The Commercial Court has held that a dispute resolution clause requiring the parties to seek to resolve a dispute by friendly discussions constituted an enforceable condition precedent to arbitration: Emirates Trading Agency LLC v Prime Mineral Exports Private Limited [2014] EWHC 2104 (Comm).
Although decided in the context of an arbitration clause, it appears from the judgment that the same conclusion would have been reached if the agreement had required such discussions before issuing court proceedings. If this approach is followed in other cases, it will represent a stark change in the English courts' position on the enforceability of agreements to negotiate in dispute resolution clauses. Parties entering into such agreements should be aware that they may be held to them if a dispute arises.
The decision is also of interest for the court's conclusion that the obligation to seek to resolve disputes by friendly discussions "must import an obligation to seek to do so in good faith", referring to Yam Seng Pte Ltd v International Trade Corporation Ltd [2013] EWHC 111 (QB) in which the court implied a duty of good faith into a distribution agreement (see our post on that decision).
For more on the Emirates decision see this post on our arbitration notes blog.
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