Rights of appeal in arbitration - Who gets a second bite at the cherry?

The London Maritime Arbitrators’ Association (LMAA) and the Chartered Institute of Arbitrators (CIArb) London Branch joint webinar was presented on 2 December 2020. Those attending the joint webinar hosted by the LMAA and CIArb’s London Branch were left in little doubt that a successful appeal from an arbitrator’s award is a very rare beast indeed.

The Rt Hon. Dame Elizabeth Gloster DBE, former judge of the Court of Appeal and now full-time arbitrator, moderated the virtual panel discussion attended by over 230 from around the world.

Clare Ambrose FCIArb, an arbitrator and deputy High Court Judge practising from Twenty Essex Chambers, illustrated the primary theme that, in London successful appeals from arbitral award hardly ever happen, with Commercial Court statistics. Of an assumed 1,000 arbitration awards a year, 300 arbitration cases are heard in the Commercial Court, of which less than half are challenges. Less than 5% of those succeeded. Of these, the most successful were jurisdictional challenges, conducted as mini-trials, with a success rate of up to 15%. Clare Ambrose concluded that considerable sums were expended on unsuccessful appeals and wondered whether the use of the appeal process for tactical purposes reflected badly on London as a choice of seat for arbitration.

The baton was then taken up by James Turner QC MCIArb, a barrister at Quadrant Chambers specialising in cross-border commercial disputes in international arbitration. He explained the limited scope for passing through the narrow appeal gateway. The main vehicle, S.69 of the Arbitration Act 1996 – Appeal on Point of Law – required the appellant to identify ‘the question of law’ arising out of the award which satisfied the statutory criteria including that the tribunal’s decision was obviously wrong, or that the question was one of general public importance. He emphasised that not for nothing did S.69 emphasise the role ‘the question’ as the key to the gateway, and advised against trying to turn the construction of a one off amendment to a standard form into a point of law.

Corina Song, a partner in Allen & Gledhill LLP, and Vice-Chair of the Singapore Chamber of Maritime Arbitration, zoomed in by video to talk about the position under the International Arbitration Act (Cap.143A IAA) in Singapore, where for 25 years there had been no right of appeal. Last year, 2019, as a result of a consultation, the Law Reform Committee recommended a limited right of appeal, which, if granted would give parties the option to correct errors in questions of law. This would benefit the development of the law and would only be available if the parties agreed. It would not jeopardise Singapore’s popularity as arbitral seat because there was no recognised correlation between choice of seat and right of appeal. It remained to be seen, however, whether the new S.24A would be passed.

David Barnett C.Arb FCIArb brought the focus back to trade association arbitrations, notably GAFTA and FOSFA disputes. With a shipping background and 35 years as a commodity trader, David Barnett has practiced as a full-time arbitrator since 2014. GAFTA has 2000 company members to FOSFA’s 1200. Both offer a 2-tier arbitration system with a right to a second hearing. Nevertheless, the statistics show that a limited percentage end in a different result. The appeal process is usually used by the losing party to delay paying, but it is not always the loser who wants a second bite at the cherry. The two tier process is so familiar to traders that reform is unlikely, but where commodity arbitrations, such as sugar disputes, have proved expensive, fast track resolution has been introduced for small claims which enable a decision to be given without reasons and is non-appealable.

Dame Elizabeth Gloster took questions via the Q&A function which raised the use of applications to the court under S.45 of the Arbitration Act, for determining a preliminary point of law. This would deal with a contentious issue in the early stages of the arbitration, rather than raising it as an appeal at the end. While Commercial Court Judges tend to avoid preliminary issues, as giving rise to satellite litigation and delaying ultimate resolution of the dispute, this process was used successfully and by agreement of the parties in the ‘Eternal Bliss’ case (2020 EWHC 2373).

KIM FRANKLIN QC C.Arb FCIArb

Crown Office Chambers