Existence of Dispute for Purposes of Obtaining Stay of Judicial Proceedings

Loon Energy, Inc. v. Integra Mining, 2007 WL 2139992, [2007] EWHC 1876 (Queen’s Bench Div., Commercial Ct.)

In this case, the court considered the application of s.9 of the Arbitration Act 1996 which requires it to stay its proceedings if the dispute before it is one falling within the scope of an arbitration clause.  Loon sought and obtained specific declarations in relation to oil exploration rights under English law contracts.  In the meantime, Integra launched arbitration in accordance with the terms of a Texas law confidentiality agreement into which the parties had entered prior to concluding the English law contracts.  Loon amended its own claim for relief to include a declaration that the confidentiality agreement had been superseded.  Integra sought to stay Loon’s application under s.9.  Loon countered that at the time it issued its own claims there was no dispute in existence in relation to the confidentiality agreement and that therefore there was no obligation on the court under s.9.

The court disagreed, finding that it did not have jurisdiction to intervene on the question of whether or not the arbitration agreement remained valid.  This was the province of the Texas tribunal.  There had been no allegation that the arbitration agreement was null and void, inoperative or incapable of being performed.  The court concluded that if it found in accordance with Loon then any arbitration agreement might readily be circumvented by the simple expedient of launching a pre-emptive strike, based on some other aspect of the parties’ contractual relationship not covered by the arbitration agreement, at a time when there was no dispute falling within the arbitration agreement; and indeed that if there was no dispute then there had been no claim in any event.  The issue raised fell fairly and squarely within the remit of the Texas arbitration.