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The Commercial Court has upheld an appeal on a point of law under section 69 of the Arbitration Act 1996, holding that it was not necessary to imply a term into an agreement between the parties in order to give it business efficacy: Pleon Ltd v Leonis Yachting Ltd ("The Maltese Falcon") [2025] EWHC 3144 (Comm).
The judgment underlines the high threshold that must be met before the courts will imply a term into a commercial contract. Where the court concludes that a contractual term reflects the agreed allocation of risk between the parties, there will be no room for implying a term based on business efficacy.
The decision is also noteworthy because challenges under section 69 of the Arbitration Act are fairly unusual, and it is still more unusual for them to succeed. The arbitral tribunal hearing the underlying dispute was split on the issue, with one arbitrator giving a dissenting opinion. It is sometimes said that dissenting opinions in arbitration encourage losing parties to bring challenges in the court, on the basis that their position has been validated by the lack of unanimity. In this case, both the decision of the majority and the dissenting opinion were considered by the court, but ultimately the appeal was allowed for reasons that were identical with neither those of the majority nor the minority of the tribunal.
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