Arbitration Agreement

A v B – QBD (Comm Ct) (Phillips J) [2018] EWHC 1370 (Comm) – 13 April 2018

The Commercial Court recently had cause to consider a Russian language Arbitration Clause in an Asbatankvoy charterparty which it was alleged provided for LCIA as opposed to ad hoc arbitration. It was also decided that when parties appoint arbitrators on procedural terms those terms shall govern the dispute subject to the tribunal having jurisdiction.

The literal translation of the disputed Arbitration Clause was as follows:

“Arbitration proceedings – London international arbitration court, in accordance with the laws of Great Britain …”

A dispute arose and the Owners commenced arbitration proceedings having appointed an arbitrator who accepted his appointment on the 2012 LMAA Terms. Charterers appointed an arbitrator who also accepted his appointment on the same basis. No reservation was made by Charterers as to either jurisdiction or procedure. Thereafter, the Charterers challenged the Tribunal’s jurisdiction on the grounds that the words “London international arbitration court” were meaningless and ineffective. The Owners argued that the clause simply provided for arbitration in London and so the Tribunal did have jurisdiction. Alternatively, they said that the Charterers had already appointed their arbitrator on that basis and had not raised any objections.

In their Award, the Tribunal mentioned that they had consulted a Russian speaking lawyer and the advice received was that if the term “London Court of International Arbitration” (for which the acronym would be LCIA) were translated into Russian it would effectively be the same as the words used in the arbitration clause. On this basis, it was held that the parties had intended that disputes would be determined by LCIA arbitration, notwithstanding that Charterers had not made this argument.

Owners were not too happy with that given that LCIA arbitration is more cumbersome and expensive than an ad hoc arbitration on LMAA Terms. They therefore appealed. Phillips J overturned the Tribunal’s decision and held that the words used did not clearly indicate an agreement to refer disputes to LCIA arbitration.

Those interested in the full decision can access it here. The case also involved our very own Nick Bradley who at the time was on the Owners’ legal team. The case is yet another example of ambiguous arbitration clauses. Those interested should check out our previous blog post on things to bear in mind when drafting arbitration clauses which can be accessed here.

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