When Is An Arbitration Clause Unenforceable In An International Transaction

(First published in In House Lawyer, May 1997)

When civil action is commenced on a contract which contains an arbitration clause, the court may be asked to rule that it has no jurisdiction because the parties' reference of all disputes to arbitration acts to bar recourse to the courts. Provided that there is a dispute which comes within the scope of the arbitration clause and that reference to arbitration has not been treated as a mere option by the parties, a court in a member state of the 1958 New York Convention on the Recognition and Enforcement of Arbitration Awards, which also governs the enforcement of arbitration agreements, will in such circumstances normally be under an obligation to grant an order to stay court proceedings in favour of arbitration.