Arbitral Jurisdiction and Contractual Obligations

This assignment delves into the complexities of arbitral jurisdiction, contractual obligations, and disputes arising from separate contracts. It examines the applicability of arbitration clauses in documented contracts and the implications of breaching employment responsibilities. The case study provides a detailed analysis of the contractual terms, highlighting the distinction between contractual obligations and employment responsibilities. The assignment concludes by emphasizing the importance of determining jurisdiction in arbitration proceedings to avoid abuse of due process.

Running head: INTERNATIONAL ARBITRATION LAW
INTERNATIONAL ARBITRATION LAW
Name of the Student
Name of the University
Author Note

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Executive Summary
The purpose of this report is to lay down the extent of jurisdiction that can be exercised by an
arbitral tribunal appointer under an arbitration clause to an agreement or an arbitration
agreement. This is done in light of the provisions of the (English) Arbitration Act, 1996. The
report takes into consideration a given set of circumstances where a concluded contract between
two companies containing an arbitration clause has given rise to a dispute. However, this dispute
arose on the basis of a personal agreement between two parties and thus would be unaffected by
the contract. Thus, the report concludes with the finding that the arbitral tribunal appointed under
the arbitration clause to the agreement would not have jurisdiction to rule over this issue.

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Introduction
Court procedures in any jurisdiction are a long drawn out process and usually take a
considerable amount of time and costs to reach an amicable solution. This is why parties to a
dispute often prefer out of court procedures to come to a conclusion. These procedures which
facilitate the settlement of disputes without employing court procedures are known as Alternative
Dispute Resolution procedures. Thus, any dispute resolution method that falls short of litigation
maybe termed as an Alternative Dispute Resolution1. Alternative Dispute Resolution is a wide
concept that includes various processes these maybe broadly classified into four different types,
these are Mediation, Collaborative law, Negotiation and Arbitration2. English Arbitration Law is
unique in its own way as it refuses to adopt the UNCITRAL model and follows its own
legislation enacted based on common law principles on International Commercial Arbitration3.
The principle statute for arbitration in England is the Arbitration Act, 1996 and applies to
England, Wales and Northern Ireland4. The following paragraphs will analyze a given set of
circumstances in light of the provisions of the act and seeks to establish that the arbitration clause
in the agreement did not include the dispute at hand hence the arbitral tribunal would not have
jurisdiction to adjudicate it.
The provisions of the English Arbitration Act, 1996 comprehensively define and regulate
the various situations that may arise during the process of arbitration. Section 6 of the act defines
Arbitration Agreement and requires such an agreement to be documented in a written form,
whether as part of another agreement (Arbitration clause) or as a separate agreement of its own.
1 Meyerson, Amy Lin. "Alternative Dispute Resolution." GPSolo32 (2015): 6.
2 Fiadjoe, Albert. Alternative dispute resolution: a developing world perspective. Routledge, 2013.
3 Redfern, Alan. Redfern and Hunter: Law and Practice of International Commercial Arbitration. Oxford University
Press, 2015.
4 Merkin, Robert, and Louis Flannery. Arbitration Act 1996. CRC Press, 2014.

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Answer-Analysis of the given situation
In the given set of circumstances the primary operational clause which could be
considered the habendum is clause 15 which defines the obligations of Tomy Technologies Ltd
(‘Tomy’) as providing the software to the HR department and 300 hours of training on use of the
software. The Arbitration clause in the agreement is clause 44 where the parties have agreed that
the seat of the arbitration would be England and would be subject to English law. Moreover, it
was agreed that the provisions of the Arbitration Act, 1996 would apply. Thus, the agreement
fully complies with the provisions of sections 6 and constitutes a sound arbitration agreement
where the seat of arbitration (defined under Section 3 of the act) is also agreed upon. However,
the dispute in concern arose out of an agreement between the installation team of Tomy
Technologies Ltd (‘Tomy’) and the marketing team at Sedgefield Greetings Cards Ltd
(‘Sedgefield’) and goes beyond the scope of the agreement that specifically deals with the
Human Resource Department at ‘Sedgefield’. Thus claiming for damages based on an agreement
that goes beyond the scope of this agreement cannot be adjudicated by an arbitral tribunal that is
formed by virtue of the arbitration clause in this agreement, namely clause 44. Section 30 of the
act empowers an arbitral tribunal formed to rule with respect to its substantive jurisdiction over a
particular reference. The present set of circumstances would ensure that the tribunal decides in
the negative with respect to section 30 (1) (a) of the act which deals with the presence of a valid
written arbitration agreement. If the current dispute had been based on the installation processes
relating to the HR department at ‘Sedgefield’ it would have attracted substantive jurisdiction.
Furthermore, if the arbitral tribunal decided to move forward with the proceedings and deemed
the reference to be within its jurisdiction an application can be made to the Court to challenge the

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tribunals ruling by virtue of the provisions of Section 325. In case of contract law the terms of a
contract have supremacy even over statutory provisions (unless dealing with elements that are
illegal or against public policy)6. Clause 15 of the agreement makes it amply clear that the
clauses of the contract apply to Tomy Technologies Ltd’s obligations towards the HR
department and there is no rationale to extend the terms to include activities with other
departments of the company.
From the given set of circumstances we are given to understand that there was a verbal
agreement between Ian Byte (Director of Tomy working with the installation team) and Alan
Server (Sedgefield’s marketing team). For both of those individuals the ascent obtained would be
sufficient to conclude a valid agreement (between the two companies) however no such formal
document was executed. The executed contract in question at clause 15 spoke specifically about
the HR department and any transaction with other departments would consequently require the
execution of a fresh contract. Thus Ian Byte’s act of installing the software in the Marketing
Department’s systems goes beyond the course of employment as per the terms of the contract.
Furthermore, when installing the software in the systems Ian was acting as an agent of the
company however his act was unauthorized as per the contract in question which Sedgefield is
basing its claim for damages on. Thus due to the absence of a formal agreement between the two
parties the arbitration clause in the contract between the two companies cannot be enforced as
applicable to this situation as well7. The contract in question comprises of two parties which are
the two companies. A personal agreement between two individuals from these organizations
cannot be construed as a binding contract between the two companies due to the separate legal
5 Trakman, Leon E. "Confidentiality in international commercial arbitration." Arbitration International 18.1 (2014):
1-18.
6 Cartwright, John. Contract law: An introduction to the English law of contract for the civil lawyer. Bloomsbury
Publishing, 2016.
7 McKendrick, Ewan. Contract law: text, cases, and materials. Oxford University Press (UK), 2014.

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entity of both companies8. Thus Sedgefield’s claim for damages would not be legally enforceable
as an arbitral tribunal constituted under the contract in question would not have jurisdiction to
adjudicate on the issue of the negligent installation of the software undertaken by Ian. Section 5
of the act necessitates that the agreement is in writing9. The agreement between the two parties is
in breach of their statutory obligation to execute the contract in a written document and thus
emphasizes further that the arbitral tribunal cannot take cognizance of the resultant dispute
arising from it. The HR department’s platform is compatible with the software which the
marketing department’s systems wasn’t (as assessed by an independent technician) but as far as
the enforceable contract is concerned Tomy performed its obligations and hence Sedgefield is
not entitled to any form of damages or equitable remedies10.
It may be argued that as per common law principles developed over the years there are
instances where the arbitral tribunal has been able to have jurisdiction over terms of contracts
which are not directly incorporated in the contract containing the arbitration clause11. In the case
of Emmott v Wilson & Partners Limited [2008] EWCA Civ 18412 the defendant after initiation
of the arbitral proceeding produced a counter-claim based on a further agreement. The arbitral
tribunal took cognizance of the terms of the further agreement and made an award allowing the
amended claim. The claimant challenged the award before the Commercial Court under Section
67(1)(a) which provides for appeals to arbitral awards based on substantive jurisdiction. The
Commercial Court held that the award consisted of answers to procedural questions and not
related to its substantive jurisdiction and dismissed the appeal. However, from the case it is clear
8 Kraakman, Reinier, and John Armour. The anatomy of corporate law: A comparative and functional approach.
Oxford University Press, 2017.
9 Robinson, William, and Boris Kasolowsky. "Will the United Kingdom's Human Rights Act Further Protect Parties
to Arbitration Proceedings?." Arbitration International 18.4 (2014): 453-466.
10 Bray, Samuel L. "The System of Equitable Remedies." UCLA L. Rev. 63 (2016): 530.
11 Moses, Margaret L. The principles and practice of international commercial arbitration. Cambridge University
Press, 2017.
12 Samuel, Mayank. "Confidentiality Dilemma in International Commercial Arbitration." (2017).

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that had the award of the tribunal been in terms of its substantive jurisdiction the court would
rule in favour of the claimant. From this inference it is amply clear that the arbitral tribunal
constituted from clause 44 of the agreement between Tomy and Sedgefield would not have
jurisdiction over disputes arising from the terms of a contract between two individuals.
Moreover, the disputes arising would not be disputes arising out of the terms of the existing
documented contract and hence are not covered by the arbitration clause embodied in it.
Alternative Dispute Resolution processes are the best recourse in case of disputes that require
fast-track adjudication13. However, determination of jurisdiction is of utmost importance as a
quasi-judicial body can never be allowed to adjudicate beyond its inherent jurisdiction and
allowing the same would be an abuse of due process of law14.
Conclusion
To conclude, arbitrary use of power is an abuse of due process of law and cannot be
condoned. The arbitral tribunal constituted through the executed contract in the given set of facts
does not allow for the extension of the arbitral tribunal’s powers to cases where different parties
are involved even if they are stakeholders of the parties to the original contract. The breach in
question was beyond the course of employment as defined under the terms of the contract and
the same would not attract liabilities based on the term of that contract. Tomy performed the
contract undertaken by it completely and is not liable to pay damages based on a further contract
unless the same was executed between the same parties and documented in a written format. The
case at hand does not show evidence of either of those characteristics. Sedgefield may pursue
litigation against Ian Byte for the losses incurred due to the installation or opt for ad hoc
13 Blake, Susan Heather, Julie Browne, and Stuart Sime. A practical approach to alternative dispute resolution.
Oxford University Press, 2016.
14 Goode, Roy. "The role of the lex loci arbitri in international commercial arbitration." Arbitration
International 17.1 (2014): 19-40.

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arbitration against him depending on the urgency of the situation. This arbitration would be
completely separate from the arbitration that maybe invoked from clause 44 of the contract as
the cause of action of the dispute goes beyond the scope of the habendum (clause 15). Damages
for contractual breaches are reliant on an obligation owed to the other party and Tomy under the
circumstances did not owe any obligation that was breached.

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Reference List:
Bray, Samuel L. "The System of Equitable Remedies." UCLA L. Rev. 63 (2016): 530.
Cartwright, John. Contract law: An introduction to the English law of contract for the civil
lawyer. Bloomsbury Publishing, 2016.
Fiadjoe, Albert. Alternative dispute resolution: a developing world perspective. Routledge, 2013.
Goode, Roy. "The role of the lex loci arbitri in international commercial arbitration." Arbitration
International 17.1 (2014): 19-40.
Kraakman, Reinier, and John Armour. The anatomy of corporate law: A comparative and
functional approach. Oxford University Press, 2017.
McKendrick, Ewan. Contract law: text, cases, and materials. Oxford University Press (UK),
2014.
Merkin, Robert, and Louis Flannery. Arbitration Act 1996. CRC Press, 2014.
Meyerson, Amy Lin. "Alternative Dispute Resolution." GPSolo32 (2015): 6.
Moses, Margaret L. The principles and practice of international commercial arbitration.
Cambridge University Press, 2017.
Redfern, Alan. Redfern and Hunter: Law and Practice of International Commercial Arbitration.
Oxford University Press, 2015.

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Robinson, William, and Boris Kasolowsky. "Will the United Kingdom's Human Rights Act
Further Protect Parties to Arbitration Proceedings?." Arbitration International 18.4 (2014): 453-
466.
Samuel, Mayank. "Confidentiality Dilemma in International Commercial Arbitration." (2017).
Blake, Susan Heather, Julie Browne, and Stuart Sime. A practical approach to alternative
dispute resolution. Oxford University Press, 2016.
Trakman, Leon E. "Confidentiality in international commercial arbitration." Arbitration
International 18.1 (2014): 1-18.