Arbitrability under a contract exclusion clause remains intact where liability is disputed and the clause covers only admitted claims.

A contractual exclusion clause cannot be read to make one party the final judge of its own alleged breach where liability is disputed. Clause 3.22 was a wide arbitration agreement covering disputes arising out of the contract, while clause 3.20 was confined to admitted liability and consequential quantification, not contested claims. An interpretation that barred both court and arbitral remedies would create a legal vacuum and offend the rule of law. The dispute therefore remained arbitrable, the arbitral tribunal had jurisdiction, and the High Court erred in treating it as an excepted matter. The award was restored and the appeal succeeded.

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Issues: (i) Whether clause 3.20 of the contract excluded arbitration and placed the dispute beyond adjudication by a court or arbitral tribunal, and whether the arbitral award suffered from want of jurisdiction.

Analysis: Clause 3.22 was a wide arbitration clause covering all disputes arising out of the agreement. Clause 3.20, properly construed, did not authorise the administration to finally decide disputed liability where wilful act, omission, neglect, or negligence was denied. A party to the contract could not be made the judge of its own alleged breach. The clause could at best permit finality in cases of admitted liability and quantification, not in a contested dispute. An interpretation that barred both court and arbitration remedies would create a vacuum in legal remedies and offend the rule of law. The arbitral tribunal therefore remained competent to decide the disputed question and the High Court erred in treating the dispute as an excepted matter.

Conclusion: The dispute was arbitrable, clause 3.20 did not oust the arbitral jurisdiction, and the award could not be set aside on that ground.

Final Conclusion: The appeal succeeded, the High Court's judgment was set aside, and the arbitral award was restored.

Ratio Decidendi: A contractual clause cannot be construed to make one party the final of its own alleged breach where liability is disputed; in such a case, the dispute remains arbitrable under a broad arbitration clause, and any exclusionary language is confined to admitted liability and consequential quantification.

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