Litigation Vs Arbitration: Unclear Choice Of Forum

The English courts generally strive to uphold agreements between parties and this principle applies equally to arbitration agreements. The English courts are also committed to supporting arbitrations over which they have jurisdiction.

The English Arbitration Act 1996 defines an arbitration agreement simply as: "an agreement to submit to arbitration present or future disputes (whether they are contractual or not)" (and requires such an agreement to be in writing). The statutory requirements for a valid arbitration agreement are, therefore, minimal (although it is advisable to provide as much detail as possible about the future framework of any arbitration, to reduce the risk of dispute). The English courts have shown that they are prepared to afford the parties some leniency when deciding if an arbitration agreement entered into by the parties is valid, and to strive to interpret ambiguities in such a way that the validity of the agreement may be upheld. A recent Commercial Court decision demonstrates this point.

In Exmek Pharmaceuticals SAC v Alkem Laboratories Limited [2015] EWHC 3158, the claimant challenged an award on jurisdiction (pursuant to section 67 of the Arbitration Act 1996). The contract between the parties had provided for the exclusive jurisdiction of the "courts of the UK" and for any disputes to be arbitrated in accordance with the "law in the UK". However, there are no "courts of the UK or "law in the UK", instead, the United Kingdom has three legal systems: English (applying to England and Wales), Northern Irish and Scottish.

Burton J noted, as a preliminary point, that the reference to the exclusive jurisdiction of the courts as well as arbitration was not irreconcilable and could be read together: the procedural law of the arbitration would be "UK law" and the "UK courts" would have supervisory jurisdiction. He then went on to hold that the reference to UK law was not ineffective or ambiguous - instead it should be read as referring to the courts and law of England and Wales. This was a case involving an international trade contract and the jurisdiction of England and Wales (and its law) is regularly resorted to for resolving such international legal disputes (the Commercial Court deals with such disputes on a daily basis). It made no difference that there were no factors indicating a connection with England or London here.

As such, this case confirms that the English courts are prepared to ascertain the intention of...