Stay Alert To Risk Of Inconsistent Dispute Resolution Provisions

What? When related agreements have inconsistent dispute resolution provisions, the dispute resolution clause contained in the agreement under which the dispute arose was held to apply.

So what? It is important to ensure that dispute resolution clauses match up in related contracts or across a suite of documents.

The case of PT Thiess Contractors Indonesia v PT Kaltim Prima Coal [2011] concerned a dispute concerning two related agreements: an operating agreement, which provided for disputes to be resolved by arbitration in Singapore; and a cash distribution agreement (CDA), which gave the English courts non-exclusive jurisdiction.

The claimant commenced proceedings in the English Commercial Court seeking to enforce the CDA. The defendant argued that the issue of whether the claimant could enforce the CDA depended on whether it was entitled to receive payment for services under the operating agreement. Under the terms of the operating agreement, that issue was required to be arbitrated, so the court should stay the proceedings.

The judge refused to grant the stay, on the basis that the...