CA considered that the real issue was whether the parties intended that the question of fulfilment of the condition precedent should be determined by the arbitral tribunal. Applying Fiona Trust, CA held that the parties did so intend, as rational businessmen would likely have intended any dispute arising out of their relationship (including compliance with pre-arbitration conditions) to be decided by the same tribunal. Such interpretation was also in line with the object of the Arbitration Ordinance to facilitate the fair and speedy resolution of disputes without unnecessary expenses.

CA therefore ruled that fulfilment of the pre-arbitration condition was an issue of admissibility, rather than jurisdiction, and should be regarded as a dispute falling within the terms of the submission to arbitration.

Concluding remarks

The Court of Appeal decision reflects the growing judicial tendency to minimise interference with arbitral proceedings and to give commercial interpretation to arbitration agreements. Rational businessmen are likely to have intended any dispute arising out of their relationship to be decided by the same tribunal. If parties truly intend to exclude certain disputes from the arbitration agreement, such exclusion should be expressly stipulated in the agreement in the clearest language possible.

Client Alert 2022-160