Lloyd's Maritime and Commercial Law Quarterly
JURISDICTION, ADMISSIBILITY AND ESCALATING DISPUTE RESOLUTION AGREEMENTS
Shaun Matos*
C v D
The distinction between issues of jurisdiction and admissibility has long been a challenge for courts dealing with arbitration agreements. The decision of the Hong Kong Court of Appeal in C v D
1 is an important landmark which clarifies that objections based on an alleged failure to complete pre-arbitration steps do not necessarily affect the jurisdiction of a tribunal. Nevertheless, the Court’s confusion as to how to distinguish between jurisdiction and admissibility shines a light on the problems that are inherent in that distinction, and shows the difficulties of applying the distinction to any given set of facts.
The underlying dispute between the parties concerned a contract for the procurement and operation of satellites. Clause 14 was a dispute resolution clause which provided:
[14.2] Dispute Resolution. The Parties agree that if any controversy, dispute or claim arises between the Parties out of or in relation to this Agreement, or the breach, interpretation or validity thereof, the Parties shall attempt in good faith promptly to resolve such dispute by negotiation. Either Party may, by written notice to the other, have such dispute referred to the Chief Executive Officers of the Parties for resolution. […]
[14.3] Arbitration. If any dispute cannot be resolved amicably within sixty (60) Business days of the date of a Party’s request in writing for such negotiation, or such other time period as may be agreed, then such dispute shall be referred by either Party for settlement exclusively and finally by arbitration in Hong Kong at the Hong Kong International Arbitration Centre … in accordance with the UNCITRAL Arbitration Rules in force at the time of commencement of the arbitration […]
A dispute arose concerning the content of transmissions, resulting in written correspondence between the parties. On 24 December 2018, the CEO of D sent a letter to C alleging a breach of the contract and stating its willingness to enter into negotiations. On 7 January 2019, the legal representatives of C responded, but neither party referred the dispute to their respective CEOs for negotiation. D issued a notice referring the dispute to an arbitral tribunal (“the Tribunal”), which found that it had jurisdiction over the dispute notwithstanding the failure to refer the dispute to the parties’ CEOs. According to the Tribunal, only the first sentence of cl.14.2 was mandatory, and had been satisfied by the correspondence between the parties. Referring the dispute to the CEOs of the parties for negotiation was considered optional. The Tribunal proceeded to issue a partial award in favour of D.
The issue before the Court of Appeal was the interpretation of s.81 of the Arbitration Ordinance, which incorporates in full Art.34 of the UNCITRAL Model Law on International Commercial Arbitration (the “Model Law”). Article 34 of the Model Law can be found in arbitration legislation around the world and has influenced legislation in other jurisdictions, including s.67 of the English Arbitration Act 1996. Article 34(2)(a)(iii) of the Model Law provides that an award may be set aside if it “deals with a dispute not
* PhD Student and Graduate Lecturer, UCL Faculty of Laws. With thanks to Alex Mills and Paul Fradley for their comments on an earlier draft. All errors remain the author’s own.
1. [2022] HKCA 729.
Case and comment
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