Scope of the arbitration clause - recent developments

The interpretation of the arbitration clause is significant for a number of reasons. It confers and delimits the jurisdiction of the arbitrator. The award may be challenged on the basis that the arbitrator acted beyond jurisdiction. The clause may be construed in such a way as to defeat the parties’ intention that the disputes arising from the underlying contract be resolved in a one-stop adjudication. Both of these considerations warrant drafting the clause broadly, and may warrant the courts construing arbitration clauses broadly. The trend of recent authority is for courts to construe clauses expansively, to the point where the historically narrower phrase “arising under” is to be viewed as being synonymous with the wider expression “arising out of”; and indeed that these two phrases are to be equated with the historically broad phrases “in connection with” and “in relation to”. A proper view of contemporary authority may be that it is only where the parties have clearly set a limit on the arbitrator’s jurisdiction that their clause should be construed more narrowly.