Regardless of their field of specialisation, most lawyers have some familiarity with the refrain that ‘before you can have an arbitration you must have an agreement to arbitrate’, together with the notion that ‘party autonomy’ and ‘party consent’ are central to the idea of arbitration. However, the contours of an arbitration agreement and the boundaries of a party’s consent to arbitration are not always clear-cut.
This is frequently the case in large-scale construction or infrastructure contracts (particularly, but not exclusively, of the bespoke variety) where the dispute resolution clauses, if not borrowed wholesale from a boilerplate used in the past by transactional lawyers, are often among the last clauses to be considered by the commercial and technical teams leading the negotiations. These clauses also happen to be among the first stopping points for any lawyer tasked with resolving a subsequent dispute.
The resulting mismatch between the importance given to these ‘midnight clauses’ by transactional lawyers on the one hand and disputes lawyers on the other provides fertile ground for satellite litigation and ancillary disputes on the meaning and effect of the underlying dispute resolution clause.
The risk of these difficulties arising is particularly acute in instances where:
- the dispute resolution clause provides (not always clearly) that, instead of taking their disputes to the national courts of country X, the parties agree to a series of steps culminating in arbitration; or, conversely,
- the parties disagree as to whether such an agreement exists and, if so, on what terms.
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This article was first published on Global Arbitration Review in October 2023; for further in-depth analysis, please visit GAR The Guide to Construction Arbitration – Fifth Edition.
The chapter looks at some of the issues that arise in relation to agreements to arbitrate and considers the position adopted by various jurisdictions.