## Facts

- Nigel Peter Albon (trading as N A Carriage Co), an English motor car dealer, brought proceedings in England against Naza Motor Trading Sdn Bhd, a Malaysian company.
- The claim sought repayment of significant sums said to be owed to Albon for overpayments made in connection with a motor-vehicle distribution arrangement governed by English law (often described in the litigation as the “UK Agreement”).
- Naza applied to stay the English proceedings under section 9 of the Arbitration Act 1996, contending that the parties’ relationship was governed (at least in part) by a written joint-venture agreement (JVA) governed by Malaysian law.
- Naza relied on an arbitration clause in the alleged JVA providing for arbitration in Malaysia and argued the English claim should be halted so the dispute could be arbitrated there.
- Albon refused to participate in the Malaysian arbitration, asserting that his signature on the JVA was forged and that no JVA (and therefore no arbitration agreement) had been made.
- Naza argued that the forgery and validity questions should be decided by the Malaysian arbitral tribunal, and that the English court should stay its proceedings while that occurred.
- The stay application arose against a background of earlier interlocutory steps in the English proceedings (including prior rulings on service out and party status), but the (No. 3) decision addressed the stay request founded on the alleged JVA arbitration clause.

## Issues

1. On an application for a stay under section 9 of the Arbitration Act 1996, must the English court decide whether a valid arbitration agreement was ever concluded where the claimant alleges the underlying contract (containing the clause) is a forgery?
2. Alternatively, is it enough for the applicant to show an arguable arbitration agreement so that the question of authenticity/validity can be left to the arbitral tribunal in Malaysia?
3. If section 9 could not be applied because the existence of any arbitration agreement was not established, should the court nonetheless stay the English proceedings using non-statutory case-management powers in favor of the Malaysian arbitration?

## Decision

- The High Court (Lightman J) refused to stay the English proceedings under section 9 of the Arbitration Act 1996.
- The court held that it was for the court, not the arbitral tribunal, to determine whether the alleged JVA (and its arbitration clause) was authentic and whether any arbitration agreement had been concluded, where forgery was directly alleged.
- Because the existence of an arbitration agreement had not been established to the court’s satisfaction, the statutory basis for a mandatory stay under section 9 was not made out.
- The court also declined to grant a stay through non-statutory case-management powers to send the forgery dispute to arbitration, given that the claimed agreement to arbitrate was itself in serious dispute.

## Legal Principles

- A stay under Arbitration Act 1996 section 9 depends on a threshold finding that an “arbitration agreement” exists; the court must be satisfied that the parties actually agreed to arbitrate before the section 9 stay regime can operate.
- The section 9(4) inquiry (whether an arbitration agreement is “null and void, inoperative, or incapable of being performed”) presupposes that an arbitration agreement has first been shown to exist.
- Where a party alleges it never made the contract containing the arbitration clause—because, for example, its signature is said to be forged—the dispute is about formation/existence, and the court seised of the action must determine that question before staying in favor of arbitration.
- Competence-competence does not give an arbitral tribunal primary authority to decide its own jurisdiction in the absence of a proven arbitration agreement; the tribunal’s jurisdiction cannot be assumed where the agreement to arbitrate is contested at the level of formation.
- The doctrine that an arbitration clause may be treated as separate from the rest of a contract does not resolve a claim that the entire document is not genuine; if the document was never made, a clause within it cannot bind a non-signing party.
- A court’s general case-management power to stay proceedings will not ordinarily be used to force a party into arbitration when the very existence of any agreement to arbitrate has not been shown.

## Conclusion

In Albon (No. 3), the High Court refused to stay English court proceedings in favor of Malaysian arbitration because the claimant alleged the joint-venture agreement containing the arbitration clause was forged; the court held it must determine whether any arbitration agreement was ever concluded before section 9 can apply, and it would not halt the case to have arbitrators decide that threshold question.


Nigel Peter Albon v. Naza Motor Trading SDN BHD & Ors. (No. 3), [2007] EWHC 665 (Ch.)