A v B (arbitration claim - contracual terms - foreign language)

Contractual arbitration clauses must initially be construed as part of the agreement as a whole. A priority clause operates only after the relevant provisions have been construed and found to conflict. Where a clause is in a foreign language and its translation is disputed, the court should combine translation evidence with ordinary principles of contractual construction. An ambiguous reference to an arbitral body may be resolved by the wider contractual machinery, including the agreed appointment procedure and commercial context. Jurisdiction is distinct from agreement to procedural terms. Where arbitrators accept appointment on stated terms, and both parties proceed without reservation, the parties may thereby agree that those terms govern the reference.

The claimant brought an arbitration claim under section 67 of the Arbitration Act 1996 challenging an award concerning a voyage charterparty. The charterparty was in Russian but governed by English law. Part I, clause J referred in Russian to arbitration before a London international arbitration court. Part II, clause 24 provided for arbitration in London or New York, according to Part I, before a three-person tribunal appointed by the parties.

The arbitrators construed clause J as referring to the London Court of International Arbitration and, applying the contractual priority provision, held that they lacked jurisdiction. The central issues were whether clause J required LCIA arbitration and whether the arbitrators had jurisdiction to proceed on LMAA Terms 2012.

1. The application succeeded. The arbitrators’ award was set aside. The court determined that the arbitrators had jurisdiction and that the arbitration was to proceed on LMAA Terms 2012.
2. The proper approach was first to construe the contract as a whole. The priority provision could operate only if there was an actual conflict. Clauses J and 24 therefore had to be construed together before deciding whether the priority provision applied.
3. Where the meaning of a foreign-language clause and its translation are disputed, construction is a combined process. The court must assess the translation evidence together with the ordinary tools of contractual construction, with the aim of identifying the meaning and effect agreed by the parties.
4. The wording of clause J was ambiguous. It could refer to the LCIA or to an international ad hoc arbitration in London. Clause 24’s detailed party-appointment mechanism was more consistent with ad hoc arbitration. The unusualness of LCIA arbitration for a maritime voyage charterparty, and the absence of wording clearly identifying the LCIA, also supported that conclusion. The court therefore found, on the balance of probabilities, that the parties intended ad hoc London arbitration under clause 24.
5. Jurisdiction and procedural terms were separate issues. The arbitrators had jurisdiction under clause 24 even though it remained necessary to decide whether the parties had agreed to arbitration on LMAA Terms 2012.
6. Applying the reasoning adopted by Saville J in Fal Bunkering of Sharjah v. Grecale Inc. of Panama [1990] 1 Lloyds LR 369, the parties’ conduct established agreement to the LMAA Terms. Each arbitrator had accepted appointment on those terms, and neither party had made a reservation. The defendant therefore accepted the condition, including as between the parties through their respective arbitrators.