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What happens to costs awards when an arbitrator, in an English seated arbitration, declines jurisdiction? Can the arbitrator make an award of costs in respect of the jurisdiction challenge, or must the court step in? These questions, and others, were addressed in the recent High Court decision of Ravfox Ltd v Bexmoor Ltd [2025] EWHC 1313 (Ch).
Background
Bexmoor commenced arbitration against Ravfox and its directors (the Dineens), alleging breach of a sublease. Ravfox disputed the arbitrator’s jurisdiction, arguing Bexmoor was not privy to the sublease. Ravfox also sought to remove the Dineens as respondents, a request Bexmoor eventually accepted.
On 21 November 2024, the arbitrator issued an award in Ravfox’s favour, finding that he had no jurisdiction because the sublease containing the arbitration clause was not binding as between it and Bexmoor. The arbitrator did not expressly address a request by Ravfox to recover its costs from Bexmoor. However, the arbitrator stated that it lacked jurisdiction to determine the costs related to the Dineens.
On 20 December 2024, Ravfox emailed the arbitrator, seeking a specific award of costs for the jurisdictional challenge. The arbitrator replied the same day, stating that he had no such power. Ravfox then sought relief from the English courts.
Issues before the Court
This encompassed two issues. First, does the Court have this power under s.63(4) Arbitration Act 1996 (AA) - which allows it to determine the “recoverable costs” of the arbitration where the tribunal has not done so. The Court disagreed with Ravfox's contention that this section could apply here. According to the Court, s.61 AA concerns the power to award/allocate costs between the parties (and empowers the tribunal, not the court, to do so). S 63 AA, by contrast, concerns only which of those costs are recoverable; it does not empower the Court to allocate costs between the parties if the arbitrator has not already done so [11-15].
That left the question as to whether the tribunal had the power to do so. The Court found that it did. In short, this was because s.30 AA allows an arbitral tribunal to rule on its own jurisdiction, and s. 31 AA confirms it may do so with an award on jurisdiction. This means that the proceedings on the jurisdictional challenge before the tribunal are legitimate arbitration proceedings. So, there is no reason why the arbitrator cannot also make a costs award for those proceedings. Also, s. 61(1) AA specifically allows the tribunal to award costs between the parties [17-22].
The Court noted (para. 24-25) that the Law Commission reached the same conclusion in its recent consultation paper on the AA. Moreover, its recommendation to “put the matter beyond doubt” will be carried into effect by the upcoming reforms to the AA which, once in force, will insert a new s. 61(1A) AA clarifying that:
“(1A) It is irrelevant for the purposes of subsection (1) whether the tribunal has ruled, or a court has held, that the tribunal has no substantive jurisdiction or has exceeded its substantive jurisdiction.”
Unfortunately for Ravfox, the above conclusion, ultimately, didn’t help. This was because, on the facts, it did not have an available route to challenge the arbitrator’s actions either as an error of law arising from an award (s.69 AA) or a serious irregularity affecting the award (s.68 AA). An important part of this, for reasons related to the time limit noted below, was a finding by the court that the arbitrator’s email of 20 December was not an award [31] leaving the earlier, 21 November, main award as the relevant target.
In relation to that, however, Ravfox was out of time under the 28 day limit applicable to both sections under s.70(3) AA (this was the case even if one accepted – which the court did not – that the relevant time limit could run from the release of the award to the parties, rather than its date [34]) and, due to issues with how Ravfox had run its application, the Court refused an extension.
Also notable is that, in relation to Ravfox's s. 69 AA application, the Court concluded that certain preconditions under s.69(3)(c) AA were not met. In particular it did not think the arbitrator had been “obviously wrong” and it did not think that the application involved a point of “general public importance” - especially as the upcoming legislative amendment meant it was unlikely to recur [40]. In relation to s.68 AA the main issue, aside from the time limit, was whether the arbitrator had failed to deal with the issue of costs in the main award (so as to engage s.68(2)(d) AA). As to that, the Court thought this was not the case: although the arbitrator did not expressly say anything about the costs between Ravfox and Bexmoor, it was inherent in his reasoning that he was deciding that he could not make such an award.
Conclusion
Although the subject of a pending legislative amendment in any event, the court’s decision is helpful in empowering tribunals to grasp the nettle on costs for successful jurisdictional challenges before them. Any other outcome would have a tendency to weight matters quite heavily to the side of the party making the reference to arbitration so, overall, the decision and the pending reform seem to aim for balance. Separately the decision also illustrates the importance of parties being aware of, and complying, with time limits in cases where they seek to challenge an award under the AA.
Click here for the judgment.