UK: Cases Under The 1996 Arbitration Act

Last Updated: 2 December 1998
Introduction

The new English Arbitration Act 1996 has now been in force for almost two years. This is perhaps a convenient time to review the manner in which the courts have been applying the Act. A selection of the more important cases decided under the new arbitration law is reviewed below.

(a) Stay of Legal Proceedings - Section 9

Perhaps the best known of all cases, and one of the earliest decided under the Act, is Halki Shipping Corporation v Sopex Oils [1998] 1 WLR 726. The Court of Appeal had to apply section 9, which provides that, where a contract contains an arbitration clause, any court proceedings which are brought must be stayed unless the arbitration agreement is null and void, inoperative or incapable of being performed.

The Court in Halki had to decide whether it was still open to a plaintiff to bring summary proceedings to enforce a claim where the contract contains an arbitration clause, but where the defendant has no arguable defence to the claim. This was the situation under the old law.

The Court found that the reduced scope of the new section 9 did not allow summary judgment to be granted in the presence of an arbitration clause (even where it might be said that there was "no dispute" or arguable defence to the claim) and, thus, the matter came within the arbitration clause.

(b) Extensions of Time for Beginning Arbitral Proceedings -Section 12

In three cases, the courts have recently had to consider the scope of their powers to extend time for the beginning of arbitral proceedings under the new arbitration law.

In order to grant an extension of time under section 12, the courts must be satisfied, either that circumstances are "outside the reasonable contemplation of the parties" and that it would be just to extend the time limit, or that the conduct of one party makes it unjust to hold the other party to the strict terms of the time provision in question.

Vosnoc Ltd v Transglobal Projects Ltd [1998] 1 WLR 101, shows an initial judicial tendency to be flexible in regards to extentions of time. This case involved a contract subject to the one year limitation provisions of the 1922 Hague Rules. The plaintiff sought to commence arbitration proceedings by sending the defendant a letter which advised that the dispute between them was referred to arbitration. The Court held that this letter did not effectively commence arbitration proceedings as it did not request the defendant to nominate an arbitrator, with the result that the action was time-barred.

The Court considered, however, that it had to take into account "the whole of the circumstances" when deciding whether or not to grant an extension. It held that it was not in the parties' reasonable contemplation that a letter referring a dispute to arbitration might fail to bring about the intended result. In view of a number of factors, in particular, the fact that it was not clear that the plaintiff's letter had failed to commence proceedings, the plaintiff's clear intention to give notice in order to prevent time running against it, the defendant's knowledge of the plaintiff's intention, and the substantial amount of the claim, the Court held that it was just to grant an extension of time under section 12.

However, in the case of Cathiship S.A. v Allanasons Ltd (The "Catherine Helen") [1998] 3 All ER 714, the Court declined to extend time under section 12 on the ground that parties must be held to the bargain they strike under arbitration clauses which contain time bars. In view of the commercial purpose of such clauses, mere notice of a possible future claim was held to be insufficient compliance with a requirement under a Centrocon clause that a claim be made in writing within a one year period.

(c) Interrelationship between Sections 9 and 12

The relationship between sections 9 and 12 of the Act was considered in the case of Grimaldi Compagnia di Navagazione SpA v Sekihyo Lines Ltd (1998) The Times, 20 July 1998. Charterers had applied to the courts for a declaration that the Hague Rules were not incorporated in the charterparty. In the alternative, they sought an extension of time for the commencement of arbitration under section 12. In response, the owners argued for a stay under section 9 of the Act as the charterparty contained an arbitration agreement.

The Court decided that, where there was an arbitration agreement and one party insisted on arbitration, matters should be resolved by section 9. There was nothing in section 12 to lead to a contrary conclusion. The Court could and should interpret the relationship of sections 9 and 12 in such a way as reflected the parties' agreement to have their substantive disputes determined by arbitration whilst preserving the Court's residual role to intervene by granting an extension under section 12 if and when necessary.

Incorporation of arbitration clause - Section 6(2)

The issue before the Court in Trygg Hansa Insurance Co Ltd v Equitas Ltd (1998) (unreported) was whether an arbitration clause in a primary insurance contract was incorporated by reference in a reinsurance contract. The relevant part of Section 6(2) provides that reference in an agreement to a document containing an arbitration clause constitutes an arbitration agreement if the reference is such as to make that clause part of the agreement. The Court held that in the absence of special circumstances general words of incorporation were not to be treated as effective for the purposes of section 6(2) and that the arbitration clause in the primary insurance contract was not incorporated into the reinsurance contract.

(d) Arbitrator's duty to act fairly - Section 33

The arbitrator's duty under Section 33 to act "fairly and impartially" as between the parties, giving each party a "reasonable opportunity" of putting his case and dealing with that of his opponent, was considered recently in the case of Gbangbola and another v Smith & Sherriff Ltd [1998] 3 All ER 730. The plaintiffs challenged a cost order made by the arbitrator on the grounds of "serious irregularity" under section 68 of the Act. They alleged that the arbitrator, in making his costs order, had relied on matters which neither party had raised.

The court held that the arbitrator's duties under section 33 extend to awards of costs:

"A tribunal does not act fairly and impartially if it does not give a party an opportunity of dealing with arguments which have not been advanced by either party. It is not suggested by the claimant contractor that either of the two points mentioned in the arbitrator's letter was raised by it in the arbitration as being influential on the overall burden and determination of costs. Unless such an opportunity is given there is danger that the final result will not be determined fairly against the party who would be ordered to pay the costs."

(e) Arbitrator's jurisdiction - Sections 30 and 67

Section 30 of the Act allows the arbitral tribunal to rule on its own substantive jurisdiction while section 67 allows a party to challenge such an award. To date, there have been a few test cases regarding these provisions. In Azov Shipping Co v Baltic Shipping Co (1998) (unreported), the arbitrator, using powers granted by section 30, concluded that he had jurisdiction and that Azov was a party to an agreement which contained an arbitration clause. This finding was challenged by Azov under section 67 of the Act. Azov also sought a direction that there should be oral evidence and cross- examination on this issue. This request was granted by the Court which found that, although there may be some prejudice to the speedy and economical disposal of the application by allowing oral evidence, justice required it.

In Ranko Group v Antarctic Maritime SA (the "Robin") [1998] LMLM 492, an arbitrator was appointed under the LMAA Small Claims Procedure for three companies in a demurrage dispute arising out of a charterparty which contained a London arbitration clause. Two of the companies asked the arbitrator to rule on his own jurisdiction pursuant to section 30. By way of response, on 14 October 1997, the arbitrator wrote a letter stating that he had been directly appointed under the provisions of the small claims procedure and that all disputes arising under the charterparty had been submitted to arbitration in accordance with the arbitration agreement.

On 28 November 1997, the arbitrator published his award relating to the disputes and the reasons for his ruling on jurisdiction which had been given on 14 October. On 23 December, the three companies tried to challenge the jurisdiction finding under Section 67 of the Act. The Court found that, as the time for challenging an award was usually 28 days from the award, the companies were out of time as the ruling had been made on 14 October. The Court also refused to grant an extension of time, stressing that the role of the Court in relation to the Act was essentially one of review rather than rehearing.

Conclusion

The courts appear to have adjusted to the new Arbitration Act without difficulty and to have made use of the new concepts and principles it introduced into English arbitration law.

This note is intended to provide general information about some recent and anticipated developments which may be of interest. It is not intended to be comprehensive nor to provide any specific legal advice and should not be acted or relied upon as doing so. Professional advice appropriate to the specific situation should always be obtained.

 

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

 
In association with
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement

Mondaq.com (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of www.mondaq.com

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about Mondaq.com’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.

Disclaimer

Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.

Registration

Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to unsubscribe@mondaq.com with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.

Cookies

A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.

Links

This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.

Mail-A-Friend

If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.

Security

This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to webmaster@mondaq.com.

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to EditorialAdvisor@mondaq.com.

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at enquiries@mondaq.com.

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at problems@mondaq.com and we will use commercially reasonable efforts to determine and correct the problem promptly.