A recurring issue in arbitration and construction law is whether an agreement to mediate is enforceable. That is because an arbitration or building contract may contain a clause imposing an obligation to mediate before arbitrating. If the agreement to mediate is enforceable, that likely has certain consequences. The limitation period is likely not running and the arbitration cannot be commenced until the mediation is finished. The reverse is true if the mediation agreement is not enforceable. And if it is uncertain which is the correct position, then the parties may be in a real quandary about whether they may or must commence the arbitration and ignore negotiation.
The English High Court recently considered this issue. The court upheld an arbitral decision that a clause requiring mediation was not enforceable. Therefore, the arbitration was not premature.
What is interesting about the decision is that the court did not hold that mediation clauses are per se enforceable. Rather, the court held that such a clause must have one or two qualities to be enforceable.
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