Parties wishing to appeal arbitration on a question of law need more than facts; context and understanding are also essential to an effective petition.

By
Alexia-Anna Kalafati & Matthew de Plater, The Standard Club – Charles Taylor,

In the recent Commercial Court decision in St Shipping and Transport Pte Ltd v Space Shipping Ltd [2016] EWHC 880 (Comm), the court refused permission to appeal an arbitration award where the parties had entered into an agreement under which points of law could be appealed.

The dispute between the owner and the charterer of the CV Stealth has raised issues surrounding the appeal arbitration on a question of law. Credit: Alfvan Beem

The disagreement was between the owner and the charterer of the CV Stealth. While stationed in Puerto La Cruz, the charterer received an authorisation for the exportation of oil which turned out to be a forgery.

Neither the charterer nor the owner were involved in the forgery but to assist with their investigation the local Venezuelan court made a precautionary order prohibiting the vessel from sailing from Puerto La Cruz, where the vessel has been detained ever since.

At the arbitral tribunal, it was decided that the charterer was liable to the owner for the financial loss they had suffered as a result of the detention of the vessel. The charterer sought to appeal the award.

“This case makes clear that an attempt to ‘dress up’ a finding of fact as a point of law will not succeed.”

An issue arose as to whether they required permission to appeal since there was an agreement between the parties – clause 41 on the Shelltime 4 form – that “either party might appeal to the High Court on any question of law arising out of an award”.

The judge dismissed the application on the basis that the charterer failed to satisfy the criteria set out in the Arbitration Act 1996 (the Act).

Appeal on a point of law

Under section 69(1) of the Act, a party to arbitration proceedings may appeal an arbitration award on a point of law. Section 69(2) further provides that an appeal can only be brought with the agreement of all parties, or with the English court’s permission.

When considering whether to grant permission to appeal, the court should be satisfied that the determination as to the question of law will substantially affect the rights of the parties (section 69(3)(a)).

The charterer here argued that they did not need the English court’s permission to appeal because clause 41 constituted an agreement to appeal under section 69(2) of the Act.

Although the owner accepted that clause 41 allowed the parties to appeal, they argued that the agreement was limited to only questions of law arising out of the award and the charterer’s appeal included questions of fact.

High Court decision

The High Court refused permission to appeal on a number of grounds. First, clause 41 was clearly drafted with the terms of section 69(3)(a) of the Act in mind. The scope of clause 41 was limited to questions of law whose determination by the court would substantially affect the right of the parties. On these facts the charterer failed to prove that all the questions raised were indeed questions of law.

What’s more, under the Act, the issue is whether the determination as to the question of law will substantially affect the rights of the parties, not whether it may. The court here was not convinced that the questions raised would substantially affect the parties’ rights beyond a purely academic consideration.

Finally, unless it is obvious from the terms of the award, the party asserting that the court’s leave is not required has the onus of proving that such an agreement has been reached. The judge was not convinced that the charterer here had established this fact with adequate evidence.

Comments

The decision helps to clarify the scope of section 69 of the Act. Parties have the option to include a bespoke clause into the subject charterparty, to allow them to appeal an arbitration award.

In this instance, however, the clause reflected the statutory test in section 69(3)(a) and, in the absence of a question of law which would substantially have affected the rights of the parties, the court’s permission was still required. 

This case makes clear that an attempt to ‘dress up’ a finding of fact as a point of law will not succeed and the courts remain reluctant to interfere with an arbitrator’s findings unless there is good reason to do so.

Alexia-Anna Kalafati is a claims assistant in the UK and Americas division at Charles Taylor. She can be contacted on +44 20 7680 5667 or alexia-anna.kalafati@ctplc.com. Matthew de Plater is a senior claims executive dealing with Mediterranean members at the same company. He can be contacted on +44 20 3320 8897 or matthew.deplater@ctplc.com.