General words capable of incorporating arbitration clause

In Habas Sinai Ve Tibbi Gazlar Isthisal Endustri AS v Sometal SAL [2010] EWHC 29 (Comm), the court considered whether general words used in a contract are capable of incorporating an arbitration clause contained in another contract between the parties. The contract in dispute did not expressly refer to an arbitration clause but ended with the words "All the rest will be same as our previous contracts". The parties had entered into 14 previous contracts, some (but not all) of which contained clauses providing for arbitration in London.

The court held that this was a case where general words of incorporation were capable of incorporating an arbitration clause without specifically referring to it. In giving his judgment, Christopher Clarke J noted a difference in approach between cases in which the parties incorporated the terms of a contract between two other parties or between one of them and a third party (two-contract cases), and those in which they incorporated standard terms (single contract cases). A strict test of incorporation of an arbitration clause applied in two-contract cases, whereas general words of incorporation sufficed in single contract cases.

In this case, although there was more than one contract to be considered, this was a "single contract" situation: the relevant distinction was between incorporation of terms of a contract made between (a) the same and (b) different parties. Further, on the facts of this case, the words of incorporation used were, in fact, effective to incorporate a London arbitration clause.

This appears to be the first reported case to consider the incorporation of an arbitration clause contained in another contract between the same parties. The decision, that general words of incorporation will suffice in such cases, makes commercial sense: the parties have previously contracted on the terms said to be incorporated (including the arbitration clause) and are therefore aware of their existence. By contrast, where the incorporation is of terms in a contract made between different parties (for example, where a bill of lading incorporates terms from a charterparty), it is more important to ensure that the parties intended to incorporate the arbitration clause, justifying a stricter test in such cases.