Lloyd's Maritime and Commercial Law Quarterly
SCOTTY. AVERY AGREEMENTS
D. Rhidian Thomas *
1. Introduction
Arbitration agreements are a special kind of contract which prevail within the general framework of the law of contract and which in common with special contracts generally have developed distinctive features as a natural and necessary incident of their province of operation.1 They assume a legal significance in two quite distinct guises.
In their traditional and orthodox form, arbitration agreements establish a private and domestic procedure for the resolution of existing or future disputes or differences as an alternative to the constitutional and public courts of law.2 Although substantive in characterization,3 the quintessential essence of such an agreement is procedural, for its overriding purpose is to establish and animate a procedural mechanism.4 Arbitration agreements in their ordinary form possess two general and salient features.
In the first place, they are wholly independent of and distinct from the cause of action which establishes the claim referred.5 In other words, liability is unconnected with the existence of the arbitration agreement. Apart from the arbitration agreement, there is an existing and complete cause of action which is capable of being compromised or pursued in the courts.6 For this reason the arbitration agreement is often described as collateral.7 The independence of the cause of action
* Professor of Law, University of East Anglia.
1. See generally Mustill and Boyd, Commercial Arbitration, 2nd edn. (1989) (hereafter “Mustill & Boyd”), Part II.
2. Northern Regional Health Authority v. Derek Crouch Construction Co. Ltd. [1984] Q.B. 644, 670, per Sir John Donaldson, M.R.: “Arbitration is usually no more and no less than litigation in the private sector.”
3. Thus, the governing law of an orthodox arbitration agreement is not the lex fori but the proper law of the agreement: Hamlyn & Co. v. Talisker Distillery [1894] A.C. 202; Compagnie d’Armement Maritime S.A. v. Compagnie Tunisienne de Navigation S.A. [1971] A.C. 572. For the conceptual difficulties in which courts on occasions embroil themselves, see National Gypsum Co. Inc. v. Northern Sales Ltd. [1963] 2 Lloyd’s Rep. 499 (Can.S.C.).
4. Woodall v. Pearl Assurance Co. Ltd. [1919] 1 K.B. 593, 607, per Warrington, L.J. To this extent arbitration agreements are analogous to choice of forum clauses. See the analysis of the latter in The Hollandia [1983] A.C. 565, 574–575, per Lord Diplock.
5. Viney v. Bignold (1887) 20 Q.B.D. 172, 176, per Wills, J.: “the covenant to refer was independent of the covenant on which the plaintiff sued.” See also Dawson v. Lord Fitzgerald (1876) 1 Ex.D. 257.
6. See Edwards v. Aberayron Mutual Ship Insurance Society Ltd. (1876) 19 Q.B.D. 563, 584, per Blackburn, J.
7. Roper v. Lendon (1859) 1 E. & E. 825, 830, per Hill, J.: “Here the agreement to refer is collateral to the agreement to pay.”
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