English court proceedings against parties including the arbitrator, B were commenced by A alleging he was induced to enter the arbitration agreement by fraudulent misrepresentation. B and the other parties applied to stay those proceedings. A had tried unsuccessfully to restrain B from determining its jurisdiction under the arbitration agreement (see Weissfich v. Julius).
The circumstances were unique. B as the arbitrator could not rely upon s.9 of the 1996 Act. Would the court grant a stay under its inherent jurisdiction in favour of Swiss arbitration?
Yes. The reasons can be summarised.
- The allegations by A related to the validity of the agreement and fell within the arbitration exclusion in Art.1(4) of EC Reg. 44/2001.
- The court retains an inherent jurisdiction to stay English proceedings in favour of a foreign arbitration where there is an issue as to whether the parties entered a binding agreement to arbitrate. Whilst the court has jurisdiction to decide the "threshold point"; that is the issue of whether there was a binding arbitration agreement, circumstances dictated that the court still retains an inherent jurisdiction to stay the proceedings to enable the foreign tribunal to decide that issue: Al Naimi v Islamic Press Services Inc [2000] 1 LLR p.522
- The Court of Appeal in Weissfich v. Julius already stated that this was a matter of Swiss law and not to grant a stay involves the court interfering with the Swiss arbitration process, and the supervising jurisdiction of the Swiss court. The obvious forum was Switzerland. To order otherwise would be contrary to the New York Convention.
- There was no "strong cause" or "reason" in the interests of justice, for the English court to retain jurisdiction and effectively restrain the foreign tribunal from deciding these issues.
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