REUTERS | Vivek Prakash

Section 69: more appealing than we thought?

The news that Singapore is consulting on the possible introduction of appeals from arbitration awards on points of law raises once more the question of whether rights of appeal are valued by users of arbitration. Most jurisdictions do not allow any right of appeal on the merits to the court of the seat: England is one of the few jurisdictions where this is possible. When the Arbitration Act 1996 (AA 1996) was being drafted, there were several calls for rights of appeal to be abolished, but ultimately the drafters decided against this. They reasoned that parties, who have often chosen the applicable law, must be taken to have intended that the law would be properly applied by the tribunal. However, the drafters sought to minimise court intervention by pragmatic means, for example, by continuing to require the grant of leave to appeal and by making the test for the grant of leave more stringent by the introduction of a requirement that it be “just and proper” for the court to rule on the question of law, despite the parties’ agreement to arbitrate.

A number of procedural restrictions were also imposed. For example, the application for leave to appeal is required to be brought within 28 days of the award (section 70(5), AA 1996). Further, section 69(5) of the AA 1996 provides that the application for leave to appeal is to be determined without a hearing unless it appears to the court that a hearing is “required”. In addition, Practice Direction 62, and the Commercial Court Guide, set out a timetable and restrictions on evidence and the length of submission. By these means, it was hoped that court intervention could be kept within reasonable limits.

Nevertheless, appeals remain controversial. They are often regarded as a somewhat old-fashioned and regressive aspect of English arbitration law, and have long been the subject of criticism. In his recent speech to the Worshipful Company of Arbitrators, Sir Bernard Eder noted that there had been a number of attacks on England as a seat, based on the existence of rights of appeal and other challenges, and the perception that English courts were interventionist and likely to interfere in the substantive result. His answer to this was to analyse the available figures, from which he concluded that a tiny proportion of awards are successfully appealed in the English courts, and that the “attacks peddled abroad are without any proper basis”.

But the relatively low rate of applications for permission to appeal, and the even lower rate of successful appeals, raise the question of whether parties require or value the opportunity to invite the court to intervene on the substantive merits. Many parties contractually exclude rights of appeal. It is also notable that it is extremely unusual for parties to agree to adopt the section 45 reference of a point of law to the court, suggesting perhaps that the court’s input on the correct interpretation of the relevant legal principles is not prioritised by the parties to arbitration.

Some further insight can be gained from the 2018 Queen Mary International Arbitration Survey, in which respondents were asked to identify the most valuable, and the worst, characteristics of international arbitration. Rights of appeal did not feature in the “most valuable” table, though “lack of appeal mechanism on the merits” was named by just 14% of respondents as one of the worst characteristics. This was just below “lack of insight into how institutions select and appoint arbitrators” (15%) and just above “lack of insight into institutions’ efficiency” (11%). These findings suggest that the lack of an appeal on the merits is unlikely to be a significant concern for most users of arbitration.

Further, the costs and delays involved in appeals are not insignificant. Applications for leave to appeal often involve an attempt to argue that the question of law raised by the appeal is one of general public importance, which can potentially generate wide-ranging evidence. Further, although the Admiralty and Commercial Courts Guide prescribes maximum lengths for skeleton arguments (15 pages), these are not always adhered to. And, although a Reply skeleton is supposed only to be served if “necessary”, in practice they have become routine, as most claimants will deem it “necessary” to respond (usually in a further 15 page skeleton).

When it comes to the court’s ruling, although section 69(5) mandates the determination of the leave application without a hearing, in practice section 69 applications are often accompanied by a challenge under section 68. Section 68 challenges do not require permission, and there are no restrictions on the evidence that may be brought to support them. The Commercial Court’s usual practice in such cases is for the section 68 application to be disposed of first, at a hearing, with the section 69 to follow (if necessary). Although this clearly is sensible in terms of allocation of court time, it has the consequence that appeals can be dragged out for a considerable time and, further, that they will be dealt with (if necessary) at a hearing rather than on paper.

All this is rather a long way from the original vision of a judge taking 30 minutes to read and dispose of the application for leave, as described by the Court of Appeal in The Northern Pioneer. Nowadays, even if the leave application is dealt with on paper, 45 plus pages of skeleton, plus evidence and award, means that even the most efficient judge would be lucky to finish an application in half a day. It is hard not to conclude that the procedural restrictions envisaged by the drafters of the AA 1996 are, in practice, not as strict as they could be.

This all raises the question of why Singapore is now considering introducing a remedy of appeal. The answer may lie in the argument that the use of arbitration in particular industry sectors can hamper development of the common law. This argument was recently revisited by Thomas LJ who, in his March 2016 Bailii lecture, urged the relaxation of restrictions on appeals, so that English courts are given sufficient “lifeblood” to develop the law. However, it is worth noting that, unlike in England where the right of appeal exists as a default, the right of appeal proposed by the Singaporean Ministry of Law would be available only on an opt-in basis. In addition, no doubt, the consultation is likely to consider the appropriate restrictions on the right of appeal. It will be interesting to see the conclusions of the consultation, and to consider further any lessons that might be learned with a view to maintaining England’s position as an arbitral centre.

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