How can a party counter an arbitration clause in a contract?

An arbitration clause that is vague or ambiguous can be challenged by a party who would wish to bring litigation proceedings rather than arbitration proceedings. Valid arbitration clauses are clear and provide a clear procedure for appointment of an arbitrator. On the other hand, examples of ambiguous arbitration clauses are those that do not have the procedure for appointment of an arbitrator; or provide for litigation alongside arbitration or even those that do not exclusively provide for arbitration as the dispute resolution method of choice of both parties

Are arbitration clauses binding?

In general, valid arbitration clauses are binding, but nevertheless an arbitration clause that is ambiguous can be challenged in court. Courts have made pronouncements on whether an ambiguous arbitration can oust the jurisdiction of the court, therefore a party can bring a n action in court and where there is a challenge to the jurisdiction of the court by the other party on the ground there is an arbitration clause, the party preferring litigation can highlight the ambiguity of the said arbitration clause that invalidates the said arbitration clause

How to challenge an arbitration clause and bring a court case?

Often, the way this is done is to just file a court case and at this point the other party in support is likely to apply for a stay of court proceedings and ask the court to refer the matter to arbitration and the party preferring litigation then files a response on why the court has jurisdiction because there is an invalid arbitration clause. Each party then submits their legal propositions on why the ambiguous arbitration clause is/is not enforceable.

What happens if there are several parties to a suit and some have not signed an arbitration agreement?

Arbitration agreements only bind the parties who are parties to the said arbitration agreement. In certain circumstances, there may be several parties that are party to a dispute some of whom  may not be party to the arbitration agreement that may exist in the contract between those parties; at the same time there could be different contracts between other parties in the same transaction and as such in a dispute arising, if there are no harmonious dispute resolution clauses amongst the parties, any party bringing litigation proceedings may rely on – arguments of avoiding multiple proceedings; and joining parties where there is one series of transactions – as arguments to why litigation is valid in the face of the said arbitration agreement that is only between certain parties.  The court can then decide if the litigation proceedings can proceed.

Can a party obtain  a stay of court proceedings when there is a valid arbitration clause?

Where there is an arbitration clause and litigation proceedings have been instituted, an aggrieved party can challenge the jurisdiction of the court to hear the case in light of the arbitration clause and ask the court to stay court proceedings and refer the matter to arbitration. Section 6 of the Arbitration Act provides for application for stay of legal proceedings and the court may stay the court proceedings if the application for stay of proceedings is made not later than the time when a party enters appearance. The court may decline to stay proceedings unless it finds the arbitration agreement is null and void, inoperative or incapable of being performed or it finds that there is no dispute with regard to the matters agreed to be referred to arbitration.

Where the court stays court proceedings and refers a matter to arbitration, this means that the dispute will then proceed to be resolved through arbitration as envisaged by the arbitration agreement that was entered into between the parties. The matter in court will then be stayed or stopped.

Does reference to arbitration oust the jurisdiction of the court totally?

Section 7 of the Arbitration Act provides that it is not incompatible with the arbitration agreement for a party to request interim measures from the court e.g. interim injunctions. This shows that the arbitration process exists in harmony with the court process and in certain circumstances the court may have jurisdiction to grant interim orders where appropriate.