ARI v WXJ

For an arbitration clause requiring each party to appoint an arbitrator within a specified period, an appointment is valid when the proposed arbitrator has communicated an unconditional willingness to accept the appointment and the appointing party has communicated the appointment to both the arbitrator and the other party. The court should adopt a pragmatic and non-technical approach. It need not determine whether a separate contract between the appointing party and arbitrator has been concluded. An arbitrator’s acceptance is not conditional on agreement of fees or other retainer terms unless the arbitrator expressly makes it so. A later subjective understanding or subsequent refusal to act does not invalidate an appointment completed in accordance with the arbitration clause.

The parties disputed the constitution of an LMAA arbitration arising from bareboat charter arrangements and a reconciliation agreement. The Claimant had appointed GGG and notified the Defendant that, unless the Defendant appointed its own arbitrator within 14 days, GGG would become sole arbitrator.

Before the deadline, the Defendant communicated with JJJ, who initially expressed willingness subject to conflict checks. After confirming that there were no firm conflicts, JJJ indicated that the appointment could be communicated. The Defendant notified the Claimant on 5 January 2022 that it had appointed JJJ. JJJ later declined to participate because the proposed maximum remuneration was below the firm’s charge-out rates.

The central issue was whether JJJ had been validly appointed by the deadline, so that the Claimant was precluded from appointing GGG as sole arbitrator.

1. The Defendant’s summary judgment application succeeded on the appointment issue. JJJ had been validly appointed by 5 January 2022, and the Claimant was not entitled to appoint GGG as sole arbitrator.

2. The question was one of construction of the arbitration clause. Although the relationship between an appointing party and an arbitrator may be analysed contractually or by reference to status, the court should approach the issue pragmatically and doctrinal complications should be avoided where a clear answer can be reached.

3. The applicable requirements, drawn from Tradax Export SA v Volkaswagenwerk AG (The Loma), were that the appointment be communicated to the other party, communicated to the proposed arbitrator, and accepted through an expressed willingness to act. Acceptance may precede the appointing party’s formal communication of the appointment.

4. JJJ’s initial response was conditional on conflict clearance. The subsequent confirmation that JJJ could act without firm conflicts removed that condition and objectively indicated willingness for the appointment to be communicated. The Defendant then unequivocally notified both JJJ and the Claimant of the appointment before expiry of the 14-day period.

5. Any later subjective belief that the appointment depended on agreeing terms of engagement was irrelevant. The absence of agreement on fees or other retainer terms did not prevent appointment because JJJ had not made acceptance conditional on those matters. The court’s conclusion was also sufficient if the issue were analysed contractually.

First-instance decision of the High Court (Commercial Court). The judgment records no prior appellate decision.