In a contract which provided that once a dispute arose the parties “shall first seek settlement of that dispute by mediation in accordance with the London Court of International Arbitration ("LCIA") Mediation Procedure” and which went on to say “if the dispute is not settled by mediation within 30 days of the commencement of the mediation or such further period as the relevant parties to the dispute shall agree in writing, the dispute shall be referred to and finally resolved by arbitration under the LCIA Rules”, the question arose as to whether or not in circumstances where there was no mediation first, did the Arbitrator consequently lack jurisdiction? The tribunal itself decided that the answer was no. The claimant disagreed and asked the commercial court to declare that the tribunal lacked jurisdiction under S 67 Arbitration Act 1996 in light of the absence of the mediation.

The court adopted an "admissibility" construction rather than a "jurisdiction" construction of the requirement to submit to mediation and in so doing held that the tribunal did not lack jurisdiction in light of the absence of a mediation. This reasoning follows a Commercial Court decision from earlier this year (Sierra Leone v SL Mining Limited [2021] EWHC 286 (Comm) ) where in similar circumstances (although different wording), the court also upheld jurisdiction.

Dispute escalation clauses providing for mediation in advance of litigation or arbitration are not uncommon. In litigation, the approach of the courts has tended to be to grant a stay of proceedings to allow mediation to take place where an agreement for pre- issue mediation has not been followed. In arbitration, all will of course depend upon the precise words of the dispute resolution clause but it seems that a party seeking to attack the tribunal’s jurisdiction on the basis that an agreement for pre- issue mediation has not been followed is unlikely to succeed. The better course is likely to be to seek a stay from the tribunal to allow mediation to take place.

The approach of the court in this case provides some welcome clarification on the crucial issue of jurisdiction and shows once again that the Commercial Court continues to be supportive of arbitration.

[NWA & ors -v- NVF & ors [2021] EWHC 2666 (Comm)