Navigating multi-tiered arbitration agreements across perspectives from UK, Singapore and Hong Kong SAR

Although these clauses aim to promote amicable settlement and reduce costs, they can also become contentious if parties dispute their enforceability or compliance. This article compares how the UK, Singapore and Hong Kong Special Administrative Region (SAR) each approach the issues of enforceability, interpretation and consequences of non-compliance with these clauses.

Courts in England and Wales, Singapore and Hong Kong SAR have increasingly recognised the enforceability of multi-tier dispute resolution clauses, provided they are clearly drafted, mandatory in language, and procedurally specific.

While the English courts initially took a cautious stance, recent decisions align more closely with the supportive approaches seen in Singapore and Hong Kong SAR, reflecting a broader trend toward upholding party autonomy and promoting efficient dispute resolution. 

The UK approach 

Historically, the English courts have been sceptical of pre-arbitration clauses, viewing them as vague or unenforceable 'agreements to agree’. This, however, changed with cases such as Cable & Wireless v. IBM in 2002, where courts began enforcing clauses that were sufficiently certain and mandatory in language, such as using “shall” instead of “may”. 

English courts now apply a three-part test: the clause must be mandatory; the process must be clearly defined; and compliance must be objectively ascertainable.

The Singapore approach  

Singapore courts have historically been more supportive of multi-tier clauses, reflecting a cultural emphasis on conciliation. In Lufthansa Systems (2013), the court upheld a clause requiring multiple rounds of mediation, on the basis that the steps leading to arbitration were clearly defined.

Singapore courts emphasise party autonomy and the commercial utility of good faith negotiation clauses, provided they are specific enough to be enforceable.

Hong Kong SAR courts’ approach  

Courts in Hong Kong SAR have followed a similar path to those in Singapore, enforcing clauses that are clearly worded and structured. In HZ Capital (2019), for example, the court upheld a clause as a condition precedent to arbitration due to its use of mandatory language and defined timeframes.  

Jurisdiction versus admissibility

A central question in the interpretation of multi-tier arbitration clauses is whether a party’s failure to comply with pre-arbitration steps affects the jurisdiction of the arbitral tribunal – allowing court intervention – or merely the admissibility of the claim, which is a procedural matter for the tribunal to decide.

Historically, courts in England, Singapore and Hong Kong SAR treated non-compliance as a jurisdictional issue. Influenced by leading arbitration scholars such as Jan Paulsson and Gary Born, courts in these jurisdictions have increasingly recognised that these objections typically relate to admissibility rather than jurisdiction.

This evolution was affirmed in key decisions in the three jurisdictions, such as in Singapore: BBA v. BAZ (2020), although not decided in the context of a multi-tier clause; in the UK, Sierra Leone v. SL Mining (2021); and in Hong Kong: C v. D (2021–2023), where the Court of Final Appeal confirmed the decision of the Court of First Instance holding that compliance with pre-arbitral steps is presumed to fall within the tribunal’s purview.

This shift reinforces the principle of minimal curial intervention, preserving the autonomy of the arbitral process and ensuring that procedural objections are resolved within the arbitral framework.

Although Singapore does not yet have a landmark judgment determining whether compliance with pre-arbitration agreements is a matter of jurisdiction or admissibility, recent Singapore Court of Appeal decisions appear to mirror the approach taken in similar cases in England and Hong Kong SAR and cite academic publications supporting a finding of admissibility, showing a shift in the same direction.

Consequences of non-compliance  

Waiver and futility  

In some jurisdictions, tribunals and courts may excuse non-compliance with these clauses if the parties waived their requirements – for example, by proceeding with arbitration without objection – or where compliance would be futile, such as when entrenched positions or bad faith conduct are present.

Examples of this include the English case Sierra Leone v. SL Mining in 2021, where the respondent waived the pre-arbitration step by insisting on immediate arbitration; and the 2008 Biwater investment arbitration dispute, in which the ICSID tribunal found negotiations would have been futile due to the state’s conduct. 

Emergency arbitration  

In urgent cases, parties may seek to bypass pre-arbitration steps to seek emergency relief prior to the constitution of the arbitral tribunal. Emergency arbitrators generally allow this, recognising the need to preserve the status quo.

Sanctions for non-compliance  

Across different jurisdictions, it is recognised by courts and tribunals that strict compliance with pre-arbitration steps may not always be practical or necessary. Where parties have waived these steps through their conduct, or where compliance would be futile, in some cases arbitration may proceed without procedural penalty.

If no waiver or futility applies, tribunals may impose procedural sanctions including stay of proceedings, dismissal of claims, or substantive sanctions. Arbitral Tribunals typically favour procedural remedies, such as a stay, over damages sanctions. This pragmatic approach balances respect for contractual obligations with the need for efficient dispute resolution, particularly in urgent or complex cases.  

Converging approach 

Across the three jurisdictions considered, a converging approach has emerged:

• multi-tier clauses are enforceable if clearly drafted and compliance objectively verifiable.
• non-compliance is increasingly treated as a matter of admissibility, not jurisdiction.
• sanctions for non-compliance are typically procedural, with a preference for stays to allow compliance, over dismissals or damages.  

Despite this convergence, uncertainty remains due to the lack of uniform institutional rules and the confidential nature of arbitration. Parties should draft escalation clauses with clarity, specificity and enforceability in mind. 

A version of this article was previously published by Asian International Arbitration Journal.