The Bar Training Course

Full Time
2022/2023

College of Business and Law

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CIVIL LITIGATION AND EVIDENCE

SGS 3

Alternative Dispute Resolution; Adjudicative Options

NCQ- SBA – QUESTIONS AND ANSWERS

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TASK 3- MULTIPLE CHOICE/SINGLE BEST ANSWER QUESTIONS

1.In an arbitration, a party may appeal a tribunal’s decision in which one of the following
circumstances?

[A] As a matter of public policy, there are no circumstances in which a decision of an

arbitral tribunal can be appealed.

[B] Where a party alleges that there was a serious irregularity affecting the tribunal.

[C] Where the determination of the question will not substantially affect the rights of one
or more of the parties.

[D] Where a party wishes to appeal on a question of law arising out of an award made in
the proceedings.

ANSWER D. s.69 (1) AA 1996. A party can only appeal on a point of law. See also
paragraph 25.26. As there is a ground on which an appeal may be made against a decision
of the arbitral tribunal, it follows that A is wrong. B is wrong as this is a ground on which a
party may challenge an award (not appeal against an award - see paragraph 25.26). C is
wrong because of the word “not”. Under s.69(3)(a) leave to appeal will be given if the
question to be determined will substantially affect the rights of one or more of the parties.

2.Richards plc and Altomart Limited have a commercial disagreement. Although Richards plc
was going to commence proceedings, both parties have agreed to refer to arbitration the
dispute between them. No institutional arbitration rules have been adopted and the
arbitration agreement provides that there will be three arbitrators. Richards plc has
appointed Raymond and Altomart has appointed Geoffrey. The arbitration agreement does
not specify how the third arbitrator should be appointed.

How would the appointment of the third arbitrator usually be determined in this situation?

[A] By the court.

[B] By Raymond and Geoffrey.

[C] By Altomart, as the party responding to the request for arbitration.

[D] By Richards plc as the party which requested the referral to arbitration.

B is the correct answer – see paragraph 25.11. “where the parties agree to a three-member
tribunal, the usual position is that each party appoints one arbitrator, and these two
arbitrators then appoint a third member who acts as the chairman”. S 16(5) of the
Arbitration Act 1996. A, C and D are therefore incorrect.

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3.You act for Ferries R Us who has retained Mike Mechanics, an engineering firm to provide
engines and maintenance for the engines for the ferries, pursuant to a contract for services
(“the substantive contract”).

Once the substantive contract had been agreed, the parties agreed in writing, by an
exchange of letters that in the event of any dispute arising out of the performance of or the
servicing of the engines, such disputes would be resolved by way of arbitration (“the
arbitration agreement”). The letters provide that the Arbitration Act 1996 will apply to the
arbitration and specifies the arbitral body and procedure. The substantive contract does not
contain an arbitration clause or any reference to arbitration.

A dispute has now arisen in relation to alleged failures by Mike Mechanics to service the ferry
engines appropriately. Ferries R Us has therefore refused to pay its latest invoice. You
believe that such a dispute falls squarely within the arbitration agreement. Mike Mechanics
has stated that it will issue court proceedings for non-payment if the matter of its latest
invoice is not settled. Ferries R Us wants to refer the matter to arbitration. Mike Mechanics
has refused and claims there is no agreement to arbitrate.

What is the correct advice to give Ferries R Us in relation to (1) whether there is a binding
arbitration agreement, and (2) what steps Ferries R Us should take in the event that Mike
Mechanics issues proceedings for breach of contract?

[A] The arbitration agreement does not form part of the substantive contract and
therefore is not binding on either party. If Mike Mechanics issues proceedings,
Ferries R Us should file a defence alleging that Mike Mechanics is in breach of the
substantive contract.

[B] There is a binding arbitration agreement between the parties and Ferries R Us can
issue an arbitration claim for the court to determine the validity of the agreement if it
is contested by Mike Mechanics. If Mike Mechanics issues proceedings for breach of
contract, then Ferries R Us should apply for a stay pending the outcome of the
arbitration proceedings.

[C] There may be a binding arbitration agreement, but this cannot be determined unless
and until there is a claim before the court. If Mike Mechanics issues proceedings,
Ferries R Us should file a defence alleging that Mike Mechanics is in breach of the
substantive contract and at the same time bring a counterclaim inviting the court to
determine the validity of the arbitration agreement

[D] The arbitration agreement does not form part of the substantive contract and
therefore it is not binding unless both parties consent to the disputed issue being
referred to arbitration. If Mike Mechanics consents to the arbitration, then Ferries R
Us should apply to stay any court proceedings that have been issued; if Mike
Mechanics does not consent to the arbitration, then Ferries R Us should file a
defence alleging that Mike Mechanics is in breach of the substantive contract.

B is the correct answer. There is a binding arbitration agreement between the parties and
Ferries R Us can issue an arbitration claim for the court to determine the validity of the
agreement if it is contested by Mike Mechanics. If Mike Mechanics issues proceedings for
breach of contract, then Ferries R Us should apply for a stay pending the outcome of the
arbitration proceedings (paras 25.01 & 25.08 and CPR 62.2)

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A is wrong because a binding arbitration agreement can exist outside of the substantive
contract. Para 25.01 makes clear that the agreement to arbitrate can be made before or
after the dispute has arisen. Here, it has been made before the dispute arises but after the
substantive contact has been formed.

C is wrong because there does not need to be a substantive claim before the court before
the validity of the arbitration agreement can be determined. CPR 62.2(1)(b) makes clear
that an arbitration claim can be brought to determine the validity of an arbitration
agreement. D is wrong because there is no need for the further consent of the parties to
arbitrate once the arbitration agreement has been formed See para 25.01 which states
“There is a strong public policy in favour of upholding arbitration agreements ,”. As a result,
if the arbitration agreement is valid, it is highly unlikely to fail because one party is no longer
prepared to consent to the arbitration.

4.Michelmore Trains Limited (Michelmore Trains) entered into a contract with Gascoine
Limited (Gascoine) whereby Gascoine agreed to supply Michelmore Trains with 4,000 metric
tonnes of steel rods (the rods), every 6 months, and as and when needed.

The contract did not contain an arbitration clause but did include a condition which stated
that: “In the event of a dispute arising out of the terms of this agreement, the parties
should meet, to negotiate whether in person or via online to try and resolve the dispute,
failing which either party can commence proceedings or initiate any other dispute resolution
as they see fit”.
The first shipment of the rods was successful. 2 months later the parties entered into an
arbitration agreement which stated that any dispute arising out of the delivery or supply of
the rods, would be referred to arbitration before proceedings could be commenced in the
courts.

When the second shipment of rods was delivered, Michelmore claimed that they were not fit
for purpose and refused to pay Gascoine’s invoice. Whilst the parties have exchanged
correspondence setting out their respective positions, there has been no meeting between
them, either in person, or via online to seek to negotiate a settlement.

Gascoine asks whether the dispute can now be referred to arbitration to seek to recover the
sums due. What is the correct advice to give?

[A] Gascoine can refer the dispute to arbitration but only if the parties first meet to
negotiate, either in person or via online and are unable to resolve the dispute.

[B] Gascoine cannot refer the dispute to arbitration as the agreement to arbitrate was
contained in an agreement which was not part of the original contract.

[C] Gascoine can refer the dispute to arbitration as the agreement to arbitrate is clear and
binding.

[D] Gascoine cannot refer the dispute to arbitration as commercial disputes such as these
are not arbitral.

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[A] is the correct answer. Gascoine can refer the dispute to arbitration but only if the parties
first meet to negotiate, either in person or via online and are unable to resolve the dispute.
The substantive contract contains a condition precedent, which states that “In the event of a
dispute arising out of the terms of this agreement, the parties should meet, to negotiate
whether in person or via online to try and resolve the dispute, failing which either party can
commence proceedings or initiate any other dispute resolution as they see fit”. It is only
when that condition precedent is satisfied (namely the parties meet to negotiate) that the
arbitration can take place (see paragraph 25.05 bullet point 7). It does not matter that the
arbitration agreement was not contained in the original agreement, as arbitration
agreements are separable from the original “substantive” contract and can be enforced (see
paragraph 25.06 bullet point 2).). It is because of this reasoning that B is wrong and also
why C is wrong. D is wrong as although there are some kinds of dispute which are not
arbitral (for example, public law disputes or disputes relating to legal status) this is clearly a
private law dispute and so is arbitral (paragraph 25.05 bullet point 2).

5. Blue Skye and Northold Securities have entered into an arbitration agreement which
provides that any difference or dispute will be resolved by way of arbitration.

Proceedings have been commenced by Blue Skye against Sebastian Holdings arising out of
an alleged breach of contract. Sebastian Holdings would prefer the matter to be resolved by
way of arbitration so that the matter can be dealt with confidentially. Although there is no
arbitration agreement between Blue Skye and Sebastian Holdings, Sebastian Holdings claims
that its commercial relationship with Blue Skye is very similar to that relationship shared
between Blue Skye and Northold Securities.

Sebastian Holdings wants to apply to the court for a stay of court proceedings so that the
matter can be heard by way an arbitral tribunal.

Which of the following is the correct advice?

[A]Sebastian Holdings cannot apply for a stay of proceedings as the fact that there is a
commercial relationship between Sebastian Holdings and Blue Skye is not sufficient. Blue
Skye must be a party to the arbitration agreement.

[B] Sebastian Holdings can apply for a stay of proceedings provided that it does so before
acknowledging service of the claim form.

[C] Sebastian Holdings can apply for a stay of proceedings provided that it does so after
filing the substantive defence to the claim.

[D] Sebastian Holdings can only apply for a stay of proceedings if the evidence in support of
its application demonstrates on the balance of probabilities that its relationship with Blue
Skye is on identical terms as Blue Skye’s commercial relationship with Northold Securities.

The correct answer is A (see the reading at 2 E-107) p 765 of Vol 2– first paragraph – it is a
“party“to an arbitration agreement who may seek a stay. Section 9 cannot apply if the
parties to the court proceedings are not the parties to the arbitration agreement and the
case law expressly supports that “a mere legal or commercial relationship between the
applicant and the claimant” is not sufficient”.

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D is therefore wrong.

6. You are advising Supercheap Stores which is involved in an arbitration initiated by one of
its suppliers “Bananas for You”. The decision by the arbitral tribunal (the arbitration award)
has been issued which is not favourable to your client.
You advise that there are grounds to challenge the arbitration award on the grounds of
serious irregularity. There is no possibility of an appeal on a point of law.

Which of the following is the correct procedure to follow to challenge the arbitration award?

[A] Supercheap Stores should issue an application to stay the enforcement of the
arbitration award, pending the hearing of the challenge and serve it upon the
Defendants with 3 clear days’ notice before the hearing of the challenge.

[B] Super cheap Stores should issue an arbitration claim form in accordance with the
Part 8 Procedure and serve the arbitration claim form on the defendant within one
month of issue.

[C] Super cheap Stores should issue an arbitration claim form in accordance with the
Part 8 Procedure and serve the arbitration claim form on the defendant within four
months of issue.

[D] Supercheap Stores should issue an application to stay the enforcement of the
arbitration award, pending the hearing of the challenge and serve it upon the
Defendants one month before the hearing of the challenge.

B is the correct answer and correctly reflects the requirements for starting an arbitration
claim as set out at CPR 62.3 and the correct timing as set out at CPR 62.4(2) (which is why
the reference to 4 months in C is wrong). A and D are wrong as this is not a situation where
you would be seeking a stay of the arbitration proceedings under CPR 62. 8 and is therefore
wrong.

7. Which ONE of the following cases is most suited to Expert (or Neutral) determination?

[A] A straight forward contractual dispute with no expert required.

[B] A dispute where the only evidence is a witness statement of fact relating to an oral
variation to a contract.

[C] To settle a dispute that arises during an assessment of costs when the main
proceedings have concluded.

[D] A dispute as to liability in a road traffic accident to which the evidence hinges on the
evidence of bystanders.

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ANSWER C. There are certain cases which are particularly suitable to expert determination,
one of which is to use expert determination to settle disputes that arise during assessment
of costs when the main proceedings have concluded (this is a good example of where the
technical nature of expert determination comes into play). A, B & D are all examples of
where expert determination would not be suitable or required. (24.09)

8. Mufti Limited (ML) is in a dispute with Surrey Investments Limited (SIL), arising out of
the valuation of a company which Mufti Limited bought on the advice of SIL. ML claims that
the Company is in fact worthless and so ML has suffered a substantial loss as a result. In the
terms of contract which governed the terms of business between ML and SIL, it was agreed
that in the event of a dispute, the parties would determine the dispute by way of expert
determination before commencing court proceedings.

ML is so furious with SIL, whom it believes was grossly negligent in the evaluation of the
company that it wants to commence proceedings against SIL without delay. It has not
followed any pre-action procedures. It has issued the claim form and notified SIL that it will
serve the claim within 14 days.

SIL seeks your advice on how to respond to the claim.

Which of the following is the best advice to give to SIL in these circumstances?

[A] SIL should apply to the court for a stay of proceedings so that the dispute can be
resolved by expert determination.

[B] Whilst ML is entitled to commence proceedings without considering expert determination

any further, it is obliged to follow the relevant pre-action protocol, and so SIL’s instructing
solicitors should ask them to apply for a stay of proceedings so that the relevant pre-action
conduct can be followed.

[C] SIL should issue proceedings against ML for damages for breach of contract for failing to
comply with the expert determination clause.

[D] ML is entitled to commence proceedings without taking any further pre-action steps, as
Article 6 of the Human Rights Act allows for a right to a fair trial of a genuine dispute. To
prevent ML from bringing proceedings would be in breach of this right. Once proceedings
are served, SIL should file and serve its defence within the appropriate time.

A is the best answer to give in the circumstances (see paragraph 24.25). In deciding
whether to grant a stay of legal proceedings so that the alternative contractually agreed
mechanism for resolving the dispute can be followed, the court will take into account a
number of factors e.g. the extent to which the parties have complied with the requirements
of the pre-action protocols – which we know on the facts here that they have not.

C is also a potential answer (see paragraph 24.24) as ML would be in breach of their

contract, but it would be quicker and cheaper to apply for a stay of proceedings to try and
get the parties around the table and to deal with expert determination.

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B is wrong as it disregards the fact that a contractually agreed method can be enforced by
the courts. D is wrong as it fails to take account of the importance of pre-action protocols
and ADR.

9. You act on behalf of Melina, the owner of a doggy parlour. Melina has leased the doggy
parlour to Nisirat for a yearly rental sum of £ 14,000. The terms of the rental agreement
provide that the rent will be reviewed every 2 years and that if the parties cannot agree the
rental rate, then it will be determined by an expert valuer whose decision will be final and
binding. After 2 years, Melina suggests that the rent should increase by 10 % and so should
therefore be £ 15,400 for the next 2 years. Nisirat, will not agree to this and so the expert
valuer is brought in, and determines that the appropriate rent for the next 2 years is £
15,000 per year. Nisirat, whilst acknowledging the terms of the contract, will not agree to be
bound by the new rental sum and will only agree to continue paying the original sum of £
14,000 per year.

Which of the following is the best advice to give Melina on how she can most effectively
enforce the expert valuer’s determination?

[A] The determination of the expert can be enforced by bringing court proceedings against
Nisirat to recover the yearly rent in the sum of £ 15,000.

[B] As Nisirat did not agree to the figure of £ 15,000, Melina’s recovery will be limited to the
yearly rent in the sum of £ 14,000.

[C] The determination of the expert valuer can be enforced by bringing court proceedings
against Nisirat to recover the yearly rent of £ 15,000 and in those court proceedings Melina
should make an application for summary judgment.

[D] The determination of the expert can be enforced as if it were a decision of a court
because the decision was final and binding.

C is the best advice to give Melina in the circumstances (paragraph 24.54). A failure by one
side to honour the decision reached by an expert valuer/ determiner amounts to a breach of
contract and proceedings can be issued in relation to the breach. In those proceedings, the
court can make an order giving effect to the decision of the expert, and if there are no valid
grounds for challenging the decision, summary judgment is likely to be granted to enforce
the decision.

A is not the best answer as it does not refer to the short cut procedure of summary
judgment which would be the quickest way of reaching the desired solution.

B is wrong as it ignores the fact of the weight to be given to the contractual term referring
to expert determination. What is relevant is not whether Nisirat agreed to the new (higher)
figure, but that Nisirat agreed in the original agreement to be bound by the decision of the
expert valuer.

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D is wrong as a decision reached by expert or neutral determination cannot be enforced in

the same way as if it were a court decision. (see first sentence of paragraph 24.54).

Unseen questions

1. MerryWeather Holidays (MerryWeather) contracted with Racey Ramblers Transfers Ltd

(Racey Ramblers) to provide bike transfers from the port of Dover to various walking
locations in the Lake District There was a dispute between the companies. The contract
between the parties contained an arbitration clause for arbitration in the UK (both are UK
based companies). Despite the presence of the arbitration clause, MerryWeather issued
proceedings in the High Court against Racey Ramblers seeking damages for breach of
contract.

Racey Ramblers wants to avoid the publicity of a court hearing and asks what steps need to
be taken so that the matter can be resolved by arbitration as previously agreed.

What is the correct advice to give to Racey Ramblers in the circumstances?

[A] Racey Ramblers should acknowledge the legal proceedings and then make an
application to the court for a stay of the legal proceedings.

[B]Racey Ramblers should file and serve as defence to protect its position and then make an
application to the court for a stay of legal proceedings.

[C]Racey Ramblers should file and serve a defence to protect its position and then issue an
arbitration claim form in accordance with the Part 8 procedure seeking a stay of the legal
proceedings.

[D] Racey Ramblers should acknowledge the legal proceedings and then issue an arbitration
claim form in accordance with the Part 8 procedure seeking a stay of the legal proceedings.

A is the correct answer. The correct procedure to follow in these circumstances is to make
an application for a stay (as noted in paragraph 25.08 and CPR 62.8 and CPR 62.3(2)). It is
not appropriate to issue an arbitration claim form. See CPR 62.2 and CPR 62.3 and so C and
D are wrong.
B is wrong, as although it is correct to state that an application needs to be made; it is
incorrect to state that this can be done after service of the defence – this would be too late
and would be considered to be a submission to the court (see reading at 2 E-111 of Volume
2 of the White Book). Also, S9(3) AA Act 1996 – 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.

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2. Section 1 of the Arbitration Act 1996 gives three general principles that govern
Arbitrations. Which one of the following is not included?

[A] The object of arbitration is to obtain the fair resolution of disputes by an

impartial tribunal without unnecessary delay or expense

[B] Parties must consider carefully if their interests are fully served by the
arbitration process before entering into it

[C] The parties should be free to agree how their disputes are resolved.

[D] The court should not intervene except as provided by the Act

Answer: B, see paragraph 25.03

3. Veba Oils and Sherwood Ltd agreed that in the event of a dispute, it would be resolved
by expert determination and that the decision of the expert would be conclusive and binding
for all purposes.

The dispute arose and an expert was appointed. Veba Oils was not happy with the decision
reached by the appointed expert and seeks your advice as to whether it can challenge that
decision.

What is the correct advice to give?

[A] Veba Oils may only challenge the decision of the expert if it can be established that
there has been a manifest error or an error of law;

[B] Veba Oils may only challenge the decision of the expert if it can be established that
there was a lack of procedural fairness;

[C] Veba Oils may only challenge the decision of the expert if it can be established that
there was fraud or partiality on the part of the expert.

[D] As the contractual agreement had provided that the decision of the expert would be
conclusive and binding for all purposes Veba Oils may only challenge the decision if there is
a contractual ground to do so or where other grounds of challenge may exist as a matter of
law.

D is the correct answer (see paragraph 24.31 and 24. 32). A, B and C are all grounds on
which the expert’s decision could be challenged but are incorrect as in each case they
suggest that that is the only ground available.

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