English Contract Law: Has the Camel’s Nose of “Good Faith” Crept Under the Tent Flap?

Under the English Arbitration Act 1996 the grounds on which an English arbitration award can be challenged in court are very limited. Section 67 of the Act provides that a challenge may be brought on the basis that the arbitral Tribunal lacks substantive jurisdiction. That position can include the argument that the dispute has not been submitted to arbitration in strict compliance with the terms of the arbitration agreement. In Emirates Trading Agency LLC v Prime Mineral Exports Private Ltd [2014] EWHC 2104 (Comm), just such a section 67 challenge was brought alleging that the Tribunal lacked substantive jurisdiction. The challenge, however, failed, as the court concluded that though a required pre-arbitration “friendly discussion” was a condition precedent to arbitration, it had in fact occurred. However, in what might seem surprising given previous English case law, the court found that participation in such discussion obliged the parties to conduct good faith negotiations before commencing arbitration. This conclusion may reflect a growing interest among English judges in finding contractually implied obligations of good faith, consistent with the approach in other jurisdictions.

The dispute itself is not particularly noteworthy or exceptional. It involved a long-term contract under which the defendant was to sell iron ore to the claimant. After the claimant had failed to acquire all of the iron ore which it was obliged to purchase during the first two years of the contract, the defendant sought liquidated damages and served notice of termination of the contract.

Please see full Alert below for more Information.

LOADING PDF: If there are any problems, click here to download the file.

Topics:  Arbitration, Arbitration Agreements, Contract Disputes, Contract Negotiations, Good Faith, Jurisdiction, Negotiations, UK

Published In: Alternative Dispute Resolution (ADR) Updates, Civil Procedure Updates, Civil Remedies Updates, General Business Updates

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Pillsbury Winthrop Shaw Pittman LLP | Attorney Advertising

Don't miss a thing! Build a custom news brief:

Read fresh new writing on compliance, cybersecurity, Dodd-Frank, whistleblowers, social media, hiring & firing, patent reform, the NLRB, Obamacare, the SEC…

…or whatever matters the most to you. Follow authors, firms, and topics on JD Supra.

Create your news brief now - it's free and easy »