Agreement To Negotiate Held To Be An Enforceable Condition Precedent To Arbitration

This Alert looks at "tiered" dispute resolution clauses (i.e. clauses which purport to provide for a process to be followed before the dispute can be referred to arbitration/litigation). They are commonly found in commercial contracts in numerous guises. Some seek to provide for mediation, some for expert determination and some for negotiation. We look at the recent Emirates Trading Agency LLC v. Prime Mineral Exports Private Ltd. [2014] EWHC 2104 (Comm) case under English law.

Whether or not such clauses are enforceable (i.e. whether or not a party can ignore the tier(s) and proceed straight to arbitration/litigation) is an issue that has been considered by the English courts a number of times in recent years. Although invariably a question of construction, it is clear that, provided the clause is sufficiently certain, it will be enforceable. For example, in Sulamerica Cia Nacional De Seguros S.A. v. Enesa Engenharia S.A. [2012] EWCA Civ 638 a clause