(2016) EWHC 2361 (Comm) : Judgment
(2016) EWHC 2361 (Comm) : Judgment
(2016) EWHC 2361 (Comm) : Judgment
CL-2016-000188
QUEENS BENCH DIVISION
COMMERCIAL COURT
[2016] EWHC 2361 (Comm)
BETWEEN:
- and -
MR. A. HOGAN (instructed by Squire Patton Boggs) appeared on behalf of the Claimant.
MR. C. KARIA QC and MR. N. BACON QC (instructed by Davies Johnson) appeared on behalf
of the Defendant.
__________
JUDGMENT
(As approved by the Judge)
HHJ WAKSMAN QC:
INTRODUCTION
1. This is an application made under s.68 of the Arbitration Act 1996 (the Act)
to set aside the fifth partial Award of the sole arbitrator, Sir Philip Otton,
made on 17th December 2015 and as clarified on 3rd March 2016 (the
Award). The Award was concerned only with the question of interest and
costs, and followed earlier awards in which he found the applicants on this
application and the defendant in the arbitration, Essar Oilfields Services
Limited (Essar), liable to pay damages to the present respondent and
claimant in the arbitration, Norscot Rig Management Pvt Limited
(Norscot), for repudiatory breach of an operations management agreement
dated 14th August 2007 (the Agreement). He also awarded to Norscot
various sums which were due, but unpaid under the Agreement.
2. The present position is that Essar is now liable to Norscot for the total sum of
around US$12m. This includes around US$4min respect of the costs order
that is in issue here. There is one further award to be made dealing with some
quantum issues and new claims.
3. As will become clear, the arbitrator was highly critical of Essars conduct
towards Norscot, both during the currency of the agreement and also for most
of the arbitration period, so as to justify an order for indemnity costs.
4. The arbitration proceeded according to the ICC Rules. It is common ground
that, by Article 28(6) thereof, the parties have excluded any right of appeal
under s.69 of the Act.
5. By the Award, the arbitrator held, among other things, that Norscot was
entitled to the costs of litigation funding which it had obtained in order to
bring the arbitration. The litigation funder, Woodsford Litigation Funding,
had made an agreement with Norscot in 2011, whereby it advanced to it the
sum of around 647,000 for the purpose of the arbitration. That agreement
entitled it, in the event of Norscots success, to a fee of 300 per cent of the
funding or 35 per cent of the recovery. In that regard, Norscot sought as
against Essar the total sum of just over 1.94 million, being the sum now
owed to Woodsford. The precise quantification of this Award of costs has yet
to be done, but it will be in that region. The arbitrator held that he was
entitled so to order in his discretion, because such litigation funding costs
were other costs for the purpose of s.59(1)(c) of the Act, which refers to
legal or other costs of the parties.
THE ISSUES
(3) Even if the alleged error would constitute a serious irregularity under
s.68(2)(b), there was no substantial injustice to Essar by reason thereof
(the Substantial Injustice Issue);
(4) Even if there was otherwise a claim under s.68(2)(b), Essar lost its right
to make it by reason of statutory waiver as a result of its pre and post
Award conduct (the Waiver Issue);
(5) Finally, in the yet further alternative, there was, in fact, no error of law
anyway because the arbitrators construction of other costs so as to
include the cost of litigation funding, was correct (the Construction
Issue).
I will now consider those issues, though in a slightly different order.
Section 68(2)(b) does not permit a challenge on the ground that the
tribunal arrived at a wrong conclusion as a matter of law or fact. It is not
apt to cover a mere error of law. A mere error of law will not amount
to an excess of power under the section.
11. Furthermore, as Hamblen J. (as he then was) put it in the case of Abuja
International v. Meridien [2012] 1 Lloyds Rep 461, at paras.49 to 50:
The focus of the inquiry under s.68 is due process, not the correctness of
the decision. For there to be a serious irregularity because the
tribunal has exceeded its powers it is necessary to establish that the
arbitral tribunal purported to exercise a power it does not have. The
erroneous exercise of a power which the tribunal does have involves no
excess of power. It is not engaged if the tribunal merely arrives at a
wrong conclusion of law. An error, however gross, in the exercise of
a power does not involve an excess of that power.
- see his paras.49, 50 and 52.
12. Finally, I refer to some observations of Cooke J. in New Age v. Range Energy
[2014] EWHC 4358, at para.15, referring to Lord Steyn:
and at para.42:
13. I now turn to the relevant provisions of the Act governing the question of
costs. First of all, s.61(1) provides that:
The tribunal may make an Award allocating the costs of the arbitration
as between the parties, subject to any agreement of the parties.
14. s61 (2) then provides that:
The tribunal shall Award costs on the general principle that costs should
follow the event except where it appears to the tribunal that it is
inappropriate.
(1) The parties are free to agree what costs of the arbitration are
recoverable;
(2) If there is no such agreement, the following provisions apply;
17. Article 31(1) of the ICC Rules provides in substantially the same terms and,
in particular, says that the costs of the arbitration shall include the reasonable
legal and other costs incurred by the parties for the arbitration.
18. In addition to referring to ss.59 and 63 of the Act and Article 31(1) of the ICC
Rules, the arbitrator also referred to CPR 44.2 with its general provisions on
costs and 44.3 on the basis of costs (i.e. standard or indemnity), and 44.4 on
how to assess costs on either basis, including the conduct of the parties.
20. At para.33, the arbitrator noted that the principal sources of jurisdiction were
the Act and the ICC Rules, and noted that the concept of costs was not merely
limited to legal costs, but extended to reasonable other costs. At paras.34 to
43, he dealt with the principles governing when Awarding indemnity costs
and, at para.48, he considered that an Award of indemnity costs was
appropriate.
21. I here refer to various observations that he made as to the conduct of Essar,
which is relevant to one or more of the issues before me. In para.44, he said
that Essar had set out to cripple Norscot financially by resolutely refusing to
make payment and it had flouted its agreement to pay the crew wages. At
paras.45 and 46, he said its conduct created a vicious circle by which their
withholding of funds meant that the crew could not be paid, and Essar would
not pay Norscot because of the lack of proof of payment. Also Essar had
withheld payment to the suppliers and paid only after being ordering by the
tribunal to do so some three years later. In para.50, he said it intended to
exert and did, in fact, exert commercial pressure on Norscot before and
throughout the arbitral process and it was a David and Goliath battle, and such
conduct forced Norscots managing director to re-mortgage his home for the
best part of $1 million. At para.52, he said that for over three years, Essar
made and persisted in unjustifiable personal attacks and allegations of fraud
and dishonesty against Norscots Mr. Tollefsen, a professional rig manager,
and Mr. Sharma which were so serious and without foundation that Norscot
was entitled to costs on an indemnity basis.
22. In para.84, the arbitrator referred to the exploitative manner in which Essar
had acted towards Norscot prior to and during the dispute and said that:
24. In para.91, the arbitrator said he was satisfied that the claimant was
consequently forced to enter into a litigation funding arrangement, and
accepted the evidence of Mr. Tollefsen that there was no credible alternative
source of funding:
The conduct of the respondent before and during the dispute was a
blatant attempt to drive Norscot from the judgment seat. They
pursued their claims with courage and determination. They undertook a
huge financial burden and gamble in entering into the funding
arrangement. The claimants conduct throughout cannot be faulted.
Justice and the merits point in [the direction of the claimants].
25. At para.92, he accepted Mr. Blicks evidence that the litigation funding costs
reflect standard market rates in terms of such facilities:
This entails the higher of a fixed lump sum multiple of the [sum]
advanced or a percentage of the sum recovered.
33. At para.88, he agreed with the force and logic of Norscots submission that:
As a matter of principle, it was difficult to see the difference between, on
the one hand, allowing a party to recover pre-judgment on the interest on
costs, which is routinely Awarded and allowing a party to recover the
interest it has had [itself] had to pay to the third party to cover those pre-
judgment legal fees on his behalf.
35. He then then went onto award those costs by reason of these key findings,
which I have noted, that Essar had forced Norscot by its unreasonable conduct
into a position where it had no alternative, but to obtain litigation funding
from this particular source of the fees referred to.
Clarification
36. On 13th January 2006, Essar sought clarification of para.86 as follows. It
asked whether it was a combination of s.59 and ICC Article 31 which made
specific reference to other costs upon which the tribunal based its decision
to award the costs of litigation funding rather than s.63, which was concerned
with the basis of costs, i.e. standard or indemnity basis.
37. The arbitrator dealt with this in the addendum as follows. He referred, first of
all, to what he had said in para.86. In para.29, he referred to Article 31 of the
ICC Rules, and then s.59 and s.63 of the Arbitration Act was set out at
para.31 and Part 44 was set out at para.32. He then says that:
With hindsight and in the light of the respondents helpful observations,
it would have clarified the matter if the tribunal had expressly referred to
sections 59 and 63(3) of the Act.
38. His revised version said as follows:
The tribunal has no hesitation in deciding that the combined effect of the
provisions of the Act [and then he inserts i.e. s.59(1) and s.63(3)] and
both rules give it a wide discretion as to what costs it can Award. This
discretion includes the power to include in other costs the cost of
litigation funding and, if so, whether on the indemnity and standard costs
basis.
39. At para.32, he observed that it would not have caused the respondent to
consider that the tribunal might have exercised its discretion whether to
Award the costs in principle under s.63, rather than s59.
40. It is not suggested that his reasoning in the Addendum has any significant
impact on the characterisation issue.
Analysis
41. As Lord Steyn noted, in order to see if what the arbitrator did fell within
s.68(2)(b) as being in excess of his powers or whether it was no more than an
erroneous exercise of a power that he did have, it is necessary to focus
intensely on the power concerned. In my judgment, the relevant power here
is the undoubted power to award costs. If the arbitrator fell into error, it was
an error as to the scope of such costs by reason of his allegedly erroneous
interpretation of s.69(1)(c) and Rule 31(1).
42. I accept that, if one characterised the relevant power as being the power to
order that one side pays the other sides costs of obtaining litigation funding, or
conversely, the power to order by way of costs such sums which do not include
the costs of litigation funding, one could say as a matter of language that he
was exercising a power that he did not have. But, if that was the correct
approach, one could re-describe many, if not all, errors of law in that way.
Indeed, an erroneous exercise of power itself could in theory almost always be
re-described as an excess of power. However, according to Lesotho, there is a
real and vital distinction to be made between the two. In my judgment, to
characterise the arbitrators error here in that way would be wholly unrealistic
and artificial, and it goes against the grain of the strict and narrow confines in
which s.68 is to operate.
43. Mr. Hogan submits that this case is analogous to the example given by Lord
Steyn of a true excess of power, where the arbitrator has an express power to
award simple interest, but awards compound interest instead. I do not accept
the analogy. One can see the force of his example, because the substantive
power in question is expressly framed as one to award simple interest, and
there was a straightforward and clear departure from that. Not so here. Again,
it all depends in every case on what in substance power at issue really is. Put
another way, it must be the exercise of a power which the arbitrator did not
have at all, to borrow from the words of Cooke J. in New Age.
44. Mr. Hogan also submits that, if in purported exercise of his power to Award
costs the arbitrator awarded an amount to compensate the claimant for
emotional or inconvenient cost, that would have to be characterised as an
excess of power, but, if so, why not here as well? Again, the analogy does not
follow. In such cases, it is artificial to use the word costs at all and,
therefore, there is little difficulty in saying that such an award would be
wholly outside the arbitrators powers to Award costs. The same could hardly
be said of the costs of litigation funding, where the line to be drawn is a
matter of construction of s.59(1)(c).
45. In my view, our case is analogous to Lesotho itself, where the majority of the
House of Lords found that the erroneous award by the arbitrator in a currency
converted from local currency at a particular date was no more than an
erroneous exercise of its power to make Awards in any currency.
46. Finally, although the arbitrator himself used the word power in para.86 of
his Award, such a nomenclature is of little relevance when considering
properly and objectively the characterisation of what he did in the context of
s.68(2)(b).
47. For all of those reasons, I conclude that there was no serious irregularity
within the meaning of s.68(2)(b), even if the arbitrator was wrong in his
construction of other costs. That disposes of this application altogether.
But, in deference to arguments made on the other issues, I deal with them as
well.
51. The difference between these contexts is made abundantly clear where
s.59(1)(c) defines the costs of arbitration as including, not just legal costs, but
other costs too. There is no parallel provision in the CPR. The CPRs own
definition of costs in 44.1 is clearly more limited. It is true that the arbitrator
did refer in the Award and the addendum to CPR 44, but it is plain that this
was essentially because of the provisions dealing with standard and indemnity
costs and the different bases of assessments, as opposed to going to the
meaning of other costs. Accordingly, the approach taken by the courts
under the CPR as to what can and cannot be Awarded by way of costs is of
little direct relevance here. The relevant context is thus the Act itself and the
wide scope of procedural powers conferred upon the arbitrator.
The language
52. In fact, of course, the correct starting point is not the wider context, but the
language of the provisions themselves. Sections 63(3) and 61(1) allow the
arbitrator to determine the recoverable costs of the arbitration as he sees fit.
Section 59(1)(c) then deliberately includes a head of costs, other than legal
costs.
53. Essar seeks to cut down on the scope of the provision by saying that the
governing expression is really costs of the arbitration and that in itself
would exclude the costs of third party funding, since the latter is not the cost
of the arbitration, but the costs of funding it. However, that is the wrong way
round. It is the collection of items in s.59(1) itself which defines what the
costs of the arbitration are. Costs of arbitration is not some prior limiting
definition.
54. I accept, of course, that other costs has to be seen as other costs which
relate to the arbitration proceedings. But, in my judgment, that does not help
Essar very much, because the question then is what such costs are or might
be. Certainly, where a party to an arbitration is funding it by obtaining
specific litigation funding which is now available in a variety of forms, so as
to enable him to specifically enforce his legal rights, it is very hard to see how
that is excluded for all purposes from the expression other costs. Indeed,
Mr. Hogan in his submissions came close to accepting that when he said that
other costs connoted something necessary to get the arbitration off the
ground or on the road. Here, at least, that could be said to include the costs
of third party funding.
55. Essar, of course, has to volunteer something for other costs to cover
otherwise the expression would be wholly meaningless. It says that it would
include some costs not available in a court-based costs order, for example,
internal expert fees or managerial time, but without extending to litigation
funding. That is a somewhat arbitrary distinction to draw. The better view,
as noted above, is to look at the expression functionally.
56. Subject to the question of assessments of, for example, proportionality and
reasonableness and the like, conventional legal costs in the sense of lawyers
fees and disbursements are incurred in order to bring or defend the claim in
question. There can be other costs also incurred to the same end. These
could be management time and they could also be the costs of obtaining
funding for the dispute.
57. Mr. Hogan also contends that the expression other costs must be construed
eiusdem generis with legal costs being a residuary class, and accordingly, it is
to be construed narrowly so as to cover only those costs that are truly
analogous to legal costs. That would allow only modest extensions therefrom
the examples that have already been cited.
58. I do not accept that the eiusdem generis rule can be said to apply in this way
here. Legal costs is not some defining genus whereby the use of other
may be expressed simply to catch any costs which almost by accident, as it
were, fall outside the definition of legal costs. The better genus, in my
view, is the costs of the arbitration to be regarded in a broad sense. There are
legal costs of the arbitration and there are other costs of the arbitration. The
real limiting factor, in my view, is the functional one. Do the costs relate to
the arbitration and are they for the purposes of it? If the costs have not been
incurred in order to bring or defend the claim in question, I would accept that
they fall outside the definition of other costs and they would not relate to
the arbitration - but that is not the case here.
59. Mr. Hogan also points to the fact that s.59(1) does not refer expressly to costs
of obtaining third party funding, but that is hardly surprising, for, if it were
otherwise, s.59(1) would have to include each and every example of what
could or did include other costs. The lack of a specific reference to third
party funding is immaterial, in my view.
60. Mr. Hogan also contends that the true source, if any, of the arbitrators ability
to award the costs of third party funding is not this part of s.63 and s59 on
costs, but rather, its power to Award interest under s.49. He accepts that, if
the current Award was set aside, it would have to be remitted to the arbitrator
and Essar would have to deal with the merits of an argument that Norscot was
entitled to such costs by way of an interest Award. I do not here analyse the
scope of s.49. But, even if the arbitrator could so Award on that basis, I fail
to see why that, in and of itself, narrows the scope of s.59(1)(c). Such
entitlement on the part of Norscot could exist side by side. For the same
reason, I do not see how the Award is somehow in fundamental conflict with
the scheme of the Act.
61. Since Rule 31(1) of the ICC Rules is expressed in substantially the same
terms as s.59(1)(c), the ICC Commission Report of 2015 headed Decisions
on Costs in International Arbitration is relevant. Its preliminary note reads:
63. Then, under the heading Third Party Funded Costs, at para.87 it said:
The successful party will itself ultimately be out of pocket upon
reimbursing such costs to the third-party funder and may therefore be
entitled to recover its reasonable costs, including what it needs to pay to
the third-party funder, from the unsuccessful party. The tribunal will need
to determine whether these costs were actually incurred and paid or
payable. The fact that the successful party must in turn reimburse those
costs is, in itself, largely immaterial.
64. And at para.90:
65. Then, at para. 92, under Success fees and uplifts, it says that:
Conclusions
68. Therefore, as a matter of language, context and logic, it seems to me that
other costs can include the costs of obtaining litigation funding. The
expression should not be confined by some legal straightjacket imposed by
reason of what a court might or might not be permitted to order. All that this
conclusion entails is that such litigation funding costs falls within the
arbitrators general costs discretion. Whether and, if so, how the arbitrator
exercises that discretion in any particular case is an entirely different matter.
Indeed, the ICC bulletin at para.93 reminds one that the overall requirement
of reasonableness can act as an important check and balance here.
69. The arbitrators exercise of his discretion here to award to Norscot the costs
of its third party funding, while, of course itself not under challenge, is
nonetheless a telling example of the good sense of reading other costs in
this way. This was a case, perhaps unusual, where the arbitrator ruled in
detailed and robust terms that Essar drove Norscot into this expensive
litigation because of its own reprehensible conduct going far beyond technical
breaches of contract, in order to vindicate its rights. Further, as the tribunal
found, Norscot had no option, but to obtain this funding from this third party
funder. As a matter of justice, it would seem very odd and certainly
unfortunate if the arbitrator was not entitled under s.59(1) (c) to include the
costs of obtaining third party funding as part of other costs where they were
so directly and immediately caused by the losing party.
71. There is a subsidiary issue between the parties as to whether, in fact, the court
could not order by way of legal costs some of the items that Essar said it
could not and which Norscot said it could or might. A further group of cases
was debated here. I accept that there are instances where the court has been
prepared to include by way of costs under the CPR somewhat more than Essar
would allow, but nothing much turns on this for the reasons already given.
72. Thus the arbitrator was entitled to interpret other costs so as to include the
costs of third party funding. There was therefore no error of law anyway.
Given my decisions on the two key issues of Characterisation and
Construction in favour of Norscot, I deal with the remaining issues somewhat
more shortly.
SUBSTANTIAL INJUSTICE
73. Even if there had been serious irregularity, it must have caused substantial
injustice to the party now complaining of it. In one sense, it can be said that it
did, because, as a result, Essar has to pay something approaching 2 million,
which, on this hypothesis, it could and should never have been ordered to pay
by the arbitrator.
74. However, Norscot argues that there is no substantial injustice since it was
Essar which, on the clear findings of the arbitrator, forced Norscot into
purchasing the third party litigation funding in order to vindicate its rights
anyway, and I have referred to the relevant paragraphs above. Norscot further
contends that, in deciding if there has been substantial injustice, the court
must enter into some sort of balancing exercise and pay regard to the justice
or otherwise of the other partys position if the serious irregularity is not set
aside.
75. Mr. Karia referred me, in particular, to the decision of Burton J. in CNH v.
PGN [2009] 1 CLC 807. Here, the arbitrator had power to award interest on
damages from the date of breach, but, for some reason, only awarded them
from the date of the claim. The arbitrator subsequently purported to correct
the award by adding a further and very substantial amount for interest; i.e.
doing what he could and should have done in the first place. Having found
that the arbitrator had no power to take that course by means of a corrective
power, Burton J. went onto consider the question of substantial injustice. He
said here that:
76. I follow all of that, but the core point on those facts surely was that there was
no true injustice caused to the claimant in that case, because, had the
arbitrator not made the original error, he would have made the payment of
interest all the way through at the outset and it could not be just for the
claimant to escape that by reason of the irregularity. The converse, of course,
was that it would be unjust to deprive the other party of such interest. I do not
read from that a principle that the court should, in fact, undertake a wide-
ranging balancing exercise looking at justice in the round. The question of
whether substantial injustice has been caused may arise more acutely where it
is not clear if the irregularity has led to any loss at all. But, in our case, at
least on the footing that the arbitrator was wrong and it was an irregularity, he
could not have Awarded the third party funding in the first place. So, in
setting that order aside, it could not be said that Essar was obtaining a
windfall.
77. I accept that, on the arbitrators finding on the facts, Essar did cause Norscot
to incur the third party funding costs. But, if, in truth, they were irrecoverable
in the arbitration, then its conduct in this context is much less relevant. The
more important direct point, therefore, is that, absent the irregularity, Essar
would not have had to pay the substantial sum awarded against it. Wider
questions of justice and fairness in respect of Norscot do not trump that, in my
view. Accordingly, had s.68(2)(b) otherwise been made out, the serious
irregularity here on substantial injustice would also have been made out. In
the event, it is academic.
WAIVER
78. Section 73 of the Act provides that
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 inter alia that the proceedings have
been improperly conducted or 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.
79. Norscot contends that, on any view, Essar waived its right to object by way of
its present s.68(2) claim, because it took part in and continued to take part in
the arbitration without making any objection that the arbitrator had
improperly conducted the proceedings or that there had been any other
irregularity. It is common ground that the complaint now made is subject to
the s.73 regime. It is also common ground that the time for any objection will
be or will start in advance of any proposed course of action intimated by the
arbitrator which is then complained of later under s.68(2) once it is done.
80. Norscot contends that waiver has occurred for two reasons:
(1) While Essar contended that Norscot was not entitled to any sum by way
of the cost of litigation funding, it did not express that in terms of an
irregularity or improper conduct and, in the context here, an excess of
power;
(2) After the Award, it continued to participate in the remaining arbitral
questions, including the form of the order regarding third party funding
and quantum issues relating to that without objecting at all. In
response, Essar contends first that, in making the objections that it did
in the form of its written submissions as to the correct construction of
other costs and whether they would allow for third party funding
costs, it had done enough for the purpose of s.73. Second, as to the
lack of objection post the Award, that was immaterial.
81. Norscot relied upon the judgment of Cooke J. in New Age, where a number of
alleged irregularities were, on any view, found to be dressed up errors of law,
as he went onto find. But he said that the parties had engaged in the question
of the content of orders which it was now said were remedies which there was
no power to award at all. He said that entirely different arguments had been
put previously as to why the orders should not be made and this was a
paradigm case for the operation of s.73(2) of the Act. The orders were
specifically sought and known to be sought during the course of the
arbitration, though sometimes in wider terms without any objection being
made that there was no power to make such orders.
82. I accept that the paradigm case for the operation of s.73 might be where there
is a procedural irregularity later complained of and which the arbitrator might
have put right, had the objection been made at an earlier stage (see, for
example, the observations of Popplewell J. in Terna v. Al Shamsi [2013] 1
Lloyds Rep 86, at paras.126 and 127). But the words of s.73 are plain, and
the statutory waiver is not confined to cases where an earlier objection might
have brought about a different course of action on the part of the arbitrator or
indeed the other side at the time. There is no causal requirement in s.73.
83. Furthermore, I consider that it should be applied strictly in order to give effect
to the underlying aim which is that any intended objection based on
irregularity or improper conduct of the arbitrator should be expressed by the
party complaining about it in those terms at the time, so that there is no doubt
about it.
84. Against that background, I conclude that there was a statutory waiver here. It
is true that Essar made clear in its submissions prior to the Award that the
other costs did not include third party funding costs, but it did not state that
this was something which amounted to an irregularity or improper conduct in
the proceedings. Secondly, what happened after the Award is not immaterial,
because the parties took forward the issue of the wording of the order about
third party funding and then discussed the question of assessment. At that
stage, there was no further objection in substance to the arbitral award already
made, and that involvement persisted for some time through the addendum
submission process until 31st March, when this claim was finally made.
85. Mr. Hogan suggests that, provided the claim form here is itself issued on time,
whether with or without the benefit of an extension, then s.73 must be
satisfied, but I disagree. The time limits and the waiver provisions are two
entirely different things. Accordingly, had it been relevant (and it is not), I
would have found that there was a statutory waiver so as to defeat the claim.
Any application must be brought within 28 days of the date of the Award
or, if there has been any arbitral process, of the date when the applicant or
appellant was notified of the result of that process.
88. I now consider the position on time if, contrary to above, the claim was
otherwise well-founded. Here, among the other clarifications sought, Essar
had sought clarification from the arbitrator as to whether his conclusion at
para.86, which referred to the provisions in the Act and the Rules, was based
upon s.59 and Rule 31, as opposed to s.63. The arbitrators addendum dealt
with that at paras.28 to 31, as I have read.
89. On the question of time, Essar submitted, first, that the 28 day time limit only
ran from the addendum, in which case, the claim was filed in time. But, if
not, an extension should be granted now and retrospectively pursuant to
courts power under s.85, and it should be given permission to amend to seek
it.
90. I deal first with whether the claim was made in time. The legal position
regarding corrected Awards in this context emerged clearly from the
observations of Teare J. in K v. S [2015] 2 Lloyds Rep 363, which I gratefully
adopt. First, the reference to arbitral review in s.73 which could be the
starting point for the 28 day period, if there was such a review, does not apply
to corrected Awards, which are not the same thing. The fact that the arbitrator
has power to correct an Award under s.57 is not to the point (see the judgment
at paras.17 to 19).
91. As to corrected Awards, the position on time was as follows. Merely because
the relevant party had sought a corrected award pursuant to s.57(3), that does
not without more extend time, so that the 28 days now runs from the date of
the corrected award. In that regard, I respectfully prefer the view of Teare J.
to the very brief observations of Jackson J. in Surefire v. Guardian [2005]
EWHC 1860. However, if the application to correct was material to the issue
now being raised under s.68(2), then the 28 days would indeed run only from
the date of the corrected Award (see paras.18 to 20 of the judgment).
Extension of time
94. This would now only arise if (a) the s.68 claim was itself well-founded, but
(b) time only ran from the 17th September, so that (c) an extension was
necessary, contrary to what I have just found. On this (by now) highly
artificial footing and having regard to the factors relevant to the exercise of
the courts power to extent time under s.85, as set out by Popplewell J. in
Terna, at paras.27 to 31, I would have concluded as follows:
(1) There was a long delay in making the application to extend time or
applying for leave to amend the claim form to ask for it 77 days from
the expiring 28 day period;
(2) Although not supported by much detail, Essars evidence is that it
worked on the erroneous assumption that time only ran from 3rd March
and it was only later that it became aware that Norscot was saying that
it was out of time. Mr. Hogan here relied on Norscots respondents
notice of 11th May 2016;
(3) In fact, Essar was first put on notice somewhat earlier, on 4th April, and
there is no explanation as to why it took until 20th May to seek extra
time. However, on the facts of this case, I can see how Essar and its
legal team might have thought, even if wrongly, that time did not run
until 3rd March;
(4) No specific prejudice to Essar has been caused by this delay. It is not
as if, for example, the application has had a material impact upon the
remaining parts of the arbitration;
96. For the reasons given above, this application must be dismissed, and I will
now hear counsel on all consequential matters.
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