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Web Alert: The CV Stealth - no permission to appeal an arbitration award despite the parties' agreement to appeal points of law

22 July 2016

This was an application for permission to appeal by the charterer of the CV Stealth[1], from an arbitration award holding they were liable to the owner of the ship for the financial consequences of the ship’s detention at Puerto La Cruz, Venezuela. 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

A procedural question arose as to whether the charterer even required permission to appeal since  there was an agreement between the parties, in 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’.

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 the following grounds:

  1. 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.
  2. 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.
  3. 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, but in this instance 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.

This article intends to provide general guidance on the issues arising. It is not intended to provide legal advice in relation to any specific query. The law is also not static. If in doubt, The Standard Club is always on hand to assist.

 

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 [1] St Shipping and Transport Pte Ltd v Space Shipping Ltd [2016] EWHC 880 (Comm)
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