Wah (Aka Alan Tang) & Anor v Grant Thornton International Ltd & Ors

A contractual step before arbitration is enforceable only if its obligations or prohibitions are sufficiently clear and certain to receive legal effect. For a positive obligation to attempt dispute resolution, the agreement must identify, without further agreement, a sufficiently unequivocal commitment to commence a process, the steps required to establish it, the minimum participation required, and when the process is exhausted or may properly end. A negative bar on arbitration must specify an objectively ascertainable event or time at which the bar ends. The court may construe an otherwise binding agreement constructively, but it must not rewrite an uncertain bargain. Where the prescribed conciliation process is too nebulous, it cannot operate as a condition precedent to arbitration.

The claimants, partners in JBPB & Co, applied under section 67 of the Arbitration Act 1996 to declare an LCIA arbitral award of no effect for lack of substantive jurisdiction. The dispute arose under a Grant Thornton Member Firm Agreement containing staged conciliation provisions followed by arbitration.

The claimants argued that compliance with the conciliation provisions was a condition precedent to arbitration and that the required steps had not been completed. The defendants contended that the provisions lacked sufficient certainty and did not prevent arbitration. The central issues were whether the conciliation provisions were enforceable conditions precedent and, alternatively, how the contractual time bar on arbitration should be construed.

1. The claim was dismissed. The court approached the challenge to jurisdiction as a rehearing, applying Dallah Estate & Tourism Holding Co v Ministry of Religious Affairs, Government of Pakistan [2010] UKSC 46.

2. Agreements to agree or negotiate in good faith are generally unenforceable because the court cannot identify with sufficient objectivity what must be done or when the process is complete. However, where the provision forms part of an otherwise binding contract, the court will strive to give it effect and may imply suitable criteria or machinery. The court must assess the particular wording and must not impose a checklist of standard ADR ingredients.

3. For a positive pre-arbitration obligation, the agreement must prescribe, without further agreement: (a) a sufficiently certain and unequivocal commitment to commence a process; (b) the steps required to establish it; and (c) sufficient definition to enable the court to determine the minimum participation required and when the process is exhausted or properly terminable. For a negative restriction, the relevant event must be sufficiently defined and objectively ascertainable.

4. Sections 14.3(a)–(c) of the MFA required referral to the Chief Executive and then, if unresolved, to a three-person panel. They gave no adequate guidance on the form of conciliation, participation by the parties, or what constituted an attempt to resolve the dispute. The provisions were therefore too equivocal and nebulous to constitute enforceable conditions precedent to arbitration.

5. Section 14.3(d) was construed purposively. It imposed a temporary deferment, not an indefinite bar. The restriction ended no later than two months after the initial reference to the Chief Executive, or earlier upon failure of the panel process, including where no panel could be established. The arbitration had been commenced after that period, so the tribunal had jurisdiction.

First-instance decision. No appellate history was stated in the judgment.