ARI v WJX: Commercial Court rules on Arbitration Agreement

30 June, 2022

On 20 June 2022, the Commercial Court (Foxton J) handed down judgment in the case of ARI v WJX, which considers the circumstances in which (i) an arbitrator will be found to have accepted an appointment as an arbitrator and (ii) the nominating party will be found to have effected the appointment of the arbitrator.  Although the case arose in the context of an arbitration agreement in the terms of clause 30 of the BARECON form, the approach adopted by Foxton J is of general application.

The Claimant appointed an arbitrator and notified the Defendant of the appointment.  Under  the relevant arbitration agreement, the Defendant had a time limit of 14 days to appoint its own arbitrator to the tribunal. On the last day before expiry of that time limit, the Defendant sent the Claimant a notice identifying an individual and stating that the individual was appointed as an arbitrator. When the named arbitrator subsequently said he would not be able to participate in the arbitration, a dispute arose as to whether the arbitrator had in fact been appointed when the Defendant sent its notice.

Foxton J first identified the relevant question for the Court when determining whether an arbitrator had accepted the appointment. Rejecting the Claimant’s submissions that there would only be an appointment where there was a concluded contract with the putative arbitrator, or something very close thereto, Foxton J held that the question was whether “there has been a clear and unconditional communication of acceptance of the appointment by the arbitrator which is then notified to the other party, or communication of an unconditional willingness by the arbitrator to accept the appointment, which the appointing party then acts upon by communicating the appointment to the appointee and the other party” ([22]).  More generally, Foxton J considered that a “broad and non-technical approach” should be adopted ([13]), consistent with the approach adopted when construing the effect of notices said to have commenced an arbitration.

On the facts, Foxton J concluded that: (i) the arbitrator had clearly and unconditionally communicated to the Defendant that he was willing to accept the appointment; and (ii) the Defendant had clearly communicated to the Claimant and to the arbitrator its appointment of the arbitrator. That satisfied all the requirements for a valid appointment ([28]-[30]).

The Defendant was represented by Paul Key QC and Mark Tushingham, instructed by Addleshaw Goddard LLP.

A copy of the Judgment can be found here.