2,051
edits
Changes
From DMC
no edit summary
DMC/Arbn/201010/5
England
Simon Bryan QC (instructed by Mays Brown) for the Claimant guarantors, Stellar
James Drake (instructed by Lax & Co) for the Defendant owners, Hudson
The judge held that “I consider that to be both the natural and the commercially sensible construction of Stellar’s endorsement as guarantor of the COA arbitration clause. It is commercially sensible because the parties were entering into a tri-partite relationship enshrined in a single contractual document and would reasonably be expected to intend that all disputes arising out of that relationship be dealt with in a like manner.”
The judge considered this to accord with the opinion of Lord Hoffmann in Fiona Trust v Privalov1 Privalov (fn1), because “similar considerations apply by analogy here”.
Against this position the principal argument of Stellar was that “to incorporate an agreement to arbitrate requires clear and indeed express words”. Stellar relied in particular on Habas v Sometal (which concerned incorporation of arbitration clauses/agreements into contracts and placed a restrictive approach on incorporation in ‘two contract’ cases)2(fn2). Stellar submitted that the present case was a ‘two contract’ case and that there were no apt words of incorporation here to satisfy the relevant test.
The judge, however, distinguished Habas v Sometal, saying“I do not consider that the incorporation cases accurately reflect the position here. This is not a case of incorporation by reference. It is a case which involves construing what, in context, is the meaning and effect of Stellar’s endorsement as guarantor of the COA in general and the arbitration clause in particular. There were no terms being introduced from some external source. On the contrary, all the terms were being specifically endorsed.”
