What disputes does an arbitration clause cover?

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The recent case of VK Holdings (HK) Ltd v Panasonic Eco Solutions (Hong Kong) Company Ltd demonstrates the importance of carefully drafting arbitration clauses to ensure they reflect the parties’ intentions about what disputes are to be covered.

DD2In this case, the court held that an arbitrator had correctly ruled that he had jurisdiction over the dispute and dismissed VK’s application under section 34 of the Arbitration Ordinance to set aside his interim award.

VK and Panasonic entered into an agreement for the sale and purchase of electronic products, “products” being defined as those specified in an exhibit. Panasonic alleged that some electronic parts supplied were defective and referred its claims to the Hong Kong International Arbitration Centre for arbitration, pursuant to the arbitration clause in the agreement, providing for arbitration of “any and all disputes, controversies or differences arising out of, or in connection with, the agreement”.

VK contended that the dispute was outside the agreement’s scope, since the electronic parts were not products, as defined in the exhibit, but the sole arbitrator appointed made a preliminary ruling that he did have jurisdiction over the dispute. The court dismissed VK’s application to set aside the arbitrator’s interim award, holding as follows:

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K K Cheung is a partner in litigation and dispute resolution at Deacons in Hong Kong