Section 69 of the AA 1996 provides parties to an arbitration seated in England and Wales with the opportunity to appeal against an award on a point of law where the substantive law governing the dispute is English law. Of interest to arbitration users will be two recent judgments of the English High Court allowing successful section 69 appeals.
Test for granting leave to appeal under section 69
Section 69 of the AA 1996 is not a mandatory provision and can be excluded by parties’ agreement either before or after the commencement of the arbitral proceedings. Often, parties expressly contract out of appealing on points of law or implicitly contract out by choosing institutional rules, such as the ICC Rules or the LCIA Rules, which contain provisions excluding the parties’ right to appeal the award.
Even where the parties have not contracted out of their right to appeal the award, the English courts are cautious in granting parties leave to appeal under section 69 because of the high threshold prescribed under section 69(3):
“69. (3) Leave to appeal shall be given only if the court is satisfied—
(a) that the determination of the question will substantially affect the rights of one or more of the parties,
(b) that the question is one which the tribunal was asked to determine,
(c) that, on the basis of the findings of fact in the award—
(i) the decision of the tribunal on the question is obviously wrong, or
(ii) the question is one of general public importance and the decision of the tribunal is at least open to serious doubt, and
(d) that, despite the agreement of the parties to resolve the matter by arbitration, it is just and proper in all the circumstances for the court to determine the question.”
2019 statistics on section 69 appeals: no successful application
The difficulty in obtaining leave to appeal is evident from the 20 February 2020 report by the Judiciary of England and Wales, on the Commercial Court Users’ Group meeting held on 20 November 2019. Among other things, it provides statistics on section 69 appeals for the 2018-2019 court year. The report states that the 2018-2019 court year witnessed a significant decline in the number of section 69 appeals, with a decrease from 87 to 39 appeals.
Further, the report notes that there were no successful section 69 appeals for the 2018-2019 court year. It is therefore clear that section 69 challenges are more likely to fail than succeed because of the high threshold that has to be met under section 69(3).
Two recent cases of successful section 69 appeals
Unlike the 2018-2019 court year, the 2019-2020 court year has already featured two successful section 69 appeals in the English High Court cases of Tricon Energy Ltd v MTM Trading LLC and Alegrow S.A. v Yayla Agro Gida San ve Nak AS.
In Tricon, charterers successfully appealed an arbitration award under section 69 on the basis that the owners, by not producing the bills of lading, did not submit all supporting documents for a demurrage claim within the 90 day time bar under the charterparty. Knowles J, on the basis of interpretation of relevant clauses of the contract, ruled that where the bills of lading detailing the quantity of such parcel were available and were referred to in the charterparty, they were part of all supporting documents to be presented with the demurrage claim, the failure of which led to the entire demurrage claim being time-barred. The court held that the arbitral tribunal had been wrong to conclude that the claim was not contractually time barred.
It is noteworthy that while coming to its conclusion, the court did not touch upon the principles applicable to the court’s dealing of section 69 appeals.
In Alegrow, the English High Court held that the Grain and Food Trade Association (GAFTA) Appeal Board had made an error in law by holding that the appellant repudiated the contract by failing to provide a shipment schedule when there was no contractual obligation to provide such schedule. The court therefore remitted the award to the GAFTA Appeal Board to consider Alegrow’s counterclaim, and for the award to be varied.
Unlike Tricon, the court in Alegrow referred to the previous case law regarding section 69 appeals. The Court emphasised that the English court:
- “… strives to uphold arbitration awards”
- “… should read an arbitration award in a reasonable and commercial way, expecting as is usually the case, that there will be no substantial fault that can be found with it”.
- In cases of uncertainty will “so far as possible, construe the award in such a way as to make it valid rather than invalid”.
Further, the court also recognised that in trade disputes such as those under GAFTA rules, deference should be accorded to the views of arbitrators who are industry professionals.
The Tricon and Alegrow cases are recent examples of rare success achieved by the parties in challenging arbitral awards on points of law. The English High Court did not lay down any new principle that the courts need to bear in mind while dealing with section 69 appeals than what has been previously established by case law. The court overturned the awards in these cases owing to their peculiar facts, which had obvious errors on a point of law. The parties will have to continue to overcome the high threshold required under section 69(3) of the AA 1996.
It is doubtful whether these cases can be considered as reversing the past trend of allowing very few section 69 appeals on a point of law. Having said that, it will be interesting to see if there are any more successful challenges in the remainder of this year’s court statistics.