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Tuesday, 2 July 2013

ARTICLE: The Constituents of An Arbitration Agreement








By Arunachalam Kasi

ABSTRACT 

Arbitration is currently one of the most prominent alternative dispute resolution mechanisms to the system of dispute resolution by the court. Arbitration is a dispute resolution mechanism by the choice of parties. Unlike the court, an arbitral tribunal derives its jurisdiction only from the agreement between the parties to submit to arbitration to resolve their disputes. The recent years have been a blooming period for arbitration through widespread use of it in commercial agreements both in local transactions and in international transactions. Model laws such as those provided by international treaties such as the Convention on the Recognition and Enforcement of Foreign Arbitral Awards of 1958 and the United Nations Commission on International Trade Law of 1985 has endorsed promotion of arbitration as an alternative dispute resolution mechanism. Local legislations throughout the world have followed the trend by legislating arbitration laws in line with the model laws. Having said this about arbitration and that it is a create of an agreement between the parties, the question arises now as to what is an arbitration agreement. In order to qualify as an arbitration agreement, the agreement will have to satisfy certain requirements as to content as well as to formalities. This is what this article attempts to explore.

1.1.  Definition and form of arbitration agreement

Section 9 of the Arbitration Act 2005 (“the Act”) provides the definition and the required form of an arbitration agreement. It has two aspects. The first is that it defines arbitration agreement and the second is that it provides exclusively the form that an arbitration agreement should take. What would be an arbitration agreement in the ordinary sense may not however be a legally recognised arbitration agreement within the scope of section 9 because it does not satisfy the requirements as to form under section 9. Accordingly, it is necessary to closely analyse section 9.
It is interesting to note that while section 9 defines arbitration agreement and the form that the agreement must take, it does not define arbitration itself. Accordingly, once a study of section 9 is undertaken, it is important to define arbitration itself. This is because there may be a mechanism of resolution of matters between the parties, which is not arbitration, though it resembles arbitration in some aspects. An example would be a case where an employer agrees to pay the contractor so much sum of money as is certified by an architect. In this case, the architect is not an arbitrator although he makes a judgment and decision (as to the price to be paid) binding on the parties, but rather he acts as an expert[i].

1.1.1. Section 9 definition and form


Section 9(2) of the Act defines an arbitration agreement as
… an agreement by the parties to submit to arbitration … disputes which have arisen or which may arise between them in respect of a defined legal relationship, whether contractual or not.
When an arbitration clause is included within a master agreement, it provides for resolution of disputes which may arise between the parties in respect of their contractual relationship. Alternatively, when the parties agree to submit to arbitration in relation to some dispute which has already arisen between them, not necessarily as a result of a contract, this  too is an arbitration agreement within the above definition. For instance, an agreement might not have had an arbitration clause originally, but when a dispute arose between the parties out of the agreement, they may agree that they will refer the dispute to arbitration rather than take action in the courts. This is an arbitration agreement within the above definition. Similarly there may arise a claim in tort, say following a car accident, and the parties may agree that the dispute shall be resolved by arbitration rather than by courts. This is again an arbitration agreement within the above definition.
Section 9(2) of the Act provides for two forms that an arbitration agreement may take. The first is the form of an arbitration clause within a master agreement, and the second is the form of a separate agreement by itself.
            Section 9(3) of the Act further provides that an arbitration agreement shall be in writing[ii], and section 9(4) defines ‘an arbitration agreement in writing’. Section 9(4) is so worded that is it is meant to provide an exhaustive definition. Section 9(5) provides for incorporation of arbitration agreement by reference.
Pursuant to section 9(4) definition, an arbitration agreement is in writing if it is contained in
(a)    a document signed by the parties;
(b)    an exchange of letters, telex, facsimile or other means of communication which provide a record of the agreement; or
(c)    an exchange of statement of claim and defence in which the existence of an agreement is alleged by one party and not denied by the other.
A fine distinction needs to be drawn here between agreements in writing and agreements reduced to (or merely recorded) in writing. An agreement is in writing when it is formed and concluded by virtue of the written document signed or sealed by the parties (such as a detailed sale and purchase agreement of a house) or by virtue of an exchange of written documents (such as letters of offer and acceptance). In such cases, in the absence of the written document or exchange of written communication, there would be no consensus of the minds of the parties.
Conversely, an agreement is reduced to writing, when the agreement was already formed and concluded prior to making of the written document. An example would be a case where a buyer orally offers to buy a used sofa set for RM200 with delivery to be taken by the buyer at the seller’s house the next day and cash to be paid thereon, and the seller orally accepts the same. At this point consensus of the minds of the parties is reached and thus an agreement is concluded. Say, later on that day the buyer sends an email to the seller confirming what was agreed between them and the seller acknowledges the same by return email. This email message is a record of the oral agreement or the oral agreement is now reduced to writing (but the email correspondence does not constitute the agreement by itself, since the agreement was already orally concluded earlier).
Section 9(4) does not recognise agreements reduced to writing, as opposed to those made in writing. It is to be noted that section 9 is an importation into our legislation of the article 7 of the UNCITRAL Model Law[iii], which too does not recognise agreements merely reduced to writing as opposed to those made in writing. Comparatively, section 5 of the English Arbitration Act 1996 expressly makes provision in its sections 5(2)(c) and 5(4) of the  Act to admit an arbitration agreement evidenced in writing to be within the definition of written agreement[iv]. Sections 2A(4) of the Singaporean International Arbitration Act has even gone a step further than the English provision by admitting arbitration agreements recorded in any form. This provision will cover cases where, for instance, an oral agreement is voice-recorded. It is interesting to note that until before June 2012, the Singaporean provision was similar to the Malaysian one. However the amendments that came into force in June 2012 took the leap.
The leap taken by the Singaporean law is too far reaching and can make ground for other problems. Recording in any form would include, say, voice recording. While both written record and voice-record may provide ease of evidence (though in different degrees), a written record in the current context[v] is necessarily consensual but a voice-record may be non-consensual. It is to be remembered that the issue arises here with respect to a commercial agreement. Ordinarily, a commercial agreement that is intended to be legally binding would more likely be evidenced in writing than in any other form. Accordingly, there does not seem to be sufficient justification to admit forms of record other than one in writing. Even if the law were to provide that any form of recording is admitted, then it should take caution to spell that such recording should be consensually made. Such caution was not taken in the Singaporean legislation. Comparatively, the English legislation has well taken the caution to stipulate that any recording of a non-written agreement should be made with the authority of all the parties to the agreement[vi].
In order to evaluate the different approaches of the respective legislations, it is pertinent to analyse the rationale behind the requirement as to formalities in case of certain agreements. It is a fundamental principle of contract law that parties are bound by what they have agreed to as long as the promises in the agreement are supported with consideration, the parties intended to create a legal relationship and there is no vitiating factor such as lack of capacity or illegality. The fundamental law of contract regarded the substance as more important than the form, and it admitted agreements concluded in writing, orally or even by conduct, be it made expressly or impliedly[vii]. However the law imposes some requirements as to formality in certain cases. Section 10(2) of the Contracts Act 1950 provides in the form of a proviso[viii] that when a law requires a particular type of agreement to be in writing or to be witnessed in a particular manner, then it should be so done in order to be valid.
There are two rationales behind the requirement as to formalities. The first is that in those cases the law requires a higher degree of intention to create a legal relationship and the second is to provide ease of evidence of the agreement. In the case of an agreement consensually recorded down into writing, the objectives of the requirement as to the formalities are likely equally satisfied because the fact that the parties have reduced their agreement to writing evidences their higher degree of intention to create legal relationship, and the written form also provides ease of evidence. Accordingly, it is advocated that the English law has taken a well-balanced position compared to the narrower position taken by the Malaysian law and to the wider position taken by the Singaporean law.
Section 9(4)(b) rightly defines a written agreement to include exchange of letters, facsimile and other means of communication, and does not require any signing in case of such exchanges unlike in the case of an agreement made by a wholesome document that need to be signed by the parities[ix]. For instance, exchange of communication by email (or even by short messaging service) will qualify as a written agreement for purposes of the section.
Section 9(4)(a) quite rightly provides that when the agreement is made by virtue of a document (such as a sale and purchase agreement of a house), then it should be signed by the parties, for without such signature the parties might not have intended to give legal effect to the transaction. However a more thoughtful drafting of the section would have expressly included sealing a document in case of certain legal entities (other than natural person) which would execute documents through sealing rather than signing (unless signed through an agent). It is interesting to note at this juncture that the Interpretation Acts 1948 and 1967 have definitions[x] of ‘sign’ in its section 3 and 66 respectively. Neither of these definitions includes ‘sealing’ within the meaning of ‘signing’. However both these definitions are provided as inclusionary definitions (and not exhaustive ones). Logically, there would be no difficulty in a court interpreting ‘signing’ to mean ‘sealing’ in case of non-natural persons where applicable.
Section 9(4)(c) is in fact a matter of procedural estoppel that was poorly drafted. The fact that the pleadings (statement of claim, defence and reply to defence, if any) acknowledge existence of an agreement has no bearing on the question of whether the agreement was in writing or not. It should be noted that the ‘agreement’ referred to in section 9(4)(c) is not necessarily a written agreement. Hence, when the pleading merely acknowledge an oral conversation between the parties whereby the parties have orally agreed to submit their disputes to arbitration, then this would satisfy the requirement of written arbitration agreement. This appears to be an unintended result of the legislation, resulting from poor drafting.
The intended effect of the section would be to provide an estoppel such that the parties could not divert away from their respective pleadings, though this may not be necessary because the law relating to civil procedure would provide the same. Quite oddly section 9 has attempted to write this  estoppel as part of the definition of a ‘written agreement’. If the provision was well drafted, it would have been provided as a stand-alone provision rather than as part of definition of ‘written agreement’[xi]. This odd drafting is a result of adoption into our legislation of article 7(2) of the UNCITRAL Model Law[xii], which is equally oddly drafted. English legislation is no exception to the adoption of this defective model[xiii].
However, the Singaporean legislation was thoughtfully drafted without importation of the defect in the model law. Section 2A(6) of the Singaporean International Arbitration Act[xiv], as amended in 2012[xv], reads “Where in any arbitral or legal proceedings, a party asserts the existence of an arbitration agreement in a pleading, statement of case or any other document in circumstances in which the assertion calls for a reply and the assertion is not denied, there shall be deemed to be an effective arbitration agreement as between the parties to the proceedings.” [xvi]
Section 9(5) expressly allows incorporation of an arbitration clause by reference, subject to requirement that both the agreement to incorporate and the referred terms to be incorporated are in writing[xvii]. Incorporation of terms by reference is not new to the law of contract but is a very well-established principle in contract law[xviii]. In any case of incorporation, it is quite common that the referred terms to be incorporated are in writing since they would usually be in a written document[xix]. Hence the crucial formality-requirement stipulated by section 9(5) is that the agreement incorporating the referred document must be in writing. Comparatively, such requirement is absent in the English[xx] and Singaporean[xxi] legislations, although the requirement that the terms to be incorporated must be in writing is present in those legislations.
In the English case of Bilta (UK) Ltd v Muhammad Nazir[xxii], a party emailed a soft copy of a proposed agreement to the other party, and the other party proceeded to transact the business without making any objection to the proposed agreement. It was held that the other party accepted the agreement by conduct and that an arbitration clause contained within the proposed agreement was valid and effective[xxiii]. This is an example of a case where the agreement was concluded otherwise than in writing (the offer made in writing but the acceptance made by conduct), which incorporates terms that are in writing (the emailed copy of the agreement). In the English law an arbitration clause contained within such agreement satisfies the formality requirement by virtue of section 5(3)[xxiv] of the Arbitration Act 1996.
However, the same clause would not satisfy the formality requirement in Malaysian law as required by section 9(5) of the Arbitration Act 2005. In Duta Wajar v Pasukhas Construction[xxv], the Court of Appeal stressed the importance of written exchange to constitute a valid arbitration agreement and further said that a mere acceptance of a written offer by conduct would not suffice.

1.1.2. Definition of arbitration


Having analysed the definition and form of an ‘arbitration agreement’, it is necessary now to find the meaning of arbitration itself since an arbitration agreement is an agreement to submit disputes to arbitration. Arbitration itself is not defined in section 9 or anywhere else in the Act. It is interesting to note that the English Arbitration Act 1996 too does not define ‘arbitration’[xxvi]. However, UNCITRAL Model Law widely defines it as “any arbitration whether or not administered by a permanent arbitral institution”[xxvii].
There could be an agreement that has some resemblance to an agreement to submit disputes to arbitration, but not in fact an arbitration agreement because the mechanism of dispute resolution envisaged does not qualify as ‘arbitration’. It is important to appreciate this distinction for two reasons. First is that the law applicable, and accordingly its effect, may be different depending on whether the particular agreement is an arbitration agreement or not. Second is that if it is an arbitration agreement, it should strictly comply with the form required in section 9 of the Arbitration Act 2005 to be effective.
In order to qualify as an arbitration agreement, it must be one whereby the parties agree to submit their disputes to arbitration[xxviii]. Two matters are clear. The first is that there must be a dispute or disagreement (whether present or one that may arise in the future out of a defined legal relationship) between the parties and the second is that they have agreed to refer it to arbitration. Irrespective of the lack of definition of arbitration in our legislation, the meaning is still clear for our purposes. It will be a reference to arbitration or arbitral tribunal if the parties refer their dispute to the non-judicial dispute resolution tribunal (or more accurately, a quasi-judicial dispute resolution tribunal) empowered by the parties’ agreement to make a final and binding decision over the dispute following a process of dispute resolution mechanism that is consistent with the scheme of arbitration recognised by the Arbitration Act 2005. In order for the mechanism to be one that is consistent with the scheme of the Act, the tribunal should hold an enquiry akin to a judicial one, hear the parties’ respective cases, and make a decision upon the hearing and evidence laid before it.
In Wilky Property v London & Survey Investments[xxix], the court placed much emphasis on looking at the process envisaged by the parties in determining whether a particular agreement is an arbitration agreement or an expert reference agreement. The required process was in principle that the decision-maker[xxx] holds an enquiry akin to a judicial one, hears the parties’ case, and makes a decision upon the hearing and evidence laid before him[xxxi]. The words used by the parties were indicative of their intention, but not conclusive. All the circumstances were taken into account in determining whether the dispute resolution clause in the case was an arbitration agreement[xxxii]. Quite commonly the process required of arbitration will not be satisfied in cases of expert-determination. In Turville Health v Chartis Insurance[xxxiii], it was held that an agreement providing for a binding decision to be made by an appraiser and an arbitrator[xxxiv] was not an arbitration agreement because the arbitrator was not allowed to make a binding decision himself and hence the process envisaged was not arbitration.
Cases such as Premium Natfa Products v Fiji Shipping[xxxv] and Fiona Trust v Privalov[xxxvi] and P.T. Tri-M.G. Intra Asia Airlines v Norse Air Charter[xxxvii] has reinforced that the courts should realistically construe agreements so as to give effect to the commercial meaning intended of the agreement. Support for such proposition could be found in cases such as Cott v Barber[xxxviii], where it was held that an agreement does not become an arbitration agreement by merely being labelled as such. An agreement to refer disputes or disagreements or any other matter to an expert may not be an arbitration agreement, and the distinction between an arbitration agreement and an expert reference agreement might be narrow. Take for example a case where an employer agrees to pay his contractor so much sum of money as is certified by the architect[xxxix]. Does the architect act as an arbitrator? No doubt the architect’s certificate is intended to be final, but there is no prior dispute or disagreement that is referred to the architect. Hence the architect is not an arbitrator and the purported reference is not to arbitration[xl]. It follows that the entire Arbitration Act 2005 has no application to this case. However if the agreement provided that the parties will first negotiate the price and in case they fail to reach the agreement then they will refer the dispute or disagreement to the architect for final determination, then this may be a reference to arbitration[xli], however provided only that the dispute resolution mechanism is consistent with the scheme of arbitration recognised by the Arbitration Act 2005[xlii].  
In Channel Tunnel v Balfour Beatty Construction[xliii], a construction contract provided that any dispute or difference would be referred to a panel of experts. Upon adjudication by the panel of experts, if either party was not satisfied with the adjudication, it might refer the matter to arbitration. It was clear that the provision of reference to the panel of experts was not an arbitration agreement for the panel’s decision was not intended to be final. It was also equally clear that the obligation of the parties to refer to the panel was a condition precedent before the arbitration clause could take effect. The result was that the contractor could not rely on the arbitration provision to apply for a stay of court proceedings while no reference was yet made to the panel[xliv].
In Cott v Barber[xlv], the parties entered into a contract-manufacturing agreement. On each side, there was a minimum quantity commitment. Each party claimed that the other party had breached the commitment. The agreement contained a clause that was headed ‘arbitration clause’. However the contents of the clause stipulated that in the event of any dispute or difference between the parties, the Director General of British Soft Drink Association would appoint an expert to determine the dispute or difference and his decision would be final. A dispute arose and the Director appointed an expert, who however did not have any experience in arbitration. The plaintiff being dissatisfied with the appointment instituted action in the court over the dispute. The defendant applied for stay of court proceedings on the basis of the arbitration clause. The court held that the clause that was headed ‘arbitration clause’ was not an arbitration clause in effect[xlvi], but a clause providing for determination of the dispute by an expert.
In this case there was a dispute and the parties agreed to submit it to the middle person and the parties also intended the decision of the middle person to be final. So the only element that could be missing, if any, is the required process of dispute resolution mechanism consistent with arbitration[xlvii]. In particular, the court placed emphasis on the fact that the expert lacked experience in arbitration, which seemed to suggest that this would impugn the process of dispute resolution mechanism consistent with arbitration.
In Mayers v Dlugash[xlviii], the parties were the beneficial shareholders of a company. They decided to distribute the business activities, assets and liabilities of the company among themselves. The parties agreed to appoint an independent accountant to resolve any differences and to determine the manner in which such distribution was to be made. The court held that the accountant was merely an expert and not an arbitrator[xlix]. The court was guided upon the key differences between an expert and an arbitrator. An expert is liable for negligence, unlike an arbitrator performing quasi-judicial function. The expert’s decision cannot be enforced as an arbitration award. In the case of an arbitrator, he is appointed to determine a formulated dispute. No doubt the similarity between an arbitrator and an expert is that both generally make a final and binding decision. In determining whether the accountant in the instant case was an arbitrator or expert, the court construed the agreement to ascertain the parties’ intention rather than merely looking at the words used. Further, in the case of an expert there would also be likely a professional-client relationship that is quite different from the relationship between an arbitrator-parties relationship even though the arbitrator may be appointed by the parties.

1.2.  Permissive and unilateral arbitration agreements


There have been cases where the arbitration clause is worded in permissive terms, such as that the parties may refer their disputes to arbitration.
Lembaga Pelabuhan Kelang v Kuala Dimensi[l] concerned, among others, an agreement that contained an arbitration clause in permissive words, that is, the parties may submit their disputes to arbitration. At the legal suit of one of the parties, the other party applied for stay of court proceedings to refer the dispute to arbitration[li]. The Court of Appeal refused the stay for reason, among others, that the arbitration clause was permissive in nature.
In Sime Engineering v Ahmad Zaki Resources[lii] there was similarly a permissive arbitration clause in a joint venture agreement, which read “such dispute or difference may be referred to arbitration and finally settled by arbitration by a sole arbitrator”. The court followed Lembaga Pelabuhan Kelang’s approach to hold that the arbitration agreement was ineffective.
It is submitted that the rejection of permissive arbitration clauses is in line with section 9(1) definition of an arbitration agreement. Section 9(1) defines an arbitration agreement as “an agreement by the parties to submit to arbitration all or certain disputes which have arisen or which may arise between them”. When the arbitration clause is in permissive terms, namely that they may submit to arbitration, it is not an agreement to submit to arbitration and accordingly is not an arbitration agreement within section 9(1) definition.
Yet another type of arbitration agreement is unilateral arbitration agreement. A unilateral arbitration agreement obliges one party only to submit disputes to arbitration, but not the other party[liii]. Such a unilateral arbitration agreement was faced in the English case of The Messiniaki Bergen[liv], where the court held that when an agreement gave the option of arbitration to one of the parties, it become an effective arbitration agreement upon the election by the party to submit to arbitration. Similarly a unilateral arbitration agreement was faced in the English case of Deutsche Bank v Tongkah, Duetsche Bank v Tungkum[lv]. The court arrived at a similar decision as that reached in The Messiniaki Bergen’s case. 
It is interesting to note that the English legislation[lvi] did not define an arbitration agreement until enactment of the Arbitration Act 1996. Section 6(1) of the 1996 Act defines an arbitration agreement as “an agreement to submit to arbitration present or future disputes (whether they are contractual or not).” This appears to give scope for admission of unilateral arbitration agreements in England. However the state of law in Malaysia is different. Section 9(1) of the Arbitration Act 2005 defines an arbitration agreement differently from the English Arbitration Act 1996. Section 9(1) defines it as an agreement by the parties to submit to arbitration”[lvii]. Accordingly, if the Malaysian court faces a unilateral arbitration agreement, the court would likely hold that it is not an arbitration agreement for purposes of 2005 Act and hence the statutory stay would not be available.




[i] Obiter statement in Scott v Avery [1855-56] 10 ER 1121 at p. 1134. An architect issuing an interim certificate of payment acts as an expert and not as an arbitrator (see Sutcliffe v Thackrah [1974] AC 72).
[ii] Section 10(2) of the Contracts Act 1950 allows any law to require any agreement to be in writing.
[iii] “(2) The arbitration agreement shall be in writing. An agreement is in writing if it is contained in a document signed by the parties or in an exchange of letters, telex, telegrams or other means of telecommunication which provide a record of the agreement, or in an exchange of statements of claim and defence in which the existence of an agreement is alleged by one party and not denied by another. The reference in a contract to a document containing an arbitration clause constitutes an arbitration agreement provided that the contract is in writing and the reference is such as to make that clause part of the contract.”
[iv] "(2)There is an agreement in writing ... (c)if the agreement is evidenced in writing." 
[v] Because it is in a single document signed or sealed by the parties, or it is in an exchange of written communication (such as letters or emails) made by the parties.
[vi] Section 5(4) of the Arbitration Act 1996 provides “[a]n agreement is evidenced in writing if an agreement made otherwise than in writing is recorded by one of the parties, or by a third party, with the authority of the parties to the agreement.”
[vii] Section 8 and 10(1) of the Contracts Act 1950. When a building owner rents-out a unit within the building, it is implied that the building owner will maintain the lifts in a good state of repair and the building will be habitable (See Liverpool City Council v Irwin [1977] AC 239).
[viii] Proviso (qualification) to section 10(1) that provides “All agreements are contracts if they are made by the free consent of parties competent to contract, for a lawful consideration and with a lawful object, and are not hereby expressly declared to be void”.
[ix] Section 9(4)(a). An example of such wholesome document will be a sale and purchase agreement of a house.
[x] In section 3, ‘sign’ includes the making of a mark or the affixing of a thumbprint. In section 66, ‘sign’ is used with reference to a person who is unable to write his name, includes ‘mark’.
[xi] Although the fact remains that it may not be necessary for the Arbitration Act to provide such estoppel because it would better be provided by the rules of the court or the law relating to civil procedure.
[xii] “An agreement is in writing if it is contained in … an exchange of statements of claim and defence in which the existence of an agreement is alleged by one party and not denied by another”.
[xiii] Section 5(5) provides "[an] exchange of written submissions in arbitral or legal proceedings in which the existence of an agreement otherwise than in writing is alleged ... not denied … constitutes as between those parties an agreement in writing".
[xiv] Cap 143A.
[xv] Act 12 of 2012 with effect from 01/06/2012.
[xvi] Prior to insertion of section 2A, the same provision was in section 2(3).
[xvii] See Life Plaza v Pasukhas Construction [2012] MLJU 176.
[xviii] In Thompson v LMS Railway [1930] 1 KB 41, a train ticket was issued subject to conditions found in timetable. At the 552nd page of the timetable, there was an exclusion clause. It was held that all the terms found in the timetable including the exclusion clause were incorporated by reference.
[xix] Such as, in the case of construction agreements, a reference to standard form contracts formulated by The Institution of Engineers, Malaysia (IEM), Pertubuhan Arkitek Malaysia (PAM), Construction Industry Development Board (CIDB), and Jabatan Kerja Raya (JKR).
[xx] Section 5(3) of the Arbitration Act 1996 provides “[w]here parties agree otherwise than in writing by reference to terms which are in writing, they make an agreement in writing”. See The Londonderry Port and Harbour v W S Atkins, Charles Brand  [2011] NIQB 74.
[xxi] Section 2A(7) of the International Arbitration Act (Cap 143A) provides “[a] reference in a contract to any document containing an arbitration clause shall constitute an arbitration agreement in writing if the reference is such as to make that clause part of the contract.”
[xxii] [2010] EWHC 1086 (Ch).
[xxiii] Section 5(3) of the Arbitration Act 1996.
[xxiv]Where parties agree otherwise than in writing by reference to terms which are in writing, they make an agreement in writing”.
[xxv] [2012] MLJU 355.
[xxvi] “it is perhaps surprising that the Arbitration Act 1996 does not attempt an answer to the basic question of ‘What is an arbitration?’” (See Wilky Property Holdings plc v London & Surrey Investments Limited [2011] EWHC 2226 (Ch) at para 26).
[xxvii] Article 2(a).
[xxviii] Section 9(1) of the Arbitration Act 2005.
[xxix] [2011] EWHC 2226 (Ch).
[xxx] An architect, in this case.
[xxxi] See Re Carus-Wilson and Greene [1886] 18 QBD 7,and David Wilson v Survery Services [2001] 1 All ER (Comm) 499. “In the absence of guidance, the question must in the end be answered intuitively” (Mustill and Boyd, The Law and Practice of Commercial Arbitration in England , 1989)
[xxxii] In this case the fact that the dispute resolution clause authorised the expert to award costs was taken, among other matters, to suggest that the clause was an expert reference clause (and not an arbitration clause) because it would be unnecessary to give such express authorisation in an arbitration clause.
[xxxiii] [2012] EWHC 3019.
[xxxiv] or alternatively by two appraisers.
[xxxv] [2007] UKHL 40.
[xxxvi] [2007] UKHL 40 at [12] and [28].
[xxxvii] [2009] 1 Lloyds L.R. 258.
[xxxviii] [1997] 3 All ER 540.
[xxxix] an architect issuing an interim certificate of payment typically acts as an expert (See Sutcliffe v Thackrah [1974] AC 72).
[xl] Obiter statement in Scott v Avery [1855-56] 10 ER 1121 at p. 1134.
[xli] All circumstances of the case will be taken into account in deciding whether the reference was meant to be made to an expert or an arbitrator (see Mayers v Dlugash [1994] 1 HKC 755).
[xlii] Principally, the required mechanism is that the architect holds an enquiry akin to a judicial one, hears the parties’ case, and makes a decision upon the hearing and evidence laid before him.
[xliii] [1993] 1 All ER 664.
[xliv] However in this case, the House of Lords granted a stay under the inherent powers of the court in favour of the clause providing for reference to the panel of experts.
[xlv] [1997] 3 All ER 540.
[xlvi] It is clear from the recent cases such as Premium Natfa Products v Fiji Shipping [2007] UKHL 40 and P.T. Tri-M.G. Intra Asia Airlines v Norse Air Charter [2009] 1 Lloyds L.R. 258, that the courts should realistically construe agreements so as to give effect to commercial meaning of the agreement.
[xlvii] Arbitration or arbitral tribunal is a non-judicial dispute resolution tribunal (or more accurately, a quasi-judicial dispute resolution tribunal) empowered by the parties’ agreement to make final and binding decision over the dispute following a process of dispute resolution mechanism that is consistent with the scheme of arbitration recognised by the Arbitration Act 2005. The required process is in principle that the tribunal holds an enquiry akin to a judicial one, hears the parties’ case, and makes a decision upon the hearing and evidence laid before it.
[xlviii] [1994] 1 HKC 755.
[xlix] An auditor making a valuation of company’s shares typically acts as an expert (see Arenson v Casson [1977] AC 405).
[l] [2010] 9 CLJ 532 (decided under the Arbitration Act 2005).
[li] Under section 10(1) of the Arbitration Act 2005.
[lii] [2011] MLJU 370, discussed at n. 267 p. 91.
[liii] It usually gives the other party the option to select either arbitration or court action.
[liv] [1983] 1 Lloyd’s Rep 424.
[lv] [2011] EWHC 225 (QB).
[lvi] Arbitration Act 1950, Arbitration Act 1975, Arbitration Act 1979.
[lvii] “by the parties” is missing in the definition in section 6(1) of the English Arbitration Act 1996.

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