UK Case law: STA -v- OFY [2021] EWHC 1574 (Comm)

Arbitration – Serious irregularity – Challenge of award – Application for time extension to appeal – Length of delay in applying for time extension

In the case of STA -v- OFY, the court considered the relevant factors applicable to granting an extension of time to challenge an arbitration award. This was an application for an extension of time to bring a challenge under section 68 of the Arbitration Act 1996 (‘the Act’) in respect of a final award.

The arbitration concerned a wrongful repudiation of contract and an early termination payment. By a final award dated 26 January 2021, the tribunal ordered STA to pay to OFY the full amount of the early termination payment, plus interest and costs.

Section 70(3) of the Act gives a party 28 days from the date of an award to file an appeal in the High Court. STA had until 22 February 2021 to appeal.

On 19 February, STA’s solicitors made an application for an extension of time until 19 April alleging inter alia that they had only been instructed the previous day and that this was as a result of “the painstaking and bureaucratic decision-making process”, a change in government and various Covid related problems.

 The court extended the time for STA up to 8 March and ordered that any application for a further extension of time had to be issued and served by 5 March. That deadline was missed.

On 1 April, STA’s new solicitors issued a claim form, applying under s.68 of the Act to set aside the arbitration award. STA also issued an application notice seeking an extension of time for challenging the final award.

The application for extension of time was to be assessed by reference to the factors set out in Kalmneft -v- Glencore International AG [2002] 1 Lloyd's Rep 128. These are:

1. Length of delay

There was no doubt that in the present case the delay was significant and substantial both for the initial and second extension. Neither the length of the relevant arbitration process nor the amount at stake should have any significant bearing on the time within which an application should be made after an award.

1. Did the applicant act reasonably?

It was held that STA had not acted reasonably in failing to meet the deadlines for further applications not only in view of the time period specified in the Act, but also in view of the first order granting additional time. STA gave no adequate explanation of their delay in doing so.

1. Did the claimant or the tribunal contribute to the delay?  Was there prejudice to the respondent? Continuation of arbitration?

The above factors will also be considered, although in this case none was applicable.

1. The merits of the proposed challenge

The merits will also be considered. In the present case the court could see that the grounds of the proposed challenge to the original award were intrinsically weak.

1. Unfairness

The final factor would be whether it would be unfair for the party seeking the extension not to have its application determined. In this instance, an extension had been given already once, and it was considered to be STA’s sole responsibility not to avail itself of this opportunity.

Comment

This case provides a useful analysis on how the court approaches applications to extend time for challenging an arbitral award when done out of time.  It is of note that for any Covid related disruptions, the court will require detailed and specific evidence.  

The decision is also a useful reminder of the importance of meeting court timetables.  The appeal of any arbitration award is challenging, but parties can seriously harm their cases by failing to heed fundamental procedural requirements, such as the 28-day deadline to file an appeal.

1. Link to commentary by Hill Dickinson can be found here

Category: Caselaw