Incorporation by reference and arbitral appointment: contract terms created a binding arbitration agreement despite earlier contrary litigation stand.

A written contract can incorporate an arbitration clause by reference where the purchase orders expressly adopt FAI terms containing that clause, so a valid arbitration agreement existed. A party is not barred from invoking arbitration merely because it had earlier taken a mistaken contrary legal position in foreign proceedings. A limitation objection need not defeat appointment of the tribunal at that stage because limitation may be decided by the arbitral tribunal itself. The tribunal's composition must also comply with the Act's requirement that the arbitrators be an odd number, leading to a three-member tribunal.

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Issues: (i) Whether the purchase orders, by incorporating the FAI terms, created a valid arbitration agreement between the parties; (ii) Whether the petitioner was estopped from relying on arbitration after taking a contrary stand in prior proceedings; (iii) Whether the respondent's plea of limitation could defeat the request for appointment of an arbitral tribunal; and (iv) what should be the composition of the arbitral tribunal under the Act.

Issue (i): Whether the purchase orders, by incorporating the FAI terms, created a valid arbitration agreement between the parties.

Analysis: The contract documents were the purchase orders, and each purchase order expressly stated that all other terms and conditions were as per FAI terms. Clause 15 of the FAI terms contained an arbitration clause. A reference in a written contract to another document containing an arbitration clause constitutes an arbitration agreement when the reference makes that clause part of the contract. The invoice need not independently contain an arbitration clause when the contract itself incorporates one by reference.

Conclusion: A valid arbitration agreement existed between the parties.

Issue (ii): Whether the petitioner was estopped from relying on arbitration after taking a contrary stand in prior proceedings.

Analysis: The earlier stand taken before the Jordanian court was treated as a mistaken legal position and not as a bar against invoking arbitration later. The existence of an arbitration agreement has to be determined from the contract documents, not from a litigating position taken after disputes arise. A party is not prevented from correcting an earlier mistaken view of law and seeking arbitration on that basis.

Conclusion: The petitioner was not estopped from invoking arbitration.

Issue (iii): Whether the respondent's plea of limitation could defeat the request for appointment of an arbitral tribunal.

Analysis: The question of limitation was treated as one that can be examined by the arbitral tribunal itself. Since the respondent fairly accepted that the issue could be decided in arbitration, it was unnecessary to reject the petition on that ground at the stage of appointing arbitrators.

Conclusion: The limitation plea did not bar the reference to arbitration.

Issue (iv): What should be the composition of the arbitral tribunal under the Act.

Analysis: The arbitration clause contemplated two arbitrators and, if they did not agree, an umpire. Section 10 requires that the number of arbitrators shall not be even. The proper composition therefore had to conform to the statutory requirement of an odd-numbered tribunal.

Conclusion: The arbitral tribunal was constituted as a three-member tribunal.

Final Conclusion: The petition was allowed and an arbitral tribunal was appointed to adjudicate the disputes between the parties in accordance with the Act.

Ratio Decidendi: Where a written contract incorporates by reference another document containing an arbitration clause, the reference forms a binding arbitration agreement, and an earlier mistaken denial of arbitration does not preclude a party from subsequently invoking it.

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