Law lords take tough line on arbitration clauses

Arbitration clauses should be presumed to cover any dispute concerning the relationship between the relevant parties, unless the contrary is clear from the wording, the House of Lords has ruled.

The Law Lords’ landmark decision for international arbitration in Premium Nafta v Fili Shipping upholds the decision of the Court of Appeal.
It was also held that under the doctrine of separability, an arbitration agreement must be treated as a distinct agreement and can be void or voidable only on grounds related directly to the arbitration agreement. The arbitration agreement will generally be unaffected by the invalidity of the main contract, whether that invalidity be based on illegality, misrepresentation, fraud or, as alleged in the Premium Nafta case, bribery.

Nicholas Hamblen QC, of 20 Essex Street, who acted for the successful respondent, says the decision will make it more difficult for parties to contend that particular types of disputes are not covered by the arbitration agreement they have made.

He adds: “It will also make it far more difficult