Whether arbitration had been validly commenced

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One of the issues in this case was whether an arbitration had been validly commenced. The relevant arbitral institution's rules provided as follows:

"1. Any party wishing to commence arbitration under these Bylaws ("the Claimant") shall send us a written request for arbitration…2. When sending the request, the Claimant shall also send [list of various requirements including the name of the nominated arbitrator and the application fee]".

The respondent to the arbitration (and claimant in this case) argued that arbitration was only validly commenced when both 1 and 2 were carried out.

Butcher J rejected that argument. A reasonable person would not conclude that it was a pre-requisite to the effective commencement of an arbitration that the "request for arbitration" should be accompanied by the relevant fee and there was nothing commercially absurd to find that payment of a fee is not a pre-condition to there being an effective arbitration. The judge also rejected an argument that Page v Hewetts (Weekly Update 34/13) applied here. That case had found that a claim form had not been validly issued because it was not accompanied by the appropriate fee. However, that was a case about the commencement of court proceedings and did not help in the construction of the institution's rules in this case.

COMMENT: Limitation periods apply to arbitration claims in the same way as they do for court actions. In court proceedings, this means that the claim form must be issued within the prescribed time period. However, there is no fixed rule for arbitration – the Arbitration Act 1996 ("the Act"), section 14(1) allows the parties to agree the required act. This case therefore contains some useful guidance as to how their agreement might be interpreted in the event of a dispute on the issue.