FAI Board’s first ruling on the consolidation of arbitrations under Article 13

Background

One of the less satisfactory features of the previous 1993 FAI Rules was that they did not recognize consolidation of arbitrations, meaning combining of two or more arbitration proceedings pending under the Rules into a single arbitration before the same arbitral tribunal. The FAI Rules Revision Task Force considered this a shortcoming because, in appropriate circumstances, there may be various advantages in consolidating cases involving common issues and facts arising out of the same or related transactions. In such instances, consolidation often makes for procedural and cost efficiency due to the reason that a single arbitral tribunal will decide all issues in one proceeding rather than two or more. Equally important, consolidation eliminates the risk of having contradictory awards rendered in different proceedings on closely related sets of facts.

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FAI Board’s negative jurisdictional decision under Article 14.2 refusing to allow the counterclaim to proceed in the arbitration

Background

Article 12 of the FAI Rules provides that claims arising out of or in connection with different contracts or different arbitration agreements may be brought in a single arbitration proceeding “subject to the provisions of Article 14”. The second paragraph of Article 14 imposes “a double prima facie test” that needs to be fulfilled in order for the FAI Board to assume jurisdiction and to administer the case whenever a respondent (or any other party against which a claim has been made in the arbitration) raises a jurisdictional plea, fails to submit a response to any claim made against it, or objects to the determination of all of the claims raised in the arbitration together in a single proceeding. The key elements that constitute the “double prima facie test” are the following:

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Two decisions by the FAI Board and arbitral tribunal allowing the arbitration to proceed regardless of a jurisdictional objection

The following is a brief account of two recent cases where the arbitral tribunal confirmed its jurisdiction to hear the merits of a dispute after the FAI Board had first made a prima facie jurisdictional decision to allow the arbitration to proceed pursuant to Article 14 of the FAI Rules.

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Arbitral award confirming arbitrator’s jurisdiction to hear a dispute arising out of an oral extension of a written contract containing an arbitration clause providing for arbitration under the FAI Expedited Rules

Claimant and Respondent had entered into a co-operation agreement, on the basis of which Claimant granted Respondent the rights to operate a restaurant under Claimant’s brand name in business premises leased by Claimant from a third party. Claimant and Respondent had also orally agreed that Respondent sublets the business premises from Claimant. In accordance with the co-operation agreement, Respondent paid Claimant a monthly co-operation fee. Additionally, the parties had orally agreed that Claimant sublets the business premises to Respondent at the same price as it itself leases them from a third party.

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Prima facie jurisdictional decision by the FAI Board allowing a single arbitration initiated against two separate parties on the basis of three different arbitration agreements to proceed

Article 14 is one of the key provisions of the FAI Rules. It sets out the prima facie jurisdictional test that needs to be fulfilled in order for the FAI Board to assume jurisdiction and to administer a case under the Rules. The provision is divided into two main subsections.

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