It often happens that parties that have obtained an award during arbitration which they wish to appeal. While appealing arbitral awards is quite common in certain other jurisdictions, doing so in England and Wales is comparatively rare but not unheard of.
Arbitration in the UK is governed by the Arbitration Act, 1996 (AA 1996). Under the AA 1996’ regime, arbitration awards may be challenged on very limited and specific grounds. The aim of the regime is to provide for a certain degree of finality to arbitral awards, and the general underlying principal under the AA 1996 is that the Court’s will only interfere with an award where not doing so would cause a serious injustice to the applying party. This is set out in s.68 of the AA 1996 and the reasons to challenge an award have been analysed and dissected at great length by many scholars since the act came into existence. This article is not concerned with the grounds to challenge an arbitral award, but rather about the time limit within which a party must bring such a challenge.
Challenging an Arbitral Award
As per s.70(3) of the AA 1996, any challenge under s.67 or s.68 must be brought within 28 days from the date of the award being made, or from the date when any tribunal procedures have been exhausted. However, over the years it has become apparent that this time limit is not set in stone and, subject to the circumstances, the Court’s have discretion as to whether the time limit should be extended, even if the challenge is brought long after the 28-day deadline has passed. For example, in 2021 the Commercial Court granted a 511-day extension for a party to challenge an arbitral award (see, #). While the Court itself stated that the case in question was “an exceptional decision to meet the justice of an exceptional case” (see, Minister of Finance (Incorporated) and another v International Petroleum Investment Co and another [2021] EWHC 2949 (Comm)) it indicates the high degree of discretion that the Courts have in these situations.
The question then is, how does the Court evaluate whether to grant an extension in a particular case or not. This is particularly important as the finality of arbitral awards is a fundamental element of arbitration and if arbitral awards could be challenged at will and without a time limit, the finality of arbitral awards would be in jeopardy. London is home to an incredibly vibrant arena for international arbitration. This jurisdiction is sought for its speed, discretion, and for the quality of awards produced. Accordingly, if the threat of an application challenging an award were to constantly hang over parties like a Damocles Sword, a fundamental concept of our arbitration regime would be under threat.
Thankfully, challenging an award remains difficult, and the requirement to do so within 28 days remains important. In the rare circumstances that a party were to bring such an action after the 28 days, the Courts are required to evaluate such an application as per the Kalmneft Factors, which are:
the length of the delay;
“(ii) whether, in permitting the time limit to expire and the subsequent delay to occur, the party was acting reasonably in all the circumstances;
(iii) whether the respondent to the application or the arbitrator caused or contributed to the delay;
(iv) whether the respondent to the application would by reason of the delay suffer irremediable prejudice in addition to the mere loss of time if the application were permitted to proceed;
(v) whether the arbitration has continued during the period of delay and, if so, what impact on the progress of the arbitration or the costs incurred in respect of the determination of the application by the court might now have.
(vi) the strength of the application;
(vii) whether in the broadest sense it would be unfair to the applicant for him to be denied the opportunity of having the application determined.”
(See, Aoot Kalmneft v Glencore International AG & Anor. [2002] 1 Lloyd’s Rep 128)
This is effectively the test for whether an application to challenge an arbitral award under s.67 or s.68 should be allowed out of time. While the introduction of these rules have provided some clarity on the issue, the bar to appeal an arbitral award after the 28-day deadline remains high.
For instance, the “length of delay” must not be calculated relative to the length of the arbitral process, but rather in relation to the length of the 28-days provided under the Act (see, Terna Bahrain v Bin Kamil [2012] EWHC 3283). The second factor concerns itself with the conduct of the party, and the Courts will take into account the Party’s previous conduct in deciding whether it was acting reasonably in bringing the claim. As such, if there is a history of delays from the party that allowed the delay to occur, the Court will take a dim view of the delay itself.
Court’s Discretion for an Application to Challenge an Arbitral Award
However, the factors do allow for a large degree of discretion at the hands of the Court. For instance, it has been held that even if it is found that an extension would cause the respondent to suffer irremediable prejudice in addition to the mere loss of time, this in itself will not be enough for a court to refuse the application to extend the deadline (see, Daewoo Shipbuilding and Marine Engineering Co Ltd v Songa Offshore Equinox Ltd [2018] EWHC 538).
This discretion also extends to the strength of the application itself. However, the Courts will not generally conduct a full investigation of the merits of the challenge and will instead consider the evidence on a “brief perusal of the grounds” and if it appears “intrinsically weak”, then this will be taken into account, but it will not be a primary consideration (see, Terna Bahrain v Bin Kamil [2012] EWHC 3283).
As such, while it is never a good idea to bring any application outside a statutory time limit to do so, there is case law to show that while it may be difficult to bring an application to challenge an award out of time, it is possible to do so. Ultimately, like much else in the law, whether such an application will succeed depends, to a large extent, on the merits of the specific case.