The seminal House of Lords decision in Fiona Trust is best known for setting out the ‘one-stop shop’ presumption vis-à-vis the construction of arbitration clauses. Just as important, but often overshadowed, is the requirement it lays down that a challenge to the validity of the arbitration agreement nestled within a surrounding contract must be directed specifically to the arbitration agreement; a challenge that is merely ‘parasitic’ to a general challenge to the surrounding contact will not suffice to impeach the arbitration agreement.
This article suggests that this dimension of Fiona Trust in fact requires the acceptance of a legal fiction in relation to the parties’ consent to the arbitration agreement (the ‘Legal Fiction of Untainted Consent’, or ‘LFUC’), which ought properly to be recognized. This article then considers the recent Court of Appeal decision in The Newcastle Express, which involved a challenge to the existence of the arbitration agreement premised upon a condition precedent to the existence of the surrounding contract remaining unfulfilled. This article argues that a modified version of the LFUC (the ‘Legal Fiction of Complete Consent’, or ‘LFCC’) can potentially apply to such ‘condition precedent’ cases, and concludes by conceptualizing and defending a potential LFCC doctrine.
Journal of International Arbitration