In S v (1) A (2) B [2016] EWHC 846 (Comm), Mr Justice Eder refused to grant an extension of time under the Arbitration Act 1996 (the “Act”) s.80(5) to challenge an arbitral award, following the applicant’s 74-day delay in applying and its failure to demonstrate that there had been a serious irregularity under s.68 of the Act. The decision also serves as a reminder of the fact that the time limit for challenging an award under the Act runs from the date of the award as opposed to the date it is made available to the parties.

The applicant was a coal seller which provided sub-standard coal to two buyers. Although the coal complied with the specifications of the contract, the applicant lost the arbitration because it was held to be in breach of the Sales of Goods Act 1979 s.13 and s.14(2). The applicant applied to challenge (under s.68 of the Act) and appeal (under s.69 of the Act) against the arbitration award on 7 July 2015.

The award was dated 27 March 2015, which was made known to the parties on 30 March. The tribunal refused to release the award until all outstanding fees and expenses had been paid by the respective parties. The applicant paid its share on 16 April 2015. The statutory deadline for a challenge or application for permission to appeal expired on 24 April 2015 (under s.70(3) of the Act), i.e. 28 days from the date of the award. The respondent paid its share of the fees on 29 May and the award was released on 20 June 2015. The application was issued 102 days after the date of the award, 74 days beyond the statutory time limit and 17 days after the release of the award.

The application under s.80(5) was rejected applying the seven factors set out in Terna Bahrain Company WLL v Al Shamsi [2013] 1 Lloyd’s Rep 86. These included the length of the delay; whether the applicant was acting reasonably in the circumstances; whether the respondent or tribunal caused or contributed to the delay; and, to a lesser extent, the strength of the application and whether it would be unfair to the applicant to deny the application.

In The Faith [1993] 2 Lloyd’s Rep 408, it was held that the applicant “must ensure that the award is taken up in time to enable the application to be made”, and it cannot be argued that it was waiting for the other party to take up the award or did not know there was any point it wanted to raise on the award. The applicant argued that the respondent had delayed the publication of the award by delaying payment but the judge, applying The Faith, considered this to carry little, if any, weight.

It was held that the applicant knew or should have known about the tight deadline and that the onus was on it to ensure the award was collected on time. Furthermore, the outstanding fees were modest and there was no issue of financial difficulty that would have prevented the applicant from paying the respondent’s share. The applicant did not seek to contact the other party on time to enquire about payment and did not pro-actively follow up on the publication of the award – factors considered by the judge in assessing the reasonableness of the applicant’s conduct.

Having reached the preliminary conclusion that he should refuse an extension of time, the judge then considered the strength of the application to challenge and for permission to appeal. He held that the applicant had not established a serious irregularity under s.68 of the Act and that the application for permission to appeal on a point of law was weak. Accordingly, his preliminary conclusion regarding the extension of time remained unchanged.

By Mark Everiss with thanks to Laura Dietschy

Posted by Mark Everiss