The UK Chancery Division held that an arbitration clause relating to any dispute regarding a contractual undertaking to renegotiate port licensing conditions in the event of ‘any major physical or financial change in circumstances affecting the operation’ of the importer’s works, was broad enough to cover a dispute about the fees for the use of the port facilities.
Tata Steel UK imported goods through the deep water harbour at Port Talbot in Wales. Tata had imported steel through the port for over 20 years under the existing licence. They sought a 50% reduction in fees amounting to GBP3.5 million per annum because of an alleged ‘major financial change in circumstances’.
The port authority contended that the dispute over licence fees did not fall within the scope of the matters referred to arbitration. The court held that it would need very clear words indeed before one could construe a clause which envisages a potentially extensive revision of the licence terms as excluding a key element of the bargain such as the fee. Any major physical or financial change in circumstances which affects the operations of the parties’ facilities is likely to affect the fee.
It is hardly surprising that the port authority ‘did not press their contention that the fee was excluded from the terms which the arbitrator could consider’.
The case is Associated British Ports v Tata Steel UK Limited.