Key Takeaway: When Can an Arbitration Clause Bind a Party Without Express Consent?

A recent High Court decision has provided a rare example of a successful jurisdictional challenge to an arbitration award. In A1 & Ors v P [2025], the Court considered whether an arbitration clause could bind companies whose solicitors had entered into a third-party contract on their behalf.

The judgment provides important guidance on:

·       When an arbitration agreement is valid and enforceable

·       The limits of a solicitor’s implied authority

·       The scope of Section 67 of the Arbitration Act1996

·       The consequences of failing to raise jurisdictional objections promptly under Section 73

The case reinforces a fundamental principle: arbitration is based on consent, and that consent must be clearly established.

What Were the Facts in A1 & Ors v P [2025]?

During earlier arbitration proceedings connected to a construction project, solicitors acting for one of the companies engaged a private investigator (PI) to assist in gathering evidence.

The PI’s engagement letter contained:

·       A success fee payable upon the fruitful use of the evidence; and

·       An arbitration clause providing for disputes to be resolved through arbitration.

After the underlying dispute was settled, the PI sought payment of its success fee. A separate arbitration followed, in which the tribunal concluded that multiple companies were liable under the contract.

The companies, excluding the PI, challenged the award under Section 67 of the Arbitration Act 1996. They argued that the tribunal lacked substantive jurisdiction because they were never validly bound by the PI contract or its arbitration clause.

When Does a Solicitor Have Authority to Bind a Client to an Arbitration Agreement?

The central issue was whether the solicitors had authority to bind their clients to the PI contract and its arbitration clause. The High Court approached the matter de novo, conducting a full rehearing of the jurisdiction issue rather than reviewing the tribunal’s reasoning.

The Court confirmed that solicitors do not automatically have authority to enter into third-party contracts on behalf of their clients simply because they are conducting litigation or arbitration.

Authority must be either:

·       Actual authority, whether express or implied; or

·       Established through subsequent ratification by the client.

The Court found insufficient evidence that the solicitors had authority to bind the companies to the PI contract. There was also no clear evidence of subsequent ratification.

As a result, the arbitration clause was not enforceable against those companies, and the tribunal lacked jurisdiction in relation to them.

What Is a Section 67 Challenge Under the Arbitration Act 1996?

Section 67 of the Arbitration Act 1996 permits a party to apply to the court to challenge an arbitral award on the basis that the tribunal lacked substantive jurisdiction.

This includes cases where:

·       There was no valid arbitration agreement;

·       The tribunal was not properly constituted; or

·       The matters decided fell outside the scope of the arbitration agreement.

Importantly, a Section 67 challenge is not limited to reviewing whether the tribunal made an error. The court determines for itself whether jurisdiction existed. In A1 & Ors v P, the Court exercised this power and concluded that, in respect of certain parties, there was no binding arbitration agreement.

How Does Section 73 Affect Jurisdiction Challenges in Arbitration?

Section 73 of the Arbitration Act 1996 provides that a party who participates in arbitral proceedings without raising a timely objection to jurisdiction may lose the right to raise that objection later.

The provision is designed to prevent parties from reserving jurisdictional objections as a fallback strategy.

In this case, one of the solicitors’ clients had participated in the arbitration without promptly and clearly challenging jurisdiction. Although similar authority arguments were advanced at a later stage, the Court held that Section 73 barred reliance on them.

As a result, the award remained enforceable against that party.

This aspect of the judgment is a clear warning: jurisdictional objections must be raised at the earliest opportunity or risk being waived.

What Does A1 & Ors v P [2025] Mean for Arbitration and Implied Authority?

The decision reinforces that consent is fundamental to arbitration. That consent must be clearly expressed or subsequently ratified. Deriving a material benefit from a subcontract does not amount to automatic consent to arbitrate.

The judgment also clarifies the limits of a solicitor’s implied authority. Conducting litigation or arbitration does not, in itself, entitle a solicitor to enter into binding third-party agreements on behalf of a client.

Finally, the case highlights the procedural importance of Section 73. Even where a jurisdictional argument exists, failing to raise it promptly may result in forfeiture of the right to object.

Conclusion

Consent is central to any arbitration agreement and must be clearly expressed or ratified. A solicitor’s authority to bind a client to a contract or arbitration clause must be established and cannot be assumed.

A Section 67 challenge allows the court to determine jurisdiction afresh, but Section 73 may bar objections not raised in time.

Businesses should ensure that authority to instruct third parties is clearly documented and properly approved. For more, read our article on the formalities of arbitration in England & Wales.

Please contact the Commercial Litigation team at Barnes Law for advice on arbitration challenges.

Written by Barnes Law Managing Partner Yulia Barnes.