Two LCIA arbitrations for the price of one?

4 April 2018

How do you commence an LCIA arbitration if you have claims under several similar contracts against one party? Can you really get two LCIA arbitrations for the price of one? The recent decision by the Commercial Court highlights a trap into which the unwary could fall.

In A v B [2017] EWHC 3417 (Comm), B commenced an LCIA arbitration against A for non-payment of the purchase price due under two contracts and delivered a single Request for Arbitration (RFA) paying a single LCIA registration fee. The two contracts both incorporated LCIA arbitration clauses.

A served its response to the RFA denying liability and, inter alia, reserving A’s rights to challenge the jurisdiction of the LCIA and any arbitral tribunal appointed. A later challenged the validity of the RFA on the basis that whereas the RFI purported to refer claims under both contracts, it failed to identify the specific dispute and the specific arbitration agreement to which it related. At first, the tribunal dismissed A’s challenge on the grounds that it was brought too late. However, A then brought its challenge to the tribunal’s jurisdiction under section 67 of the Arbitration Act 1996 (AA), it being well established that an application under section 67 requires determination by way of a complete rehearing. Section 67 provides that an award of an arbitral tribunal can be challenged on the grounds that the tribunal lacked “substantive jurisdiction”.

Mr Justice Philips had no hesitation in declaring the RFA invalid as it was “an ineffective attempt to refer separate disputes to a single arbitration”. Philips J commented that:

  1. The LCIA Rules treat a single request as giving rise to a single arbitration, the payment of fees for one arbitration and the formation of a single arbitral tribunal (emphasis added).
  2. Article 22.1(ix) of the LCIA Rules gives an arbitral tribunal (once formed) the power to consolidate the arbitration with one or more other arbitrations into a single arbitration.
  3. It would be inconceivable that the LCIA Rules could be read as permitting a party to pay only one fee when commencing multiple arbitrations and undoubtedly impermissible to read them as giving rise to consolidated proceedings without the consent of all parties given to the statutory restriction on consolidation of arbitration proceedings (section 35 AA).
  4. For the purposes of section 61 of the Law of Property Act 1925 (LPA), the term “an arbitration” in Article 1.1 of the LCIA Rules should not be read as including the plural.
  5. In any event, even if section 61 LPA is applied to Article 1.1 of the LCIA Rules so that “an arbitration” includes “arbitrations”, it is unclear why the references to “a written request” would not also include “written requests”. In any event, the end result could not be the consolidation of more than one arbitration without the agreement of all parties per the statutory position.

Although B relied on The Biz [2011] 1 Lloyd’s Rep 688, in which a notice commencing arbitration for claims under ten bills of lading each containing a London arbitration clause was given, ultimately Philips J distinguished on the basis that in The Biz no arbitral rules were applicable.

You cannot therefore get two LCIA arbitrations for the price of one. Where there are multiple claims under multiple agreements, the correct procedure, at least under the LCIA Rules, is to submit a single RFA in respect of each arbitration agreement and to later apply to the arbitral tribunal, once constituted, to consolidate the multiple arbitrations into a single arbitration.