Nederland

A reference by agreement of the parties must originate in an arbitration agreement. Such an agreement may be made verbally or in writing. The Arbitration Acts 1950 –1979 only apply to written agreements, but an agreement by telex is ‘an agreement in writing’; held in Arab African Energy Corporation Ltd. v Olieprodukten Nederland BV (1983). An arbitration agreement is defined by Section 32 of the 1950 Act as: “A written agreement to submit present or future differences to arbitration, whether an arbitrator is named therein or not”. An arbitration agreement may be framed in such a manner as to prevent any right to court proceedings from accruing under the contract until an award is first made. In such a case an award is a condition precedent to a right to sue. A clause which is framed in such a manner is known as a ‘Scott v Avery Clause’. In Scott v Avery (1856) a policy of insurance on a ship provided that in the event of loss the amount of the loss should be referred to arbitration. It also provided that the award of the arbitrators was to be a condition precedent to the maintaining of an action. Held, until an award was made, no action was maintainable. It is provided by Section 25 (4) of the 1950 Act that if the court orders that the agreement to refer the dispute to arbitration shall cease to have effect, it may also order that the condition precedent shall cease to have effect.