In a case dated May 2010 but only recently made available on Bailii, the High Court has held that a party seeking the appointment of an arbitrator only has to satisfy the court that there is an arguable case that there is an arbitration agreement. The defendant made an application to the court, on the basis that there was no arbitration agreement between the parties and that there was a claim pending in the US by it and other parties against the claimants, in respect of the same subject matter. The claimants asserted that there was a binding arbitration agreement, claiming that the relevant contractual relationship between the parties was based on an agreement between different parties, but which bound all subsequent parties. Both parties accepted that there was an arguable case that an arbitration clause existed.

One of the issues the court had to decide was whether, in an application for the appointment of an arbitrator under section 18 of the Arbitration Act 1996, in default of agreement by the parties, the issue to be resolved was whether there was an arbitration agreement, or whether there was simply a good arguable case for an arbitration agreement.

Burton J held that the correct test on section 18 was whether there was an arguable case. The principles of party autonomy and kompetenz-kompetenz underlined the fact that arbitrators must and are entitled to decide not only issues, but also their own jurisdiction. Although there are occasions where the court will intervene, none of these applied in this case.

Its seems that this is the first time a court has directly considered this issue. In Vale do Rio v Shanghai Bao Steel [2000] 2 Lloyd's Rep 1, the court left the section 18 issue open (although it said that the court would probably only require an arguable case) and the matter was overlooked at first instance in Midgulf International Ltd v Groupe Chimique Tunisien [2000] 2 Lloyd's Rep 411 and it was considered too late for the point to be taken on appeal.

However, Burton J confirmed that it was clear that the authorities pointed in one direction, namely, that:

One way around this would have been for the defendant to make an application to the court under section 72 of the Arbitration Act 1996 (a person alleged to be a party to arbitral proceedings but who takes no part in the proceedings may question the validity of the arbitration agreement). However, in the absence of such an application, it was not appropriate for the issue to be tried by the court under section 18.

Case: Noble Denton Middle East and another v Noble Denton International Ltd [2010] EWHC 2574 (Comm) (7 May 2010).