What exactly do you have to arbitrate in a contract dispute with an arbitration clause?  In light of the House of Lords' reformulation of the English approach on Wednesday - the Times is calling it landmark, and English lawyers think it is a "big win for London arbitrators" - it seems wise to check in with Susan Franck.   She says - if I got the gist of our interaction right - that “arising under” language in contracts has been more narrowly tailored in the UK than “arising out of or related to” language – which meant there was more scope to go straight to court if the "arising under" language appeared in the dispute settlement part of the contract.

German courts never bought this rather technical distinction.  Nor, now, do those in the UK.  On Wednesday, Lord Hoffman held that "the construction of an arbitration clause should start from the assumption that the parties, as rational businessmen, are likely to have intended any dispute arising out of the relationship into which they have entered or purported to enter to be decided by the same tribunal.  The clause should be construed in accordance with this presumption unless the language makes it clear that certain questions were intended to be excluded from the arbitrator's jurisdiction"

Okay, so a clear statement about what's excluded from the scope of arbitration is required before you can go to court on that issue.  How will it play out?  In the case Lord Hoffman decided, the "arising under" language was interpreted severably, so that even a contract induced by fraud could be subject to mandatory arbitration if the parties to the fraudulent contract so agreed.

Which certainly is a broad interpretation of "arising under" language.  I'll leave it to our wise commenters to speculate as to how the new UK rule matches the approach of American arbitrators.

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