Toziwepi Ropa v Kharis Solutions Limited

His Honour Judge Charman:

1. This is an application made under the Arbitration Act 1996 (“the 1996 Act”) for an order requiring the Defendant to submit a dispute to arbitration and for the appointment of an arbitrator.

2. The background is that the parties entered into two joint venture agreements dated 17 October 2017 and 1 January 2018, pursuant to which the Claimant would provide working capital for and the Defendant would operate a domiciliary care and nursing home business with the profits to be shared in specified proportions (“the Agreements”). The Agreements do not create a partnership.

3. Most of the detailed terms of the Agreements are not directly relevant to the issues that I have to decide, save that each includes dispute resolution clauses as follows: “54. “The members submit to the jurisdiction of the court of the Country of England for the enforcement of this Agreement and for any arbitration award or decision arising from this Agreement.

55. In the event a dispute arises out of or in connection with this Joint Venture Agreement, the Members will attempt to resolve the dispute through friendly consultation.

56. If the dispute is not resolved within a reasonable period, then any or all outstanding issues may be submitted to mediation in accordance with any statutory rules of mediation. If mediation is not successful in resolving the entire dispute or is unavailable, any outstanding issues will be submitted to final and binding arbitration in accordance with the laws of the Country of England. The arbitrator’s award will be final, and judgment may be entered upon it by any court having jurisdiction within the Country of England.”

4. There is a dispute between the parties as to whether the Claimant has been paid sums due to him under the Agreements and provided with information which the Agreements provide that he is entitled to receive.

5. There has been lengthy correspondence between the parties about the dispute. The Claimant says that the effect of the clauses in the Agreements referred to above is that the dispute must be resolved by arbitration, and he says that he served a Notice to Arbitrate dated 18 February 2025. The Claimant maintains that the Notice to Arbitrate is valid and therefore the Defendant is bound to join in the submission of the dispute to arbitration and the appointment of an arbitrator. The Defendant says that there is no binding arbitration clause which applies in the circumstances of the current dispute and the Notice to Arbitrate is invalid due to defects in its form and its service.

6. The claim was issued in April 2025 and at that time there had been no mediation between the parties. The Defendant applied for security for costs and that application was dismissed by District Judge Rich in July 2025. The parties then attended mediation which was unsuccessful. Accordingly, there has been a mediation, but it post-dated the Notice to Arbitrate.

7. The Claimant’s case is that the provisions set out at paragraph 3 above amount to an arbitration clause, requiring the Defendant to submit that dispute to arbitration and to appoint an arbitrator.

8. The Defendant says not, for four main reasons: (a) the claim itself is defective as the Part 8 Claim form used to bring the claim does not comply with the relevant provisions of the CPR, so that the claim is invalid or should not be allowed to proceed or should be dismissed for that reason in any event. (b) the purported Notice to Arbitrate was not validly served; (c) the provisions to which I have referred do not amount to a compulsory arbitration clause as a matter of their true construction and in the circumstances, the Defendant is not bound to arbitrate; and (d) in any event the Notice to Arbitrate is defective.

9. Those are the four issues which fall to be determined.

10. I have had the benefit of helpful skeleton arguments from counsel for the parties; Mr Porte for the Claimant and Mr Perring for the Defendant. At the first hearing before me, it was apparent that neither party had called evidence going to the validity of service of the Notice to Arbitrate. Therefore, after hearing some argument on the application, by consent, I adjourned the hearing and gave directions for the filing of such evidence. At the adjourned hearing, it became clear during the course of argument that there were matters going to the proper construction of clause 56 of the Agreement which is set out above that had not been anticipated by counsel and which there was insufficient time for them to properly address orally. I therefore directed that the parties file sequential written submissions addressing the questions of what needs to happen for mediation to be “unavailable” for the purposes of clause 56 and whether, on the evidence before the Court, mediation was in fact “unavailable” for the purposes of clause

56. I am grateful to Mr Porte and Mr Perring for their helpful written submissions on those questions.

11. I have read the witness statements and all of the evidence in the hearing bundle to which I have been referred, and considered the submissions made by counsel in the skeleton arguments, their written submissions, and orally. I cannot sensibly summarise everything I heard or read in evidence or determine each and every dispute of fact however tangential its relevance and I do not propose to do so. I have however considered and taken into account everything that was before me and I will refer to the evidence as necessary throughout this judgment. I have attempted to distil into this judgment only such material as is necessary for the parties to understand what I have decided and why. My not mentioning a particular matter should not therefore be treated as my having overlooked it.

12. Before deciding the claim, I observe that the need for it to be brought is at least in part the result of the very poor drafting of the Agreements generally and the dispute resolution provisions in particular. The parties have incurred very considerable costs in this action which could and would have been unnecessary if those provisions had been drafted with a reasonable degree of precision and clarity. The Notice to Arbitrate, to which I refer in more detail below, was also poorly drafted, albeit not as poorly as the dispute resolution clauses themselves. The costs of the claim would be likely to have been significantly reduced if they had been drafted with an appropriate degree of care and precision and by reference to the requirements of section 14 of the 1996 Act. It is also clear from the correspondence between the parties that the approach of the Defendant has been to seek to avoid grappling with the substance of the Claimant’s dispute. This has included delaying responding to correspondence, sending what I regard as “stalling” responses and requesting copies of documents the Defendant obviously already had, or not responding at all and maintaining that clause 56 is a compulsory arbitration clause until the Claimant’s solicitors proposed arbitration and then maintaining that the current dispute is not required to be resolved by arbitration since the Notice to Arbitrate has been served. All of this will be relevant to the question of costs.

13. I shall address the question of the validity of the claim first. If the claim is invalid, the other issues do not arise as there is no valid claim before the Court. (1) Is the claim invalid by reason of defects in the Claim Form?

14. As Mr Perring points out, the claim is made as a Part 8 claim using an Arbitration Claim Form to which CPR Part 62 applies. CPR 8.2 provides: “(1) Where the claimant uses the Part 8 procedure the claim form must state– (a) that this Part applies; (b) (i) the question which the claimant wants the court to decide; or (ii) the remedy which the claimant is seeking and the legal basis for the claim to that remedy; (c) if the claim is being made under an enactment, what that enactment is; (d) if the claimant is claiming in a representative capacity, what that capacity is; and (e) if the defendant is sued in a representative capacity, what that capacity is. (Part 22 provides for the claim form to be verified by a statement of truth)”

15. CPR 62.4 provides: “(1) An arbitration claim form must— (a) include a concise statement of— (i) the remedy claimed; and (ii) any questions on which the claimant seeks the decision of the court; (b) give details of any arbitration award challenged by the claimant, identifying which part or parts of the award are challenged and specifying the grounds for the challenge; (c) show that any statutory requirements have been met; (d) specify under which section of the 1996 Act the claim is made; (e) identify against which (if any) defendants a costs order is sought; and (f) specify either— (i) the persons on whom the arbitration claim form is to be served, stating their role in the arbitration and whether they are defendants; or (ii) that the claim is made without notice under section 44(3) of the 1996 Act and the grounds relied on.”

16. Mr Perring says that the claim form does not set out the remedy sought nor the legal basis for it, nor the enactment under which it is brought as required by CPR 8.2. The same requirements are stipulated in CPR 62.4, as well as the requirement to specify the section of the 1996 Act under which it is brought.

17. As Mr Perring says, these alleged defects in the claim form are not being raised for the first time. They were referred to in the skeleton argument for a hearing before DJ Rich on 16 July 2025, when an application for security for costs was heard. Despite notice of the point being given then, and at a further hearing before me on 28 October 2025, which was adjourned to enable the parties to provide further evidence, no application to amend the claim form has been made.

18. Mr Perring submits that the use of the word must in both provisions means that the requirements contained in them are mandatory. The failure to comply with them means that the claim form is defective on its face. He adds that arbitration is an area of the law where precise compliance should be enforced and the claim form should consequently be declared to be invalid, or the claim should be dismissed by reason of the defective claim form.

19. Before turning to Mr Porte’s response as to the validity of the Claim Form, I observe that, as Mr Porte acknowledged, the claim form is far from a model of its kind, and it is therefore surprising in the circumstances that no application for permission to amend it has been made, even now.

20. The relevant parts of the claim form state: “1. The Claimant seeks an order compelling the Defendant to submit to arbitration, pursuant to arbitration clauses in two agreements. Background

2. In 2018, the Claimant entered two joint venture agreements with the Defendant: a Domiciliary Care Agreement and a Supported Living Agreement.

3. Under the Agreements, the Claimant would provide the initial and working capital to the Defendant to run care homes and staff. The Claimant was entitled to 50% and 41.5% of the profits respectively.

4. Pursuant to the Agreements, the Claimant did provide significant amounts of capital to the Defendant, namely £57,378.00 of initial capital and £86,740.00 as working capital.

5. Although the Claimant did initially receive profits from the joint ventures from May 2021 he was excluded from the joint ventures and has received no accounts, updates, or profits.

6. The Agreements contain arbitration clauses. Agreement to arbitrate was sought in correspondence, and then in a Notice to Arbitrate. However, the Defendant has refused to arbitrate.

7. The Claimant therefore seeks the court's orders and directions for the parties to jointly appoint an arbitration tribunal.”

21. Mr Porte submits that the remedy that the Claimant seeks is stated in paragraph 1 – an order compelling the Defendant to submit to arbitration. Further, the legal basis for it is stated, namely, pursuant to the arbitration clauses.

22. Mr Perring says that the usual relief sought in such a case is a declaration that the defendant is bound to arbitrate and an order compelling submission of the dispute to arbitration. I agree. However, I do consider that while unconventional in form, the claim form does state the remedy sought and the legal basis for seeking it – namely the contractual obligation.

23. As Mr Porte accepts, Mr Perring is correct that the claim form does not state the enactment of the section of the 1996 Act upon which the Claimant relies nor show that any statutory requirements have been met. In my judgment, the claim form also fails to set out the question on which the Claimant seeks the decision of the Court, albeit that the question is obvious from the statement of relief sought.

24. It is then necessary to consider what the consequences of these defects in the claim form are. In doing so, the Court applies the Overriding Objective, in order to deal with the case justly, as stated by the Court of Appeal in Hannigan v Hannigan [2000] 2 FCR

650.

25. It follows that it will only be appropriate to invalidate the claim by reason of defects in the claim form where it would be proportionate and in the interests of justice to do so. If there had been a timely application to amend the claim form to correct the defects, these factors would have carried considerable weight in favour of granting permission.

26. Mr Porte submits that the Court has discretion under CPR 3.10 to rectify matters where there has been an error of procedure. CPR 3.10 provides: “Where there has been an error of procedure such as a failure to comply with a rule or practice direction— (a) the error does not invalidate any step taken in the proceedings unless the court so orders; and (b) the court may make an order to remedy the error.”

27. I consider that for these purposes, consistent with the approach taken by the Court of Appeal in Steele v Mooney [2005] EWCA Civ 96, “error of procedure” should be construed widely and that defects in the content of the claim form are such errors.

28. The application of the overriding objective when exercising the discretion arising under CPR 3.10 is fact specific and depends on all the circumstances of the particular case. There are two authorities which in my judgment are relevant to the approach to be taken in this case. First, Walsham Chalet Park Ltd v Tallington Lakes Ltd [2014] EWCA Civ 1607, which clarifies that the court can and usually should have regard to the well-known Denton principles applicable to an application for relief from sanctions when considering whether to waive the error, invalidate the proceedings by reason of it or to correct the error. Second, General Medical Council v Reddy [2012] EWCA Civ 310, is authority that where a party intending to initiate an appeal uses the wrong form but the form used contains all of the necessary information, that may be treated as an error of procedure capable of being remedied under CPR 3.10.

29. Accordingly, the approach which I should take in this case is to apply by analogy the Denton test, and as part of the third stage of that test, consider whether any unfairness to the Defendant has resulted from the errors in the claim form which I have found.

30. Applying by analogy the Denton test; I do consider the breach of CPR 62.4 in particular to be serious and significant, but not of the most serious nature as the remedy claimed and legal basis of the claim is apparent on the face of the claim form and the Defendant has always known what they are. The reason for the error appears to be simply an error by the Claimant’s solicitors, which is not a good reason. Considering all of the circumstances of the case and applying the overriding objective, a number of matters are relevant.

31. The fact that compliance with CPR 62.4 is not particularly difficult and the fact that even now no application to amend the claim form has been made point against the waiver of the breach of the CPR. So does the importance of ensuring compliance with the CPR. Pointing in favour of waiver are that the extensive correspondence which predates the claim form made clear to the Defendant that the Claimant wished to refer the dispute between them to arbitration and indeed it was the Defendant who had first insisted on reference to arbitration. Further, if the claim form were to be treated as invalid, the long-running issue between the parties as to whether their dispute should be determined by arbitration or by the courts would remain unresolved. It is clear from the correspondence and in particular from counsel’s skeleton arguments for the hearings before me and the hearing in July before DJ Rich, that the Defendant has long been aware of what the issue is that the Claimant is asking the court to determine. The purported Notice to Arbitrate, the effect of which is also in issue, does refer to the applicable provisions of the 1996 Act and the Defendant is not caught unawares or otherwise prejudiced by the procedural errors.

32. I attach significant weight to the fact that even now, the Claimant has not applied to amend the Claim Form to make it compliant and I do not consider that the fact that the Defendant has not made an application to strike it out to be an adequate answer or a countervailing factor of equal weight. However, applying the overriding objective, I do not consider that it would be in the interests of justice to refuse to consider the substance of the claim due to the procedural errors. There has been considerable delay, and the parties have incurred significant costs going to the issue of whether the Defendant is bound to submit the claim to arbitration. It would not be in the interests of justice, including dealing with claims expeditiously and fairly and at proportionate cost, to refuse now, at what is the final hearing of this claim, to simply dismiss it by reason of the errors in the claim form.

33. I am therefore just about persuaded, despite the absence of an application to amend, to effectively waive the procedural errors in the claim form and proceed to hear the claim. However, in the event that the claim succeeds, it is appropriate to take account of the procedural errors in the claim form when considering the question of costs. (2) Was the purported Notice to Arbitrate validly served?

34. A prerequisite to the commencement of arbitration is the valid service of a Notice to Arbitrate. Here, the Defendant contended at the hearing on 28 October 2025 that the purported Notice to Arbitrate had not been validly served. Due to the absence of evidence as to service from either party, the application was adjourned to permit the parties to serve evidence on the question of service, and each did so.

35. The Agreements set out how notices under them could be validly served as follows: “Any notices or delivery required here will be deemed completed when hand delivered, by agent, or seven (7) days after being placed in the post, postage prepaid, to the parties at the address contained in this Agreement or as the parties may later designate in writing.”

36. The evidence filed on behalf of the Claimant is that his solicitor posted the Notice to Arbitrate by recorded delivery to the Defendant’s registered office on 28 February 2025 and that it was delivered on 3 March 2025. The Defendant accepts that something was delivered on 3 March 2025 as the photograph of delivery relied upon by the Claimant shows delivery at the Defendant’s offices, but does not recognise the signature for the document and does not accept that what was delivered was the Notice to Arbitrate, as the Defendant says it does not know what was delivered. The position of the Defendant is therefore in substance, that it cannot put forward positive evidence that the Notice to Arbitrate was not delivered on 3 March 2025, but puts the Claimant to proof.

37. From the evidence put forward by the parties, the most significant parts of which I have referred to, I find that on the balance of probabilities, the Notice to Arbitrate was sent by post to the Defendant on 28 February 2025 and was in fact received by the Defendant on 3 March 2025. The operation of the notices provision in the Agreements means that the deemed date of service is 7 March 2025, but nothing turns on the date. Accordingly, the Notice to Arbitrate was validly served on the Defendant before the claim was commenced in April 2025. (3) Do the Agreements, on their true construction, contain a compulsory arbitration clause?

38. The relevant legal principles as to contractual construction are well-established and are agreed between the parties. Clauses 54 – 56 of the Agreements, which I have set out above, fall to be construed together.

39. The principles of contractual construction are agreed between the parties and were conveniently summarised by Popplewell J in Lukoil Asia Pacific Pte Ltd v Ocean Tankers Pte Ltd [2018] EWHC 163 (Comm) at [8] as follows: “The court’s task is to ascertain the objective meaning of the language which the parties have chosen in which to express their agreement. The court must consider the language used and ascertain what a reasonable person, that is a person who has all the background knowledge which would reasonably have been available to the parties in the situation in which they were at the time of the contract, would have understood the parties to have meant. The court must consider the contract as a whole and, depending on the nature, formality and quality of drafting of the contract, give more or less weight to elements of the wider context in reaching its view as to the objective meaning of the language used. If there are two possible constructions, the court is entitled to prefer the construction which is consistent with business common sense and to reject the other. Interpretation is a unitary exercise; in striking a balance between the indications given by the language and the implications of the competing constructions, the court must consider the quality of drafting of the clause and it must also be alive to the possibility that one side may have agreed to something which with hindsight did not serve his interest; similarly, the court must not lose sight of the possibility that a provision may be a negotiated compromise or that the negotiators were not able to agree more precise terms. This unitary exercise involves an iterative process by which each suggested interpretation is checked against the provisions of the contract and its commercial consequences are investigated. It does not matter whether the more detailed analysis commences with the factual background and the implications of rival constructions or a close examination of the relevant language in the contract, so long as the court balances the indications given by each.”

40. As Mr Perring submits, clauses 54 – 56 of the Agreements are multi-tiered dispute resolution clauses which are to be read together and interpreted in a unitary manner in accordance with the principles set out in Lukoil.

41. As I have observed, and is agreed by both counsel, the Agreements generally and the dispute resolution provisions in particular are badly drafted. Lord Neuberger in Arnold v Brittan [2015] UKSC 36 at [18], stated that where an agreement is badly drafted, greater emphasis may be placed on the background to the Agreements and commercial commonsense in determining its meaning.

42. Clause 54 is primarily a jurisdiction clause providing that the English courts have jurisdiction to enforce the Agreements and any arbitration award arising from it. It includes the words “the enforcement of this Agreement and for any arbitration award or decision …”. This makes clear that it is anticipated that at least some disputes will be resolved by arbitration. The Defendant maintains that the use of the word “and” means that enforcement of the Agreement itself, and not just an arbitration award, is available using the English courts. If clause 54 were to be construed in isolation, or clause 56 were absent or differently drafted, that would be right. However, clauses 54 and 56 must be construed together as part of the whole of the agreement between the parties and due to the poor drafting of clause 56, the position is not so clear. Further, the current application to determine the effect of the arbitration provisions and to enforce them is an example of the jurisdiction of the courts under clause 54 which is separate from the enforcement of an arbitration award.

43. Clause 55 adds little, simply providing for friendly consultation to seek to resolve disputes. It seems doubtful that it was followed but neither party seeks to rely upon it.

44. Clause 56 is the key clause for current purposes. The first sentence provides that any or all unresolved disputes “may” be submitted to mediation. That sentence on its own does not create a compulsory mediation clause. However, the clause must be construed as a whole, and the following sentence is also relevant to whether mediation is compulsory.

45. The second sentence is the main source of disagreement between the parties. It provides: “If mediation is not successful in resolving the entire dispute or is unavailable, any outstanding issues will be submitted to final and binding arbitration …”. The language used has the effect that any disputes which are caught by the sentence must be referred to arbitration. That much is agreed. The disagreement is as to which disputes are caught. The Claimant says it catches all disputes. The Defendant says that it only applies to those disputes which were referred to mediation.

46. Mr Perring submits that clause 56 only applies at a party’s election. A party can elect to refer a dispute (which may be all or one of several disputes between the parties) to mediation. If mediation does not resolve the dispute referred, then that dispute must be resolved by arbitration. He says that the words “any outstanding issues” have the effect that mediation, or at least an attempt at mediation, is a precondition for arbitration, as otherwise, those words would be given no meaning. The last part of that submission does not take into account the obligation under clause 55, but the first part of the submission accords with the natural meaning of the words.

47. Mr Perring emphasises the words of Lord Neuberger in Arnold v Brittan at [17], that commercial common sense and the surrounding circumstances should not be invoked to undervalue the importance of the language of the provision itself. He says that the structure of clause 56 and the second sentence of it is an ‘if-then’ structure, so that the first sentence permits mediation and the second sentence provides that if there is mediation then should the mediation not be successful, any dispute not resolved by mediation must be submitted to arbitration. As Mr Perring submits, if that is correct then there are two pathways (only) to arbitration. Either where mediation is attempted but unsuccessful in resolving the entire dispute or where mediation is “unavailable”.

48. It also follows from this analysis that although clause 56 does not compel mediation but makes it optional, mediation is compulsory if a dispute is to be referred to arbitration in that before an arbitration of a particular dispute can take place, the dispute must either be referred to mediation or it must be established that mediation is unavailable. The question of what is meant by mediation being “unavailable” is a separate one the significance of which depends upon whether mediation or attempted mediation, is on the true construction of the Agreements, a condition precedent to arbitration.

49. I find Mr Perring’s submission compelling as a matter of linguistic analysis. However, I also need to consider the effect of such a construction as a matter of commercial commonsense before arriving at the true construction of the Agreements.

50. The effect of the purely literalist approach advanced by Mr Perring is curious in a number of respects. If it is right, then, assuming that the obligation to mediate first is binding, if any party or the parties together wish to hold a mediation they will as a consequence be compelled to then move to arbitration if the mediation fails, but if they do not first hold a mediation they will not be entitled to require the other to submit to arbitration rather than proceed via litigation. In my judgment, this makes no practical sense. I can see no reason why the suitability or desirability of arbitration depends upon whether a dispute has or has not been referred to mediation. Further the inclusion of a multi-tiered dispute resolution clause commencing with provision for ‘friendly consultation’ then escalating through mediation and then arbitration if a party opts to go down that route, or straight to litigation if they do not, makes no sense either. Parties who take the trouble to include provision for ‘friendly consultation’ and then for mediation would not be expected to make the offering of mediation dependent on whether a party wishes to proceed ultimately to arbitration or litigation. No reason why they would do so has been put forward.

51. It is also, in my judgment, unlikely that parties who choose to include an arbitration provision in their agreement intend that whether any dispute is determined by arbitration is to be optional and conditional on whether a party wishes to or is willing to attempt mediation before moving to determination of the dispute. I bear in mind that when the Agreements were made in 2017 and 2018, the current approach of the courts to compel mediation in suitable cases was not present. Agreements which provide for some disputes to be resolved by arbitration and others by litigation usually do so by distinguishing between different types of dispute – commonly disputes with significant specialist technical features being determined by an arbitrator with relevant technical expertise.

52. The subject matter of the Agreements is not technical. The disputes which may arise under them were always very likely to be financial and the reason for including an arbitration provision would be very likely to be confidentiality.

53. Clause 56 provides that “any or all” outstanding issues may be submitted to mediation. If Mr Perring is right, that would mean that a party raising several disputes could pick and choose between litigation and arbitration, referring some to mediation but not others, with those referred to mediation then being determined by arbitration and the others by litigation. This involves different forums being used to determine different disputes arising under the same contracts at the same or about the same time, which would be curious. Even more curiously, it would involve parties with a number of disputes holding a mediation at which they attempt to resolve one or some but not all of their disputes. Proceeding in that way not only makes no commercial sense but is likely to be unworkable in practice. Parties at mediation and any other settlement process are usually only willing to conclude a settlement that resolves all of the issues between them. Whilst it is not impossible that parties may be willing to resolve some disputes and not others, a regime which is designed to expressly permit a party to call for and attend a mediation where only some of the issues between the parties are to be addressed is, in my judgment, unlikely to have been intended by commercial parties.

54. It is also inherently unlikely, in my judgment, that parties to contracts in the form of the Agreements would include an arbitration clause with the intention that arbitration may be used to resolve a dispute only if both parties agree to refer a dispute between them to arbitration. Such a provision would serve no practical purpose as parties to a dispute can always agree to refer it to arbitration. The arbitration provision only makes sense if it enables a party to a dispute to compel the submission of that dispute to arbitration. Parties to a contract containing a compulsory arbitration clause can, of course, always agree that notwithstanding the clause, their dispute will be determined by litigation.

55. Having considered and taken into account all of these matters, in my judgment, the true construction of clause 56 and of the Agreements is that all disputes are to be determined by arbitration. The Agreements are badly drafted and the literal meaning of the words used when read as a whole is not clear but tends to point the other way. However, when the practical effect of the alternative constructions is considered, commercial commonsense points strongly to this conclusion. This is what a person who has all the background knowledge which would reasonably have been available to the parties in the situation in which they were at the time of the contract, would have understood the parties to have intended. Mediation as a condition precedent?

56. Clause 56 also provides that the submission of a dispute to arbitration is to occur “If mediation is not successful in resolving the entire dispute or is unavailable”. The meaning of mediation not being successful in resolving the entire dispute is obvious and not in dispute. What amounts to mediation being “unavailable” is not and is addressed in counsels’ written submissions.

57. Mr Porte for the Claimant submits that the wording of the mediation provision is entirely permissive and the mediation part of clause 56 is too uncertain to create a binding obligation to go to mediation. He points to the judgment of Moore-Bick LJ in Sulamerica CIA Nacional de Seguros SA v Enese Engenharia SA [2012] EWCA Civ 638 that for a clause to be a binding clause requiring mediation it must include unequivocal requirement for mediation and be sufficiently certain as to what is to occur.

58. Mr Porte also relies upon the judgment of Ramsey J in Holloway v Chancery Mead [2007] EWHC 2495 (TCC) at [81], that such a clause should meet three requirements. They are that (1) the process must be sufficiently certain in that there should not be the need for another agreement at any stage before matters can proceed; (2) the administrative process for selecting a party to resolve the dispute and to pay that person should be defined; and (3) the process or at least a model of the process should be set out so that the detail of the process is sufficiently certain. I accept Mr Porte’s submission that in order to be enforceable, a mediation provision needs to meet those requirements. The submission is supported by the relatively recent decision of Joanna Smith J in Children’s Ark Partnerships Ltd v Kajima Construction Europe (UK) Ltd [2022] EWHC 1595 (TCC). In that case, it was held that a dispute resolution clause which did not contain a meaningful description of the process to be followed was not sufficiently clear or certain to create a binding obligation.

59. Mr Porte submits that clause 56 does not meet all or indeed any of these three requirements. Mr Porte also submits (in the alternative) that mediation requires the consent of both parties, so that mediation is “unavailable” where both parties do not consent to it.

60. Mr Perring for the Defendant submits that the meaning of mediation being “unavailable” means the presence of an objective impediment to mediation taking place. He says that if it extends to a party’s preference not to mediate, it would be deprived of all meaning, removing the distinction in the wording between mediation being unsuccessful and it being unavailable. Accordingly, it would render what is clearly intended to be a multi-tiered dispute resolution clause devoid of any real structure.

61. Mr Perring does not engage directly with Mr Porte’s submission that the provision for mediation is unenforceable, but submits that there is a clear and important distinction to be drawn between a mediation provision being sufficiently certain to be enforced or compelled and whether a tiered dispute resolution clause operates as a matter of proper contractual construction to determine when an arbitration may be commenced. Mr Perring relies on Tang v Grant Thornton International Ltd [2012] EWHC Civ 3109 (Ch). In that case, at [60] – [61], Hildyard J said: “[60] In the context of a positive obligation to attempt to resolve a dispute or difference amicably before referring a matter to arbitration or bringing proceedings the test is whether the provision prescribes, without the need for further agreement, (a) a sufficiently certain and unequivocal commitment to commence a process (b) from which may be discerned what steps each party is required to take to put the process in place and which is (c) sufficiently clearly defined to enable the court to determine objectively (i) what under that process is the minimum required of the parties to the dispute in terms of their participation in it and (ii) when or how the process will be exhausted or properly terminable without breach. [61] In the context of a negative stipulation or injunction preventing a reference or proceedings until a given event, the question is whether the event is sufficiently defined and its happening objectively ascertainable to enable the court to determine whether and when the event has occurred.”

62. I accept Mr Perring’s submission that this passage from the judgment of Hildyard J is an accurate statement of the law.

63. I agree with Mr Porte that the provision for mediation in clause 56 does not meet the requirements set out by Ramsey J in the Holloway case in that it does not set out a process that is sufficiently certain that there is no need for further agreement for a mediation to proceed and the administrative process for selecting the mediator and paying them is not defined. Therefore, the provision for mediation is not sufficiently certain to be capable of enforcement.

64. As to whether it contains what was said by Hildyard J to be necessary; in my judgment clause 56 properly construed contains a positive obligation to submit a dispute to mediation before it can be the subject of arbitration. Although the use of the word “may” is permissive, the clause goes on to provide that submission of a dispute to arbitration is conditional on mediation of it being unsuccessful or being unavailable. Therefore, it does create a positive obligation to attempt to resolve a dispute by mediation before referring it to arbitration.

65. I find that the test set out by Hildyard J at paragraph [60] of this judgment in Tang is not met here. In order for mediation as required by clause 56 to take place, it would be necessary, at the least, for the parties to further agree on the identity of the mediator or how and by whom a mediator is to be appointed if they do not agree, and also on where responsibility for the fees of the mediator and the costs of staging the mediation are to fall. It is also unclear from clause 56 what is the minimum required to be done by the non-referring party.

66. It follows from this that clause 56 does not create any obligation to submit a dispute to mediation as a condition precedent to submission of the dispute to arbitration. Therefore, the fact that there had been no mediation when the Claimant purported to serve the Notice to Arbitrate is not fatal to his application. Mediation “unavailable”?

67. As it was a matter which was fully argued, and in case I am wrong as to whether submission to mediation was a condition precedent to arbitration, I will also consider whether mediation was in any event “unavailable” in this case.

68. I agree with Mr Perring that mediation is not “unavailable” where a party wishing to have a dispute determined chooses not to seek mediation. However, in my judgment, Mr Porte is correct that where one party seeks to submit a dispute to mediation and the other refuses or simply fails to respond, then mediation is unavailable. Mediation is a consensual process and clause 56 provides no mechanism for the appointment of a mediator where the parties do not agree on such an appointment. In those circumstances, mediation is “unavailable” as it is not in fact possible for mediation to take place. In such circumstances, it seems to me that to use Mr Perring’s term, there will be an objective impediment to mediation taking place.

69. Therefore, if submission to mediation and mediation not being successful in resolving the whole dispute or mediation being unavailable is a condition precedent to arbitration, then where one party proposes mediation and the other either refuses, refuses to agree to the appointment of a mediator or simply fails to respond, mediation is “unavailable” for the purpose of clause

56.

70. By reason of my conclusion that clause 56 does not create a binding condition precedent of mediation before referral of a dispute to arbitration, nothing turns on whether in fact mediation was unavailable here. However, that was also the subject of argument and I therefore address it, albeit briefly.

71. For mediation to be “unavailable” within clause 56, it must be proposed in respect of a dispute by the party who then seeks arbitration of that dispute and then not be possible in practice, including because the other party fails or refuses to agree to the appointment of a mediator. In my judgment, that requires the referring party to expressly propose mediation and to either propose a mediator, invite the other party to propose a mediator, or propose a mechanism by which a mediator may be identified and appointed.

72. The Claimant’s then representative, by its letter dated 15 October 2021, proposed a “tabletop” meeting to seek to resolve the dispute. That was a proposal for “friendly consultation” in accordance with clause 55 but was not a proposal for mediation.

73. I have reviewed the correspondence included in the hearing bundle and can find no clear and unequivocal proposal of mediation by the Claimant, let alone a proposed mediator, invitation to propose a mediator or proposed mechanism for the appointment of a mediator. It follows that as at the date on which the Claimant purported to serve the Notice to Arbitrate, mediation had not become unavailable, as it not been proposed or attempted. However, mediation did in fact take place after the hearing before DJ Rich in July, so the current position is that mediation was unsuccessful. Is the Notice to Arbitrate Valid and Effective?

74. As Mr Perring submits, the basis of the court’s jurisdiction to appoint an arbitrator under the 1996 Act is that a valid notice to arbitrate has been served and arbitral proceedings have therefore commenced.

75. The Defendant challenges the validity and effectiveness of the Notice to Arbitrate on two grounds. Mr Perring says that in order to be valid and effective the Notice must require the Defendant to appoint an arbitrator and that it must identify the dispute being referred to arbitration with sufficient precision. Mr Perring submits that the Notice to Arbitrate does neither. Appoint an arbitrator

76. In common with the Agreements, the Notice to Arbitrate is not well drafted. It provides at paragraph 15, that it is served on the Defendant “requiring you to agree to the appointment of an arbitrator. The arbitration scheme we propose is the Cost-Controlled Expedited Arbitration Scheme.”

77. I have set out clause 56 above. It does not make any provision as to who is to appoint an arbitrator. In the absence of agreement for a third party to appoint an arbitrator, it is for the parties to agree to make the appointment and for the court to do so if they are unable to agree on the identity of the arbitrator. The parties may also agree when arbitral proceedings are to be regarded as commenced, but where, as here, they do not do so, section 14 of the 1996 Act applies. Section 14 (4) provides: “Where the arbitrator or arbitrators are to be appointed by the parties, arbitral proceedings are commenced in respect of a matter when one party serves on the other party or parties notice in writing requiring him or them to appoint an arbitrator or agree to the appointment of an arbitrator in respect of that matter.”

78. Mr Porte submits that a broad and flexible approach must be taken to the consideration of whether a notice complies with section 14 (4). He relies upon HHJ Mackie QC’s summary of the authorities on the approach to the provision in Bulk & Metal Transport (UK) LPP v Voc Bulk Ultra Handymax Pool LLC [2009] EWHC 288 (Comm) which was approved by Eder J in Finmoon Ltd v Baltic Reefers Management Ltd [2012] EWHC 920 (Comm). HHJ Mackie QC emphasised the importance of substance over form when considering whether a notice is effective and whether it makes clear that an arbitration clause is being invoked and the other party is being called upon to take steps consequential on that. Eder J adopted HHJ Mackie QC’s analysis at [61] as follows: "HHJ Mackie QC summarised the effect of the cases in the following way: i. A broad and flexible approach must be adopted with respect to the effect of s14(4) . ii. The requirements of that section will be satisfied provided that it is objectively clear that a communication is intended to refer a dispute to arbitration and to require the necessary steps in that regard to be taken. In that regard the communication must be viewed in its context and not taken in isolation. iii. A communication will satisfy that test if, by its wording (construed in a matter which is not unduly strict, scrutinous, technical, legalistic or formulaic, and which focuses upon its substance rather than its form) that intention is objectively express or implied. iv. That intention will be implied from a communication which simply demonstrates that an arbitration clause is being invoked, or which intimates that a dispute is to be submitted to arbitration or that an arbitration is to be resorted to, or which states to the effect that ‘I demand the right to have this dispute decided by arbitration as we agreed and require your co-operation in bringing about’ or ‘I require the difference between us to be submitted to arbitration’ or ‘unless you are prepared to make proposals for settlement, you must take this letter as requiring you to appoint your arbitrators'. v. A communication which makes the invocation of the arbitration clause conditional upon the failure to accept an offer of settlement will also suffice, provided that the time of commencement is made clear (by way of a time limit for acceptance of any proposal). Thus, a communication to the effect of ‘Unless you are prepared to settle the matter amicably, we must ask you to agree to the appointment of an arbitrator’ will suffice to commence proceedings as from the expiry of the stated time limit for acceptance. I respectfully agree with that summary of the applicable principles.”

79. I also agree and adopt that approach when considering the Notice to Arbitrate in this case.

80. Mr Perring relies upon the decision of HHJ Jack QC in Vosnoc Ltd v Transglobal Projects Ltd [1998] 1 WLR 101 where HHJ Jack QC decided that to commence arbitral proceedings and to stop time running, a notice needed to expressly or impliedly request that an arbitrator be appointed and that a communication which merely stated that the dispute was referred to arbitration did not either expressly or impliedly request the defendants to nominate an arbitrator. I note that Vosnoc was not referred to by Eder J in Finmoon.

81. Whether there is a difference between the decision in Vosnoc and the decision in Finmoon is not a matter that I need to decide as in my judgment there is a material difference between the notice in Vosnoc and the Notice to Arbitrate here. In Vosnoc the notice stated: “By this letter the dispute between our respective companies is referred to the arbitration of three arbitrators in London pursuant to the provisions of clause 17.8 of the contract of affreightment such arbitration to be conducted in accordance with the rules of the London arbitrators.”

82. There is no reference at all to the appointment of any arbitrator by either party. In this case the Notice to Arbitrate states “… we serve on you this notice in writing requiring you to agree the appointment of an arbitrator.” That difference means that Vosnoc can and should be distinguished.

83. In my judgment, applying the broad and flexible approach referred to in Finmoon, the Notice to Arbitrate does by its wording clearly intend to refer the dispute identified in the Notice to Arbitrate referred to in it to arbitration and it does actually refer to the requirement for the Defendant to agree the appointment of an arbitrator. The Notice to Arbitrate does, expressly, and if not by clear implication, require the Defendant to appoint an arbitrator. It is therefore not rendered an ineffective or an invalid notice by reason of a failure to do so. Identification of Dispute

84. Mr Perring relies on a passage in Mustill & Boyd: International Commercial Arbitration (3rd ed) at 7.19, which states: “To be effective, a notice of arbitration has to identify the dispute to which it is related with sufficient particularity. In order to ascertain whether a tribunal as constituted has jurisdiction to determine a particular dispute or claim it is necessary to look at objectively what has passed between the parties to the reference.”

85. Mr Perring also relies upon the quotation with approval of a passage in Russell on Arbitration from Global Aerospares Ltd v Airest AS [2023] EWHC 1430 (Comm) at [24] that the notice must be objectively clear as to who is being required to do what. Mr Perring submits that unless and until a notice to arbitrate sets out what the dispute is that is to be arbitrated, an arbitration cannot have commenced.

86. Mr Porte again relies on Finmoon. He relies on both the passage to which I have referred above and Eder J’s words at [59], that the nature of the dispute must be communicated to the other party but that a broad and flexible interpretation is what should be undertaken and the test is whether “it is clear on objective grounds that arbitration in respect of the relevant dispute has been commenced …”.

87. Mr Porte also submits that the Notice to Arbitrate should not be considered in isolation and that the communications about the nature of the dispute in prior correspondence between the parties must be considered.

88. In my judgment, the passages in Finmoon relied upon by Mr Porte and the passage from Mustill relied upon by Mr Perring are essentially different ways of expressing the same thing. It is necessary that the extent and limits of the dispute being referred to arbitration must be capable of being clearly identified from an objective view of the relevant notice to arbitrate. However, a broad and flexible approach should be taken when doing so. As well as looking at the notice itself, as stated in the passage in Mustill to which Mr Perring referred, what has passed between the parties to the reference prior to the service of the notice may be considered. What is necessary is that the arbitral tribunal would be able to determine what it is that has been referred to it to decide and hence the limits of its jurisdiction.

89. Applying that approach here, the Notice to Arbitrate itself contains a broadly accurate summary of the Agreements, including that they provide that the Claimant “was to receive 50% of the profits.” It also has a subheading “The Dispute”, under which it sets out the capital contributions paid by the Claimant in accordance with the Agreements and then states: “Mr Ropa did initially receive profits from the business on a regular basis. However in May 2021 Mr Ropa was excluded from the email account he had and refused access to the premises of the business. His calls, messages and WhatsApps went unanswered. Further, Mr Ropa has not been given access to any accounts to calculate what is owing to him under the profit share agreement. This is a relevant point when it comes to our client’s inability to quantify his loss.”

90. It is not necessary for the Notice to Arbitrate to define the dispute with the level of precision and particularity which would be required in a statement of case. Therefore, its failure to set out what the Claimant has in fact received by way of profit share and when is not fatal. Whilst I am aware from the Claimant’s witness statement and skeleton argument that his claim is that he has not been paid his profit share, the Notice to Arbitrate does not actually say that. The only express complaint is that he has not been provided with access to accounts in order to calculate what is due to him. Accordingly, whilst it is objectively clear on the face of the Notice to Arbitrate that there is a dispute as to whether the Claimant has been provided with the access to information to which he says he is entitled under the Agreements, it is not clear that he claims that he has not been paid sums due to him by way of profit share or as repayment of capital.

91. In my judgment, it follows from the authorities to which I have referred that it is permissible and where necessary, appropriate to also consider the correspondence passing between the parties. Mr Perring submits that the case advanced by the Claimant in correspondence has changed over time. That is correct. In 2021, the Claimant’s then representatives asserted that the joint venture was operated by a company and then (in a separate communication) that Claimant alleged unfair prejudice within section 994 of the Companies Act 2006. Those contentions were powerfully responded to by the Defendant’s solicitors. This is unsurprising as they were clearly incorrect.

92. However, a letter dated 2 November 2023 from the Claimant’s then solicitors, Stephenson Harwood, sets out his claim for profit share payments and for repayment of specified capital advances, each of which are said to be due to the Claimant in accordance with the terms of the Agreements. That letter was the subject of a substantial response from the Defendant’s solicitors. The respective solicitors then engaged in correspondence as to whether the dispute raised by Stephenson Harwood’s letter must be referred to mediation before it can be submitted to arbitration – at that time the Defendant’s stated position had changed from asserting that any claim should be brought by litigation in response to a statutory demand which has been served by the Claimant, to asserting that clause 56 of the Agreements amounted to a compulsory arbitration clause.

93. The Stephenson Harwood letter of 2 November 2023 did set out clearly what was in dispute between the parties and stated that proceedings would be issued to recover the sums claimed in it. The Defendant’s solicitors replied on 15 March 2024 rejecting the claim and asserted that it was in any event caught by the arbitration clause. Stephenson Harwood responded on behalf of the Claimant in a letter dated 23 July 2024, pointing out that the Defendant had previously asserted that the dispute was a matter for litigation but that if the Defendant considered that the arbitration clause applied then the Claimant would proceed by arbitration, and proposed the CIArb Business Arbitration Scheme which is also proposed in the Notice to Arbitrate.

94. There is no further correspondence in the evidence before me until the purported Notice to Arbitrate on 18 February 2025.

95. In my judgment, whilst Mr Perring is correct that over the course of correspondence the Claimant’s case changed (as did the Defendant’s), by the time of the Notice to Arbitrate, the correspondence from Stephenson Harwood had set out the dispute with sufficient particularity and it is clear from a review of the correspondence as a whole that it is the claim advanced in correspondence by Stephenson Harwood which is what is being referred to in the Notice to Arbitrate.

96. It follows that looking objectively at what has passed between the parties, including both the Notice to Arbitrate itself and the correspondence which preceded it, the dispute which the Notice to Arbitrate seeks to refer to arbitration is identified with sufficient particularity to commence the arbitral proceedings as provided for in section 14 of the 1996 Act. Conclusion

97. It follows from my decisions on the issues raised, that the Claimant’s application should be granted in that he is entitled to a declaration that the dispute he raises with the Defendant as to rights under the Agreements be referred to arbitration and to an order for the appointment of an arbitrator. The parties should seek to agree a form of order consequential on this judgment. If they are unable to do so, the matter will be listed for a hearing to determine what consequential orders should be made.