In a recent application under the Arbitration Act 1996 (the Act), the Commercial Court considered time limits for appealing an arbitration award. The outcome highlights the policy objective of arbitral finality in England & Wales, and the importance of exercising any right of appeal promptly.
This article reviews the outcome and what parties looking to make an appeal should do in response.
Arbitration appeals in England & Wales
Under s.69 of the Act, a party to arbitral proceedings seated in England and Wales may appeal to the court on a question of law arising out of an award made in that arbitration. This right of appeal is relatively rare among national arbitration laws, many of which exclude the possibility of appeal in favour of promoting the final and binding nature of arbitration as a consensual process. In its recent report on the Act though, the UK Law Commission concluded that "s.69 is a defensible compromise between promoting the finality of arbitral awards (by limiting appeals) and correcting blatant errors of law", and that it should not be repealed or reformed. This statutory right of appeal is also subject to a number of procedural safeguards to prevent abuse and, as a result, successful appeals under s.69 are notoriously rare. It should also be noted that it is a non-mandatory provision which applies "unless otherwise agreed by the parties". Parties can (and do) opt-out of the right of appeal, including by adopting the rules of some arbitral institutions (for instance the ICC and the LCIA) which exclude rights of appeal.
Background to the dispute
In the case of Eronat v CPNC International (Chad) Ltd & Anor [2024] EWHC 2880 (Comm) under the terms of a deed of indemnity, governed by Hong Kong law, the parties had agreed to refer disputes to arbitration in London under the LCIA rules. Although (as noted above) the LCIA rules exclude any right of appeal, the parties overrode this with an express provision in their arbitration agreement allowing them to appeal any arbitration award to a court in England, provided that such appeal was brought within 30 days after the decision was "rendered".
A dispute later arose under the deed and was referred to arbitration. The tribunal found for the defendants, who had sought to recover sums paid by way of an indemnity. The tribunal issued a partial award on 11 April 2024 and the award stated that it was "made and signed on this eleventh day of the month of April in the Year Two Thousand and Twenty Four". The LCIA sent the award to the parties on 16 April 2024.
On 16 May 2024 (i.e. 30 days after receipt of the award), the claimant issued an application under s.69 of the Act seeking to appeal the award.
The two defendants sought to dismiss the appeal on the basis that the award had been "rendered" within the meaning of the arbitration agreement on 11 April, and the application had therefore been made more than 30 days later. The two defendants therefore applied for reverse summary judgment on the basis that the claimant's appeal was out of time. The claimant contended that the award was "rendered" only on 16 April when it was sent to the parties, and so the appeal had been made in time.
Date of award vs date of notification
Although the case concerned the construction of a bespoke clause in the parties' contract, the judge referred to the statutory scheme under the Act, which distinguishes between the date an award is "made" and the date it is "notified".
The judge found that there could be no dispute that the award was 'made' on 11 April 2024 - that was expressly stated and provided for in the award itself. This was also the effect under s.54 of the Act, which provides:
Date of award
(1) Unless otherwise agreed by the parties, the tribunal may decide what is to be taken to be the date on which the award was made.
(2) In the absence of any such decision, the date of the award shall be taken to be the date on which it is signed by the arbitrator or, where more than one arbitrator signs the award, by the last of them."
Meanwhile, s.55 of the Act provides that, absent other agreement between the parties:
The award shall be notified to the parties by service on them of copies of the award, which shall be done without delay after the award is made.
Section 56(1) also permits a tribunal to refuse to "deliver" an award pending full payment of their fees and the expenses of the arbitration.
These provisions therefore refer to "notification of an award", as distinct from "the date of an award" - it being the "date of an award" which is when time for appealing an award starts under s.70(3) of the Act.
The judge noted that:
"It is therefore built into the whole structure of the Arbitration Act 1996 (and the time for appeal) that there may be (and usually is) a passage of time between when the Award is made and when it is notified to the parties by service on them of a copy of the award (reducing the available time for any appeal)."
Acknowledging that under the Act, the time for appeal "runs from the date of the Award regardless of when the Award is notified to the parties", the judge noted the consequences this might have for parties, noting that "if neither party pays for the award before expiry of the 28 days the period for appealing can have expired even before the parties are aware of the contents of the award and the outcome thereof".
The judge noted that this distinction also underpinned the LCIA Rules which the parties had agreed to.
When is an award "rendered"?
In this case though, the parties' bespoke clause didn't use the language of the Act, but said time for the appeal ran from the date the award was "rendered". In those circumstances, what was the crucial date?
The judge found that "rendered" referred "to the work of producing/creating the Award". The time period for appealing the award therefore ran from the date the award was made (11 April), not the date it was notified to the parties (16 April). As such, the appeal had been brought out of time.
Extending time
The claimant also made submissions (albeit no formal application) that it should be allowed an extension of time to bring its appeal. The judge found though that the court had no jurisdiction to extend time because the parties had, by incorporating the LCIA Arbitration Rules in the deed, waived any recourse to the courts, save for their bespoke appeal clause. Even if the court had jurisdiction, the judge said he would have declined to extend time in this case, emphasising the importance of finality and respecting time limits for court intervention in the arbitration process.
The enforcement application
The judge also considered an application by the second defendant to enforce the award. This application succeeded, in light of the court granting the defendants' application for reverse summary judgment and refusing the claimant permission to appeal.
Lessons for arbitral parties
While this case turned on the meaning of a "one-off" arbitration clause, it nevertheless holds important lessons for arbitration appeals under the Act.
Running down the appeal clock
Parties to a London seated arbitration can take heed of the judge's clear guidance that under the Act, the notification of an award "is distinct from and subsequent to the making of an Award" and his acknowledgement that tactically, either or both parties may therefore delay paying for the award to run down the appeal clock. While the facts of this matter relate to the LCIA Rules, the judge recognised that a similar distinction appears in the ICC Rules between the "rendering" of an award and the "notification" of an award.
Accordingly, parties should be wary that, unless they have provided otherwise (and they should consider doing so in arbitration agreements), they assume the risk of the time for appeal running out before they are notified of an award.
The importance of finality and time limits
Further, the courts have repeatedly emphasised "the importance of finality and the time limits for any court intervention in the arbitration process". Although England and Wales retain the rare s.69 right of appeal, it is policed in a number of ways so as not to undermine arbitral finality. Parties wanting to use the procedure therefore need to act swiftly and be aware that the court will require "cogent reasons" for extending time (see O9.2 of the Commercial Court Guide), even in cases where an extension is possible.
Key takeaways
- Under the Act, there is a distinction between the date an award is made and the date it is notified. The time to make an appeal starts from the former.
- This distinction can be used tactically to run down the appeal clock - e.g. by delaying payment for the award
- Parties should be wary of this distinction and consider drafting arbitration agreements to cater for it.
- Parties seeking to appeal should do so as early as possible, and will need cogent reasons to extend time for an appeal
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The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
