First: The Notion of an
Arbitration Agreement
1.
General Overview
The laws of the Arab countries
that form the subject matter of this research regulating arbitration
provisions are at least in format divided into two categories: The
first group regulated these provisions in their respective Laws of
Civil Procedures, while the other regulated them in a separate Law
altogether. The first group of
countries comprises Syria (Chapter 4, Articles 506 – 534), Lebanon
(Vol. 2, Chapter 1, Articles 762 – 821), the United Arab Emirates
(Chapter 4, Articles 203 – 218) and Qatar (Chapter 13 of the Law of
Civil and Commercial Pleadings, Articles 190 – 210). While the second
group, comprises Egypt
(Law no. 27 of 1994), Jordan
(Law no. 31 of 2001), Oman
(Sultanate Decree no. 47 of 1997) and Palestine (Law no. 3 of 2000).
It is to be noted that these
Laws, and specially those of countries that have legislated separate
Laws for Arbitration, are so similar and are almost identical to each
other in many respects. In form,
this similarity is essentially attributed to the source, i.e. the Model
Law, which was adopted by the (UNCITRAL) United Nations Commission on
International Trade Law in 1985(1). The bulk of the Egyptian Law is
derived from and based on the Model Law,(2) while the Laws of the other
Arab countries (Oman, Palestine and Jordan) are derived mainly from the
Egyptian Law. While, substantively, the similarity is attributed to the
fact that all the laws of the Arab countries that are covered in this
paper, in addition to the UNCITRAL, have given wide and primary powers
to the parties’ will in the arbitration process(3). All these Laws underscore that the
source of arbitration is the intention of the parties, the absence of
which bars any referral to arbitration.
As a general rule, they all agree on the right of the parties to
constitute the arbitration tribunal, by mutual agreement, either
directly or indirectly; just as the parties’ rights to decide on the
arbitration procedures to be followed.
The parties’ agreement could also influence the shape and form
of the arbitral award, such as, for instance, whether they wish the
award to be reached unanimously, rather than be a majority, or to agree
not to challenge the award once rendered, at least with regard to
certain types of challenges (not all).
However, in return, Arab
countries’ Laws differ on the details, which necessarily reflect on the
application in the various countries.
An example is that Egyptian Law, just as the Omani, Palestinian
and Jordanian, expressly stipulate the independence of the arbitration clause
from the contract in which it is contained, which we shall elucidate
hereinafter. These countries’
Laws are similar on this doctrine, which is also reflected in their
respective case law.
Nonetheless, there are other Laws, such as Syria’s, the
Emirates’ and Qatar’s, which do not provide for this doctrine, hence
entailing the application of the general rules, that do not uphold the
doctrine of the non-independence of the arbitration clause(4). Furthermore, all relevant Laws
stipulate that the arbitration agreement must be in writing. However,
some countries, such as Egypt, Oman, Palestine and Jordan, stipulate
that the arbitration agreement is void if it is not in writing, whereas
other countries, such as Syria, Lebanon, the Emirates and Qatar, have
stipulated that the arbitration agreement be in writing for evidentiary
purposes(5).
2. Legal
Provisions
The Syrian, Emirate, and
Qatari legislature did not define the arbitration agreement, but were
content with stipulating the right of the parties to agree to submit a dispute
or certain disputes to arbitration.
In this regard, Article 506 of the Syrian Law provides that
“Parties to a contract may generally stipulate to refer any dispute
arising out of a contract to a sole arbitrator or more; and they may
agree to submit a certain dispute to arbitration, subject to certain
provisions”. Also, Article 190 of the Qatari Law provides that “Parties
may agree to refer a certain dispute to arbitration by a special
arbitration document; and they may agree to submit to arbitration all
disputes arising out a certain contract". And Article 203/1 of the Emirates Law
provides that “Parties, generally, may agree in the original contract
between them, or in any other subsequent agreement, to refer any
dispute that may arise between them in connection with a certain
contract to a sole arbitrator or more; and they may agree to submit to
arbitration a certain dispute and subject to special provisions”. Similarly, Jordanian Law did not
define the arbitration agreement or arbitration per se, but
provided in Article 3 the possibility of submitting to arbitration
civil and commercial disputes “between parties of public or private law
persons whatever the nature of the legal relationship to which the
dispute is connected, whether contractual or not”. However, Lebanese
Law distinguishes between an arbitration clause, which it refers to as
arbitral article, and arbitration stipulation, which Lebanese Law
refers to as arbitral contract.
With regard to the arbitration clause, (arbitral article), Article
762 of the said law provides that parties to a contract may include a
article, in the commercial or civil contract between them, stipulating
that all amiable compositeaur disputes arising out of a contract
or its interpretation are to be submitted to arbitration. However, with regard to an arbitral
contract (arbitration stipulation), Article 765 of the same Law defined
it as a contract whereby parties thereto agree to resolve an amiable
compositeaur dispute between them through arbitration by a sole or
multiple arbitrators. We shall present hereinafter the difference
between arbitration clause (arbitral article) and arbitration
stipulation (arbitral contract).
As for the Egyptian Law of
Arbitration, Article 10/1 of said Law defines an arbitration agreement
as “an agreement between the parties to refer to arbitration all or
certain disputes which have arisen or may arise between them in respect
of directly defined relationship, whether contractual or not”(6). This stipulation corresponds to
Article 10/1 of the Omani Law(7), and Article 5/1 of the
Palestinian Law(8).
3. Elements
of the Agreement
A thorough examination of
Arab Laws referred to above, reveals that they conform with the general
principles and basic elements of the arbitration agreement, in terms of
the requirement that there be a current or future dispute, and an
agreement to refer it to arbitration; and that the dispute be, broadly
speaking, a civil one, whereby it includes commercial disputes, or vice
versa, where the dispute is, broadly speaking, commercial, whereby it
includes civil disputes. Certain Laws, such as Jordan’s, also sanctions
arbitration in administrative contracts, whereas other countries also
sanctions it, but subject to the concerned Minister’s approval, as is
the case with the Egyptian Law.
All these laws are unanimous on the requirement that parties to
an arbitration agreement must enjoy legal capacity, for the agreement
to be valid; and that only amiable compositeaur matters could be
referred to arbitration. They all provide that an arbitration agreement
could be either in the form of a stipulation in the contract, or in an
a separate document; and that the subject matter of the dispute be one
which is referable to arbitration; and that the legal relationship, or
relationships, from which the dispute has arisen, is defined. Moreover, they agree that arbitration
could be either ad hoc or institutional, and on the parties’
right to relive the Arbitral Tribunal from abiding by procedural rules
customarily followed by the courts. Furthermore, they all stipulate
that the arbitration agreement must be in writing, noting that, as was
mentioned, in certain jurisdictions, the requirement that the agreement
be in writing is a condition precedent for its formation and validity,,
while in others it is for evidentiary purposes. As for the
interpretation of the arbitration agreement, case law in these
countries underscore that arbitration is an exceptional form of dispute
resolution and, accordingly, they accord the arbitration agreement
narrow interpretation.
4. Arbitration
Defined
Arbitration, in its most simple form,
is an agreement by parties to a defined legal relationship within the
context of private law, to submit their financial dispute to a person
or more, to be appointed, directly or indirectly(9), by the parties, and for
that person(s) to issue a final (binding) award in relation to the
dispute in lieu of the official judicial system(10). The enforcement of
Arbitral Awards follows the same path as court judgments, provided that
the legal requirements are met.
An example is where there is a contract between (A) and (B),
which stipulates that any dispute related to the contract is to be
settled through arbitration and that (C) is the sole arbitrator with
the task of settling such dispute(11). Likewise, there could be
no such agreement but, after a dispute has arisen, (A) and (B) agree to
refer said dispute to (C),as a sole arbitrator, to settle it, as
opposed to resorting to the courts. In both cases, such agreement is
binding on both (A) and (B) in that they are obliged to settle their
dispute through (C) and not through the court or, else, the court will
dismiss the case in form if certain conditions are met. Should the dispute be referred to
(C), he is expected to handle the matter as if it was a court case,
whereby he should listen to both parties’ claims, requests, pleas,
defences and evidences with neutrality and impartiality, and then issue
his finding as if it was a judicial decision(12). Following its endorsement
by the competent department, the Award is enforceable just as any other
judicial ruling.
5. Arbitration
Removes the Courts’ Judicial Jurisdiction
Accordingly, such notion of an
arbitration agreement removes, in principle, the courts’ jurisdiction(13), and bestows the
jurisdiction to decide the dispute to another person(14). If such an agreement exists, then
resorting to arbitration is deemed to be the right of both parties, or
either, depending on the circumstances, while by the same token, it is
also an obligation. Hence,
according to our erstwhile example, should a dispute arise between (A)
and (B), with (A) being the Claimant, he should have the right to
resort to arbitration, and (B), being the Respondent (Defendant),
should consent to such referral, and vice versa. Put differently, (A) is obliged to
resort to arbitration, as opposed to resorting to the courts, as this
is (B’s) right. If (A) is to
resort to the courts in lieu of arbitration, (B) shall be
entitled to put up the challenge of the existence of an arbitration
agreement. In such instance, the
court is obliged to refuse to hear the case, and dismiss the claim in
form(15).
It is worthwhile noting that removing
the jurisdiction is preliminary and not permanent(16), just as it is partial and
not total. Competence to hear
the dispute shall revert back to ordinary courts should the arbitration
agreement be extinguished for whatever reason, be it nullity, voidance,
rescission or express or implied relinquishment. Moreover, ordinary courts enjoy wide
powers in overseeing the arbitration process, such as appointing the
Arbitral Tribunal or a sole arbitrator, if the parties so wished, or if
either party refused to nominate an arbitrator; and in the eventuality
of a removal, challenge, or replacement of an arbitrator; and in
assisting the Arbitral Tribunal in serving notices, and summoning
witnesses, should the need arise.
Most crucially, the Arbitral Award is unenforceable unless
endorsed by the competent court.
6. Arbitration
is a Contract
Arbitration, as described
above, is a contract just like any other, whether came about in the
form of an arbitration clause in the original contract, or as an
agreement independent of the contract, and whether this independent
agreement is made prior to or after the dispute. This leads us to state that an
arbitration agreement, being a contract, is subject to the general
provisions of Contract(17), in terms of formation, consequences,
effects and extinguishment, unless governed by any other special law,
where the latter would prevail in terms of application(18).
However, an arbitration
agreement is to be distinguished from other contracts in that it does
not stand independently and is always linked to a defined legal
relationship, usually by way of a contract of sorts. But this relationship may be
non-contractual, in that it may emanate from a unilateral disposition
(unilateral act) or an injurious act (a tort) or a beneficial act
(unjust enrichment), or Law, being one of the direct sources of
obligations(19). It is hard to
imagine an arbitration agreement in the absence of such relationship,
otherwise the contract, i.e. the arbitration agreement, would be
rendered without a subject matter or cause, and accordingly, void. When we talk of the existence of a
relationship, we do not necessarily mean a legal relationship, suffice
it that it be material, as it need not be legal. Since as we shall see later an
arbitration agreement could still be upheld, notwithstanding the
nullification or rescission of the contract to which it is
attached. This is referred to as
the separability doctrine, a doctrine adopted by a various Arab Laws
that form the subject matter of this paper.
7. The
Nature of the Arbitration Agreement
By virtue of the nature of
an arbitration agreement, being a legal act, we find that the laws of
the Arab countries that form the subject matter of this paper have
divided legal acts into administrative acts and disposition acts, in
terms of a person’s capacity, and specially the natural person. Administrative
acts denote those acts whose aim is to administer and invest funds, or
safekeeping it, while ownership thereof remains with the original
owner, i.e. he continues to have the title for it. Such acts include lending the funds
or depositing them at a bank in return for interest, if it were monies,
or depositing it with an honest party for safekeeping, or to enter into
agreement with someone to utilize it and invest it in whatever
manner. As for disposition acts,
they cover activities that result in the funds moving from the owner to
another, whether by way of proceeds from sale, or without return as in
the case of a gift, or the likelihood of it moving from the owner, as
in the case of mortgage. Such
dispositions are in turn divided into absolute benefits, as in
accepting a gift or a guarantee of a loan without return, or to
absolute detriments, such as bequeathing a gift or lending monies or
offering a guarantee for no return.
It is worth noting that there exists a middle ground that varies
between benefit and detriment, such as sale, barter and
partnership. Such division of
legal acts has a major impact on the minor in Arab laws, especially in
connection with acts of dispositions.
These laws void all dispositions by an undiscerning minor, and
those dispositions made by a discerning minor, which result in an
absolute detriment to him. As
for dispositions that confer absolute benefit on him, they are
upheld. With respect to
dispositions that fall between the two, they are considered valid but subject
to certain conditions and provisions that fall beyond the scope of this
paper.
A question arises
surrounding the nature of an arbitration agreement as a legal act, and
the extent one could regard it as falling under one of the aforementioned
legal acts. The courts, in a
number of Arab countries, have provided us with answers to this
question by holding that this agreement falls within the range of
actions that fall between the two – the middle ground. Whereby if one of the parties is a
discerning minor, the agreement is voidable for the benefit of the
minor(20), however, we do not necessarily
subscribe to this position, for following any examination of an
arbitration agreement we would discover that its subject matter and aim
is to settle a certain dispute connected to one of those acts (or
others), away from ordinary courts, and assigning such task to a person
agreed to by both parties (as was mentioned above). Accordingly, it is
not an act that falls under administration, since it is not linked to
administering of funds through investments or otherwise. Similarly, it is not disposition,
since its subject matter is not dealing with a certain money. Hence, it has its own distinct
nature, and accordingly, cannot be placed under any of the
aforementioned legal acts.
Second: Types of Arbitration
Agreement
8. Arbitration
Clause
An arbitration agreement could be in
the form of a clause in the original contract that regulates the legal
relationship between the parties, which is the most commonplace and
practical form, and is customarily referred to as an “arbitration
clause”(21).
Usually, the clause is mentioned in an abridged and brief
format, merely referring a dispute to arbitration, such as “any dispute
that may arise between the parties shall be submitted to
arbitration”. It happens at
times that parties tend to expand the clause by including certain extra
provisions, such as the place of arbitration, the applicable law, the
attributes and qualifications of all or some of the prospective
arbitrators to be appointed to the Arbitral Tribunal, such as a
requirement that the Chairman be an engineer, a lawyer or an auditor,
or that two of the arbitrators be legally qualified, with the Chairman
being an engineer. Parties may
also specify the nationality, sex and age of all or some of the
prospective arbitrators, although in practical terms it is a
rarity. If the arbitration is
institutional (22), it is common for the concerned
arbitration institution to lay down a formula advising the parties to
include it in their respective contracts should their desire be to
submit their disputes before it.
In this event, rules and procedures of the concerned
institutions are followed, including the mechanism for the appointment
of arbitrators.
Once an arbitration clause
is included in the contract – be it at the beginning, end, or anywhere
in the contract – any dispute that may arise from or in connection with
the said contract shall be referred to arbitration, unless the
contract, either expressly or impliedly, stipulates otherwise. One such example is when there is a
contract for sale containing a clause stipulating that the vendor
provides a performance bond issued by a bank, and the contract
stipulates that any dispute over the warranty be referred to
arbitration. Or for the contract
to be divided into two independent parts: the first deals with
construction works and appertains to regulating the rights and
obligations of the parties; while the second deals with warranties that
the contractor is obliged to submit in favour of the works, such as
loan warranty, or performance and maintenance bond, and the arbitration
clause is mentioned in the first part, thus insinuating that it applies
only to the first and not the second.
In other words, it is a matter of interpretation of the
arbitration clause, which is a matter for the judge or the Arbitral
Tribunal to decide, as the case may be.
9. Independent
Agreement
An agreement to submit a
dispute to arbitration may not be contained in the contract altogether,
but in a separate agreement, independent of the original contract. As is the case with the arbitration
clause, such agreement may have been made prior to the dispute. One such example is when the contract
makes no mention of a referral to arbitration, but the parties enter
into another independent agreement to submit any future disputes
appertaining to the original contract to arbitration. This agreement could be either
attached to the original contract in the form of an addendum, or could have
been entered into subsequent to the original contract, but before any
dispute has arisen. These two types of an arbitration agreement, i.e.
arbitration clause, and other arbitration agreements made prior to the
arising of a dispute have been stipulated in some Arab countries’ laws
covered in this paper, such as the Egyptian and Jordanian laws(23). While other Laws, such as
Qatar’s, do not provide for theses two types of an arbitration
agreement, but it could be argued that the general rules do not prescribe
for a specific form of an arbitration agreement, or for a defined
time. Accordingly, Qatari Law
does not bar either of the forms mentioned above.
We do not necessarily find
any cause for distinguishing between an arbitration clause and other
forms of arbitration agreements concluded prior to the arising of the
dispute. However, it is to be
noted that laws in Arab countries and case law have underscored the
independence of the arbitration clause from the original contract, in
which it is contained, as shall be elucidated hereunder. It could be gleaned that this
independence is confined to the arbitration clause and does not cover
other arbitration agreements, which are deemed to be part of the
original contracts, with the various legal effects that we shall
discuss thereafter. Nonetheless,
we do not agree with such understanding, as we subscribe to the
viewpoint that the applicability of the independence principle on the
arbitration clause should also include arbitration agreements made
subsequent to the original contract, including an arbitration
stipulation, for unity of purpose in all forms of arbitration
agreements.
10. The
Clause and Agreement Combined
On the other hand, we may
face a situation where we have an arbitration clause and the subsequent
arbitration agreement, which is still made prior to the dispute. One such example is when the contract
contains an arbitration clause, and subsequent to the conclusion of the
contract, the parties agree on the conditions, provisions and rules of
arbitration, primarily based on the arbitration clause, such as the
place, language and procedures to be followed. In all cases, the parties are not
compelled to conclude an arbitration agreement to that effect. However, they may agree otherwise in
the original contract, such as wording the arbitration clause in the
following manner: all contractual disputes are to be submitted to
arbitration in accordance with the conditions, provisions and rules
that are to be decided in due course.
If they agree on such arrangement, then this agreement would
apply and shall be binding on them.
In this instance, the vacuum in the arbitration clause shall be
filled in accordance with the provisions of the Law, which deals with
such matters, such as appointment of arbitrators, the procedures before
the Arbitral Tribunal and the requirements of the Arbitral Award, and
other provisions, unless it was inferred from the intention of the
parties that the operation of the arbitration clause is contingent upon
the conclusion of a more detailed subsequent agreement. In such instance, failure to agree
shall render the arbitration clause, in effect, void, and again this is
a matter of interpretation and construction.
If the arbitration agreement
and arbitration clause are joined together as indicated above, and the
first was dependent upon the existence of the second, it is deemed that
the arbitration agreement is subservient to the arbitration clause, in
terms of non-existence, not existence.
In other words, if the arbitration clause is void, or has been
terminated for whatever reason, such as mutual rescission, the
arbitration agreement shall, in turn, be voided; but the reverse is not
true, in that the arbitration clause may be proper and valid, while the
arbitration agreement may be void.
Since both parties may be in full capacity at the time of the
conclusion of the arbitration clause, while at the time of the
conclusion of the arbitration agreement one of them may have been
rendered incapacitated, in that case the first is valid, while the
latter is void. This nullification does not affect the arbitration
clause, since it is subservient to the clause and not vice versa. Nevertheless, one could state that
the relationship between the arbitration clause and the subsequent
arbitration agreement is a matter of interpretation of the intention of
the parties, according to the circumstances. It could be that the purpose of the
subsequent agreement that is for it to be subservient to the arbitration
clause as shown above; also, it may be that the intention of the
parties was to abrogate the arbitration clause and replace it with a
new agreement. In such instance,
the arbitration clause is rendered extinguished, while the arbitration
agreement is valid, and arbitration is accordingly based on the latter,
not the former.
11. The
Arbitration Stipulation
An arbitration agreement may
have been made after the dispute had arisen, whereby both parties agree
to refer this dispute, which has in fact arisen, to arbitration. This type of agreement is
jurisprudentially and judicially referred to as an arbitration
stipulation in order to distinguish it from an arbitration clause(24). Accordingly, the
difference between an arbitration stipulation and other arbitration
agreements, is whether the arbitration agreement was made prior or
after the dispute had arisen. In
the case of the latter, it is deemed an arbitration stipulation, while
the former falls within the ambit of other arbitration agreements. The laws of Syria, the Emirates and
Qatar do not accord this distinction much attention(25), but rather stipulate the
requirement of defining the subject matter of the dispute, either in a
document or in the arbitration agreement(26), or at the pleadings stage,
as enshrined in Syria’s and Qatar’s laws, or during the hearing of the
case, according to the Emirates’ law.
Nonetheless, it is to be noted that it is somewhat difficult,
not to say impossible, to define the subject matter of the dispute in
the arbitration clause as long as it is contingent upon a potential
future event, which may or may not occur. Hence, the stipulation in both Laws,
for the requirement to define the subject matter of the dispute in the
arbitration document, appertains to the arbitration stipulation, not
the arbitration clause. However,
it is not imperative to define the subject matter of the dispute in the
arbitration stipulation for it to be valid, since the parties may lay
out the subject matter of the dispute a priori at the pleadings
stage before the Arbitral Tribunal. Since it is rather awkward for one
of the parties to initiate arbitration proceedings without laying out
the subject matter of the dispute, just as it is impossible for the
Arbitral Tribunal to hear a case and decide it without having the
dispute defined and laid out; otherwise the entire arbitration
proceedings is deemed void.
12. Terms
of Reference
It is also worthwhile
distinguishing between an arbitration stipulation and what the
International Chamber of Commerce refers to as the Terms of
Reference. The Arbitral
Tribunal, following receipt of the arbitration file from the ICC,
drafts this document. The file
at this stage generally contains the request for arbitration by the
claimant, the reply thereto and the counter-claim, if any, by the
respondent, and the claimant’s reply to the counter-claim. These
documents contain various primary and basic elements of the arbitration
case, such as the names of the parties, the facts of the claim,
evidences and requests, which have the effect of enabling the Arbitral
Tribunal to form a preliminary idea of the nature of the dispute. At this stage, the Arbitral Tribunal
prepares a draft of the Terms of Reference, which includes a summary of
the facts, the parties requests and the issues to be ultimately decided
by the Tribunal. The Terms of reference is subsequently sent to the
parties for their comments and observations. Once the Terms of Reference is
drafted in a final form, the Arbitral Tribunal sends it to the parties
for their signature and then the Arbitral Tribunal signs it. When all the signatures are obtained,
the Terms of Reference is sent to the ICC Court for endorsement. Once the endorsement is given, the
Arbitral Tribunal begins the arbitration proceedings aimed at settling
the dispute(27).
Accordingly, it becomes
abundantly clear that the Terms of Reference complement the arbitration
stipulation in that both have been prepared and drafted before the
dispute has arisen, and not after. However, there remain basic
differences between them. The
stipulation is the arbitration agreement itself, hence, both parties’
signature is required, otherwise there is no referral to arbitration,
whereas the Terms of Reference is invariably prepared on the assumption
that an arbitration agreement is in existence, whether in the form of
clause, a stipulation, or an independent agreement. It also assumes that a referral to
arbitration is made on the strength of an arbitration agreement. In
form, it is to be noted that an arbitration stipulation is prepared by
the parties themselves, whereas the Terms of Reference is prepared by
the Arbitral Tribunal, with or without the parties’ participation. Accordingly, it could be adopted and
applied on the parties even without their consent should they refuse to
sign it.
13. Agreement
on Arbitration Before the Court
It happens quite frequently
that parties to a dispute may agree to submit their dispute to
arbitration while their case is being heard before the courts, and in
the absence of an arbitration agreement. One such example is when there is a
contract between (A) and (B) that does not contain an arbitration
clause. Should a dispute arise
which prompts (A) to resort to court, both parties may still agree –
either before the court or on their own – to settle that very dispute
through arbitration(28).
In that event, the court, upon the request of either or both
parties, must dismiss the case and refer the dispute to
arbitration. Such agreement is
permissible, whether the case is being heard before the Court of First
Instance, the Court of Appeal, and even before the Court of Cassation,
provided it has not rendered its decision yet (29). However, there is a difference
between an arbitration agreement made while the case is being heard by
the court, and an original arbitration agreement made before lodging a
case before the court. This
difference relates to the court where the Arbitral Award and other
arbitration documents are to be deposited, and to the authority, which
is expected to handle the notification of the Arbitral Award to the
parties. Naturally, this
appertains to countries that adopt such procedures, as Egypt, Oman,
Syria, Qatar
and the Emirates, which is beyond the scope of this paper.
It is to be noted that
various Arab laws require an arbitration agreement to be in
writing. Accordingly, entering
the parties agreement to refer their dispute to arbitration in the
hearing’s minutes, and issuing a court decision to dismiss the case and
refer the dispute to arbitration, is tantamount to a written
arbitration agreement, even where the court’s minutes are not signed by
the parties(30).
14. Reference
to a Document Containing an Arbitration Clause
It frequently happens that
parties do not directly agree to arbitration in the original contract
between them, but make reference in the contract to stipulations
contained in another document that are applicable, but which are not
provided for in the original contract.
This other document may contain a stipulation for the settlement
of disputes through arbitration.
An example is when the contract between the parties is one for
the carriage of goods by sea between the shipper (A) and the consignee
(B), and the Bill of Lading stipulates the application of the
provisions contained in the vessel’s hiring contract between (A) and the
hirer (C), which are not contained in the Bill of Lading. If we are to assume that the Bill of
lading does not contain a dispute resolution clause, while the vessel’s
hiring contract provides for the settlement of any dispute between (A)
and (C) through arbitration, in such event, general rules necessitate
the application of the arbitration clause to the relationship between
(A) and (B) as long as the contract governs the relationship between
the contracting parties(31).
However, we do not
necessarily subscribe to the position that general rules should not
enjoy blanket application, save when they are in conformity with
arbitration rules. There is a
consensus in Arab countries that arbitration is an exceptional method
of dispute resolution, a view asserted and confirmed by case law in
various Arab jurisdictions. And
owing to the significance of an arbitration clause, we find that many
modern arbitration laws have stressed the requirement that reference to
arbitration be expressly and clearly stated, inasmuch as making it part
of the agreement. In fact, this
is the stipulation contained in Article 7(2) of the Model Law, which
provides that reference in a contract to a document containing an
arbitration clause constitutes an arbitration agreement provided that
the reference is such as to make that clause part of the contract (32).
One such example is when the
contract between (A) and (B) expressly stipulates the applicability of
an arbitration clause in the following manner: “including the
arbitration clause contained in the vessel’s hiring contract”. As we see, a vague or ambiguous
referral to an arbitration clause is inadequate, such as saying
“including the dispute resolution clause”, since the latter does not necessarily
denote that the clause is an arbitration clause. It goes without saying that it is not
a requirement that reference to an arbitration clause be made in the
original contract between (A) and (B), but could be made subsequent to
it. This view is expressly
adopted by Egyptian Law when stating in Article 10/3 that every
reference in a contract to a document containing an arbitration clause
is deemed an arbitration agreement, provided the reference is clear as
to make that clause a part of the contract. Both Omani and Jordanian Laws have
adopted identical provisions(33).
Third: Independence of the Arbitration
Clause
15. The
Orthodox and Modern Principles
At times, we are faced with
a situation where an arbitration clause is contained in an original
contract that is rendered void for whatever reason,
