(FALTU WALI BAKCHODI DAAL DENA FACTS SE RELATE KARKE)

Pre arbitral agreement shows the common intention of the parties to stay the proceedings and
will be respected by the court1. In this case both the parties mutually decided for negotiation
and therefore it must be respected by the court.

Many authors take the view that the first-tier stage is a condition precedent to arbitral
proceedings. As long as first-tier commitments have not been complied with, an arbitral
tribunal has to treat the claim as procedurally inadmissible. However, arbitral tribunals may
not decide on this issue ex officio, but only based on objection by one of the parties2. A
similar view holds that the tribunal should held that the claim be inadmissible until
compliance with first-tier commitments3.

In a decision of the German Federal Supreme Court (Bundesgerichtshof ) of 19984, the court
held that a clause, under which the parties had agreed to attempt to resolve disputes arising
out of a contract by settlement negotiations is inadmissible if the settlement negotiations had
not been commenced and completed. An action brought before the courts prior to completion
of an agreed settlement procedure are inadmissible5.

In other case the respondent claimed that the party showed no willingness to comply with pre
arbitration agreement. The court held that such pre-litigation conciliation clauses are valid
and must be respected by the parties and the courts.

1 Ibid (If all parties request a stay the proceedings will be stayed for one month []. At r 26.4(2)).

2 Ruede and Hadenfeldt, Schweizerisches Schiedsgerichtsrecht (2nd edn, 1993), p.27; Karl Heinz
Schwab/Gerhard Walter, Schiedsgerichtsbarkeit, (7th revised edn, 2005).

3 Nathalie Voser, Sanktionen bei Nichterfullung einer Schlichtungsklausel, case note decision of March 15,
1999 of the Zurich Court of Cassation, ZR 99 (2000) No.29; ASA Bulletin 2002, pp.376381

4 BGH decision of November 18, 1998: VIII ZR 344/97

5 Decision BGH, reported in (1999) Neue Juristische Wochenschrift, Heft 9, pp.647648.

A court has vacated an arbitration award because of a partys failure to satisfy the pre arbitral
proceedings6.An arbitral tribunal applying English law will decline jurisdiction where a
contractual provision expressly states that determinate procedures are a condition precedent
to arbitration, until they have been followed. In another case the tribunal held that pre arbitral
negotiations are mandatory to approach an arbitral tribunal.

When there is no doubt that the wording of the contract reflects the true will of the parties,
there will be no reason for the court or tribunal to depart from the wording of the contract. 7In
the current case the pre arbitral clause was clear in the agreement making it enforceable. The
use of the term will in the pre arbitral clause leaves no room for discretion and suggests
that a predetermined procedure must be followed8.

6 Kathleen Scanlon, Country report for US, in Enforcement of Multi-tiered Dispute ResolutionClauses, IBA
Newsletter of Committee D (Arbitration and ADR), Vol.6 No.2, October 2001.

7 This is in line with the position of the Swiss Federal Supreme Court taken in the case A.
SA v. B. SA, no. 4A_124/2014, judgment of July 7, 2014

8 Escalation clause