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International arbitration has firmly established itself as the main method of resolving disputes in a large business, and today no one needs to be convinced of its effectiveness. However, it would be nice if the parties were more attentive to international treaties even at the stage of their preparation. This would help to avoid a lot of questions, difficulties, and confusion that may arise when the parties do not indicate in their agreement which law their dispute will regulate - the right to conduct the arbitration (curial law) and the Arbitration Law (AA law). Accordingly, it would be advisable that the parties expressly stipulate the choice of the law governing their arbitration agreement, in addition to the provision on the governing law of the contract.

In this regard, the English Court of Appeal has issued useful guidance for determining the law applicable to arbitration agreements and a place of arbitration. In this article, we will analyze the changes that are relevant to those who want to start arbitration in England.

Disputes Arbitrability 

The choice of arbitration and the place of the dispute should be considered at the stage of concluding the contract. The pros and cons of each arbitral institution and each country as a place of consideration should be seriously considered before the contract is signed. There are no trifles here, and mistakes are expensive.

We will analyze the case concerning a construction dispute resolution in England related to the arbitration agreement. In the case, the Court of Appeal appealed against the decision of the judge, who refused to satisfy the ban on the limitation of the proceedings initiated by the first defendant, which constituted a violation of the arbitration agreement.

Detailed Case Description: a Construction Dispute Resolution  by Arbitration in the UK

Plaintiff is a Turkish construction and engineering company that operates in Russia. 

The first defendant is a Russian company that is part of the insurance group.

The first defendant has filed a lawsuit against Plaintiff in the Moscow Arbitration Court, seeking damages in connection with the fire. 

Plaintiff filed an arbitration claim with the Commercial Court of London, demanding:

  • a statement that the first defendant is bound by the arbitration agreement in the construction contract and that it relates to the lawsuit filed in Moscow;
  • to ban the Russian production of the first defendant (since there was a violation of the arbitration agreement).

The trial court concluded that Plaintiff’s inability to continue arbitration in Russia is a good reason to refuse a restraining order. However, the court made the justification that the English court is not a suitable court to resolve an international construction dispute. Since there was no determination as to whether the arbitration obligation extended to the Plaintiff liability dispute in the Moscow lawsuit. He came to the conclusion that the Moscow Arbitration Court would be the appropriate forum for making a decision.

The English arbitration court, making a decision of the Court of Appeal, concluded that the approach of the Russian judge of the first instance was, in principle, incorrect in resolving an international dispute. An English court for arbitration is the proper court to issue a restraining order. In this regard, questions about the suitability of the court to resolve an international construction dispute through arbitration did not arise.

Output

This case reflects not only the importance of concluding an arbitration agreement but also the need to correctly formulate the choice of applicable law. Thus, international construction disputes through arbitration would be settled faster.

If you have any questions, you can order advice on the start of arbitration in the UK from experienced IQ Decision UK experts.