English High Court Dismisses Section 67 Jurisdictional Challenge To Arbitral Award In MPB v LGK

In the recent case of MPB v LGK [2020] EWHC 90 (TCC), handed down on 23 January 2020, the High Court dismissed an application to set aside an arbitration award on jurisdiction pursuant to section 67 of the Arbitration Act 1996 (the "Act").

In a suite of contractual documents incorporated into the parties' agreement, the arbitration agreement included in a lower ranking set of standard terms and conditions was held to bind the parties in the absence of any dispute resolution clauses existing in contractual documents which ranked higher in the contractual hierarchy.

Background facts

MPB, a building contractor, entered into an agreement with LGK for the installation of steel works. The agreement arose out of a series of email exchanges between the parties where various quotations, amendments to those quotations and standard terms and conditions were exchanged. The final order for the works expressly incorporated MPB's standard terms and conditions ("MPB's Terms"). It also included manuscript annotations and, in its description of the works and value, references to emails having attached LGK's standard terms and conditions ("LGK's Terms"), as well as other correspondence.

MPB's Terms were silent as to the dispute resolution procedure to adopt in the event that a dispute arose between the parties. In contrast, LGK's Terms provided, at Clause 11, that the parties could refer a dispute to adjudication at any time, and that the decision of the adjudicator would be binding on the parties "until the dispute is finally resolved through agreement for by Arbitration [sic] under the CIMAR rules".

A dispute arose between the parties regarding the works performed by LGK, and MPB engaged other contractors to complete LGK's works. A series of adjudications followed. The third was commenced by MPB with reference to Clause 11 of LGK's Terms, and resulted in a decision being handed down in MPB's favour, which provided that MPB was entitled to recover GBP 76,056.67. MPB sought to enforce the decision. LGK commenced arbitration proceedings to challenge the adjudicator's decision, in accordance with Clause 11 of LGK's Terms. MPB immediately challenged jurisdiction. Notwithstanding MPB's position, an arbitrator was appointed, leading to a subsequent ruling that he had substantive jurisdiction over the parties' dispute by virtue of Clause 11 of LGK's Terms.

Application to the High Court

MPB applied to the High Court to set aside the arbitrator's award on...

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