Appealing High Court decisions under the Arbitration Act 1996 (the Act) may be restricted following a recent ruling by the Court of Appeal. In Integral Petroleum SA v Melars Group Limited (2016 EWCA Civ 108), the Court of Appeal confirmed the High Court’s wide discretion in relation to the way in which it chooses to deal with challenges to arbitral awards and confirmed the strict limitations on granting permission to appeal challenge decisions.
The claimant, a Swiss oil and petroleum trading company, originally challenged an arbitral award on the basis of the lack of jurisdiction of the tribunal (s67 of the Act). Although the High Court judge found that the tribunal had incorrectly declined jurisdiction, the judge nonetheless, as matter of discretion, refused to make an order for relief and, in turn, refused permission for the claimant to appeal the High Court’s decision.
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What can the High Court do? S67 of the Act allows a party to challenge an award based on the lack of jurisdiction of the tribunal. Under s67(3), the court may confirm, vary or set aside (in whole or in part) the award. In this case, the claimant argued that the court’s powers are confined to only confirming, varying or setting aside (in whole or in part) the award and the High Court was therefore wrong when it declined to make any order. The Court of Appeal held that s67 relief is discretionary, noting the permissive nature of the word “may” in s67 and that the language of the section did not set out an exhaustive list of what the court could do. The High Court was therefore entitled to make no order.
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When can the Court of Appeal grant permission? The Court of Appeal also confirmed that only the High Court judge may grant permission to appeal his/her order on challenges to awards, save where the High Court judge acts without jurisdiction (which had not occurred here). This stems from s67(4) of the Act, which provides that “the leave of the court is required for any appeal from a decision of the court under this section”, and “the court” means the High Court (not the Court of Appeal).
Important takeaways
This case is a reminder that it is essential to have carefully drafted arbitration clauses to reduce the likelihood of jurisdictional challenges. In the contract in this case, the parties agreed to submit “all disputes hereunder” to arbitration, and the uncertainty in this wording was at the heart of the challenge to the tribunal’s jurisdiction.
Further, the Court of Appeal has now clarified that the list of available relief under s67(3) is not exhaustive and that the court has the discretionary power not to grant any relief at all. The courts may take the same approach to challenges made under s68 (challenge based on serious irregularity) and appeals under s69 (appeal on a point of law). Parties must also seek permission from the High Court to appeal a s67 decision, unless the High Court has acted without jurisdiction.
This post was prepared with the assistance of Eleanor Scogings in the London office of Latham & Watkins.
