Exam Arbi Agreement PQ null/void legality? (how should arbitrator deal…
Exam Arbi Agreement PQ null/void legality?
1(a) advise A application for B to be referred to arbi by ct
Arcadia is a model law (ML) country and is bound by relevant provisions of ML if the dispute falls within the scope of 'international commercial arbitration' (Article 1(3) ML). As H is from Norway and I is from Portugal, there is no doubt the dispute is 'international'. The arbitration requirement is also undoubtedly satisfied, as the words 'shall be decided' is of a mandator nature. Accordingly, both parties appear to have a valid arbitration agreement and the dispute falls within the scope of 'international commercial arbitration'.
ML applies only if Arcadia is the seat of arbitration (Art 1(2) ML). As the seat is not clearly stated, the venue of the arbitration is implied to be the seat of arbitration (Shashouna v Shauna). Thus, Arcadia is the seat of arbitration and the Arcadian court is bound by the provisions of ML.
A and B entered into k for (sale and purchase of a sculpture) containing an arbi clause to arbitrate dispute under k.
B in breach of AA had commenced court proceedings before Arcadian ct.
A in response, applied for dispute to be referred to arbi.
Art 11 NYC imposes on contracting states an obligation to refer parties to arbitration when proceedings have been brought by one party in breach of an AA. Art II NYC have been implemented in arcadia by virtue of Art 8 ML.
in respect of formality req, A7 ML provides that it shall be in writing. As clause 31.1 has expressly provided for that dispute to be decided by an arbitrator, there is a written record of the agreement to arbitrate, and thus, the F req under A7ML have been satisfied.
Article 8(1) ML provides that the ct which an action is brought in a matter which is the subject of an arbi agreement shall 'submitstatement on the substance of the dispute' to the defendant... refer parties to arbi unless the agreement is 'null and void, inop etc'.
the crux of the issue in this case is [whether by application to the Arcadian ct for 'an extension of time in which to submit his defence on the merits'] A had
waived his right for the matter to arbitration
(also bound by Art 4 ML - principle of waiver)
in asking for an extension, A implies his willingness to allow the matter to be resolved by litigation as the application for extension seems to suggest he is fine to proceed w court proceedings. however, must be read in light of his act of applyin to the ct for the matter to be referred to arbitration, which implies he would want the dispute to be arbitrated in accordance to AA.
FM, test in Art 8(1) ML provides 'not later than when submitting his first statement...'.
clearly, A had not done so ... and had not defended the case on its merits ...
A cannot be said to have submitted / waived his right to arbitrate
B had argued c31 is invalid and ct inevitably must consider the validity of AA to decide It is 'null and void' before referring to arbi. This relates to the doctrine of cz-cz and there is a debate in the level of review.
Born favours a full merits review, the balanced view among the ML court eg. Canada in Dell (?) and Singapore in Tomolugen Holdings (CA Sing) prefers the prima facie review.
while there is no right ans, it is submitted that the PF level review is the better view as it is coexistent w the generally accepted view that the full merits should be a matter for the tribunal (czcz). Accordingly given Arc is a ML country, it is likely for Arcadia to adopt PF review
generally there appears to be a valid AA, formality req are met and A had not waived or submitted to Arc cts. Therefore by virtue of Art 8(1) ML A is advised the Arc ct is bound to refer the claim to arbi
how should arbitrator deal with B's jurisdictional challenge?
by virtue of czcz, under A16ML
(I) libel's claim
B's argument that arbitrator (C) could not have jurisdiction over A's libel claim is a bad argument. it is not for B to argue the libel claim does not fall within the scope of clause 31.1.
Lord Hoffman in Fiona Trust (HL,Eng): the construction of an AA must start from the assumption that parties, as rational businessmen are likely to have intended any dispute arising out of the parties legal relationship to be dealt w by the same tribunal
Arcadia as ML is likely to follow Hoffman's approach as this would avoid fragmenting the issues btwn ct and tribunal
clause is likely to be construed as cr8ting a 'one-stop method adjudication for the resolution of dispute' (Lord Hope) and arbitrator will be deemed as having jurisdiction over A's libel claim
(ii) B's argument that arbitrator cannot consider A's claim until ct proceedings have been concluded is sure to fail
goes against A8(2) ML which provides the existence of ct proceedings do not prevent 'arbitral proceedings' to be 'commenced or cont... and an award to be made'. -> arbitrator is entitled to consider A's claim notwithstanding the ct proceeding
(iii) B's argument that the arbi clause under c31 is invalid bc k is null and void is a weak argument that flies in the face of the well est doctrine of separability
Art 16.1 ML has provided that an 'arbi clause which forms part of a k shall be independent'
this is explained by Hoffman in Fiona Trust that the agreement to arbitrate and the k are 'distinct' agreements , and the validity of the k does nto necessarily entail invality to AA. while there may be the situation where grounds of invalidty of the k are identical to the grounds of invalidity of AA (i.e. when arbi clause and main k are in the same document and one party claims his signature was forged) - but this is not the case in the facts
chong J in BCY BCZ (HC, Sing), doc of sep serves to give effect to parties arbiclause such that clause remains valid even though there are allegations or the k is found to be invalid.
by virtue of doc of sep, even if k is invalid, clause 31 survives and parties are under oblig to arbi
A28(1) ML: tribunal shall decide the dispute in accordance of rule of law chosen by parties. 28(3) ML provides that arbitral tribunal shall decide ex aequo et bono of parties have expressly authorised it to do so.
as a starting pt, arbitrator is auth to decide the dispute between the parties ex aequo et bono
in applying Sul America (affirmed by BCY BCZ) and Dyna-Jet v Wilson Taylor thereby overruling First Link; the law w the closest connection w the k is the seat of arbi, as parties would not have intended to choose a law that is invalid.
arcadia is the law governing k and clause 31.3 is not null and void.
by virtue of A28.3 ML, c is entitled to decide the matter ex aequo et bono
C is entitled to deal w the matter pertaining to his jurisdiction as a prelim qn or as an award of merits
if it is awarded as a prelim qn, B would have 30 days to appeal A16.3ML