Hesham Amin Hamza El Nasharty and others v J Sainsburys Plc

[2003] EWHC 2195

Parties who want breadth should be explicit

Facts

This was a dispute arising out of a share sale agreement made in 1999 containing an arbitration clause covering any proceedings in relation to the agreement. The defendant purchaser later alleged breach of warranty, and the claimant vendor alleged that a subsequent agreement in 2001 to extend the warranty had been made without due authority, and so any warranty claim was out of time.

Issues

Whether the dispute over the agreement of 2001 was ‘in relation to’ the 1999 agreement containing the arbitration clause, and thus could be the subject of a stay under section 9 of the Arbitration Act 1996.

Decision

The QBD Commercial Court (Julian Flaux QC) held that it was. ‘In relation to’ included disputes which were in connection with or related to the contract as well as those arising out of it. The present dispute was in effect concerning a variation of the original agreement. The stay was granted.

Comment

A sensible decision giving a reasonable and broad interpretation to commonly used words (‘in relation to’) in arbitration agreements. Nevertheless, this is a first instance decision by a deputy High Court judge. It is suggested that parties who want breadth should be explicit and should insert additional words beyond ‘in relation to’ such as ‘connected with’ and ‘touching upon’.