Allyn Walton for applicant, Hawkswell Kilvington for respondent
The applicant sought an order for pre-action disclosure but the respondent alleged that the court had no jurisdiction to make the order because the parties had agreed to arbitrate disputes. The parties had entered into a subcontract which was said to incorporate the terms of a separate contract entered into between the respondent and a third party (the main contract). The main contract contained a valid arbitration clause.
The applicant submitted that ordinary contractual principles applied, but the respondent argued that special rules apply to the incorporation of arbitration clauses. In the case of Aughton Ltd v MF Kent Services Ltd , the Court of Appeal was divided as to whether general words of incorporation were sufficient to incorporate an arbitration clause. In Habas Sinai v Sometal (see Weekly Update 03/10), Clarke J drew a distinction between incorporation of an arbitration clause entered into between two other parties or one of the parties and a third party, and incorporation where the same two parties had previously contracted. In the former case, there was a particular need to be clear that the incorporation of the arbitration clause was intended (ie there should be a specific reference to the arbitration clause), whereas in the latter case, no special rules applied. On the facts of this case, the general words of incorporation in the subcontract were not sufficiently clear to incorporate the arbitration clause in the main contract.