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In Rollitt (trading as CD Consult) v Ballard [2017] EWHC 1500 (TCC), the High Court rejected an application for permission to appeal an arbitral award on a point of law under section 69 of the Arbitration Act 1996 (“the Act”). In doing so, it restated the test for extending the time to challenge an award under section 79 of the Act.
The relevant award was handed down in an ad hoc arbitration regarding the payment of fees under a project management services agreement. In that award, the arbitrator declined to hear the dispute on the ground of lack of substantive jurisdiction. Although the award was dated 12 May 2016, it was not released to the parties until 8 August 2016, due to a delay in paying the arbitrators’ fees.
Pursuant to section 70(3) of the Act, in an English seated arbitration, there is a 28-day period for bringing any challenge or appeal against the award that may, under the Act, be available before the English courts. This had started to run from the date of the award and expired on 9 June 2016.
An application for permission to appeal was made on 5 September 2016. In the Application, the claimant sought: (i) an extension of time for appealing the award; (ii) permission to adduce further grounds and evidence in support of the application for an extension; and (iii) permission to appeal on a point of law.
In relation to (iii), in an English seated arbitration, section 69 of the Act allows (subject to certain limited conditions) a party to appeal to the English court on a question of English law arising out of the arbitral award. (Section 69 may also be excluded by the agreement of the parties, and, although there was no indication of this in the present case, parties frequently do so in an arbitration clause either expressly, or by use of a set of institutional rules containing provisions with such an effect.)
Quoting from Popplewell J in Terna Bahrain Holding Co. WWL v Al Shamsi [2012] EWHC 3283, the judge cited the following factors as being relevant to an application for extension of time to appeal an award, of which the first three are the most important:
(I) the length of the delay;
(ii) whether the party who permitted the time limit to expire and subsequently delayed was acting reasonably;
(iii) whether the respondent to the application or the arbitrator caused or contributed to the delay;
(iv) whether the respondent would, by reason of the delay, suffer irremediable prejudice in addition to the mere loss of time if the application were permitted to proceed;
(v) whether the arbitration has continued during the period of delay and, if so, what impact on the progress of the arbitration, or the costs incurred in respect of the arbitration, the determination of the application by the court might now have;
(vi) the strength of the application; and
(vii) whether in the broadest sense it would be unfair to the applicant to be denied the opportunity of having the application determined.
Applying these criteria, O’Farrell J rejected the application on the basis that:
a) the delay in this case (88 days) was substantial compared to the 28-day yardstick of provided for in the Act;
b) the claimant had no reasonable explanation for the delay; and
c) the defendant did not contribute to the delay. The claimant argued that the respondent was responsible for the delay in the release of the award by not paying its share of the arbitrator’s fees. This was rejected by the Court on the basis that the arbitrator's terms and conditions stated expressly that the parties would be jointly and severally liable for his fees and that payment would be required before release of the award.
Furthermore, the Application was found to be weak on the merits. The claimant sought to appeal on three issues of law: (1) whether it was right for the arbitrator to find that the reference to the RICS standard conditions in the contract was not sufficient to incorporate the arbitration agreement; (2) whether the arbitrator erred in finding that there was a tiered dispute resolution process in the contract which the parties failed to comply with; and (3) whether it was right for the arbitrator to hold that the arbitration agreement (even if incorporated) was invalid on the basis that the defendant was a consumer. The Court found that issue (3) fell outside the scope of an appeal under section 69 because it raised mixed questions of law and fact. Further, success on issues (1) and (2) would not lead to a different outcome on jurisdiction and, as a result, the claimant was unable to demonstrate that the determination of the issues would “substantially affect the rights of the parties” as required under section 69(3)(a) of the Act.
Having refused to exercise her discretion to grant an extension of time under section 79 of the Act, O’Farrell J refused the application for leave to appeal pursuant to section 69(2) of the Act for the same reasons.
The judgment in Rollitt (trading as CD Consult) v Ballard confirms that there is a relatively high threshold to satisfy when seeking an extension of time to appeal an arbitration award. The case follows from the decision in K v S [2015] EWHC 1945 (Comm), where the principles in Terna v Al Shamsi were also applied and the Court similarly refused to grant a time extension.
The statutory 28-day limit is short but, as Popplewell J noted in Terna v Al Shamsi, it is reflective of the principle of speedy finality which underpins the Act. Parties to English seated arbitrations should therefore be aware of the short statutory limit and do their utmost to ensure that appeals, where available, are brought in time.
Adrien Canivet would like to thank Jeevan Hariharan for his assistance in the preparation of this article.
15 August 2017
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