5 April 2018 Stephen Lacey ArbitrationLinks

Does a slip buy more time? English High Court considers the relationship between corrections of awards and time limits for appeal

In DSMG v Songa [2018] EWHC 538 (Comm), the English High Court has examined whether an application to the tribunal to make straightforward corrections to an award extends, under the English Arbitration Act 1996 (the “Act”), the period for bringing a challenge in court against the award. It appears that it is only where an application for corrections is material - in the sense of enabling a party to know whether it has grounds to challenge an award - that it will do so.

Background

The facts of the case were relatively straightforward. Under a contract between DSMG and Songa the former was to build drilling rigs. Disputes arose concerning the construction of the rigs which were referred to an English seated arbitration under the LMAA terms.

An award, going against DSMG, on two preliminary issues was made. 17 days after the date of the award DSMG then applied to the tribunal for certain corrections to be made to it. These (in the judge’s words) amounted to correcting “classic clerical and typographical errors” and were completely unrelated to the substance of DSMG’s later appeal to court (see below). 27 days after the award, the tribunal issue a memoranda of correction addressing these errors. Just over three weeks later, the claimant issued an arbitration claim form at court seeking permission to appeal the award under s.69 of the Act. That section permits, in English seated arbitrations and under certain limited circumstances, an appeal to the court on a point of English law (although this can be contracted out of and parties often do, for example, by use of institutional rules with relevant opt-out provisions).

The issue of timing

The question before the court was whether this application under s.69 had been brought in time. In particular, s.70 of the Act - which also applies to challenges to awards made by English seated arbitrations on the basis of substantive jurisdiction of the tribunal (s.67) or serious irregularity (s.69) (those being provisions of the Act which cannot be contracted out of) - provides that such applications or appeals:

s.70(2)…may not be brought if the applicant has not first exhausted:

(a) any available arbitral process of appeal or review; and

(b) any available recourse under section 57 (correction of award or additional award).

And under s.70(3): “Any application or appeal must be brought within 28 days of the date of the award or, if there has been any arbitral process of appeal or review, of the date when the applicant or appellant was notified of the result of that process”.

That section, whilst relatively clear as to how it is to operate where a “process of appeal or review” is engaged; arguably admits a greater degree of interpretation when it comes to s.57 of the Act. That provision deals with the correction of the award or the making of an additional award. On one reading s.70(3) admits of no extension to the 28-day time period for bringing a challenge to the award in such cases, whilst s.70(2) simultaneously obliges an aggrieved party to follow s.57 if available. That would encourage finality but, on the other hand, may prove problematic to such a party depending upon the timing and/or substantive content of its s.57 application.

In DSMG, the interpretation of these provisions was a live issue because DSMG’s initial application to the tribunal was one which fell under s.57. If it was the case that it had 28 days from the date of the Tribunal’s memoranda of correction, then its s.69 application to the court was in time. If time ran from the date of the initial award; it was out of time.

The court’s conclusions
In resolving this conundrum, the court reviewed the relevant authorities; DSMG, in particular, placed heavy reliance on an earlier case in which it had been found (but without reference to any authority, and without reasoning) that a clarification issued by an arbitrator had extended the relevant time limit. More recent decisions (K v S [2015] EWHC 1945 and Essar Oilfields [2016] EWHC 2361) had, however, looked in more detail at the issue and Bryan J, in DSMG, agreed with the approach adopted in those later cases. In short there was a clear distinction between “any available process of appeal or review” which referred to a process by which an award is subject to appeal or review by another arbitral body (and which, under s.70(3), does extend time) and an application under s.57.
 
In that latter respect, DSMG’s position (given the nature of the corrections sought in this case) was necessarily that any application for a correction under s.57 (including mere typographical errors) could extend time under s.70(3). Bryan J disagreed with this proposition as being contrary to the interests of speed and finality, and the whole ethos of the Act.
 
This, in itself, was enough to dispose of DSMG’s case, but left the question as to whether an application under s.57 can ever extend the time limit under s.70(3). In this respect Bryan J was “in no doubt” that, in common with the judges in the two aforementioned cases, this turned on a test of materiality; if the application for a correction is necessary to enable the party to know whether it has grounds to challenge the award then in such circumstances postponement of the time period makes good sense, and the party is also obliged to follow the correction before the tribunal through to its conclusion. If, by contrast, the application is merely to correct typos then there is no time extension to the period for bringing a challenge to the award before the court, but, equally, the corrections will be immaterial to that challenge so, in that context, there is no bar to that challenge being brought within 28 days of the initial award. Although a neat solution this, of course, raises questions of what “materiality” is. In Bryan J’s view this should not be a problem as it was a well-known test – his other suggestion being, however, that, if in doubt, litigants could, in the absence of the other party’s agreement to an extension, apply to court for an extension of the initial 28 days.