English High Court Hands Down Decision Regarding Effect Of Pre-arbitration Mediation Provision

• Published date: 11 November 2021
• Law Firm: Mayer Brown
• Author: Mr Ian McDonald and Stephen Moi

It is common for arbitration or jurisdiction clauses in commercial contracts to include a requirement that the parties should first attempt to resolve their dispute amicably, and only seek to arbitrate or litigate should those attempts fail. Some provisions will specify mediation as part of this process; others may be less prescriptive as to the form of alternative dispute resolution ("ADR").

What are the consequences if the parties do not engage in ADR as so required? Would this mean that an arbitral tribunal would not have jurisdiction to hear the dispute, or that court proceedings cannot be commenced? These were the issues which the English High Court addressed in NWA and another v. NVF and others [2021] EWHC 2666 (Comm). This Update summarises the key points of this decision and considers its implications.

Abridged background

In 2007, the parties entered into an agreement relating to certain intellectual property rights. In that agreement, the parties agreed to settle any disputes by mediation in accordance with the London Court of International Arbitration Mediation Procedure or, if the dispute was not settled within 30 days of that mediation, by arbitration under LCIA Rules (the "arbitration agreement").

The terms of the arbitration agreement were as follows:

"10.2 Disputes

(a) In the event of a dispute arising out of or in connection with this Agreement, including any question regarding its existence, validity, termination, interpretation or effect, the relevant parties to the dispute shall first seek settlement of that dispute by mediation in accordance with the London Court of International Arbitration ("LCIA") Mediation Procedure, which Procedure is deemed to be incorporated by reference into this clause insofar as they do not conflict with its express provisions. Any mediation shall take place in London.

(b) If the dispute is not settled by mediation within 30 days of the commencement of the mediation or such further period as the relevant parties to the dispute shall agree in writing, the dispute shall be referred to and finally resolved by arbitration under the LCIA Rules from time to time in force ("the Rules"), which Rules are deemed to be incorporated by reference into this Agreement insofar as they do not conflict with its express provisions."

A dispute subsequently arose between the parties, and in August 2019 the Defendants (in this litigation) commenced an LCIA arbitration at the same time as requesting an LCIA mediation, proposing also...