Since the airlines were supposed to «have not paid any alleged amount,» the policyholders argued that airlines should be required to submit to the jurisdiction of a competent court in the United States, regardless of the compromise clause. As a result, the court was ordered to refer a mandatory arbitration order for the hedging dispute. Moreover, in approving the CoA, the applicant had accepted and accepted each of his conditions. With respect to the arbitration clause, the natural construct was to say that the applicant`s approval could only make sense if it was the applicant`s agreement to resolve any dispute over his own obligations that might arise from the guarantee. The parties had entered into a three-part relationship, supported by a single document, and it was expected that they would be expected to deal with all disputes arising from this document in the same way (according to Fiona Trust – Holding Corp/ Privalov (2007) UKHL 40). The Philadelphia court was convinced by the argument that just Estoppel Philadelphia and not SMG preferred over the compromise clause. The Tribunal cited Boucher v. Alliance Title Co., Inc. (2005) 127 Cal.App.4th 262 to propose that a party may be deterred from arguing that the compromise clause of a contract is not applicable, while the other provisions of the contract apply. And Philadelphia itself was not arrested because it did not make any commitments to SMG under the contract – it only took a position that the liability in question does not fit within the scope of the coverage granted. In addition, the Philadelphia court stated that «it is contrary to logic to require a covered insured to present covered disputes to arbitration proceedings, while he releases from that obligation an anonymous insured who seeks the same coverage.» The court disagreed and found that the clauses were harmonious and indeed complementary. First, the «court of competent jurisdiction» (as stated in the confirmation of meaning) may be necessary to enforce the sentence. Second, the court would also have the option of imposing arbitration if one of the parties objected.

Since the tribunal and the arbitral tribunal would have different functions, their roles would not necessarily be in conflict. The court stated that this interpretation «gives meaning to the compromise clause and the service of follow-up clause, while the applicant`s reading renders the compromise clause redundant.» As a result, the judge recommended that the case be upholded and binding arbitration imposed, and the district court adopted the judge`s report and recommendation. In rejecting the application, the Tribunal agreed with the Tribunal that the applicant had entered into a guarantee contract. The parties had agreed that, at the time of the CoA`s conclusion, it would include a period by which the applicant would guarantee the provision of the subsidiary as a charterer.