Domestic Arbitration in UK Law

The power to stay domestic legal proceedings under section 9 and the power to determine that foreign proceedings are in breach of an arbitration agreement and to injunct their commencement or continuation are in truth opposite and complementary sides of a coin. The general power provided by section 37 of the 1981 Act must be exercised sensitively and, in particular, with due regard for the scheme and terms of the 1996 Act when any arbitration is on foot or proposed.

While deprecating the extension of the use of the expression "purposive construction" from the interpretation of statutes to the interpretation of private contracts, I agree with the passage I have cited from the arbitrators' award and I take this opportunity of re-stating that if detailed semantic and syntactical analysis of words in a commercial contract is going to lead to a conclusion that flouts business commonsense, it must be made to yield to business commonsense.

Where there is an application to stay proceedings under section 9 of the 1996 Act, both in international and domestic cases, the court will determine the issue of whether there ever was an agreement to arbitrate: Al-Naimi (t/a Buildmaster Construction Services) v Islamic Press Agency [2000] 1 Lloyd's Rep 522 (CA) (English arbitration); Albon (t/a NA Carriage Co) v Naza Motor Trading Sdn Bhd (No 4) [2007] EWCA Civ 1124, [2008] 1 Lloyd's Rep 1 (Malaysian arbitration).

Comity and common sense are likely to require no less; pre-empting the decision on a challenge to an award before the court exercising supervisory jurisdiction in the country of origin would be a strong thing in a case where all parties were domiciled or incorporated in that country.

An English court exercises control over the enforcement of arbitral awards as part of the lex fori, whatever the proper law of the arbitration agreement or the place where the arbitration is conducted. If a claimant wishes to invoke the executive power in this country to enforce an award in his favour, he can only do so subject to our law. For the purposes of the present dispute, that means section 26 of the Arbitration Act 1950.

In my judgment, these authorities establish in a manner binding upon us in this Court that, where a third party undertakes the role of deciding as between two other parties a question, the determination of which requires the third party to hold the scales fairly between the opposing interests of the two parties, the third party is immune from an action for negligence in respect of anything done in that role.

That said, it is important that there shall be no misunderstanding of the purposes for which reasons can be used. Few nations are prepared to lend the power of the state to enforcing arbitration awards, without retaining some right to review the awards themselves. On the other hand, it cannot be over-emphasised that the parties, having chosen their tribunal, have to accept it "with all faults".