English court requires parties to arbitrate where tiered dispute resolution clause and notice to arbitrate are unclear

Case background

Ropa v Kharis Solutions Ltd [2026] EWHC 259 (Comm) concerned a dispute arising out of two joint venture agreements between the claimant, Toziwepi Ropa, and the defendant, Kharis Solutions Ltd, under which the claimant was to provide working capital and the defendant was to operate a care and nursing home business, with profits shared in specified proportions.

Each agreement contained three dispute resolution clauses:

(a) Clause 54, stating that the parties submitted to the jurisdiction of the English courts "for the enforcement of [the agreement] and for any arbitration award or decision arising from [the agreement].";

(b) Clause 55 providing for "friendly consultation" if a dispute arises;

(c) Clause 56 stating that outstanding issues (not resolved in the "friendly consultation") "may be submitted to mediation", and, if mediation was "not successful… or is unavailable", outstanding issues "will be submitted" to final and binding arbitration in accordance with English law.

A dispute arose regarding whether the claimant had been paid sums due under the agreements and whether he had been provided with information that he was contractually entitled to receive. The claimant served a notice to arbitrate and later issued a claim form applying to the English High Court for an order compelling the defendant to submit to arbitration and participate in the appointment of an arbitrator.

The defendant resisted the application on several grounds, including that there were defects in the claim form and notice to arbitrate, and that the dispute resolution clause did not create a mandatory obligation to arbitrate the dispute in question. Mediation between the parties eventually took place, but only after the notice to arbitrate had been served.

The court granted the order sought by the claimant.

The court's decision

Do the agreements contain a compulsory arbitration clause?

The court applied the usual English law principles of contractual construction, construing the three dispute resolution clauses together. The court noted that, following Lord Neuberger in Arnold v Britton [2015] UKSC 36, where provisions are poorly drafted (such as in this case), greater emphasis may be placed on the background to the agreement and commercial common sense in determining their meaning.

The court rejected the defendant's argument, based on a literal reading of the dispute resolution clauses, that enforcement of the agreements themselves (and not just an arbitration award) is available using the English courts. That would be right if Clause 54 was to be construed in isolation, or Clause 56 were absent or differently drafted. However, Clauses 54 and 56 must be interpreted together as part of the agreement as a whole, and the application in question was an example of the jurisdiction of the courts under Clause 54 separate to the enforcement of an arbitration award.

The court held that the true construction of Clause 56, and of the agreements, was that all disputes are to be determined by arbitration. The court acknowledged that a literal reading of Clauses 54 and 56 may point the other way, but relied on commercial common sense in reaching its decision. In particular, the court noted that the defendant's interpretation would have produced commercially unrealistic results by allowing a party to switch between arbitration and litigation depending on whether it had chosen to mediate a particular dispute (as only disputes that had first been mediated would be allowed to proceed to arbitration), potentially leading to different forums being used to determine different disputes arising under the same agreements at around the same time.

The court also rejected the argument that mediation was a condition precedent to arbitration. The mediation wording in Clause 56 was too uncertain to amount to a binding obligation to mediate before commencing arbitration. The clause stated that disputes "may" be referred to mediation and did not provide a sufficiently clear process for that to happen. In order to be enforceable, a mediation clause must meet three requirements: (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 process is sufficiently certain. As these criteria were not satisfied, the provision for mediation in Clause 56 was not sufficiently certain to be capable of enforcement.

Was the notice to arbitrate valid?

The defendant argued that the notice to arbitrate was defective because it did not require the defendant to appoint an arbitrator or agree to the appointment of an arbitrator, and did not identify the dispute being referred to arbitration with sufficient precision for the purposes of section 14(4) of the English Arbitration Act 1996. The notice clearly showed a dispute about the claimant's access to information, but only when read with the prior correspondence was the wider profit sharing dispute identified with sufficient particularity.

The court accepted that the notice was poorly drafted, but held that those criticisms were not enough to invalidate it. Applying the flexible approach endorsed in Finmoon Ltd v Baltic Reefers Management Ltd [2012] EWHC 920 (Comm), the court held that the notice was valid and effective because it clearly indicated an intention to refer the dispute to arbitration and sought the defendant's agreement to the appointment of an arbitrator. The court emphasised that a notice to arbitrate does not need to define the dispute with the level of precision and particularity that would be required in a statement of case in English court proceedings, and that it is permissible to read a notice to arbitrate with previous correspondence to decide whether a dispute has been identified clearly enough.

The arbitration clause in this case provided for ad hoc arbitration, i.e. it did not provide for the arbitration to proceed under institutional rules or be administered by an arbitral institution, such as the London Court of International Arbitration (LCIA) or the International Court of Arbitration of the International Chamber of Commerce (ICC). Where an arbitration agreement provides that the rules of an institution will apply, it is important that the notice of or request for arbitration also complies with the requirements of the relevant institutional rules, for example those set out in Article 1 of the LCIA Arbitration Rules or Article 4 of the ICC Arbitration Rules.

Other issues

This summary focuses on the interpretation of the dispute resolution clauses and alleged defective notice to arbitrate. In relation to the other grounds raised by the defendant in opposition to the application, the court found that the overriding objective in the English Civil Procedure Rules meant that defects in the claim form were not fatal (despite being serious and relevant to costs, as no application had been made to amend the claim form). The court also held that the notice to arbitrate had been validly served.

Authored by Annabel Maltby, Jamie Phillips and Mark Crossley.