Robert Kay examines the approach to multi-tiered dispute resolution clauses
In the recent English case of Emirates Trading Agency LLC v Prime Mineral Exports Private Limited [2014] EWHC 2104 (Comm), [2014] All ER (D) 40 (Jul) on 1 July 2014, Teare J held that a clause which required parties to have friendly discussions prior to resorting to arbitration—a clause which is fairly common in contracts between Asian parties—was an enforceable condition precedent to the right to invoke arbitration. The case shows the willingness of the court to apply decisions in support of enforceability (as in recent Australian, Singaporean and International Centre for Settlement of Investment Disputes decisions).
The facts
The applicant, ETA, agreed to purchase iron ore from the respondent, PMEPL. However, ETA failed to lift all of the iron ore expected and PMEPL raised a debit note in respect of liquidated damages, pursuant to the terms of their contract. During the next shipment year, ETA failed to lift any iron ore and so PMEPL served notice of termination claiming US$45m.
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