Scope of arbitration clause

The principle that the parties intend their disputes to be resolved in a single forum, so that if there is an arbitration clause in the agreement it is to be construed generously in order to avoid fragmentation, has been established in English law since the decision of the House of Lords in Fiona Trust & Holding Corporation v Privalov [2008] 1 Lloyd’s Rep 254. However, that decision is relevant only where arbitration is the sole specified form of dispute resolution. If the parties have allocated different disputes to different resolution mechanisms, then Fiona Trust has no part to play. That is shown by the decision of Blair J in PT Thiess Contractors Indonesia v PT Kaltim Prima Coal and Anr [2011] EWHC 1842 (Comm).

Thiess: the facts

KPC operated a coal mine at Sangatta in Indonesia under an agreement with the Government of Indonesia. By an Operating Agreement – Mining Services (OAMS) dated 10 October 2003 KPC appointed Thiess as its main subcontractor to perform mining services at the mine. Under the OAMS, which was to last for the life of the mine, Thiess was paid at an agreed rate per tonne of coal produced. It was governed by the law of Queensland and provided for a tiered dispute resolution process under which any issue, defined as a difference or dispute arising under or in connection with the OAMS, was to be referred initially to mediation, then to expert determination and finally to arbitration in Singapore subject to the UNCITRAL Arbitration Rules.