Arbitration clauses must be construed liberally to give effect to their essential purpose which is to resolve legal disputes arising from commercial relationships before privately agreed tribunals, instead of through the courts.
When business people choose to arbitrate their disputes they generally intend that all their disputes will be determined by the same tribunal unless they express the wish to exclude any issues from the arbitrator’s jurisdiction in clear language.
There is a presumption in favour of one-stop arbitration.
One of the arbitrating parties in Riversdale Mining Ltd v Du Plessis claimed that the arbitrator who was supposed to deal with ‘existing disputes’ had dealt with an issue that was not an existing dispute at the time of agreeing to the arbitration. The decision complained of related to the impact of one clause of a share subscription agreement on another clause.
It was held to be unbusinesslike and insensible to construe the arbitration agreement in a manner that gave the arbitrator the power to resolve all disputes concerning the validity and enforceability of the agreement but to exclude a dispute regarding the interpretation of the contract. The arbitrator had therefore not committed any irregularity.
When embarking on arbitration, the dispute should be declared and defined as clearly as possible to avoid cases like this. If an arbitrator commits an error of law it is not reviewable by the courts.