UK: Human Rights and Arbitration: Revisited

Last Updated: 3 September 2003
Article by Norah Gallagher

In BLCT (13096) LTD v J Sainsbury plc Lady Justice Arden and Lord Justice Longmore of the English Court of Appeal had to consider the implications of Article 6 of the European Convention of Human Rights (ECHR) to an application for leave to appeal against an arbitral award under section 69 of the Arbitration Act 1996.

Background

The dispute between the parties involved the application of a rent review clause in a lease of supermarket premises in Cambridge. The tribunal was persuaded by the tenant’s, Sainsburys, submissions on the calculation of the revised rent. The tribunal accepted that the comparable rental property was of critical importance but treated it as if no premium of £3,000,000 had been paid. The tribunal did note that there was "no single approach to the treatment of premiums." BLCT alleged that the arbitrator misunderstood the legal concept of a willing lessee. In particular because he had refused to accept BLCT’s submission that a premium payment should have been decapitalised (or rentalised). A further error of law identified by BLCT was that the arbitrator wrongly regarded the premium as "key money" making it entirely unconnected with the lease and the consideration paid for its grant. The award was issued on 13 May 2002.

Appeal

BLCT applied for permission to appeal against the arbitral award. Permission was refused by the High Court by letter of 30 August 2003. BLCT subsequently applied to have this matter reconsidered at an oral hearing. The judge again refused this application in accordance with his discretion under section 69 (5) Arbitration Act 1996. BLCT appealed to the Court of Appeal requesting that the judge’s order be set aside and that there be an oral hearing of the application for permission to appeal against the arbitrator’s award. BLCT sought this relief on a number of grounds including that section 69 (6) Arbitration Act 1996 was incompatible with the provisions of Article 6 of the ECHR.

Human rights element

BLCT accepted that they had no right to appeal against a refusal of leave or to appeal against the decision of an arbitrator. However, they argued that they were entitled to an oral hearing under Article 6 in the absence of any special circumstances. BLCT referred to some of the jurisprudence of the European Court of Human Rights which confirmed that "in proceedings for a court of first and only instance the right to a "public hearing" under Article 6 (1) of the Convention entails an entitlement to an oral hearing unless there are exceptional circumstances that justify dispensing with such a hearing." In response, Sainsburys argued that the judge’s authority to determine the application was exhausted once he had decided the matter on paper. Furthermore, the judge was correct in concluding that no oral hearing was necessary as the full particulars appeared on the grounds of the application. Sainsburys relied on the North Range Shipping Ltd v Seatrans Shipping Corporation [2002] 1 WLR 2397 to confirm that parties to arbitration waive their Article 6 rights in the interest of privacy and finality. Article 6 of itself does not guarantee a right of appeal and any statutory limitations on that right to appeal do not breach Article 6. Sainsburys further argued that "if a would be appellant cannot convince a judge on paper, it would be a rare case where he could do so at an oral hearing." Even in the European Court of Human Rights permission to appeal can be refused on paper in a criminal case.

Conclusion

The Court of Appeal acknowledged that both parties had accepted "that notwithstanding section 69 (6) of the 1996 Act this court had a residual jurisdiction to grant relief in a case of unfairness." The only issue to be decided was whether the judge’s reasons for refusing permission to appeal under section 69 (5) were adequate for the purposes of Article 6 ECHR. The court confirmed that "statutory provisions limiting the right of appeal from an arbitral award do not offend Article 6 as a general proposition." The court further concluded that if an oral hearing was required by the ECHR jurisprudence then "it is surely required for the purposes of section 65 (5) on its true interpretation." However, once the application has been determined on paper it is too late then to ask for an oral hearing.

The Court of Appeal did not accept that Article 6 required that there should be an oral hearing unless there were exceptional circumstances in the particular case. Both parties had already been given a full and fair hearing before the arbitrator and there was no suggestion that the arbitral process had not complied with Article 6. The hearing was before an independent tribunal. Each side had the opportunity to put its case in full and the arbitrator gave reasons for his decision. Although the proceedings were in private the parties had waived their right to assert that this was a violation by virtue of their agreement to arbitrate at the outset. The court agreed that generally there is value in oral argument and good advocacy is an essential requirement for doing justice. However, there were contravening policy considerations under the Arbitration Act, in particular those set out in the general principles of section 1 where the object of arbitration was to obtain a fair resolution "without unnecessary delay or expense."

The Court of Appeal rejected the submission that section 69 (6) Arbitration Act 1996 was incompatible with Article 6 of the ECHR because it did not confer a right of appeal. Permission to appeal was thereby refused.

This case would appear to preclude further possible arguments that the provisions for applications for leave to appeal on a question of law under section 69 are in any way incompatible with the right to a fair trial provided under Article 6 ECHR. Taken together with the earlier decision in North Range Shipping it is unlikely that this appeal process will again be the subject of consideration by the English courts.

By Norah Gallagher

© Herbert Smith 2003

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