Arbitration Clauses: Fairness, Justice and Commercial Certainty

Abstract

This article considers a narrow but significant issue in English commercial arbitration: the incorporation of arbitration clauses within commercial contracts. The importance of this issue is especially illustrated by some of the tensions which currently exist within commercial arbitration between the need to minimise judicial intervention in an internationally recognised method to resolve disputes within the international business community and thereby upholding the principle of party autonomy in commercial arbitration whilst at the same time maintaining, through necessary judicial intervention, sufficient protections for parties in order to uphold basic principles of fairness and to ensure a minimum requirement of justice.[1][1] This article reflects upon the general principles of incorporation as they have evolved from cases concerning exclusion clauses and considers how these principles have been adopted and, in some instances, have been modified by the courts in formulating legitimate policy constraints when considering commercial contracts which purport to incorporate arbitration clauses. In particular, an analysis is made of the rationale behind the approaches taken by the English courts when considering the incorporation of arbitration clauses in single and two contract scenarios[2][2]. Finally, this article discusses the recent High Court case of Habas Sinavi Tibbi Gazlar Isthisal Endustri AS v. Sometal SAL,[3][3] (“Habas”), which followed the leading case of Trade Maritime v. Hellenic Mutual War Risks Association (The Athena)[4][4], and which clarified the approaches the courts should take when considering the incorporation of arbitration clauses in single contract scenarios. It is argued that the policy rational which supports the principles of incorporation of exclusion clauses are reflected in the courts reasoning in respect of incorporation of arbitration clauses but also that the courts have gone further in two contract scenarios in severely restricting the freedom of a commercial party to bind a third party to an arbitration clause. It is suggested that this approach and policy rational of the courts is justified in the interest of fairness, justice, business efficacy and commercial certainty. [1]: #fn-1 [2]: #fn-2 [3]: #fn-3 [4]: #fn-4