Right to arbitrate

Many international commercial transactions provide resolution of disputes by way arbitration. However, difficulties can arise where a party ignores such an agreement and starts court proceedings.

In a recent Commercial Court case—AES Ust Kamenogorsk v Ust Kamenogorsk Hydropower [2010] EWHC 772 (Comm) —this issue was revisited. Interestingly the Claimant (AESUK) simply wanted to prevent court proceedings being issued; it did not intend to instigate an arbitration. The judgment highlighted that the Arbitration Act 1996 (the Act) does not assist in such circumstances.

Facts

The disputes revolved around a Concession Agreement containing an arbitration agreement providing for ICC arbitration in London.

AESUK continued to operate the concession but the parties, and their parent companies, were involved in a number of court disputes in the Republic of Kazakhstan (where both parties were based). The Kazakhstan Supreme Court ruled that the arbitration agreement was invalid primarily because it conflicted with Kazakhstani legislation.

AESUK sought a declaration in the English courts as to the validity of the