What to do if…you’ve been served with a Request for Arbitration

Is there an Arbitration Agreement?

You should check if the contract you have with the other side has a clause which says that any dispute should be referred to arbitration. Under English law, any agreement to arbitrate needs to be made in writing.  The Request for Arbitration should set out where to find the clause. If you have not agreed to arbitrate, you will be able to challenge the arbitration process, and do not have to participate in it.

Are there conflicting dispute resolution clauses?

Certain contracts can contain poorly drafted dispute resolution clauses which say in one clause that any dispute needs to go to a court of a particular country whilst another says that a dispute has to be resolved by arbitration. These conflicting provisions can create serious problems. If you would prefer to go to court (for example, because the process will be in public), then you may be able to force the other side to do so (although there are English court decisions which have said that parties should arbitrate where there are conflicting clauses).

Has with the Claimant done what it needed to do before sending the Request for Arbitration?

Contracts sometimes have provisions saying that certain steps need to occur before a party can refer a matter to arbitration (known as “tiered escalation clauses”). For example, the contract may say that parties need to take steps such as:

• notifying the other side of a dispute within a set number of days of the event occurring
• notifying the other side of the issue to allow them a set number of days to resolve the problem
• attempting to engage in senior management or principal to principal discussions to see if a dispute can be resolved, or
• mediating a dispute

The list above is not exhaustive and will depend on what the contract says. But it is worth checking if the Claimant has complied with these. If they have not, you may be able to challenge the arbitration process.

Has the Claimant sued the correct party?  

It may seem obvious that a Claimant will know which party has harmed it. But there are occurrences where the Claimant sues the wrong party (either the wrong subsidiary within a group of companies or where it fails to appreciate it is another party such as another contractor that has caused the harm). You should check that the Claimant’s claim is made correctly against you.

Has the correct arbitration centre been used?

Arbitration clauses can state that a dispute has to be arbitrated by the rules of a particular arbitration centre (such as the LCIA or ICC). You should check that the Claimant has issued the request in the correct centre if the arbitration clause names a particular centre or a particular set of arbitration rules that specify a particular centre.

Is there a limitation or contractual time period engaged?

You should check if there is a limitation or contractual time period in which the claim needed to be commenced by. If there is a contractual time period, this will be set out in the contract.  If not, you should check whether there is a limitation period which might be engaged under the law which applies to your agreement – for example the Limitation Act 1980 (LA1980) under English law. Under the LA1980, claims under contract need to be brought within six years of the dispute arising and within 12 years if the contract is a deed. If a limitation or contractual period is engaged and the claimant has filed after that time expired, you may have a procedural bar to the claim, meaning the claim cannot go any further.

Is the Request for Arbitration compliant?  

You should check that the Request for Arbitration sets out what it needs to set out.  Each arbitration centre has particular rules, which usually set out what matters need to be contained in a Request for Arbitration.  If your arbitration agreement does not state that a dispute has to be arbitrated by the rules of a particular arbitration centre, you should check the local law requirements which apply to your arbitration agreement.  For example, under English law, s14 Arbitration Act 1996 (AA1996) sets out what needs to be contained in a Request for Arbitration.

Has the Request been served correctly?  

Your contract will usually set out how notices are to be sent to the other side. You should check that the Claimant has complied with that. If your contract is silent, you should check local law requirements on service. Under English law, the “fail-safe method” for service is set out under s76 AA1996.

When do you need to raise an objection?  

You should carefully check if the law which applies to your arbitration sets out by when you need to raise a challenge (for any of the reasons listed above).  Under English law, s73 AA1996 requires any objections to be made promptly. That means they need to be made at least by the time you take the first active steps in the proceedings. 

When do you need to respond?  

You need to check by when you need to file your Response to the Request for Arbitration. If your arbitration agreement states that a dispute has to be arbitrated by a particular arbitration centre, the time by when you need to respond are typically set out in that arbitration centre’s rules. If there are no rules specified, you should check what the position is under local law which applies to your arbitration agreement. There is no prescribed rule under the AA1996 by when you need to respond unless it is specified in arbitration rules referred to in your arbitration agreement. But you should in any event look to respond early so you can raise any objections you have or participate in selecting who the arbitrator(s) is.

Should you seek legal advice?  

This is a decision ultimately for you but engaging lawyers as early as possible can be of huge assistance, as they can advise you not only as to the merits but on what your response should be, how to best deploy a strategy for the case and on whether the matter can be settled early.
 

For more information about the matters above, please speak to the authors of this article.   

For more information about:

• what arbitration is, please see here
• what benefits arbitration may provide parties in a post coronavirus and Brexit world, please see here