In PT Thiess Contractors Indonesia v PT Kaltim Prima Coal and another  EWHC 1842, the Commercial Court refused to grant a stay where arbitration proceedings were ongoing in relation to disputes arising out of a related and overlapping contract.
The dispute concerned two agreements relating to the operation of a coal mine in Indonesia. The Claimant was engaged by the Defendant to perform mining services at the mine pursuant to an Operating Agreement (OA). In the event of a dispute, the OA ultimately prescribed Singapore arbitration. Also of relevance was a Cash Distribution Agreement (CDA), which governed the distribution of the proceeds of coal sales. The CDA referred disputes to the non-exclusive jurisdiction of the English courts.
A number of disputes arose in relation to payments under the OA. These became the subject of arbitration proceedings. Concurrently, the Claimant commenced proceedings in the English courts to enforce the terms of the CDA. Under section 9 of the Arbitration Act 1996 (the Act), the court must grant stays in respect of matters which are to be referred to arbitration proceedings under the relevant agreement.
The Defendant argued that the English proceedings should be stayed under s9 of the Act because the issue of whether the Clamant could enforce the CDA depended on whether it was entitled to receive payments under the OA and this was to be decided in the arbitration proceedings.
The court refused to stay the proceedings, holding that the purpose of the CDA was to provide security whilst disputes under the OA were resolved. It was accepted that there was some overlap between the agreements but the court considered that the correct approach was to follow the dispute resolution provisions in the contract with which the claims were most closely associated. In this case, that was the CDA. Section 9 did not therefore apply, because the CDA did not prescribe arbitration.
This case illustrates that, where presented with competing dispute resolution clauses, the courts will follow whichever agreement is most closely connected with the issues in dispute. This will be the case regardless of any wording in the other contract purporting to take precedence.