Summary
General words may incorporate an arbitration clause where the parties are incorporating terms of an earlier contract made between themselves. The court should determine the parties’ intention by ordinary principles of construction and should not impose a special restrictive rule merely because the term concerns arbitration.
A stricter approach is appropriate where terms are incorporated from a contract made between different parties, particularly where linguistic adjustment is required. In a same-parties case, the court must identify the earlier terms intended to be incorporated and be satisfied that the parties intended to include the arbitration agreement. An arbitration clause is not ordinarily an onerous term requiring an extraordinary method of incorporation.
Factual background
Habaş applied under section 67 of the Arbitration Act 1996 to set aside an LCIA tribunal’s interim final award on jurisdiction and costs. The tribunal had held that a clause in a June 2008 steel-scrap contract incorporated a London arbitration clause appearing in earlier contracts prepared by Sometal.
The parties had repeatedly contracted using short-form documents stating that the remaining terms would be the same as in previous contracts. The central issues were whether general words could incorporate an arbitration clause and whether, on the sequence and context of the contracts, the clause had in fact been incorporated.
Held
The application under section 67 of the Arbitration Act 1996 was dismissed. The court was not confined to reviewing the tribunal’s decision.
The court distinguished between incorporation of terms from a contract made between the same parties and incorporation of terms from a contract made between different parties. The restrictive approach developed in bill-of-lading, reinsurance and similar two-contract cases does not automatically extend to same-parties cases.
Where parties agree the essential terms of a contract and provide that it shall include terms of previous contracts between them, the court must determine from the communications and context which provisions they intended to incorporate. It should not impose special rules limiting incorporation where ordinary construction establishes the agreement.
It must be clear which earlier terms are incorporated and that the parties intended to incorporate an arbitration clause, because such a clause concerns dispute resolution rather than substantive contractual obligations. That requirement is satisfied where the later contract incorporates all remaining terms of an earlier same-parties contract and the relevant terms can be identified from the parties’ course of contracting.
Terms which are particularly onerous or restrictive may require appropriate notice. An arbitration clause of the present kind is not ordinarily an onerous term requiring special attention or an extraordinary method of incorporation.
Applying those principles, the June contract referred to the relevant sequence of later contracts, excluding contracts in which the parties had merely agreed to agree the remaining terms. The Sometal contracts contained the London arbitration clause, and the replacement of a short-form contract by a fuller Sometal form confirmed the parties’ understanding. The clause was therefore incorporated.
The court’s approach to earlier authorities
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Key cases cited
15 authorities cited.
- Thomas & Co Ltd v Portsea SS Co Ltd [1912] AC 1
- Stretford v The Football Association Ltd. & Anor [2007] EWCA Civ 238
- 7E Communications Ltd. v Vertex Antennentechnik GmbH Rev 1 [2007] EWCA Civ 140
- DORNOCH LTD v MAURITIUS UNION ASSURANCE CO LTD [2006] 2 Lloyd's Rep 475
- Africa Express Line Ltd v Socofi SA [2009] EWHC 3223
- SEA TRADE MARITIME CORPORATION v HELLENIC MUTUAL WAR RISKS ASSOCIATION (BERMUDA) LTD (THE “ATHENA”) (No 2) [2007] 1 Lloyd's Rep 280
- AIG EUROPE (UK) LTD AND ORS v ANONYMOUS GREEK INSURANCE COMPANY OF GENERAL INSURANCES THE ETHNIKI [2000] Lloyd's Rep IR 343
- AZOV SHIPPING CO. v. BALTIC SHIPPING CO. [1999] 1 Lloyd's Rep 68
- TRYGG HANSA INSURANCE CO. LTD. v. EQUITAS LTD. AND OTHERS EQUITAS LTD. AND OTHERS v. TRYGG HANSA INSURANCE CO. LTD. [1998] 2 Lloyd's Rep 439
- Excess Insurance Co Ltd v Mander [1995] LRLR 358
- FEDERAL BULK CARRIERS INC v. C. ITOH & CO. LTD. AND OTHERS (THE “FEDERAL BULKER”) [1989] 1 Lloyd's Rep 103
- PINE TOP INSURANCE CO. LTD. v. UNIONE ITALIANA ANGLO SAXON REINSURANCE CO. LTD. [1987] 1 Lloyd's Rep 476
- SKIPS A/S NORDHEIM AND OTHERS v. SYRIAN PETROLEUM CO. LTD. AND PETROFINA S.A. (THE "VARENNA") [1983] 2 Lloyd's Rep 592
- Bremer Vulkan Schiffbau und Maschinenfabrik v South India Shipping Corpn (Gregg v Raytheon Ltd) [1981] AC 909
- The Annefield [1971] P 168
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Cases citing this case
12 later cases · 8 positive · 4 caution
Most senior citing decisions:
- MSC Mediterranean Shipping Company S.A. & Ors v Interglobal Technologies Limited & Ors [2025] EWHC 1464 (Comm) distinguished
- Ebury Partners Belgium SA/NV v Technical Touch BV & Anor. [2022] EWHC 2927 (Comm) applied
- HEYTEX BRAMSCHE GMBH v UNITY TRADE CAPITAL LIMITED [2022] EWHC 2488 (Ch) explained
- Catlin Syndicate Ltd v AMEC Foster Wheeler USA Corp [2020] EWHC 2530 (Comm)
- MPB v LGK [2020] EWHC 90 (TCC)
- SEA2011 Inc v ICT Ltd [2018] EWHC 520 (Comm)
- Barrier Ltd v Redhall Marine Ltd [2016] EWHC 381 (QB)
- Imtech Inviron Ltd v Loppingdale Plant Ltd [2014] EWHC 4006 (TCC)
- Caresse Navigation Ltd v Office National De L'electricite & Ors [2013] EWHC 3081 (Comm)
- Interserve Industrial Services Ltd v ZRE Katowice SA [2012] EWHC 3205 (TCC)
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