined in minute detail here, but it is referred to since although
it borrows heavily from the 1996 Act, it does so with some deviations, so
that some of the 2010 Act provisions provide an interesting contrast for
discussion of some of their 1996 Act equivalents.
The intention is then to examine the Arbitration Act 1996 provisions
logically and pointing out any distinctions/similarities with the 2010 Act
provisions as that process is undertaken. First, some explanation of each
of the regimes is necessary.
Arbitration Act 1996
As noted above, the English arbitration system is probably the most used
and best known in the world. The present system is based almost entirely
in one Act of Parliament, the Arbitration Act 1996 which came into force

on 31 January 1997. It is closely based on the Model Law (to be discussed

in a later topic) but with various important changes.
The most important difference is that the 1996 Act applies to all
arbitrations where the seat of the arbitration is in England, Wales or
Northern Ireland, not just commercial ones.
Before enacting the 1996 Act, a Departmental Advisory Committee was set
up by the government and asked to report. The committee produced two
reports:
• Departmental Advisory Committee on Arbitration Law, Report on the

Arbitration Bill, February 1996 (DAC 1996)
• Departmental Advisory Committee on Arbitration Law,

Supplementary Report on the Arbitration Act 1996, January 1997
(DAC 1997)
This committee produced these reports under the chairmanship of Lord

Justice Saville, a senior English judge at the time. The reports are an
especially useful and comprehensive guide to the meaning of the provisions
in the 1996 Act as well as a guide to the options explored and discarded
when the wording and content of the Act was being considered.
In addition, it should be noted that, although the 1996 Act is a relatively

comprehensive code for English arbitration, many gaps have still had to
have been filled by case law as will be seen below. Some case law under
the 1950 Arbitration Act (which was replaced by the 1996 Act) is still
relevant where the 1996 provision is identical or similar to its 1950
counterpart.
The 1996 Act is split into 4 parts:
• Part I- Arbitration Pursuant to an Arbitration Agreement (sections 1-
84)
• Part II- Other Provisions relating to Arbitration (sections 85-98)
• Part III- Recognition and Enforcement of Certain Foreign Awards
(sections 99-104)
• Part IV- General Provisions (sections 105-110)
By far the most important part of the Act for this module is Part I, and we
will concentrate mainly on the provisions in that Part. The relevant
provisions of the Act are reproduced at points throughout this and the next
four topics.
Arbitration (Scotland) Act 2010

Until relatively recently most of the arbitration law in Scotland came from
case law and very aged legislation.
Scotland has not seen the volume of arbitration business which has taken
place in England, and there has been very little international arbitration
business in Scotland over the years. Until 2010, the law of arbitration in

Scotland was scattered across several centuries of case law. Unlike in

England, there was no codified law of arbitration. There were only statutory
provisions, that dealt with certain limited aspects of the law of arbitration,
but they arguably muddied the waters as they had to be looked at
alongside the scattered common law. In 1990, the UNCITRAL Model Law
on International Commercial Arbitration 1985 (discussed in a later topic)
was incorporated into Scots Law, leaving the domestic Scots law applicable
only to domestic arbitrations.
One of the disadvantages of this environment was that the law of

arbitration was uncertain (because of a lack of volume of cases through
the courts), difficult to find and not user-friendly.
As a result of these, pressure built on the Scottish Government to introduce

legislation setting out a codified Scots Law of Arbitration.
The 2010 Act sweeps away all of the previously piecemeal case law and
legislation: all Scottish arbitrations are regulated by the 2010 Act. That Act
came into force on the 7th June 2010 and applies to all Scottish arbitrations
which began on or after that date, whether the agreement to arbitrate was
reached before, on or after 7th June 2010 (unless the parties agree that
the Act should not apply to a pre-7th June agreement1)
In some instances, the Scottish and English provisions are similar, and in
such cases the English case law will be influential in a dispute arising from
an arbitration in Scotland. As Lord Glennie said in one of the first references
to the Scottish courts:
“Since the Act was closely and unashamedly modelled on the English
Act, and reflects the same underlying philosophy, authorities on the
that Act (and its predecessor, the Arbitration Act 1979) in relation
to questions of interpretation and approach will obviously be of
relevance. There is no point in re-inventing the (arbitration) wheel.
In the written submissions relating to this application, both parties
have helpfully referred to authorities on the approach to granting
leave to appeal under the English Act.2
However, there are some important differences, and these will be

highlighted as these the discussion unfolds.
One major structural difference worth noting now is that the English Act
contains the substantive procedural rules within the body of the Act;
whereas the Scottish Act contains a number of operative provisions within
the body of the Act and then appends a detailed set of procedural rules
(known as the Scottish Arbitration Rules) as Schedule 1 to the Act. The
terms of the Act represent the law of Scotland in terms of the operation of
1
s.36 of the 2010 Act.
2
Arbitration Application No. 3 of 2011 [2011] CSOH 164 at para. 8

arbitrations – while the Rules appended set out the procedure to be

followed (at least to some extent).
These procedural rules are designated as being either “mandatory” or
“default”. In terms of the difference:
• It is possible to contract out of the default rules – either by
agreement or because an alternative set of arbitration rules has
been agreed and these are at variance with the default provisions.
• The mandatory provisions apply whatever the parties may have
otherwise agreed. This is explained in more detail below.
(This contrasts with the English 1996 Act, where the provisions apply in
their entirety if, without further specification, the 1996 Act is specified by
the parties or if England is the seat of the arbitration. In that case, if the
parties wish to disapply certain provisions, they may agree to do so, but
only with regard to the non-mandatory provisions (this is explained
below).)
2. Territorial Application
Sections 2 and 3 of the 1996 Act deal with where and when the Act applies.
Section 2 provides that the provisions of the Act apply where the seat is in
England, Wales or Northern Ireland
Thus, the ‘seat’ of the arbitration is usually the key territorial determining
factor for the application of much of the provisions of Part 1 of the Act.
However, the sections specified in s.2(2) allow the English courts to retain
certain jurisdiction in relation to arbitrations that have their seat elsewhere
- this allows, for example, legal proceedings in an English court to be
stayed in terms of s. 9 (see later) where the seat of the arbitration is
elsewhere, but where concurrent litigation is taking place in England and
Wales. In terms of s.2(3), certain powers exist in connection with arbitral
proceedings that have their seat other than in England and Wales, but the
court has discretion to refuse to exercise these powers where it finds, by
virtue of the seat being elsewhere, it is inappropriate to do so. In fact, in
connection with each of s. 2(2) and 2(3), the powers are exercisable where
the seat has not yet been designated or determined.
Section 2(4) takes this idea further, and gives all Part 1 powers to the court
where a seat has not yet been determined or designated. This time there
must be a connection with England and Wales that persuades that court
that such an exercise of power is appropriate.
Meaning of the ‘seat’ of the arbitration
Section 3 then deals with the important concept of the “Seat” of the
arbitration. It says as follows:
“In this Part "the seat of the arbitration" means the juridical seat of
the arbitration designated--

(a) by the parties to the arbitration agreement, or

(b) by any arbitral or other institution or person vested by the
parties with powers in that regard, or
(c) by the arbitral tribunal if so authorised by the parties,
or determined, in the absence of any such designation, having
regard to the parties' agreement and all the relevant
circumstances.”
The ‘seat’ of the arbitration is not the same as the place where the
arbitration is held. In addition, although the seat might be in England and
Wales, the parties can choose to apply the substantive law of a different
country - s.4 (5). The tribunal can rule on its own jurisdiction (s.30), but
this can be challenged (s.31) – see below on both points. Parties are free
(and are advised) to agree the seat, and this agreement will be respected
under s. 3(a); as will be agreement by the tribunal (with the consent of
the parties) or by an institution empowered by the parties to so nominate
(s. 3(b) and (c)). However, where the seat is not agreed and where there
is no mechanism for agreement, the court resorts to all the circumstances
of the case.
Mr Justice Aikens in the Commercial Court of the Queen’s Bench Division
provided some further guidance on such an exercise in Dubai Islamic
Bank v Paymentech Merchant Services Inc. 2001 1 Lloyds LR 65 at
paras, 40 and 52 where he stated:
“Section 3 states that "the seat of the arbitration means the juridical
seat of the arbitration". It is clear that "seat" is intended to refer to
some state or territory; hence the reference to "the seat of arbitration
[being] in England and Wales" in s. 2(1) of the Act. I think that the
location contemplated is a particular state or territory which is
associated with a recognisable and distinct system of law. So, the
"juridical seat of the arbitration" means the state or territory where,
for legal purposes, "the arbitration" is to be regarded as situated.... I
take the phrase "all the relevant circumstances" to mean just that. The
phrase must mean that a Court has to have regard to any connections
with one or more particular countries that can be identified in relation
to (i) the parties; (ii) the dispute which will be the subject of the
arbitration; (iii) the proposed procedures in the arbitration, including
(if known) the place of interlocutory and final hearings; (iv) the issue
of the award or awards”.
The more recent case of Arab National Bank v El-Abdali [2005] 1

Lloyd’s Rep. 541; [2004] EWHC 2381 provides further guidance. There,
Justice Morison in the Commercial Court was considering an application
under s. 72 of the 1996 Act for declarator that a purported arbitral award
was invalid. One of the questions considered was whether the seat of the
arbitration was in England and Wales, and in relying on the last part of s.
3, the judge considered the following factors as being relevant:

1. The arbitrator claimed to be a member of the London Court of

International Arbitration (LCIA) and the rules of that institution
contained a default provision nominating London as the seat of the
arbitration.
2. The tribunal, in making the award, relied upon the Theft Act, English
legislation.
3. In the award, the tribunal ordered that the content of the award be
published in English newspapers and magazines.
4. The award was ordered to be recorded at Companies House in
Cardiff (the headquarters of the UK company registry).
5. The only steps taken to enforce the award had been taken in
England, when they could have been taken in Saudi Arabia.
For these reasons, the judge held that the seat of the arbitration was
England.
In ABB Lummus Global Ltd. v Keppel Fels Ltd. [1999] 2 Lloyd’s Rep.
24 Mr Justice Clarke in the Commercial Court held that as the parties had
agreed a place for the arbitration to take place in accordance with the LCIA
Rules, this meant that they had agreed a juridical seat. While normally
agreement on a place is not decisive, if this decision is correct, such
agreement in the context of institutional rules is decisive (the decision is
supported by Harris, Planterose and Tecks).
“Seat” vs “Place”
The seat and the place where the arbitration proceedings take place are
not one and the same.
In the recent case of Braes of Doune Wind Farm (Scotland) Ltd v

Alfred McAlpine Business Services Ltd. [2008] 1 Lloyd’s Rep. 608.
There, a dispute arose over the works in connection with the installation of
36 wind turbine generators at a site in Scotland. The dispute arose out of
delay and whether this triggered a liquidated damages clause.
On the one hand, disputes arising out of the contract were referred to
arbitration under English Law and the English courts were to have
jurisdiction (subject to any arbitration process, which was to be carried out
under a set of arbitral rules). The 1996 Act was nominated as the
procedural regime to govern any arbitration.
On the other hand – and causing a problem - the seat of the arbitration
was nominated as Glasgow, Scotland.
Taking all of this into account, Akenhead, J (an English judge, sitting in
England) decided that the reference to the seat being in Glasgow was
actually intended as a reference to the place of the arbitration. The correct
construction of the position was that the true seat of the arbitration was
England.

This case demonstrates that reference to a specific seat can be ineffective

where that express reference is regarded as not a reference to the true
seat, which is a matter of circumstances, not label. This is despite the
terms of s.3(a). This case was also followed by Shashoua v Sharma
(2009) 2 Lloyd’s Rep. 376 where parties agreed to set up a joint venture
using an India company for a project. Shareholders agreed that the
substantive law of contract would be Indian Law but that disputes would
be referred to arbitration under the ICC Rules and for the “venue” to be
London. Both parties acknowledged that the seat of the arbitration can be
different from the venue. The defendant’s opposed this and his argument
was rejected as it was held that:
“When…there is an express designation of the arbitration venue as

London and no designation of any alternative place as the seat…the
inexorable conclusion is…that London is the judicial seat and English
law the crucial law”. 3
The Scottish Position
This is regulated by s.3 of the 2010 Act, and while it is worded differently
from the 1996 Act provision, it is not substantially different (except, of
course, that the seat, whether agreed or determined, must be in Scotland)
and it is likely that the English case law on the definition of the seat would
apply in Scotland.
3. General Principles
These are set out in s.1 of the 1996 Act:
“The provisions of this Part are founded on the following principles,

and shall be construed accordingly--
(a) the object of arbitration is to obtain the fair resolution of
disputes by an impartial tribunal without unnecessary delay or
expense;
(b) the parties should be free to agree how their disputes are
resolved, subject only to such safeguards as are necessary in the
public interest;
(c) in matters governed by this Part the court should not intervene
except as provided by this Part.”
It is crucial to note that these apply throughout the arbitration process.

This setting out of general principles is unusual in a piece of UK legislation,
which usually provides detailed provisions. (for comment see the DAC
Report 1996 paras 18-22). These principles are regularly referred to by
3
See also Enercon GmbH v Enercon (India) Ltd [2012] EWHC 689 (Comm) and
discussion (albeit obiter) at para. 54ff

both arbitral tribunals and by the courts in considering arbitral proceedings.

However, it should be noted that these principles would never be used as
the sole basis of a decision – they are only used as guidelines for the
interpretation of other sections in the Act. We will refer to the principles as
we consider the remainder of Part 1 as and when their application arises.
The Scottish position

This is remarkably similar with almost identically worded “founding
principles” in s.1 of the 2010 Act.
4. Mandatory and Non-mandatory Provisions
Arbitration is based on the agreement of the parties. However, there are

areas where the Act provides that – rather than parties being free to agree
– there are certain restrictions on that autonomy.
The relevant section is section 4.
“s 4 Mandatory and non-mandatory provisions.
(1) The mandatory provisions of this Part are listed in Schedule 1

and have effect notwithstanding any agreement to the contrary.
(2) The other provisions of this Part (the "non-mandatory
provisions") allow the parties to make their own arrangements by
agreement but provide rules which apply in the absence of such
agreement.
(3) The parties may make such arrangements by agreeing to the
application of institutional rules or providing any other means by
which a matter may be decided.
(4) It is immaterial whether or not the law applicable to the
parties' agreement is the law of England and Wales or, as the
case may be, Northern Ireland.
(5) The choice of a law other than the law of England and Wales
or Northern Ireland as the applicable law in respect of a matter
provided for by a non-mandatory provision of this Part is
equivalent to an agreement making provision about that matter.
For this purpose an applicable law determined in accordance with
the parties' agreement, or which is objectively determined in the
absence of any express or implied choice, shall be treated as
chosen by the parties.”
So, each section is either mandatory or non-mandatory. Mandatory

provisions cannot be contracted out of and these are specified in
Schedule 1 to the Act as follows:
sections 9 to 11 (stay of legal proceedings);

section 12 (power of court to extend agreed time limits);
section 13 (application of Limitation Acts);
section 24 (power of court to remove arbitrator);
section 26(1) (effect of death of arbitrator);

section 28 (liability of parties for fees and expenses of

arbitrators);
section 29 (immunity of arbitrator);
section 31 (objection to substantive jurisdiction of tribunal);
section 32 (determination of preliminary point of jurisdiction);
section 33 (general duty of tribunal);
section 37(2) (items to be treated as expenses of arbitrators);
section 40 (general duty of parties);
section 43 (securing the attendance of witnesses);
section 56 (power to withhold award in case of non-payment);
section 60 (effectiveness of agreement for payment of costs in
any event);
section 66 (enforcement of award);
sections 67 and 68 (challenging the award; substantive
jurisdiction and serious irregularity), and sections 70 and 71
(supplementary provisions; effect of order of court) so far as
relating to those sections;
section 72 (saving for rights of person who takes no part in
proceedings);
section 73 (loss of right to object);
section 74 (immunity of arbitral institutions, etc.);
section 75 (charge to secure payment of solicitors' costs).
All other provisions (non-mandatory provisions) can be altered by the

parties’ agreement or may be left out. Some of the more important
provisions are mandatory.4
This is subject to the proviso that certain sections (essentially sections 1-

6 of the Act) are regarded as effectively mandatory, even although they
are not expressly so (see Harris, Planterose and Tecks in The Arbitration
Act 1996: A Commentary, discussed above). This is because they are so
important to the operation of the Act that they cannot be contradicted by
any term agreed by the parties, as is usually the case with a non-
mandatory provision under section 4(2).
The idea behind the mandatory provisions is that they represent a basic
framework for the regulation of an arbitration. Any essential clauses to
make the arbitration process work will be covered within the mandatory
provisions, so that if parties simply choose to apply only the mandatory
provisions and nothing else, the arbitration should be able to operate
effectively.
It is important to note that only where the seat of the arbitration is in

England and Wales must the mandatory provisions apply. If the parties
make no specific agreement on the non-mandatory provisions, they will
also apply, by default.
In addition, where the seat is in England and Wales, the 1996 Act must
apply even where the parties have agreed to the contrary, for example
where there is an attempt to specifically exclude the application of the Act.
4
(for comment see the DAC Report 1996 paras 28-30).

However, the parties may agree to apply institutional rules, as long as they
do not conflict with any of the mandatory provisions.
Where institutional rules are adopted and where something is not provided
for, it is thought that the relevant provision of the 1996 Act will ‘fill the
gap’. There is a danger, then, in choosing institutional rules that may clash
with the 1996 Act. However, as might be expected, many sets of rules are
formulated to be compatible with the 1996 Act provisions, at least as far
as the mandatory terms are concerned.
Also, parties can choose the domestic arbitration law of another state, but
only in respect of non-mandatory provisions in the Act (s.4 (5)). This can
be complex and the parties insisting on adopting this course may wish to
specify precisely which non-mandatory provisions are to be replaced, since
if a provision in a foreign system is not on all fours with the equivalent
1996 Act provision, it could be argued that the latter provision prevails, or
at least does so in part. Note that the reference to applicable law here is
not a reference to the substantive law to be applied - this is a matter of
choice too but is dealt with under a different provision- s. 46.
As explained above, the 2010 Act is structured somewhat differently. If the

2010 Act applies, the parties must accept all of the provisions in the main
body of the Act plus at least the mandatory provisions of the Scottish
Arbitration Rules (set out in Schedule 1 of the Act). They are free to agree
to cut out (or replace) any or all of the Default provisions of the Rules. If
the parties say nothing and the 2010 Act applies, all of the Act (including
all of the Rules) apply.
In the rules, the Mandatory provisions are marked with an ‘M’, the Default
provisions with a ‘D’. See ss.7-9 of the 2010 Act.
Despite this distinct structure, the effect of these provisions is not
significantly different from the 1996 Act and the aim is the same: to
provide a minimum and workable compulsory structure for arbitrations
while allowing the parties the flexibility to agree individual non-
fundamental procedural points.
5. Form of Arbitration Agreement
Section 5, like the Model Law provides that the agreement should be in
writing but unlike the Model Law s. 5 provides a detailed breakdown of
what this means:
“s 5 Agreements to be in writing.
(1) The provisions of this Part apply only where the arbitration
agreement is in writing, and any other agreement between the parties
as to any matter is effective for the purposes of this Part only if in
writing.

The expressions "agreement", "agree" and "agreed" shall be construed

accordingly.
(2) There is an agreement in writing—

(a) if the agreement is made in writing (whether or not it is signed by
the parties)
(b) if the agreement is made by exchange of communications in writing,
or
(c) if the agreement is evidenced in writing.
(3) Where parties agree otherwise than in writing by reference to terms

which are in writing, they make an agreement in writing.
(4) An agreement is evidenced in writing if an agreement made
otherwise than in writing is recorded by one of the parties, or by a third
party, with the authority of the parties to the agreement.
(5) An exchange of written submissions in arbitral or legal proceedings
in which the existence of an agreement otherwise than in writing is
alleged by one party against another party and not denied by the other
party in his response constitutes as between those parties an
agreement in writing to the effect alleged.
(6) References in this Part to anything being written or in writing include
its being recorded by any means.”
The following points can be made:
1. There can be a reference to material elsewhere (s. 5 (3)) – this means

that, for example, there can be an oral agreement which refers to a written
agreement elsewhere, and this is designed to meet the flaw in Article 7(2)
of the Model Law. See, for example, the case of Channel Tunnel Corp.
Ltd. v Balfour Beatty Construction Ltd. [1993] A.C. 334; 1993 1 All
ER 664.
2. The requirement for ‘Writing’ in section 5 is at variance with Article 7

(2) of the Model Law.
3. The agreement can include an e-mail exchange or tape-recorded

agreement (see section 5(6) - recorded ‘by any means’)
4. The agreement can also be oral (section 5 (2) (c) and (4)). Only
authority to record is required, although it would be possible to argue
subsequently that the record made is not a record of the actual agreement
(for example, because it is not accurate).

5. The signature of the parties is not required (section 5 (2) (a) and
Compare with the Model Law Article 7(2)).
6. Section 5 (5) - allows an agreement to be deemed to exist but unlike

the Model Law must be failure to deny by the other party in his response
so if there is no response the sub-section cannot be activated.
Again, as with sections 1-3, although not specifically mandatory in terms

of section 4, it is thought that this provision cannot be contradicted, given
its importance.
There is no equivalent provision in the 2010 Act. It is not entirely clear,

therefore, whether or not an arbitration agreement can be reached orally.
On balance, it seems that it can. One benefit of this approach over the
1996 Act is its simplicity. A drawback is that it could be argued that an
agreement to exclude the jurisdiction of the courts is so important and far-
reaching that it should be in writing. Moreover, there is the important
practical problem of proving that an oral agreement has been reached,
although this is not insurmountable, and oral contracts are not strangers
to Scots Law.
6. Definition of an Arbitration Agreement
This is contained in s.6:
“s 6 Definition of arbitration agreement.
(1) In this Part an "arbitration agreement" means an agreement to

submit to arbitration present or future disputes (whether they are
contractual or not).
(2) The reference in an agreement to a written form of arbitration
clause or to a document containing an arbitration clause
constitutes an arbitration agreement if the reference is such as to
make that clause part of the agreement.”
Once again, on the same basis as sections 1-3 and 5, this section is
effectively mandatory (see above).
Several points can be made here.

The word ‘arbitration’ is not decisive; neither is its absence.
There is no need to use the word “arbitration” in order for a clause to be

regarded as an arbitration clause. In David Wilson Homes Ltd. v Survey
Services Ltd. 2001 1 All ER (Comm) 449 the question was whether the
following clause was a valid arbitration clause:
"... Any dispute or difference arising hereunder between the Assured

and the Insurers shall be referred to a Queen's Counsel of the
English Bar to be mutually agreed between the Insurers and the
Assured or in the event of disagreement by the Chairman of the Bar
Council”.
There were two basic arguments. Firstly, it was argued that the clause did
not mention arbitration and so could not be a valid arbitration clause and
secondly the clause, taken as a whole, was indicative of a form of non-
binding alternative dispute resolution process to facilitate not force a
settlement of a dispute.
This is a significant issue. The wide variety of possible forms of alternative
dispute resolution were discussed earlier in the module. The question of
whether one of these is arbitration – or not – has significance across a
range of issues. It is therefore worthwhile setting out in some detail how
the courts understand arbitration and its interaction with other forms of
dispute resolution.
So, in David Wilson Homes, in the Court of Appeal, Lord Justice
Longmore had this to say:
“There is no need for a clause which deals with reference of disputes

to say in terms that the disputes are to be referred to an "arbitrator"
or to "arbitration". The necessary attributes of an arbitration
agreement are set out in the second edition of Mustill & Boyd,
Commercial Arbitration at page 41. But, for present purposes, the
important thing is that there should be an agreement to refer
disputes to a person other than the court who is to resolve the
dispute in a manner binding on the parties to the agreement. That
is what this clause in my opinion does, and it is therefore an
arbitration agreement within the meaning of section 6 of the
Arbitration Act 1996... The question is purely a matter of construing
the relevant clause. The alternatives canvassed and supported by
Mr Bowdery in the end come down to saying that the clause is an
option that can be exercised by a party if he wishes, but without any
concomitant obligation on the other party to comply. That is, in my
view, an extraordinarily uncommercial and unlikely proposition for
the meaning of a clause in an insurance policy such as this…Since it
is just a matter of construction, not much assistance can be gained
from authority, but the question whether an agreement is an
agreement to arbitrate or merely to value as an expert has

occasionally had to be decided, and Mr Bowdery has referred us to

one such case, Re Carus-Wilson v Green (1887) 18 QBD 7. There a
contract for the sale of land provided that the timber was to be paid
for at a valuation made by two valuers appointed by the parties, who
were to appoint an umpire to decide if the valuers did not agree. The
valuers did not agree, so the umpire decided. The aggrieved party
applied to set that valuation aside on the basis that it was an
arbitration award and thus, according to the legislation then in force,
could be set aside on certain grounds. The Court of Appeal refused
to entertain the application. The passage to which Mr Bowdery
referred us is at page 9, where Lord Esher MR said this:
"The question here is whether the umpire was merely a valuer

substituted for the valuers originally appointed by the parties in
a certain event, or arbitrator. If it appears from the terms of the
agreement by which a matter is submitted to a person's decision,
that the intention of the parties was that he should hold an
inquiry in the nature of a judicial inquiry, and hear the respective
cases of the parties, and decide upon evidence laid before him,
then the case is one of an arbitration. The intention in such cases
is that there shall be a judicial inquiry worked out in a judicial
manner. On the other hand, there are cases in which a persons
is appointed to ascertain some matter for the purpose of
preventing differences from arising, not of settling them when
they have arisen, and where the case is not one of arbitration
but of a mere valuation. There may be cases of an intermediate
kind, where, though a person is appointed to settle disputes that
have arisen, still it is not intended that he shall be bound to hear
evidence or arguments. In such cases it may be often difficult to
say whether he is intended to be an arbitrator or to exercise
some function other than that of an arbitrator. Such cases must
be determined each according to its particular circumstances.”
For my own part, it seems to me that the clause in the present case
falls fairly and squarely into Lord Esher's first category, where the
intention is that the inquiry is to be in the nature of a judicial inquiry
and that the Queen's Counsel is to hear the respective cases of the
parties and decide on evidence before him. That is what Queen's
Counsel are normally expected to do when matters are referred to
them, and all the more so if the formality of the position is such that,
if there is disagreement as to the identity of the Queen's Counsel,
he is to be appointed by the Chairman of the Bar. In the present
case, the parties cannot, with respect to the judge, have intended a
reference to a Queen's Counsel as an expert or for a non-binding
opinion, because in that way no finality could be achieved. They
must in my judgement have wanted a binding result, and the clause
thus constitutes an arbitration agreement. As far as Mr Bowdery's
second point is concerned, it does not seem to me that it is
necessary for the clause to say in terms that it is final and binding.”
Lord Justice Brown, on the second argument, agreed:

“As to the suggestion that this was some sort of non-binding ADR
clause, that seems to me nothing short of absurd. The condition
goes to the lengths of providing, if necessary, for the Chairman of
the Bar Council to appoint a Queen's Counsel to deal with the
reference. That, to my mind, is quite inconsistent with any
suggestion that the process required by the clause is simply an
optional extra in the contract. Rather it makes business sense only
if it provides for a final and binding determination of whatever
dispute or difference is referred -- if, in short, it is an arbitration
agreement.”
Having said that the use of the term ‘arbitration’ is not conclusive - the
whole clause requires to be examined to see if arbitration is what the
parties intended. So, Cott UK Ltd. v Barber [1997] 3 All ER 540
(summary on Westlaw) the clause in dispute was headed “Arbitration” and
continued that any dispute or difference was to be referred to a person to
be appointed by the Director General of the British Soft Drinks Association
and that:
“The person chosen or appointed shall be independent consultant
and shall act as an expert and not as an arbiter and his decision shall
be final and binding on the parties.”
The court held that the clause was clearly not an arbitration clause, despite
the clause heading and was an expert clause. The court went on, however,
to say that proceedings could be stayed to allow an expert determination
to take place (but declined to do so in this case).
Similarly, where rules are referred to, there is no need for them to be
arbitral by name; as long as they are arbitral in character. In
Walkingshaw v Diniz [2000] 2 All ER (Comm) 237 (summary on
Westlaw) a dispute arose over the interpretation of a contract between a
Formula One racing team and a racing driver. The body nominated to
determine disputes was the Contract Recognition Board which sat in
Geneva, Switzerland. It was argued that this body is merely the rules body
for the industry, but this was rejected. In deciding that the system for
resolving disputes by that board was an arbitral one, the Commercial Court
of the QBD relied upon the following features of the procedure: Lawyers of
distinction were members of the tribunal; evidence had to be led;
procedures and hearings necessary for the fair determination of the issues
were contemplated (including impartiality of the tribunal) and a decision
with reasons was required.
It is clear then that the nature of the tribunal and any other role it might
have is not determinative of the nature of the decision-making process,
the latter being the important benchmark for a decision on whether the
parties intended that arbitration should take place.

An interesting case on the interpretation of s.6 is Flight Training

International v International Fire Training Equipment Ltd. [2004]
2 All ER (Comm) 568. There, the parties had contracted for the supply
by the defendants to the claimants of a simulator of a 747 aircraft. The
claimants had, in turn, a contract to provide this simulator and other anti-
terrorism and hostage rescue services to the Saudi Royal Guard. The
following clause appeared in the contract:
“XI Settlement of Disputes
Disputes between [the parties under this agreement]…shall be

submitted to the Advisory, Conciliation and Arbitration Services
(ACAS) in London. Legal fees and costs shall be paid by either party
which does not prevail at mediation.”
There occurred certain disputes, and the question for Mr Justice Cresswell
in the Commercial Court was whether this was a valid arbitration clause.
It was established that ACAS is a body that provides arbitration,
conciliation and mediation services. However, the court took the view that
the reference to mediation in the clause meant that this was not an
arbitration clause, but one requiring the parties to mediate through ACAS.
It was not an agreement to arbitrate under s.6.
Option to arbitrate is valid agreement
Where an agreement creates an option to arbitrate, as opposed to a

requirement to do so, it is still valid. An important case is Westfal-Larsen
& Co. A/S v Ikeri Compania Naviera SA [1983] 1 Lloyd’s Rep. 424.
In this case the clause in dispute provided:
“. either party may elect to have the dispute referred to arbitration

of a single arbitrator in London in accordance with the provisions of
the Arbitration Act 1950...”
One of the questions argued was whether this was a valid arbitration clause
and Justice Bingham in the Commercial Court of the QBD stated:
“Whether an arbitration agreement within the meaning of the 1950

Act must confer on both parties equally a right to insist on arbitration
is a question which has aroused some controversy.... On my
construction of the present clause, however, equal rights of recourse
to arbitration are afforded to both parties and this question is one
which I need not, and accordingly should not, decide. The proviso to
cl. 40 (b) assumes that a dispute exists and stipulates that 'either
party' (my emphasis) may elect to have the dispute referred to

arbitration. If one pauses there, it is plain that either claimant or

respondent may insist on the reference and there would be no room
for an argument by the owners to the contrary. That argument was
founded on the second sentence of the proviso and was that the
option to elect arbitration was conferred only on the party to whom
notice of dispute was given. Whether that would, if true, be enough
to render the clause unilateral and bad I need not consider because
I do not read the clause in that way. The notice of election, like the
notice of dispute, may be given 'by one party to the other'. No
attempt is made, by any reference to 'such party' or 'that party', to
identify the giver of the notice of election with the recipient of the
notice of dispute, or to distinguish him. The matter is left at large by
the use of language deliberately chosen as wide enough to mean
either party in either situation. In the ordinary course of events it is
no doubt likely that the prospective claimant gives notice of dispute
and the prospective respondent elects arbitration, but I do not
construe the language of the proviso as applying only to that
sequence of events. I accordingly conclude that the objection taken
to the jurisdiction of the Court to make an appointment under s. 10
must fail.”
Although this is a case on the earlier 1950 Act, it is still good law under the
1996 Act.
Also relevant is the case of Lobb Partnership Ltd. v Aintree

Racecourse Co. Ltd. 2000 BLR 65. Here, the clause in dispute stated:
“Disputes may be dealt with as provided in paragraph 1.8 of the

RIBA Conditions [of Engagement] but shall otherwise be referred to
the English Courts.... any difference or dispute...shall be referred by
either party to arbitration to a person to be agreed between the
parties or, failing agreement...a person to be nominated...by the
President of the Chartered Institute of Arbitrators.”
In the Commercial Court of the QBD, Justice Colman indicated that if the
clause were regarded as wholly or partly ambiguous it would not be
enforced by the courts. In other words, an arbitration clause, to be
effective, must be clearly worded. However, the same principles of
interpretation apply to this contract as to any other.
It was argued that the first part of the clause was ambiguous, since it was
not clear whether a joint reference to arbitration was intended or whether
only one party could refer- the use of the word may be ambiguous. The
agreement to arbitrate, it was argued, was void from uncertainty.
Justice Colman said this about the general approach:

“In each case, the court is concerned to identify that meaning of the
words used which in all the relevant circumstances the parties are
to be taken mutually to have intended. If there is only one ordinary
and natural meaning of the words used, no problem arises. If,
however, the words are capable of bearing more than one meaning
in their ordinary and natural sense, the meaning to be imputed to
the parties is that which in all the relevant circumstances they are
taken most probably mutual to have intended...The English courts
have consistently taken the view that, provided the contract gives a
reasonably clear indication that arbitration is envisaged by both
parties as a means of dispute resolution, they will treat both parties
as bound to refer disputes to arbitration even though the clause is
not expressed in mandatory terms”.
He held then that the clause was a valid and effective arbitration clause
and the arbitral award already made was valid.
(Side note: The Scottish position

In the Scottish case of Brakenrig v Menzies 1841 4D. 274 the opposite
position was reached from Lobb v Aintree. Since this is such an old case,
it is unlikely that if this point arises under the 2010 Act a Scottish court
would feel compelled to follow this case, since the Scottish equivalent
provision is broadly the same as the English one. but it may choose to do
so. This is a point of clarification which will require to await a suitable
Scottish case.)
The importance lies in deciding whether the parties have agreed to depart
from the court’s jurisdiction and resolve their differences by alternative
means (which tends to require significant clarity) and, if so, whether those
alternative means is arbitration (which would lead to certain
consequences) or some other form of ADR.
No Need for Mutuality
English Law provides that there is no need for mutuality in an arbitration

agreement. In other words, a valid right to arbitrate can be created in a
clause which allows only one party to opt for an arbitration; both parties
are bound by such a clause. This is distinct from the point (above)
regarding an option to arbitrate- in such a case, either party may opt, but
here, we are dealing with the case where only one party may, in terms of
the clause, opt to arbitrate. So, in Pittalis v Sherefettin [1986] Q.B.
868; [1986] 2 All ER 227 the question was whether a clause which gave
one party (the tenant) an option to arbitrate in a lease of commercial
premises. The decision was that such a term was a valid agreement to
arbitrate since it was mutually agreed by the parties. The fact that they
had agreed a one-sided right was irrelevant.

Incorporation by Reference of Agreement to Arbitrate
As discussed in the context of contract law generally, it is possible to

incorporate terms into a contract by reference to another document (not
the main contract between the parties). The question here is whether it is
possible to incorporate an arbitration clause from another document by
reference in the contract between the parties. This is always inadvisable,
given that this question has had to be litigated; it is safer to include any
ancillary clauses within the contract between the parties.
This is an area where Scots and English law diverge. The English law
position is uncertain, but there seems to be a distinct approach. This is a
useful point for a comparative overview.
The 2010 Act provides for the possibility of incorporation in s4. This is dealt
with by section 6 (2) of the 1996 Act which is a similar provision to Model
Law Article 7(2).5
The reference must be such as to make the clause part of that agreement.
(a) The Scottish position
This issue arose in McConnell & Reid v Smith 1911 1 S.L.T. 333; 1911
S.C. 635. In this case, a member of the Glasgow Flour Association sold
flour to a non-member. The sale note which contained the contractual
terms and which had been delivered to and accepted by the purchaser
stated:
“Any dispute under this contract to be settled according to the rules

of the Glasgow Flour Trade Association”
One of the rules of the Association provided that all disputes should be
settled by arbitration. The purchaser had not seen the rules and was not
sent a copy. It was held that the purchaser had not had sufficient notice
of the content of the rules and was not bound by them - he could insist on
the settlement of the dispute by the public courts.
Lord Dundas in the Inner House of the Court of Session put it in this way:
5
The reference here is to the original version of the Model Law of 1985 which was
in force when the Arbitration Act 1996 was adopted and not to the updated 2006
version; we will consider the latter in greater detail later in this module.

“.. It requires clear and distinct language to oust the ordinary

jurisdiction of the Courts and substitute… arbitration. A mere
reference to the rules is, to my mind, quite insufficient to import
such a condition into the contract. It is an important matter, and
one that must be distinctly expressed, that a man should abandon
his normal remedies at law.”
Despite the appearance of express and unambiguous words, this was not
enough.
The problem arose again in Babcock Rosyth Defence Ltd v Grootcon

(UK) Ltd. 1998 S.L.T. 1143. There, Lord Hamilton was not convinced
that the arbitration clause in the ICE Conditions of Contract (5th Ed) had
been properly incorporated. He approved of the McConnell decision
(above) and added this at 1150-1151:
“In my view the proper approach under Scots law is, while not
requiring an express reference to an arbitration clause as a
prerequisite to its incorporation, to hold it to have been incorporated
only where it is in all the circumstances clear that the parties
intended to embrace that clause within the scope of the clauses to
be incorporated. Any difficulty or impracticability in adapting such a
clause to the circumstances of the [incorporating contract] is also,
in my view, a relevant consideration.”
This is particularly significant in terms of the way in which standard form
contracts may be incorporated (or not) in construction project supply
chains.
(b) The English position
The McConnell case was commented upon unfavourably in the English

case of Golodetz v Schrier [1947] 80 Lloyd’s Rep 647, a case involving
similar facts. This case involved a contract for the sale of 100 tons of white
Java sugar. The contract provided that the terms and conditions of the
Refined Sugar Association of London Contract should apply. In said terms
and conditions was a stipulation requiring that all disputes should be
arbitrated in terms of the rules of the association. Lord Chief Justice
Goddard, sitting in the King’s Bench Division, held that the rules had been
sufficiently incorporated in this case, and said this of the Scottish McConnell
decision:
“Speaking with very great respect, if the [McConnell] case goes as

far as that, I have some doubts as to whether it ought to be followed
in this country. As I have said, I have taken a simple example of the
Stock Exchange contract note. I am not a member of the Stock
Exchange, and if I buy or sell some shares on the Stock Exchange,
and receive that note, although my brokers do not send me a copy

of the Rules of the Stock Exchange, I can ask them what they are,
if I like. I do not suppose anybody takes the trouble to do it; they
assume they are dealing in a particular market, and deal on the
terms of the particular market.”
Although this case was decided pre-1996, it is still of some value.
The English position was clarified further more recently in Secretary of

State for Foreign and Commonwealth Affairs v The Percy Thomas
Partnership 65 Con. L.R. 11; [1998] CILL 1342 (summary on
Westlaw), per Judge Bowsher, QC, who, in applying other cases from the
1970’s, held that an arbitration clause contained in one party’s standard
terms and conditions was validly incorporated in to the principal agreement
between the parties, even although no specific mention was made of it in
that principal agreement, which simply referred to the standard terms.
This was confirmed in a case decided in the same year, Trygg Hansa
Insurance Co Ltd. v Equitas Ltd. [1998] 2 Lloyd’s Rep 439. There,
Judge Jack Q.C. sitting in the Commercial Court, had to consider whether
or not to stay proceedings arising out of a dispute over insurance contracts
in order to allow the dispute to go to arbitration. The key question was
whether there had been a valid incorporation by reference of the arbitration
clause under s. 6(2). The clause in question, to be found in a re-insurance
contract, stated:
“Except as otherwise provided herein, this policy is to follow the

same terms, exclusions, conditions, definitions and settlements as
the Policy of the Primary insurers”
The Policy of the Primary Insurers contained the arbitration clause. The
court held that it was perfectly in order to look at the already established
body of case law on incorporation of arbitral clauses, even although that
body pre-dated the 1996 Act. He further held that s.6 (2) did not require
there to be any specific reference to be made in the reference document
to the arbitral clause in the other document, in order for that latter clause
to be validly incorporated.
However, the judge examined the pre-1996 case law closely, as well as
the Model Law equivalent clause (Article 7(2)) and the view of the DAC at
the time of preparation of their report that preceded the Act (see above).
From all of this, as well as from commentaries on the Act, he concluded
that s.6(2) did not change the law, and that general words of incorporation
(i.e. where there was no specific reference to the arbitration clause) were
not enough, in the absence of special circumstances. In this case, then,
the clause had not been validly incorporated, so no valid arbitration
agreement existed and the request to stay proceedings was refused. This

was also followed in the case of Cigna Life Insurance Co of Europe SA

NV v Intercaser SA De Seguros y Reaseguros (2002) 1 All E.R.
(Comm) 235.
A more generous approach to incorporation was taken by Langley J. in Sea

Trade Maritime Corp. v Hellenic Mutual War Risks Association
(Bermuda) Ltd. [2007] 1 Lloyd’s Rep. 280; [2006] EWHC 2530;
[2007] 1 All E.R. (Comm) 183 where it was held that general words
could act to incorporate an arbitration clause, as with any other terms,
particularly where the parties are established players in a well-known
market. However, a stricter test should be adopted, it was held, in cases
involving charterparties and bills of lading.
Until there is a judgement from an appeal court in England on the question

of incorporation, the question of the rule of previous authorities, in
particular on the question of general words of incorporation, remains to be
resolved.
Commencement of arbitration
How does a party commence arbitration? The rules on commencement are

significant for many subsequent matters, because they describe the first
steps necessary to set the arbitral process in motion. When there is a risk
that the claim could become barred by virtue of a time-bar provision in the
arbitration agreement, or by virtue of a statutory time limitation, it is
especially important to precisely define the date when arbitration is
formally commenced. The relevant rules can be found in section 14 of the
1996 Act. This is a default section, i.e. the parties can by their agreement,
including a reference to institutional rules, modify the default provisions.
Failing such contractual modification, the following rules apply:
(3) Where the arbitrator is named or designated in the arbitration

agreement, arbitral proceedings are commenced in respect of a
matter when one party serves on the other party or parties a notice
in writing requiring him or them to submit that matter to the person
so named or designated.
(4) Where the arbitrator or arbitrators are to be appointed by the
parties, arbitral proceedings are commenced in respect of a matter
when one party serves on the other party or parties notice in writing
requiring him or them to appoint an arbitrator or to agree to the
appointment of an arbitrator in respect of that matter.
(5) Where the arbitrator or arbitrators are to be appointed by a
person other than a party to the proceedings, arbitral proceedings
are commenced in respect of a matter when one party gives notice
in writing to that person requesting him to make the appointment in
respect of that matter.

This provision should be read in conjunction with section 76 of the 1996

Act which sets out the rules for the serving of notices. Although this section
is also default, the consequences of a failure to serve a notice – particularly
the notice of commencement – can have the gravest consequences,
including the subsequent setting the award aside by the court on
procedural grounds.
Section 76 is more permissive than the comparable service provisions in

the Civil Procedure Rules (see paragraph [38] of Sino Channel Asia Ltd
v Dana Shipping and Trading PTE Singapore and Another [2017]
EWCA Civ 1703). Service is merely to be by "any effective means".
Christopher Clarke J observed in Bernuth Lines Ltd v High Seas
Shipping Ltd (The Eastern Navigator) [2006] 1 Lloyd's Reports 537 at
paragraph [28]:
"The Civil Procedure Rules cater for litigants of all kinds from major
corporations represented by the most accomplished firms of
solicitors to individuals represented by more modest firms and those
who are not represented at all. By contrast arbitrations are usually
conducted by businessmen represented by, or with ready access to
lawyers. … There is no reason why, in this context, delivery of a
document by e-mail – a method habitually used by businessmen
lawyers and civil servants – should be regarded as essentially
different from communication by post, fax or telex."
In this case, the service to the company’s email promulgated on its website
as a generic contact email was sufficient.
On the other hand, it still remains wise to approach service by email with
some caution. In Glencore Agriculture B.V. v Conqueror Holdings
Limited [2017] EWHC 2893 (Comm), the court considered the situation
where the initial service and all subsequent notices were sent to the email
of the respondent’s employee who was earlier involved in the performance
of the contract in dispute. In paragraphs [24]-[25] of the judgment, Mr
Justice Popplewell said as follows:
“There is a distinction to be drawn between an email address which

is a personal business address of an individual, and one which is
generic. Individual email addresses are readily recognisable as in
the form name@domainname. By contrast businesses often have
generic email addresses which do not identify the name of the
person who will receive the email sent to that address.
Info@glencore.com is an example, as is the chartering department
generic email, voyagecharter.rtm@glencore.com. Where an
individual email address is used, the sender will reasonably expect
the email to be opened and read by the named individual. With a
generic email address, the sender will not, at least usually, know
the identity of the person who will open and read the email.
However if the generic address has been promulgated by the
organisation, whether on its website or otherwise, the sender can
reasonably expect the person who opens the email to be authorised
internally to deal with its contents if the subject matter falls within

the scope of the business activity for the purpose of which the
generic email address has been promulgated.
An email sent to an individual employee's email address is different.

… The question whether an email sent to a personal business email
address is good service must yield the same answer as if the
document were physically handed to that person. Whether it
constitutes good service if directed to an individual's email address
must depend upon the particular role which the named individual
plays or is held out as playing within the organisation”.
Having established that the employee in question had neither express nor
implied or ostensible authority to participate in dispute resolution on the
company’s behalf or accept the service of arbitral proceedings, the court
went on to set the arbitral award aside.
The Scottish provisions on the issue of commencement are similar.

According to the default Rule 1 of the Scottish Arbitration Rules, an
arbitration begins when a party to an arbitration agreement (or any person
claiming through or under such a party) gives the other party notice
submitting a dispute to arbitration in accordance with the agreement. The
rules on the service of formal communications are more detailed but also
very similar: see Rule 83 of the Scottish Arbitration Rules.
7. Interpretation of the Arbitration Agreement
There is no clear and consistent approach in England to the way in which

arbitration agreements are to be interpreted. A number of commentators
take the view that an arbitration clause is to be interpreted in the same
way as any other clause in a commercial contract. Others speak of the
‘liberal’ or ‘enabling’ or ‘generous’ interpretation of the clause, suggesting
a more lenient approach. Those who argue for a lenient approach seem to
be of the view that as long as there is the merest hint that arbitration is
intended, the case should go to arbitration. It is often argued that the
framework of the 1996 Act can fill in the gaps in an otherwise sparse or
inadequate arbitration agreement; after all, not much needs to be agreed
in the clause, most of the regulation appears in the Act.
Many of the cases in which interpretation points arise occur where there is
a ‘defective’ arbitration clause, in other words, one which is incomplete or
badly expressed. These are sometimes also called ‘pathological clauses’, a
phrase coined by Frédéric Eisemann, former secretary general (for 26
years) of the ICC Court of Arbitration: La clause d’arbitrage pathologique
in Essays in Arbitrage Commercial: Essais In Memoriam Eugenio Minoli 129
(1974). There are several works in which such clauses are discussed, and
there exist numerous checklists providing guidance on how to frame a good
arbitration clause, some of which are mentioned below in the further
reading list. In the meantime, we will consider some examples of cases

where badly drafted clauses have led to litigation over whether or not the
dispute in question falls within the clause.
As we have already learned when considering the law of contract, a

contract term can be void from uncertainty - the arbitration clause is, in
theory, no exception to this. However, it would appear from the case law
that a different standard applies to an arbitration clause - a more relaxed
standard than that applied to other clauses in a contract.
The English courts will go to considerable lengths to give effect to what

they see as an agreement to arbitrate, so that it will be difficult to succeed
in an argument that a clause is void from uncertainty. By contrast, in
Scotland the position is stricter, with the Scottish courts taking a restrictive
view.
In Hobbs Padgett & Co. (Reinsurance) Ltd v JC Kirkland Ltd. 1969

2 Lloyd’s Rep. 547, the Court of Appeal was faced with a contract in
which there appeared a provision that simply stated:
’16. Suitable Arbitration Clause’
It was held that this was a valid agreement to arbitrate. Lord Justice
Salmon said this:
“It seems to me that 'Suitable Arbitration Clause' means that these

parties have agreed that, if any dispute arises between them under
the contract, including any dispute as to the meaning of the contract,
that dispute should be referred to arbitration rather than to the
Courts. If the parties cannot agree upon an arbitrator, then they can
invoke the terms of the Arbitration Act, 1950, and an arbitrator will
be appointed by the Court.”
He went on to add that the word ‘suitable’ made no difference, and if the
clause had consisted of ‘Arbitration Clause’ then there could be no
argument:
“In this case it is said that the addition of the word 'Suitable' makes
the clause entirely meaningless. I fail entirely to understand, when
considering whether Clause 16 can be given any meaning, how the
fact that the word 'Suitable' is added to it makes its meaning
uncertain. If, for example, one side wanted an arbitrator appointed
by the Chairman of Lloyd's, no one, I suppose, could suggest that
that would be unsuitable. If one side or the other suggested that the
arbitrator should be appointed by the chairman of a body wholly
inexperienced in reinsurance and that the arbitration should take
place in Timbuktu, I suppose, equally clearly, it would be plain that
that was not suitable

I do not think that there is any great difficulty about construing the
words 'Suitable Arbitration Clause' in a contract of this kind. It is any
form of arbitration which reasonable men in this type of business
would consider suitable.
There has been a very interesting argument in this Court on the

topic, there has been a difference of opinion between the learned
Master and the learned Judge, and, as far as I am concerned,
between the learned Judge and myself. But I cannot think that any
businessman--and, after all, this is a contract made by
businessmen-- would entertain the doubts which are apparently
entertained by lawyers. I think that any insurance broker who is told
that, in a contract of this kind, 'Suitable Arbitration Clause' is
completely meaningless, would, as one of the gentlemen concerned
in this matter did, say: 'What is this all about?'
The parties, by Clause 16, have made it quite clear that their
intention is that their differences should be arbitrated. I do not think
that the word 'Suitable' adds to or detracts from the meaning of the
clause. If the clause had read 'Arbitration Clause' there could have
been no doubt that it would have been sufficiently precise to be
given the meaning which, to my mind, any ordinary man would
consider that it obviously bears. I do not think that we should be so
pedantic as to suggest that the addition of the word 'Suitable' makes
its meaning uncertain. Any such conclusion would, in my view, make
the law ridiculous in the eyes of those who enter into contracts of
this kind.”
Other arguments were discussed in this case, but the main thrust of the
case is disclosed in the excerpts above. The party arguing against the
validity of the clause conceded that “Suitable Arbitration Clause” is
synonymous with “Arbitration Clause” and this made the task of the court
easier. It is debatable as to whether this concession was wise or
appropriate. It is arguable that this ‘clause’ could well have been a clause
heading left over from a standard contract, which the parties had failed to
delete, as opposed to a well considered arbitration clause. The clause
heading theory was not discussed in court.
Another example of a case involving a doubtful arbitration clause is

Mangistaumunaigaz Oil Production Assoc. v United World Trading
Inc [1995] 1 Lloyd’s Rep. 617. This case involved an agreement for the
sale of 200,000 tonnes of crude oil. The contract contained a clause, part
of which went as follows:
“(15) Other terms

-FOB Incoterms latest issue
-Arbitration, if any, by I.C.C. rules in London
-English law to apply”

Mr Justice Potter in the Commercial Court, in holding that there existed a

valid arbitration clause, reasoned that decision in this way:
“Considered on its face, and without resort to the negotiations or

any suggestion as to additional oral terms, I consider that the words:
"Arbitration, if any, by I.C.C. rules in London" amount to a valid and
binding arbitration clause…. In my opinion the clause as a whole,
read in the context of an international contract for the sale of oil,
demonstrates that the parties intended to settle any dispute which
might arise between them by arbitration according to I.C.C. rules in
London with English law to apply. The alternative is that, by
providing for arbitration "if any", the parties were merely binding
themselves in advance to the arbitral rules and venue which would
govern any ad hoc agreement for arbitration which they might
subsequently make if a dispute arose. The terms of the written
contract suggest no need or reason to take so unusual a course. I
consider that the commercial sense of an agreement of this kind,
and the presumed contractual intention of the parties in importing
the words used, can best be effected either by treating the words "if
any" as surplusage, or as being an abbreviation for the words "if any
dispute arises ". Any other construction appears to me to strain
common sense and to breach the overall rule of construction which
is to give effect to the presumed intention of the parties having
regard to the context in which the words appear.”
The words, “if any” are, according to this decision, to be regarded as

redundant or as short for “if any dispute arises”, but this assumes that the
words are meaningless. The possibility of “if any” referring to a future ad
hoc agreement (in other words short for “if any arbitration is to take place”)
is rejected.
In all of the above cases, there is one common feature: the absence of a
structured consideration of the rules of contractual interpretation as they
applied at the time (albeit these have been subject to some shifts over the
last decade or so). Moreover, there is an absence of any proper
consideration of some of the subsidiary rules of interpretation, such as the
rule on uncertainty and the many cases on that rule, and on the rule of
interpretation of contracts called the ‘surplusage’ rule: this rule is described
in this way by Lewison, The Interpretation of Contracts (Sweet and
Maxwell) (7th edition) (2020) at paragraph 7.24:
“In construing a contract, all parts of it must be given effect where

possible, and no part of it should be treated as inoperative or
surplus.”
This principle, again with the numerous cases on it, might arguably have a
bearing in cases such as Hobbs Padgett (effectively ignoring “Suitable”)
and Mangistaumunaigaz (ignoring “if any”). This rule, however, was not

considered at all in either case. In one case, Flight International

discussed in the last topic, the court does engage in what might be
described as a proper interpretation exercise, with full reference to the
words in the contract and the relevant case law but this case stands out
from the others in this respect.
On the other hand, where parties mention the word “arbitration”, and
where there is a comprehensive set of rules already in place, why should
one of them later try to wriggle out of the obligation to arbitrate and
employ highly technical rules in order to do so? The presence of the 1996
Act allows a bare clause to receive full effect; s.6(1) is broad in its terms.
Having said this, that provision does require an agreement to arbitrate in
the first place, and one assumes that this should be a fully valid one that
can be interpreted as such from the words used and their context, before
the provisions of the Act apply.
The move away from the technical interpretation of arbitration clauses has,
in the context of the use of connecting words designed to delineate the
scope of the arbitration clause, been sanctioned recently by the House of
Lords. In Fili Shipping Co. Ltd. and others v Premium Nafta Products
Ltd. and others [2007] Bus. L.R. 1719, the House of Lords approved
the following passage from the Court of Appeal judgement in that case (at
the Court of Appeal stage the case was known as: Fiona Trust and
Holding Corp v Privalov [2007] All ER (D) 169) at paragraphs 17 and
19 of the Court of Appeal judgement:
“Not all these authorities are readily reconcilable but they are well-
known in this field and some or all are invariably cited by counsel in
cases such as this. Hearings and judgments get longer as new
authorities have to be considered. For our part we consider that the
time has now come for a line of some sort to be drawn and a fresh
start made at any rate for cases arising in an international
commercial context. Ordinary businessmen would be surprised at
the nice distinctions drawn in the cases and the time taken up by
argument in debating whether a particular case falls within one set
of words or another very similar set of words. If businessmen go to
the trouble of agreeing that their disputes be heard in the courts of
a particular country or by a tribunal of their choice they do not
expect (at any rate when they are making the contract in the first
place) that time and expense will be taken in lengthy argument
about the nature of particular causes of action and whether any
particular cause of action comes within the meaning of the particular
phrase they have chosen in their arbitration clause. If any
businessman did want to exclude disputes about the validity of a
contract, it would be comparatively simple to say so…. One of the
reasons given in the cases for a liberal construction of an arbitration
clause is the presumption in favour of one-stop arbitration. It is not
to be expected that any commercial man would knowingly create a
system which required that the court should first decide whether the

contract should be rectified or avoided or rescinded (as the case

might be) and then, if the contract is held to be valid, required the
arbitrator to resolve the issues that have arisen. This is indeed a
powerful reason for a liberal construction.”
So, the presumption in favour of ‘one-stop adjudication’ seems to have

approval from the House of Lords. In that case the words “arising out of”
the contract and “arising under the contract” are to mean the same thing.
However, this is in the context of the inclusion of all disputes within the
arbitration clause. Despite this, the wide wording of the passage above
suggests a more liberal approach across the board in the interpretation of
arbitration clauses.
Having said this, the courts are still, in some cases, insisting on clear words
in arbitration clauses, especially when it comes to excluding parts of the
1996 Act which are non-mandatory: see Shell Egypt West Manzala v
Dana Gas Egypt Limited [2009] EWHC 2097 (Comm), a decision of
Mrs Justice Gloster in the High Court.
The Scottish courts are generally more conservative in the application of

the principles of interpretation of contracts than the English courts. In the
case of the interpretation of arbitration clauses, the Scottish courts seem
to interpret these restrictively since they are clauses which exclude the
jurisdiction of the courts, and so are to be approached cautiously. This
applies at least in relation to an argument that an arbitration clause is void
from uncertainty. Two examples will suffice to make the point here.
Although these cases are pre-2010 cases, they are likely to be considered
in any future case where an uncertainty argument arises.
The Scottish courts are less likely to uphold an arbitration clause where
there exists uncertainty: see Bruce v Kordula 2001 SLT 983, below. In
Scotland, a more restricted approach to the interpretation of such clauses
is followed. The general approach was commented on as follows by Lord
Justice Clerk Ross in ERDC Construction Ltd. v HM Love & Co. 1994
S.C. 620; 1995 S.L.T. 254:
“…a submission must be interpreted according to the ordinary rules

of construction just like any other contract, and that parties are not
to be considered as intending to oust the jurisdiction of the court
except to the extent to which they have expressly specified that they
are doing so. In the present case, it does not appear to me that
there is any need to apply any rule in favour of liberal construction;
what the court requires to do is to determine from the terms of [the
relevant clause] what the intention of the parties was when they
entered into their agreement to submit to arbitration.”

Another example is the case of Wylie Hill & Co. Ltd. v The Profits and
Income Insurance Co Ltd (1904) 12 S.L.T. 407. There, the arbitration
clause simply referred any dispute in an insurance contract to arbitration
under the then in force arbitration legislation. However, it was argued that
the clause was ineffective due to uncertainty since it did not stipulate how
many arbitrators were to be appointed. It was conceded that the terms of
the 1894 Act (on the appointment of arbitrators) could not assist in this
situation. However, Lord Low in the Outer House of the Court of Session
held that there was no impossibility in carrying out the contract so there
was no reason why it should be regarded as unenforceable - he referred
the case to arbitration. [Note: Lord Low did, in fact, dismiss the court action
that had been raised rather than sisting it (halting it) to allow an arbitration
to take place, but this was for a particular reason arising out of the wording
of the contract. Thankfully, rule 5 of the new Arbitration (Scotland) Act
2010 which we will look at in detail later removes the uncertainty of this
situation and now a single arbiter will be appointed if there is no agreement
as to the number of arbiters to be appointed].
In the more recent case of Bruce v Kordula 2001 S.L.T. 983, Lord
Hamilton, again in the Outer House, had to consider the effectiveness of
an arbitration clause in a partnership agreement. Here, the clause provided
that disputes arising from the retrial of a partner should be referred to an
arbitrator chosen by “both the partners or, failing agreement, to be
nominated by the Dean of the Faculty of Arbiters on the application of any
party…”.
There were two problems with this reference clause. First of all, at the time
of the dispute, the partnership consisted of five partners, not two.
Secondly, there was no such office as “Dean of the Faculty of Arbiters”
since the “Faculty of Arbiters” did not exist. On the first point, Lord
Hamilton held that the clause was void from uncertainty. In a five partner
firm, there was no way to decide which of the five partners were to make
the selection, assuming that a majority not unanimous decision could be
made. It was argued that this referred to those partners involved in the
dispute, but this was rejected on the basis that a dispute in such a firm
might involve more than two partners. In this case, the dispute was
between one retiring partner and the other four partners. It was impossible
to tell how the four on one side would split the vote on the nomination
decision. Lord Hamilton conceded that if “both” could be read as “all” then
this would make the clause valid, but this was not possible.
On the second problem, it was argued that the reference to the “Faculty of
Arbiters” was clearly a mistaken reference to the “Faculty of Advocates”.
Lord Hamilton accepted that the Dean of the Faculty of Advocates was
commonly nominated as an arbitrator. However, he relied on the existence
of the Scottish Branch of the Chartered Institute of Arbitrators as clouding
the picture. He thought that it was conceivable that the parties intended
to refer to that body and not the Faculty of Advocates. Although there is

some uncertainty, the fact that there was at the time (and still is) the office
of Dean of the Faculty of Advocates, and no such office existed in the CIArb
Scottish Branch, this does not seem to have been considered by the court.
In the Bruce case, the court agreed with Professor Davidson’s view that
the Wylie case was wrongly decided. However, as both decisions
emanated from the Outer House, there was no authoritative decision on
this point.
It remains to be seen whether in any future 2010 Act cases the Scottish
courts will take a more restrictive approach to the interpretation of
arbitration clauses where there is an uncertainty argument, than their
English counterparts.
8. Stay of Legal Proceedings
This is regulated by s.9 of the Act, which is a mandatory provision:
s 9 Stay of legal proceedings.
(1) A party to an arbitration agreement against whom legal

proceedings are brought (whether by way of claim or counterclaim)
in respect of a matter which under the agreement is to be referred
to arbitration may (upon notice to the other parties to the
proceedings) apply to the court in which the proceedings have
been brought to stay the proceedings so far as they concern that
matter.
(2) An application may be made notwithstanding that the matter is
to be referred to arbitration only after the exhaustion of other
dispute resolution procedures.
(3) An application may not be made by a person before taking the
appropriate procedural step (if any) to acknowledge the legal
proceedings against him or after he has taken any step in those
proceedings to answer the substantive claim.
(4) On an application under this section the court shall grant a stay
unless satisfied that the arbitration agreement is null and void,
inoperative, or incapable of being performed.
(5) If the court refuses to stay the legal proceedings, any provision
that an award is a condition precedent to the bringing of legal
proceedings in respect of any matter is of no effect in relation to
those proceedings.
There has been a substantial amount of litigation on this section. For

reasons of space, we will concentrate on a few of the main issues.

Matter covered by an arbitration agreement
Before the court can stall (stay) the proceedings raised in order to permit
arbitration proceedings to take place, it must be satisfied that the dispute
in question arises under an arbitration agreement. So, it can be said that
the court must be satisfied on two matters under s.9 (1):
(1) That an arbitration agreement exists; and

(2) That the dispute arises under it.
Section 9(1) was examined in the case of Birse Construction Ltd. v St

David Ltd. [1999] BLR 194 (summary on Westlaw). This was a
construction dispute between building contractors and property
developers. The parties were in dispute over whether a contract existed or
not. It was accepted by both that if one did exist, it included provision for
arbitration. In these proceedings, therefore, the judge had to consider
whether there existed an arbitration agreement. If it decided that one
existed, then it would be appropriate for the case to be stayed. In reaching
his decision, Judge Lloyd outlined the four options he had:
(1) To determine on the basis of the (affidavit) evidence lodged that

there existed an arbitration agreement, in which case the action
would be stayed under s.9; or
(2) To apply s.30 of the Act (see later) and therefore to stay the
proceedings to allow the arbitrator to rule on his own jurisdiction
(or lack of it); or
(3) To refuse to rule on the issue in the meantime and order a trial
under the rules of court; or
(4) To decide that there is no arbitration agreement and to refuse
the application for a stay.
Although the decision of the judge was reversed on appeal, this was on a
different issue: none of the Court of Appeal judges took issue with Judge
Lloyd’s identification of these four options. For our purposes, we are
interested in options (1), (2) and (4). These three options may be distilled
down further into two options:
(1) Deciding on the issue of whether there is an arbitration

agreement or not (options 1 and 4); or
(2) Allowing the arbitrator to make that decision under s.30 (option
2)

In this case, the Court of Appeal, by a majority decision, held that, on the
evidence tendered before the judge in the form of affidavits, there was a
triable issue, and the case should not have been stayed, but evidence
should have been led - the appeal was allowed, and the case referred back
to the lower court. The importance of the case, however, lies not in the
result but in the options approved by the Court of Appeal and outlined
above. See also, Midgulf International ltd. V Groupe Chimiche
Tunisien [2009] 2 Lloyd’s Rep. 411.
This general approach was approved again by the Court of Appeal in

Ahmad Al-Naimi v Islamic Press Agency Inc [2000] 1 Lloyd’s Rep.
522.
Reasons for refusal of stay application
In terms of s.9 (4), the court can only refuse the stay request for certain
reasons:
(1) If it is satisfied that the arbitration agreement is null and void;

or
(2) If it is satisfied that the arbitration agreement is inoperative; or
(3) If it is satisfied that the arbitration agreement is incapable of
being performed.
Of course, as discussed above, an arbitration agreement must exist and

the dispute must arise out of it, otherwise the stay application cannot be
entertained.
It would seem, despite the terms of s.9 (4) that some judges still believe
that, under s.9, they have a general discretion to grant or refuse an
application. In Exeter City AFC Ltd. v The Football Conference Ltd.
[2004] 4 All ER 1179, a petition for winding up under s.459 of the
Companies Act 1995 was presented by the football club. The respondents
sought to stay that petition to allow the case to go to arbitration. The stay
application was refused by Judge Weeks in the Chancery Division of the
High Court. He refused the application on the basis that to grant it would
mean that part of the ground covered by the petition would go to
arbitration, while another part would not, and nothing would happen to the
other part while the action was stayed. This was thought to be undesirable,
and that the court (not the arbitral tribunal) was deemed by the judge to
be the most suitable forum for the resolution of all issues arising out of the
petition. The judge took the view that he had discretion in the matter, but
this does not seem to be correct - the only grounds of refusal of the
application to stay are outlined in s.9 (4), and while the judge would have
discretion to decide whether any of these grounds apply, this does not
seem to be the basis of the discretion used by the judge here - he seems

to speak of general discretion to grant or refuse the stay. As we will see

below, there exists an inherent discretion, but this only applies outwith the
operation of s.9.
In two other cases, the courts have offered further guidance on when the
court should stay proceedings. It seems that where there is a dispute about
whether there is a concluded and valid arbitration agreement, that should
be decided by the court, and not referred to arbitration. Of course, where
the court decides that there is not such an agreement, the court will then
decide the dispute itself. Where it considers there is a concluded and valid
arbitration agreement, the dispute must be referred to arbitration.
However, where there is no such dispute, and where the argument is
instead about the scope of the admittedly valid arbitration clause (in other
words about whether the dispute in hand falls within it) the stay should be
granted, and the court has very little discretion, except where the case
should, exceptionally, be dealt with under the inherent power to stay the
case. These conclusions come from the two 2007 cases of: Fiona Trust
and Holding Corp v Privalov [2007] All ER(D) 169 and Albon v Naza
Motor Trading [2007] EWHC 665; [2007] 2 Lloyd’s Rep. 1.
In Lombard North Central plc v GATX Corp [2012] EWHC 1067

(Comm), the court discussed the circumstances in which litigation could
or would be stayed while parts of the issues between the parties were
resolved by arbitration.
Inherent jurisdiction of the court to stay
The court may grant an application to stay an action notwithstanding the

non-application of s.9. This is perhaps the only basis on which it could be
said that the Exeter City decision (above) was correctly decided, although
it was not the basis on which it was, in fact, decided. The existence of such
a jurisdiction, even in cases where s.9 might be applied, was confirmed by
the Court of Appeal in Ahmad Al-Naimi v Islamic Press Agency [2000]
1 Lloyd’s Rep. 522. The inherent jurisdiction to stay could, it was held,
be exercised where the s.9(1) requirements had not been established to
the satisfaction of the court, but where the court took the view that from
a practical point of view, resolution of the issues would be better carried
out by the arbitral tribunal than the court.
Scott v Avery clause
The purpose of s. 9(5) is to prevent a party from relying on such a clause.

This clause is so named following the case of Scott v Avery [1856] 5 HL
Cas 811. Such a clause insists that an award by the arbitral tribunal is a
condition precedent to the enforcement of the contract. If such a clause
were able to be enforced, this would affect the ability of the court to refuse

to stay proceedings, since if it did so, any court order would be ineffective
since it would not be preceded by an arbitral award. For this reason, such
a clause is devoid of any force as a result of s.9 (5).
Timing of application
An application to stay must be taken after the party has entered

proceedings but before he has taken any step to answer a substantive
claim - s. 9(4). So, if a party files an acknowledgement of service under
Part 10 of the Civil Procedure Rules 1998, and then seeks to stay the
proceedings, the application will be entertained. However, where any step
beyond this is taken, such as even a letter with the acknowledgement
stating the defence, and that more details are to follow, this will be treated
as a ‘step in [the] proceedings to answer the substantive claim’- see, for
an example of this, London Central and Suburban Developments Ltd.
v Banger (1999) ADRLJ 119.
Section 10 of the 2010 Act on Suspension of Legal Proceedings is the broad

equivalent of s.9 of the 1996 Act. The only main area of difference here is
the one highlighted above, on the approach to the need for a genuine
dispute.
Topic Activities
Consider the case of Shell Egypt West Manzala v Dana Gas Egypt
Limited [2009] EWHC 2097 (Comm) and say whether you agree or
disagree with the decisions and why.
Do bear in mind that people become judges in England largely on the basis
that they were successful barristers. Persuasion is the stock in trade of a
barrister and, while the motivation for trying to persuade someone of the
correctness of a point is different when it comes in the form of an opinion
from the judicial bench; the judge is still likely deploying some of their
skills. You can see this in the discussion above, about the distintive
approaches between the Scottish and English courts on the question of
incorporation of arbitration agreements.
So, in attempting this exercise try to see around the arguments and test
them out before reaching your conclusion. Do think, too, about selective
quoting of particularly power points (and try and keep those quotes to as
focussed a form as you can).
Guideline: no more than 500 words

Further Reading
Harris, Planterose and Tecks The Arbitration Act 1996, A Commentary.

Commentary to sections 1-6 (chapters 2 and 3), sections 9-29 (chapters
3-6).
Nigel Blackaby and Constantine Partasides, with Alan Redfern and Martin
Hunter, Redfern & Hunter on International Commercial Arbitration, (6th
ed., 2015), chapter 2
Mallia, P. and Ganado, M., Staying litigation for arbitration: one angle of
the interface between the courts and arbitration 2002 Arbitration 389.
Tweedale, A. and Tweedale, K., Incorporation of arbitration clauses

revisited 2010 Arbitration 656.
Christie, D The elephant in the dispute resolution room: Problems with

the definition of arbitration in Scots law 2016 JR 27. (available on
Westlaw)

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LLM 228 Arbitration Law, Practice and Procedure Topic 3: UK Arbitration.

Topic 3: UK Arbitration. Arbitration

• Mandatory and non mandatory provisions

• Form and Definition of arbitration agreement

• Interpretation of the arbitration agreement

1. Introduction to Arbitration in the UK

(1) Scotland, regulated by the Arbitration (Scotland) Act 2010; and

© Robert Gordon University 2020-21 1

The English arbitration regime is probably the most developed anywhere

As a result, many clauses in international contracts will nominate England

Arbitration Act 1996

© Robert Gordon University 2020-21 2

on 31 January 1997. It is closely based on the Model Law (to be discussed

• Departmental Advisory Committee on Arbitration Law, Report on the

• Departmental Advisory Committee on Arbitration Law,

This committee produced these reports under the chairmanship of Lord

In addition, it should be noted that, although the 1996 Act is a relatively

Arbitration (Scotland) Act 2010

© Robert Gordon University 2020-21 3

Scotland was scattered across several centuries of case law. Unlike in

One of the disadvantages of this environment was that the law of

As a result of these, pressure built on the Scottish Government to introduce

However, there are some important differences, and these will be

© Robert Gordon University 2020-21 4

arbitrations – while the Rules appended set out the procedure to be

Meaning of the ‘seat’ of the arbitration

© Robert Gordon University 2020-21 5

(a) by the parties to the arbitration agreement, or

The more recent case of Arab National Bank v El-Abdali [2005] 1

© Robert Gordon University 2020-21 6

1. The arbitrator claimed to be a member of the London Court of

In the recent case of Braes of Doune Wind Farm (Scotland) Ltd v

© Robert Gordon University 2020-21 7

This case demonstrates that reference to a specific seat can be ineffective

“When…there is an express designation of the arbitration venue as

The Scottish Position

These are set out in s.1 of the 1996 Act:

“The provisions of this Part are founded on the following principles,

It is crucial to note that these apply throughout the arbitration process.

© Robert Gordon University 2020-21 8

both arbitral tribunals and by the courts in considering arbitral proceedings.

The Scottish position

4. Mandatory and Non-mandatory Provisions

Arbitration is based on the agreement of the parties. However, there are

(1) The mandatory provisions of this Part are listed in Schedule 1

So, each section is either mandatory or non-mandatory. Mandatory

sections 9 to 11 (stay of legal proceedings);

© Robert Gordon University 2020-21 9

section 28 (liability of parties for fees and expenses of

All other provisions (non-mandatory provisions) can be altered by the

This is subject to the proviso that certain sections (essentially sections 1-

It is important to note that only where the seat of the arbitration is in

© Robert Gordon University 2020-21 10

The Scottish position

As explained above, the 2010 Act is structured somewhat differently. If the

5. Form of Arbitration Agreement

© Robert Gordon University 2020-21 11

The expressions "agreement", "agree" and "agreed" shall be construed

(2) There is an agreement in writing—

(3) Where parties agree otherwise than in writing by reference to terms

1. There can be a reference to material elsewhere (s. 5 (3)) – this means

2. The requirement for ‘Writing’ in section 5 is at variance with Article 7

3. The agreement can include an e-mail exchange or tape-recorded

© Robert Gordon University 2020-21 12