Incorporation of arbitration clauses

The decision of HHJ Havelock-Allan QC in Capes (Hatherden) Ltd v Western Arable Services Ltd [2009] EWHC 3065 (QB) deals with a series of difficult issues concerning the existence of an agreement to arbitrate as derived from a course of dealing between the parties, the scope of the arbitration clause and whether the parties had entered into an ad hoc agreement to arbitrate by reason of the fact that an arbitration had been commenced. Of particular interest is the argument by the claimant that an arbitration clause falls foul of art 6 of the European Convention on Human Rights, and thus is not binding unless specifically drawn to his attention, if the pool of arbitrators represents the interests of the other party to the proceedings.

Capes: the facts

The claimant farmed about 500 hectares of land near Andover. In October 2007 the defendant, a grain merchant, agreed to buy from the claimant 185 acres of his 2008 harvest of barley at £175 per metric ton, and shortly afterwards the defendant agreed to buy a further 115 acres at the same price. The defendant sent a contract note to the claimant, dated 1 November 2007. This referred only to the first 185 acres of barley and also purported to incorporate Agricultural Industries Confederation (AIC) standard terms, AIC Contract 1/04. Those terms included an arbitration clause, which stated that any dispute (other than a claim for an unpaid debt) between a member of the National Farmers Union and a member of the Agricultural Industries Confederation Ltd was to be referred to arbitration under rules for the conduct of arbitration jointly agreed between those bodies. In fact there were no agreed rules.