[View without highlighting]
[Printable RTF version]
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
||Royal Courts of Justice
Rolls Building, 7 Rolls Buildings
Fetter Lane, London EC4A 1NL
B e f o r e :
MR. JUSTICE TEARE
||- and -
Robert D'Cruz (instructed by Simmons & Simmons LLP) for the Claimant/Respondent
Alan Maclean QC and Andrew Scott (instructed by Baker & McKenzie LLP) for the Defendant/Applicant
Hearing dates: 29 June 2015
HTML VERSION OF JUDGMENT
Crown Copyright ©
Mr. Justice Teare :
- This is an application by S, a Russian businessman, to strike out a challenge to an award brought by K pursuant to sections 67 and 68 of the Arbitration Act 1996. The ground of the application to strike out is that the applications pursuant to sections 67 and 68 of the Arbitration Act 1996 (jurisdiction and serious irregularity) were brought outside the 28 day time limit for such applications provided by section 70(3) of the Act and there are no sufficient grounds for extending the time limit.
- There is no dispute as to the background to the claim. It suffices to say that S claimed that K and Y, a Russian businessman who, it was said, owned K, misappropriated S's interest in a real estate project in Moscow, known as E. The arbitral tribunal awarded S damages in a sum in excess of US$72 million together with interest and costs. K and Y were held jointly and severally liable in respect of those damages.
- The award was dated 11 November 2014. 28 days later, on 9 December 2014, Y issued his challenge to the award pursuant to section 67 of the Arbitration Act 1996. K did not issue its application on that day but instead applied to the tribunal for correction of its award pursuant to article 27 of the LCIA arbitration rules. On 9 January 2015 the tribunal issued its correction and on 6 February 2015, 28 days later, K issued its application to challenge the award pursuant to sections 67 and 68 of the Arbitration Act 1996. S says that the 28 day period for issuing such a challenge expired on 9 December 2014. K says that the 28 day period expired on 6 February 2015 and accordingly its challenge was issued (just) within time. The date from which the 28 day period runs is the first issue to be determined on S's application to strike out. The second issue to be determined is whether, assuming the 28 day period ran out on 9 December 2014, it is appropriate to extend that period until 6 February 2015.
- It is first necessary to set out the most material provisions of the Arbitration Act 1996:
"57. Correction of award or additional award.
(1) The parties are free to agree on the powers of the tribunal to correct an award or make an additional award.
(2) If or to the extent there is no such agreement, the following provisions apply.
(3) The tribunal may on its own initiative or on the application of a party-
(a) correct an award so as to remove any clerical mistake or error arising from an accidental slip or omission or clarify or remove any ambiguity in the award, or
(b) make an additional award in respect of any claim (including a claim for interest or costs) which was presented to the tribunal but was not dealt with in the award.
These powers shall not be exercised without first affording the other parties a reasonable opportunity to make representations to the tribunal.
(4) Any application for the exercise of those powers must be made within 28 days of the date of the award or such longer period as the parties may agree.
(5) Any correction of an award shall be made within 28 days of the date the application was received by the tribunal or, where the correction is made by the tribunal on its own initiative, within 28 days of the date of the award or, in either case, such longer period as the parties may agree.
(6) Any additional award shall be made within 56 days of the date of the original award or such longer period as the parties agree.
(7) Any correction of an award shall form part of the award.
70. Challenge or appeal: supplementary provisions.
(1) The following provisions apply to an application or appeal under section 67, 68 or 69.
(2) An application or appeal may not be brought if the applicant or appellant has not first exhausted-
(a) any available arbitral process of appeal or review, and
(b) any available recourse under section 57 (correction of award or additional award).
(3) Any application or appeal must be brought within 28 days of the date of the award or, if there has been any arbitral process of appeal or review, of the date when the applicant or appellant was notified of the result of that process.
73. Loss of right to object.
(1) If a party to arbitral proceedings takes part, or continues to take part , in the proceedings without making, either forthwith or within such time as is allowed by the arbitration agreement or the tribunal or by any provision of this Part, any objection-
(a) that the tribunal lacks substantive jurisdiction,
(b) that the proceedings have been improperly conducted,
(c) that there has been a failure to comply with the arbitration agreement or with any provision of this Part, or
(d) that there has been any other irregularity affecting the tribunal or the proceedings,
he may not raise that objection later, before the tribunal or the court, unless he shows that, at the time he took part or continued to take part in the proceedings, he did not know and could not with reasonable diligence have discovered the grounds for the objection.
- It is next necessary to describe the structure of the award and to mention, in particular, those paragraphs relevant to K's request for a correction.
- Part 1 of the Award, paragraphs 1-67, gave an account of the procedural history of the arbitration. Paragraph 15 stated that K had not challenged the jurisdiction of the Arbitral Tribunal. Part 2 of the Award, paragraphs 68-85, dealt with the factual background. Part 3 of the Award, paragraphs 86-138 summarised the parties' positions. The passage dealing with the 2003 Agreement recorded at paragraph 90 that both K and Y had challenged the jurisdiction of the tribunal. The passage dealing with the Shareholders Agreement and the Escrow Agreement recorded at paragraph 93 S's submission with regard to jurisdiction over both K and Y. Part 4 of the Award (incorrectly labelled 3), paragraphs 139-141, dealt with prayers for relief.
- Part 5 of the Award, paragraphs 142-233, set out the tribunal's reasons and decisions. Section A was entitled Jurisdiction. It ran from paragraphs 144-176. Paragraph 144 begins by stating that both respondents to the claim had raised jurisdictional objections. Paragraph 147 states that the tribunal will proceed to try the jurisdictional objections raised by both respondents. In paragraphs 148-9 the tribunal referred to the doctrine of separability and said it would focus on facts and arguments relevant to determining the existence, validity and applicability of any arbitration agreement. In paragraphs 150-154 in a section entitled "Jurisdiction with respect to the First Respondent" (ie K) the tribunal held that the tribunal had no jurisdiction over K with regard to the 2003 Agreement but held that it had jurisdiction over K with regard to the Shareholders Agreement and the Escrow Agreement. In the light of that decision the tribunal said that it was unnecessary to decide whether the tribunal had jurisdiction over K with regard to the 2008 Agreement. In the course of these findings the tribunal said in paragraph 152:
"Even though First Respondent [K] has not objected to the jurisdiction of the Tribunal, it has argued that it only acted as an agent for Second Respondent and never for its own account in relation to breaches alleged by Claimant. This is a central theme of the parties as far as the merits of the dispute are concerned. As far as the arbitration agreement is concerned, First Respondent has not been able to establish to the satisfaction of the Tribunal that the arbitration agreements, in, respectively, the Shareholders Agreement and the Escrow Agreement, were entered into only for the and on behalf of First Respondent. Consequently, the Tribunal finds that it has jurisdiction over First Respondent on the basis of the arbitration clauses in the afore-mentioned agreements."
- The remainder of the award dealt with jurisdiction over Y and the merits of S's claims.
- Article 27 of the LCIA rules provided that a party could seek clarification of an award in these terms:
"Within 30 days of receipt of any award
.a party may by written notice to the Registrar
.request the Arbitral Tribunal to correct any errors in computation, clerical or typographical errors or any errors of a a similar nature. If the Arbitral Tribunal considers the request to be justified, it shall make the corrections within 30 days of receipt of the request. Any correction shall take the form of separate memorandum dated and signed by the Arbitral Tribunal
.and such memorandum shall become part of the award for all purposes."
- On 9 December 2014 and pursuant to Article 27 K sought a number of corrections. Some concerned the question of jurisdiction. The relevant part of the request is as follows:
"Paragraphs 15, 144, 147 and 152
On their face, these statements in paragraphs 15 and 152 contradict what is stated in paragraphs 144 and 147 and the premise of the entire discussion under section A.2.
We respectfully invite the Tribunal to correct paragraphs 15 and 152 in order that they conform with paragraphs 144 and 147 and reflect the fact that jurisdiction with respect to the First Respondent was an issue (in the context of its agency argument, as recognised by the Tribunal in the discussion in section A.2).
- On 9 January 2015 K informed S that corrections had been sought and suggested that the 28 day period for challenging the award would run from the date on which the tribunal's response was received pursuant to section 70(3) of the Arbitration Act 1996. K further informed S that it intended to challenge the award "in due course as soon as the determination of the Tribunal is received."
- Although it appears arguable, as submitted by counsel for S, that paragraphs 15 and 152 were intended to reflect the fact that K, unlike Y, had not issued a "bespoke" application to challenge the jurisdiction, the tribunal, on 9 January 2015 (but after the above letter had been sent), issued its "decision on correction of award". It stated that paragraph 15 should read "First respondent has challenged the jurisdiction of the Arbitral Tribunal". It further stated that paragraph 152 should read: "First Respondent has objected to the jurisdiction of the Tribunal, and has argued
- K did not immediately issue its challenge to the award. But it did so on 6 February 2015. The grounds of challenge were both in relation to jurisdiction (section 67) and in relation to a suggested serious irregularity (section 68) in that the tribunal failed to consider and determine all the relevant points in relation to jurisdiction (see grounds 1, 3, 4 and 5). In addition there was a challenge to the finding of liability on the basis that there had been a serious irregularity in failing to deal with all relevant issues (grounds 2 and 6).
- Counsel for S submitted that the date of the award was 11 November 2014 pursuant to section 54 of the Arbitration Act. It followed that any application to challenge that award on the grounds of jurisdiction (section 67) or serious irregularity (section 68) had to be brought within 28 days of 11 November 2014, namely, 9 December 2014. Counsel accepted that where there was an arbitral process of appeal or review the 28 day period only began to run from the date when the applicant was notified of the result of that process; see section 70(3) of the Act. But he submitted that the application for corrections pursuant to article 27 of the LCIA rules was not an arbitral process of appeal or review. Counsel also accepted that where there was a "material" application for clarification of an award pursuant to section 57 of the Act (or to an agreed arbitral provision to the same or similar effect such as article 27 of the LCIA rules) then, as a matter of construction of section 70, the 28 day period ran from the date of the award, as corrected; see McLean Homes South East Limited v Blackdale Limited, an unreported decision of HHJ Humphrey Lloyd QC, dated 2 November 2001 sitting in the TCC, and Al Hadha Trading Co. v Tradigrain SA and others  Lloyd's Law Reports 512, a decision of HHJ Havelock-Allan QC. But counsel submitted that the application for corrections was not "material" because K was able to issue its application challenging the award without waiting for the response from the arbitral tribunal to the application for corrections.
- Counsel for K submitted that the application for corrections pursuant to article 27 of the LCIA rules was an arbitral process of review within section 70(3) of the Act, relying upon the decision of Jackson J. (as he then was) in Surefire Systems Limited v Guardian ECL Limited  EWHC 1860 (TCC). Accordingly time ran from the date when K learnt of the result of that process of review. In the alternative, if the application for clarification was not an arbitral process of review, time ran from the date of the corrected award for the reasons given in McLean Homes South East Limited v Blackdale Limited and Al Hadha Trading Co. v Tradigrain SA and others. If, however, the challenge to the arbitration award was out of time then time should be extended.
The date from which the 28 day period ran
- Section 70(2) refers in separate sub-sections to an "arbitral process of appeal or review" and to "recourse under section 57 (correction of an award or additional award)". Although the application in the present case was not under section 57 but under article 27 of the LCIA rules neither counsel suggested that this was of any relevance. That is probably right given that section 57 contemplates that the parties are free to agree on the powers of the arbitral tribunal to correct an award. That being so the reference in section 70(2) to "recourse under section 57" can reasonably be construed as wide enough to include recourse under an agreed power to correct an award.
- Counsel for K submitted that the application for a correction pursuant to article 27 of the LCIA terms was an arbitral process of review. In support of this submission he noted that the tribunal itself, when making its corrections to the award, said that it had "reviewed" the award. He also relied upon the observation in Surefire Systems Limited v Guardian ECL Limited by Jackson J. that the clarification of the award in that case by the arbitrator was "an arbitral process of review" such that the 28 day time limit for challenging the award ran from the date when the applicant was informed of the result pursuant to section 70(3) of the Act. However, the judgment does not indicate the nature of the clarification or whether it was pursuant to section 57 of the Act.
- I accept that in one sense a correction of an award involves a review of the award because it is only by reviewing it that the tribunal can decide whether there is a mistake, error or ambiguity which needs to be corrected. However, in my judgment it is clear from section 70(2) of the Arbitration Act 1996 that an "arbitral process of appeal or review" is a different process from "any available recourse under section 57". I consider that the former process is one by which an award is subject to an appeal or review by another arbitral tribunal (as in GAFTA arbitrations or in arbitrations pursuant to Lloyd's Standard Form of Salvage Agreement) whilst the latter recourse for correction is to the same arbitral tribunal which issued the award. This distinction is consistent with the definition of available arbitral process in section 82 of the Act and was also drawn by Edwards-Stuart J. in Price v Carter  EWHC 1451 (TCC) at paragraph 68. I respectfully disagree with the observation of Jackson J. in Surefire Systems Limited v Guardian ECL Limited if he was referring to a correction issued pursuant to section 57 of the Act.
- It follows that the 28 day period did not run from the date on which K had been informed of the result of the application for a correction because that was not an arbitral process of appeal or review.
- However, there was no dispute between the parties that where there is a material application for a correction pursuant to section 57 of the Act (or an agreed process to the same effect such as article 27 of the LCIA rules) the 28 day period runs, on the true construction of section 70(3) of the Act, from the date of the award as corrected, for the reasons given in McLean Homes South East Limited v Blackdale Limited and Al Hadha Trading Co. v Tradigrain SA and others. The crucial issue in the present case was whether K's application was a "material" application for this purpose.
- Section 70 does not refer to "material" applications but, as I have indicated, it was common ground that the mere fact that there had been an application for a correction pursuant to section 57 did not mean that the 28 day period ran from the date of the corrected award; otherwise a party could simply extend the time for challenging the award by finding some slip in the award which had no connection with the proposed challenge and issuing an application for a correction.
- Counsel for K submitted that its application for a correction was material because, if the position was as described in paragraphs 15 and 152 of the award (ie that K had not challenged the jurisdiction of the arbitral tribunal), K would have been barred from pursuing its challenge pursuant to section 73(1) of the Act. Moreover, pursuant to section 70(2) of the Act K could not challenge the award if it had not first exhausted any available recourse under section 57.
- Counsel for S submitted that the application was not material because it was clear from the arbitration award that K had challenged the arbitration award and that K was able to issue its challenge to the award within 28 days of the date of the award. It did not have to await the clarification of the award before issuing its challenge.
- Challenges to arbitration awards are strictly limited by the Arbitration Act. Where they are permitted they must be promptly made. In this way the Act promotes the finality of arbitration awards. In that context I consider that an application for correction of an award is material and will properly serve to postpone the running of the 28 day period until the date of the corrected award where the correction is necessary to enable the party to know whether he has grounds to challenge the award. In such a case there is obvious good sense in construing the 28 day period as running from the date of the award as corrected for the reasons stated in McLean Homes South East Limited v Blackdale Limited and Al Hadha Trading Co. v Tradigrain SA and others. But if the grounds for challenge are known and are not dependent upon the outcome of the application for clarification then there is no good reason to postpone the running of the 28 day period until the date of the corrected award. To do so would unnecessarily delay the making of a challenge to an award. That would be contrary to the aim and object of the Act which is to promote the finality of arbitration awards. This was the approach of HHJ Humphrey Lloyd QC in McLean Homes South East Limited v Blackdale Limited at paragraphs 19-24 with which I respectfully agree.
- The outcome of the application for correction of the award in this case was not necessary in order for K to know whether it had grounds to challenge the award. It knew what the tribunal's view was as to K's challenge to the jurisdiction and it knew what its grounds were for challenging that view. The issue of the tribunal's correction of its award was not expected to add to those grounds and did not in fact add anything to those grounds. The application to challenge the award pursuant to sections 67 and 68 of the Act could have been issued on 9 December 2014, the date on which Y issued his challenge. There was no need to delay the issue of its challenge until the award had been corrected and section 70(2) did not bar the issue of a challenge because the application for correction was not material to that challenge.
- Section 73 is not a bar to the issue of the challenge in this case because K had objected to the jurisdiction to the tribunal. This was clear to K. In its application to the tribunal for clarification dated 9 December 2014 K referred to "the fact that jurisdiction with respect to the First respondent was an issue". If K had not objected to the jurisdiction of the tribunal K could not subsequently issue a jurisdictional challenge pursuant to section 67. Counsel for S did not suggest that K had failed to object to the jurisdiction of the tribunal and, although I thought at one point that counsel for K was suggesting that it had not objected to the jurisdiction of the tribunal, he could not have been suggesting that because, if that were so, then its application under section 67 was doomed to fail.
- In her second witness statement at paragraph 22 Ms. Menshenina said that
..before they were amended paragraphs 15 and 152 of the Award provided an inaccurate basis on which K could have been barred from pursuing a jurisdiction-based challenge to the award. Had K not sought the clarification and correction in question:
(1) it would have faced the risk of its jurisdiction-based challenge being dismissed:
(i) on the mistaken basis that it had not objected to the Tribunal's jurisdiction in the Arbitration or
(ii) because it had failed to utilise an arbitral process of appeal or review an recourse available (under LCIA Rule 27.1) to correct the erroneous assertions in the Award,
(which would have been inaccurate and unfair); or
(2) the court would have had to have ordered the Tribunal to clarify the contradiction in the Award on this point, using its powers under s.70(4) of the Arbitration Act 1996 (which would have involved unnecessary and significant delay and expense).
- I was not persuaded by this submission. It is unrealistic to suggest that had paragraphs 15 and 152 remained uncorrected they would have provided a basis on which K could have been barred from pursuing a jurisdiction-based challenge to the Award. Notwithstanding those two paragraphs it is clear from the tribunal's consideration of its jurisdiction in respect of the 2003 Agreement (held, no jurisdiction), the Shareholders' Agreement and Escrow Agreement (held, there was jurisdiction) and the 2008 Agreement (unnecessary to decide) that K had made submissions which challenged the tribunal's jurisdiction. Indeed, it must be K's case that it did object to the tribunal's jurisdiction; otherwise section 73 would bar its jurisdiction challenge. It is suggested that had it suited S he would have alleged, based upon the uncorrected paragraphs 15 and 152 of the Award, that there had been no challenge to the jurisdiction of the tribunal by K. I doubt that. But even if he might have done so his allegation would have been unfounded.
- Since the application for a correction of the award made pursuant to article 27 of the LCIA rules was not material to either the section 67 or 68 challenge (for the reasons already given) K was free to bring its challenge without waiting for the tribunal to respond to its request for a corrected award. Nor would the court have ordered the tribunal to clarify the contradiction in its award pursuant to section 70(4) of the Act. That power is exercised where the award does not set out the tribunal's reasons at all or in sufficient detail to enable the court to consider an application or an appeal. That was not the case here. The tribunal had set out its reasons for reaching its decision on jurisdiction.
- I accept that there was a connection between the application for a correction and the jurisdictional challenge in that the application for a correction concerned (in part) the question of jurisdiction but that, in my judgment, is not enough to render the application material. For the reasons I have given the application for correction must be such that until the award is corrected the challenge cannot be made. If it is material in that sense then it is appropriate to construe section 70(3) as providing that the 28 day limit runs from the date of the corrected award. If is it not material in that sense then it is not appropriate to construe section 70(3) in that way and section 70(2) cannot prevent a party from bringing its challenge until it has first sought and obtained a correction to the award.
- For these reasons I have concluded that the challenge to the award was out of time.
The application for an extension of time
- The court's discretion to extend time in this context has been reviewed by Popplewell J. in Terna Bahrain Holding Co. WWL v Al Shamsi  1 Lloyd's Rep. 87. His account of the relevant principles was not challenged.
"27. The principles regarding extensions of time to challenge an arbitration award have been addressed in a number of recent authorities, most notably in AOOT Kalmneft v Glencore International AG  1 Lloyd's Rep 128, Nagusina Naviera v Allied Maritime Inc  EWCA Civ 1147, L Brown & Sons Ltd v Crosby Homes (North West) Ltd  BLR 366, Broda Agro Trading (Cyprus) Ltd v Alfred C Toepfer International GmbH  1 Lloyd's Rep 243, and Nestor Maritime SA v Sea Anchor Shipping Co Ltd  2 Lloyd's Rep 144, from which I derive the following principles:
(i) Section 70(3) of the Act requires challenges to an award under sections 67 and 68 to be brought within 28 days. This relatively short period of time reflects the principle of speedy finality which underpins the Act, and which is enshrined in section 1(a). The party seeking an extension must therefore show that the interests of justice require an exceptional departure from the timetable laid down by the Act. Any significant delay beyond 28 days is to be regarded as inimical to the policy of the Act.
(ii) The relevant factors are:
(i) the length of the delay;
(ii) whether the party who permitted the time limit to expire and subsequently delayed was acting reasonably in the circumstances in doing so;
(iii) whether the respondent to the application or the arbitrator caused or contributed to the delay;
(iv) whether the respondent to the application would by reason of the delay suffer irremediable prejudice in addition to the mere loss of time if the application were permitted to proceed;
(v) whether the arbitration has continued during the period of delay and, if so, what impact on the progress of the arbitration, or the costs incurred in respect of the arbitration, the determination of the application by the court might now have;
(vi) the strength of the application;
(vii) whether in the broadest sense it would be unfair to the applicant for him to be denied the opportunity of having the application determined.
(iii) Factors (i), (ii), and (iii) are the primary factors.
28. I add four observations of my own which are of relevance in the present case. First, the length of delay must be judged against the yardstick of the 28 days provided for in the Act. Therefore a delay measured even in days is significant; a delay measured in many weeks or in months is substantial.
29. Secondly, factor (ii) involves an investigation into the reasons for the delay. In seeking relief from the court, it is normally incumbent upon the applicant to adduce evidence which explains his conduct, unless circumstances make it impossible. In the absence of such explanation, the court will give little weight to counsel's arguments that the evidence discloses potential reasons for delay and that the applicant "would have assumed" this or "would have thought" that. It will not normally be legitimate, for example, for counsel to argue that an applicant was unaware of the time limit if he has not said so, expressly or by necessary implication, in his evidence. Moreover where the evidence is consistent with laxity, incompetence or honest mistake on the one hand, and a deliberate informed choice on the other, an applicant's failure to adduce evidence that the true explanation is the former can legitimately give rise to the inference that it is the latter.
30. Thirdly, factor (ii) is couched in terms of whether the party who has allowed the time to expire has acted reasonably. This encompasses the question whether the party has acted intentionally in making an informed choice to delay making the application. In Rule 3.9(1) of the Civil Procedure Rules, which sets out factors generally applicable to extensions of time resulting in a sanction, the question whether the failure to comply is intentional is identified as a separate factor from the question of whether there is a good explanation for the failure. This is because in cases of intentional non-compliance with time limits, a public interest is engaged which is distinct from the private rights of the parties. There is a public interest in litigants before the English court treating the court's procedures as rules to be complied with, rather than deliberately ignored for perceived personal advantage.
31. Fourthly, the court's approach to the strength of the challenge application will depend upon the procedural circumstances in which the issue arises. On an application for an extension of time, the court will not normally conduct a substantial investigation into the merits of the challenge application, since to do so would defeat the purposes of the Act. However if the court can see on the material before it that the challenge involves an intrinsically weak case, it will count against the application for an extension, whilst an apparently strong case will assist the application. Unless the challenge can be seen to be either strong or intrinsically weak on a brief perusal of the grounds, this will not be a factor which is treated as of weight in either direction on the application for an extension of time. If it can readily be seen to be either strong or weak, that is a relevant factor; but it is not a primary factor, because the court is only able to form a provisional view of the merits, a view which might not be confirmed by a full investigation of the challenge, with the benefit of the argument which would take place at the hearing of the application itself if an extension of time were granted."
- In the present case the delay was from 9 December 2014 until 6 February 2015, almost two months. That is a substantial delay compared with the yardstick in the Act of 28 days.
- In delaying for that period of time was K acting reasonably? As at 9 December 2014 K was represented by Perley-Robertson, Hill & McDougal LLP, a Canadian firm of lawyers who represented K in the arbitration. It was that firm which made the application for a correction of the award on 9 December 2014. There was no evidence from that firm as to why the challenge to the award was not issued on that day. By 9 January 2015 K was represented by Simmons & Simmons LLP. On that day Simmons & Simmons said in their letter to S's lawyers Baker & McKenzie that in circumstances where there had been an application to correct an award the 28 day period for challenging the award ran from the date of the tribunal's response to the request for a correction. This, for the reasons I have given, was mistaken. But there is no evidence that this mistaken belief was the reason why a challenge to the award had not been issued on or before 9 December 2014. Instead, Ms. Menshenina has suggested in her second witness statement that if paragraphs 15 and 152 of the award had remained uncorrected K could have been barred from pursuing a jurisdiction-based challenge to the award (see the passage which I have already quoted and discussed). She then submitted that K had acted reasonably, proportionately and in accordance with the principles which underpin the Arbitration Act 1996. I do not accept that submission but what is important for present purposes is whether the concern mentioned by Ms. Menshenina was in fact the reason why no challenge was issued on 9 December 2014. There is no evidence that it was. Ms. Menshenina's evidence is no more than a submission. As stated by Popplewell J., it is incumbent upon an applicant for an extension of time to adduce evidence which explains the delay. There is no such evidence in the present case, at any rate for the period until 9 January 2015. On that date Simmons & Simmons said that a challenge would be issued as soon as the determination of the tribunal had been received. The corrected award was received on that day and yet the challenge was not issued until 6 February 2015, 28 days after the date of the corrected award. There is no explanation for that delay. In the absence of any evidence explaining that delay it is possible that K chose to delay matters as long as possible by delaying the issue of its challenge until, on its case, the last day for doing so.
- The third primary factor to consider is whether S or the tribunal caused or contributed to the delay. S did not. It is suggested that the tribunal did so by making the contradictory statements in the award concerning whether or not K had challenged the jurisdiction. I accept that those paragraphs caused K to seek a corrected award but the requested and anticipated correction was not necessary to enable K to know whether it had grounds to challenge the jurisdiction of the tribunal and so there was no material recourse for correction to exhaust before K could issue its challenge. The challenge could and should have been issued by 9 December 2014. In any event there was, as I have already noted, no evidence from Perley-Robertson, Hill & McDougal LLP or Simmons & Simmons saying this was the cause of K's delay until 9 January 2015.
- Having considered the primary factors I do not consider that the interests of justice require an extension of time notwithstanding that S would suffer no irremediable prejudice in addition to the mere loss of time were time extended.
- There is also a further factor, namely, the challenge can be seen to be intrinsically weak on a brief perusal of the grounds. The basis of K's challenge is the suggestion that K had entered into the Shareholders Agreement and Escrow Agreement as agent for Y and had no liability under them and did not agree to the arbitration agreement contained within them. However, both agreements were signed on behalf of K and described K as "Party 3". In those circumstances the terms of the agreements preclude any suggestion that K was not a party to the agreements. K seeks to rely upon extrinsic evidence (S's views as to who was the "real" party and the fact that the 2008 Agreement (which post-dated the Shareholders Agreement and Escrow Agreement) was signed by Y personally). But extrinsic evidence is not admissible to vary the true construction of a contract; see Bowstead & Reynolds on Agency 20th ed articles 99 and 100. Thus, had consideration of the three primary factors left me in doubt as to whether the present case was a proper one for an extension of time this added factor would have removed that doubt.
- Conclusion: K's application to challenge the award was issued out of time and there are no sufficient grounds to extend time. It must therefore be struck out.
Copyright Policy |
Donate to BAILII