'Full Steam Ahead For London Arbitration As The House Of Lords Steers Clear Of Semantic Obstacles'

Article by Nikos Dimopoulos

The House of Lords in the landmark case of Premium Nafta Limited & Others v Fili Shipping Company Limited & Others1 has unanimously upheld the earlier decision of the Court of Appeal in Fiona Trust & Holding Corp & Others v Privalov & Others2, agreeing that arbitration clauses should be construed liberally and should be treated separately from the agreements in which they are found.

The decision has been heralded by commentators as a fresh start for international arbitration in England upholding the rights of parties who elect to resolve commercial disputes by arbitration.

Background

The dispute arose out of eight charterparty contracts entered into between a group of shipowners and charterers. Each of the charters included an arbitration clause, according to which parties could refer any disputes "arising under" the charter to arbitration. The ship-owners argued that the charters had been procured by bribery and sought to rescind them.

Subsequently, the charterers commenced an arbitration to determine whether rescission was effective. The ship owners applied to the English court to restrain the arbitration proceedings under section 72 of the English Arbitration Act 1996...