Date: Wed, 13 Nov 2002 12:22:12 +1100

From: Andrew Robertson

Subject: ADR and contract certainty UK-style

Readers of Cable & Wireless v IBM [2002] EWHC (Comm) 2059 may be interested to know that the decision of Colman J is consistent with that of Einstein J in the Supreme Court of NSW in Aiton Australia Pty Ltd v Transfield Pty Ltd (1999) 153 FLR 236. Einstein J held that an agreement to participate in good faith in a properly defined process of mediation as a prerequisite to litigation is enforceable. He found the clause in question uncertain, however, because it failed to make provision for payment of the mediator's costs. The judgment contains a very lengthy discussion of the certainty of an obligation to negotiate in good faith. All dicta, of course, but interesting nonetheless.

Andrew Robertson

At 10:13 AM 12/11/02 +0000, Andrew Tettenborn wrote:

An interesting gloss from Colman J on the notorious Walford v Miles rule in England that you can't have a contract to negotiate in good faith.

In Cable & Wireless v IBM [2002] EWHC (Comm) 2059 a master agreement contains a provision requiring disputes to be first submitted to ADR as suggested by CEDR. C & W sue without submitting to ADR: IBM apply to set aside the proceedings under the Arbitration Act. C & W argue, with some logic, that ADR is by nature a form of non-binding negotiation and either party can duck out at any time: that the obligation to submit to it, if it has any content at all, is therefore an obligation to negotiate in good faith: and that therefore it must be ineffective as a matter of law under Walford. Logical maybe: but Colman J is having none of it. Any agreement to submit to ADR - even one that doesn't introduce the arbitrament of a third party - he suggests is on principle enforceable.

Any thoughts? What price Walford now?

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