Arbitration 2 Notes

Arbitration 2

Court interference with/supervision of arbitration

• Generally, hands-off approach by courts.

• S1 AA, general principles

• 1(b) parties should be free to agree how their disputes are resolved (subject only to such safeguards as are necessary in the public interest)

• 1(c): in matters governed by this Part, court should not intervene except as provided by this Part.

• So balancing act: courts have to retain some degree of oversight over, and support for, arbitral proceedings. Mandatory provisions of AA assist in striking the right balance.

Where court can become involved:

1. To enforce arbitration agreement

2. To enforce peremptory orders of arb tribunal

3. Determine a preliminary point of law

4. (reviewing the award) Where there is a challenge or appeal to an arbitral award

5. (enforcing the award) Where there is an attempt made to enforce the award (i.e. where has been no challenge or appeal to/from the award, or where a challenge/appeal has been dismissed by the court)

(1) Enforcing an agreement to arbitrate, stays of proceedings (s9)

• Remember, need a valid arbitration agreement (ss5-6 AA):

  • (1) agreement in writing

  • (2) which submits disputes to arbitration.

• NB, where it is feared that proceedings are about to be commenced in breach of an arbitration agreement it may be possible to apply for an anti-suit injunction.

• When court proceedings have already been commenced:

• S9 AA 1996 = a mandatory provision:

• S9(1): “A party to an arbitration agreement against whom legal proceedings are brought (whether by way of a 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 proceedings) apply to the court in which the proceedings have been brought to stay the proceedings so far as they concern that matter”.

• Technically, the proceedings can be continued if the stay is lifted, but in practical terms s9 stays are usually permanent (because the consequence is that the dispute is referred for final determination by arbitration).

• Must apply to the court in which the claim is proceeding (s9(1)).

• S9(3), must comply with s9(3) before bringing such an application under s9(1) prerequisite, the party seeking stay must have filed an A/S:

  • S9(3): “application may not be made by a person before taking the appropriate procedural step (if any) to acknowledge the legal proceedings against him

  • But application may not be made after he has taken any step in those proceedings to answer the substantive claim”

  • [i.e. (1) must ACKNOWLEDGE SERVICE of the proceedings before making an application under s9; BUT (2) but must not have taken a ‘step’ in proceedings to answer the substantive claim].

• So the party seeking stay must file an A/S (Form N9, response pack); and then apply for stay by issuing an application notice in Form N244.

• S9(4):

  • on an application under this section, the court SHALL grant a stay, UNLESS satisfied that the arbitration agreement is (a) null and void, (b) inoperative, or (c) incapable of being performed.

  • [this links to s1(c) court shall not intervene except as...]

  • encouraging arbitration with minimal court intervention.

• A clause that says the parties ‘may’ refer disputes to arb is permissive, and allows a party to commence litigation, but enables the other party, before or after litigation is started, to insist on arbitration.

To order s9 stay, court must be satisfied that:

• (a) there is a valid, concluded arbitration agreement and

• (b) the subject/issue of the action is within that arbitration clause.

• And the parties to the court proceedings must be the parties to the arb agreement

• If there is a dispute over whether the dispute comes within the arb agreement the court may decide that question or give directions, see below.

Application for a stay, CPR 62

• 62.3: ‘An application under s9 AA to stay legal proceedings must be made by application notice to the court dealing with those proceedings’. i.e. PART 23

• 62.8: the application notice must be served on:

  • all parties to the legal proceedings who have given an address for service

  • AND on any other party to the legal proceedings (whether or not within the jurisdiction) who has not given an address for service, at: (a) his last known address or (b) a place it is likely to come to his attention.

• 62.8(3) where a question arises as to whether:

  • (a) an arbitration agreement has been concluded; or

  • (b) the dispute which is the subject-matter of the proceedings falls within the terms of such an agreement

  • the court may (a) decide that question or (b) give directions to enable it to be decided, and may order the proceedings to be stayed pending its decision.

Commentary in White Book re s9 stay of legal proceedings (2E-105 - 114)

• S9 is a mandatory provision, and applies even though the seat of arb is outside Eng & Wales or no seat of arb has been designated (s2 AA).

• Right of appeal there is a right of appeal to the Court of Appeal: the general terms of s107 and Sch 3 do not remove the right of appeal.

• A “party” to an arb agreement

  • S9(1) stay may be applied for by a “party” to an arb agreement against whom legal proceedings are brought re a matter within the arb agreement.

  • “a party” includes ‘any person claiming under or through a party to the agreement’ (s82(2)).

  • S9 cannot apply if the parties to the court proceedings are not the parties (or persons claiming through or under a party) to the arb agreement no stay against a C who was not a party to the agreement.

  • CA: possible for court to impose a stay in favour of a third party on the basis of an intention to rely on a contractual defence which was subject to a term providing for the submission of disputes to arbitration.

  • Difficulties where provisions in one agreement give jurisdiction to the court, and in another refer disputes to arbitration in such cases, allocation of jurisdiction is a matter of construction.

• Whether legal proceedings were in respect of a ‘referred matter’ within s9:

  • depends on...

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