PT Thiess Contractors Indonesia v PT Kaltim Prima Coal and another [2011] EWHC 1842 (Comm)

The application before the Court in this case arose in the context of disputes concerning two related agreements dealing with the operation of a coal mine in Indonesia. One was an operating agreement which provided for disputes to be referred first to expert determination, then to arbitration in Singapore. The other was a cash distribution agreement which contained a clause referring disputes to the non-exclusive jurisdiction of the English courts.  

Disputes arose under the operating agreement, and were referred to arbitration in Singapore. The Claimant also commenced proceedings in the Commercial Court seeking to enforce the terms of the cash distribution agreement. The Defendant argued that the issue of whether the Claimant was entitled to enforce this agreement depended on whether it was entitled to receive payment under the operating agreement. That issue, in turn, was one which had to be arbitrated in Singapore. As such, the Defendant submitted that the court should stay the proceedings before it under s.9 Arbitration Act 1996.  

The judge considered that the key issue was the construction of the dispute resolution provisions in the two contracts. In order to consider this, the court had to identify the contract under with which the claims were most closely connected. In the present case this was the cash distribution agreement, which was governed by English law. That there was some degree of overlap with the other contract was not sufficient justification for imposing a mandatory stay.

Where the court is required to consider competing dispute resolution clauses, it will first identify the contract with which the claim is most closely connected. In the context of arbitration this means that, even thought the wording of an arbitration clause may seem broad enough to cover a particular claim, the court will refuse a stay of proceedings where that claim is more closely connected with a different contract