X. Ltd., Y. Corps and Z. v. A. and ICC Sole arbitrator, Salah El Mejri, Esq. [The Lebanese Ski Resort] - Swiss International Arbitration Law Reports (SIALR) - 2007 Vol. 1 Nos. 1 & 2

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17 pages

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December, 2007

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Headnote

Exclusion agreements are admissible only where a number of strict

conditions are met. They must clearly and unambiguously set out the

parties’ mutual intention to waive setting aside proceedings.

Disputes relating to interpretation and construction of a contract are

outside the scope of the principle pacta sunt servanda, and an award

adjudicating on such disputes cannot therefore be reviewed on the

ground that it violates public policy.

The complaint that an arbitrator did not adjudicate on a claim made by

either party (award infra petita) is without foundation whenever the

operative part of the award contains language to the effect that “all other

or further claims are hereby dismissed”.

Summary of the Decision

Investor Z. and companies X. Ltd. and Y. Corps. entered into a contract

with A. The contract required A. to perform several acts and services in

consideration for payment of an amount equal to 20% of the total capital

invested in the project; the contract further provided that A. would

receive 20% of the revenues from the project. The project was not

finalised. A. brought arbitration proceedings seeking payment under the

contract. A sole arbitrator made an award for A. based on a finding that

companies X. Ltd. and Y. Corps. had failed to perform their contract

duties to A. Companies X. Ltd. and Y. Corps. then brought these setting

aside proceedings on the basis that the award was inconsistent with

public policy, and more specifically, inconsistent with the principle pacta

sunt servanda. The petitioners also contended that the sole arbitrator

failed to decide on their claim for damages, and as such ruled infra petita

in violation of article 190(2)(c) FPILA. The respondent contended from

the outset that the parties had concluded a valid exclusion agreement (art.

192 FPILA) barring the possibility of setting aside proceedings.

The Federal Supreme Court first reiterated the principle that exclusion

agreements are admissible only in a restrictive manner, and must clearly

and unambiguously set out the parties’ mutual intention to waive the

setting aside proceedings. The court did not, however, rule on the

validity of the exclusion agreement.