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English Court confirms tribunals have jurisdiction to determine disputes involving allegations of criminal conduct

The English High Court has recently confirmed in Interprods Limited v De La Rue International Limited [2014] EWHC 68 (Comm) that, absent a specific statement to the contrary, arbitration clauses confer jurisdiction on arbitral tribunals to determine contractual disputes arising out of alleged criminal conduct.

De La Rue had terminated an agency agreement with Interprods following an alleged oral admission by Interprods that payments under the agreement would be used to bribe officials (a criminal offence under the relevant laws). The agency agreement contained an arbitration clause pursuant to which De La Rue obtained an LCIA award confirming it had been entitled to terminate. Interprods challenged the award under s67 of the Arbitration Act 1996 on the basis that the court should not construe the arbitration clause as extending to allegations of serious criminal conduct, and that the tribunal therefore lacked jurisdiction to make the award. The Court rejected the challenge, stating that ‘it would seriously restrict the ambit of arbitration clauses … were the allegation of criminal conduct … sufficient to deprive the arbitral tribunal of jurisdiction to determine the contractual rights and obligations in the light of that criminal conduct’. It observed that an arbitration clause would need clear wording stating that contractual disputes dependent on assertions of criminal conduct were to be excluded from the jurisdiction of the tribunal before the court would accept that was what the parties had intended to agree.

The decision reconfirms that in the absence of specific exclusions, arbitration clauses will be held by the courts to have a broad scope. If parties wish to exclude the jurisdiction of an arbitral tribunal in a particular situation, they will need to make that clear through express wording in the arbitration clause.