Written by Graham Perry

Graham Perry M.A. Cantab FCIArb Experienced Arbitration Lawyer | China & Chinese Business Affairs | Public Speaker/Lecturer

15 June 2021


Lord Hamblen’s pronounced on the issue of business context v dictionary definitions in The Financial Conduct Authority v Arch Insurance (UK) Ltd & Others [2021] UKSC1. He suggested that it is rare for something to have gone wrong with the words and language used and it is rare to have an interpretation that creates several meanings. Ambiguity is not present that often and one should not be looking for ambiguity.
But under the heading “The meaning of the words used”, the Supreme Court resisted an interpretation of a clause on the basis that such an interpretation would be turning the clause on its head. The Supreme Court cautioned, in the words of Lord Mustill: “There comes a point at which the court [or arbitrators] should remind itself [or themselves] that…to force upon the words a meaning which they cannot fairly bear is to substitute for the bargain actually made one which the court [or the arbitrators] believe could better have been made. This is an illegitimate role for a court [or the arbitrators].”

Where does it leave us? Do not stretch the meaning of the language too far, is the instruction, and when ambiguity does occur do not give words “a meaning that they cannot fairly bear”. But suppose that the trade arbitrators’ understanding of the meaning can, in fact, be fairly and reasonably borne? Should not their interpretation be permitted? Is the Judiciary trying to tie the hands of the arbitrators too securely?

It is in this context that we see that there is still tension between a trade arbitrator’s understanding of business context and a lawyer arbitrator’s understanding of dictionary definitions. Fairness is everything in arbitration. This issue has not been finalised. There is room for differences and there is many an argument yet to be had in the retiring room of Boards of Appeal.



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