The Belgor Case: Towards an Extensive Interpretation and Application of Arbitration Agreements

Abstract

The jurisdiction of an arbitral tribunal only covers issues that fall under the scope of the arbitration agreement. This reflects the consensual nature of the arbitral process. If an arbitration agreement does not cover a specific dispute, the arbitrators have no jurisdiction and a future arbitral award may be set aside or its enforcement may be refused. Therefore it is essential to properly ascertain the scope of an arbitration agreement.
There has long been a debate of whether arbitration agreements should be construed widely or narrowly. There can be no doubt that the current trend in international arbitration is to construe arbitration agreements extensively. Although some jurisdictions apply slightly stricter requirements than would otherwise be the case with respect to the determination of whether an arbitration agreement has been entered into, once such an agreement has been established it is considered that there is no reason for interpreting it narrowly. Favouring a wide interpretation of arbitration clauses avoids the risk of separate proceedings that deal with the same related issues and set of facts. The broad interpretation approach is also typically motivated by an assumption that it is the will of the parties to apply the arbitration agreement to anydispute arising from their commercial relationship. An extensive interpretation would thus correspond to an average and typical hypothetical mutual intention of reasonable commercial parties.