The UK Chancery Division held that an arbitration clause, which could be invoked over a dispute whether there had been ‘any major physical or financial change in circumstances affecting the operation’ of Tata Steel which imported goods through a Welsh port, was not void for uncertainty.
The court quoted a nice passage from a previous decision that: ‘The role of the court in a commercial dispute is to give legal effect to what the parties have agreed, not to throw its hands in the air and refuse to do so because the parties have not made its task easy. To hold that a clause is too uncertain to be enforceable is a last resort or, as Lord Denning MR once put it, “a council of despair”’.
The court held that it was possible for an arbitrator to identify whether there had been a major physical or financial change in circumstances. The phrase was not too uncertain for the arbitrator to be able to come to a sensible decision. The wording was not entirely open-ended. There had to be not only a major physical or financial change in circumstances but also one that affected the operation of the harbour or the steelworks. Financial changes that had an impact on the steelwork’s overall situation might not be relevant.
The arbitrator would have to consider the impact of the alleged change in circumstances on the operation of the port facilities and hence on the reasonableness of the terms of the licence. The arbitration clause was not void for uncertainty and created a binding obligation.
The case is Associated British Ports v Tata Steel UK Limited.