This case raised the question how the Court should approach an application for a stay pending arbitration, in circumstances where the parties had agreed that the jurisdiction of any arbitral tribunal should be determined in the first instance by that tribunal and not by the Court.
Lombard and GATX were party to an agreement concerning the finance of train vehicles. The agreement provided for the parties to share in profits and losses from the exploitation of the trains by establishing a joint venture. It further provided that if the parties had been unable to establish a joint venture by a specified date, they agreed to negotiate in faith to achieve the same objectives through other means.
The parties agreed to refer any disputes relating to the creation of the joint venture to arbitration pursuant to the LCIA Rules. Article 23.4 of the LCIA Rules contains an agreement not to apply to Court for any relief regarding the tribunal’s jurisdiction prior to the tribunal’s award ruling on the objection to jurisdiction.
Lombard asked the Court to declare that its sole obligation in relation to the sharing of profits and losses from the exploitation of the trains was an obligation to negotiate in good faith, which was unenforceable. GATX in turn sought a stay pending LCIA arbitration.
Andrew Smith J held that the Court proceedings were “in respect of” a matter which under the agreement was to be referred to arbitration (“a referred matter”) for the purposes of section 9 of the Arbitration Act 1996, because the question whether the agreement to negotiate was enforceable would require the Court to consider the scope of the arbitration agreement (which was a referred matter by virtue of Article 23.4 of the LCIA Rules).
The Judge stayed the proceedings under section 9 of the Arbitration Act 1996, and further indicated that if the threshold requirements of section 9 were not satisfied, the proceedings should be stayed in the inherent jurisdiction of the Court in order to uphold the parties’ agreement that the jurisdiction of the tribunal should only be decided by the tribunal.