English High Court allows rare appeal of arbitral award on point of law

Summary

The recent decision of Tricon Energy Ltd v MTM Trading LLC [2020] EWHC provides a rare example of the English High Court allowing an appeal against the decision of an arbitral tribunal on a point of law. The decision relates to a claim for demurrage and the question of whether the claim was time barred following a failure of one party to submit the bills of lading with its demurrage claim. The English High Court disagreed with the decision of the tribunal and allowed the challenge made pursuant to section 69 of the Arbitration Act 1996.

Background

Tricon Energy Ltd (the Charterers) had chartered a vessel owned by MTM Trading LLC (the Owners) and, following delays at both the load and discharge ports in Antwerp and Houston respectively, the Owners brought a claim for demurrage. The Charterers disputed that the demurrage claimed by the Owners was due on the principal basis that the demurrage claim had not attached all necessary supporting documents as required by clause 38 of the charterparty terms, and specifically that the bills of lading had not been provided. As a consequence of these documents not being submitted, the Charterers argued that they could not determine whether the claim was well-founded, and that, in any event, the demurrage claim had since become time barred.

Clause 38 provided (in part): “Charterer shall be discharged and released from all liability in respect of any claim/invoice the Owner may have/send to Charterer under this Charter Party unless a claim/invoice in writing and all supporting documents have been received by Charterer within [90] days after completion of discharge of the cargo covered by this Charter Party or after other termination of the voyage, whichever occurs first.”

The Owners argued that their claim, which was received by the Charterers within the 90 day time-frame, was sufficiently documented for the purpose of clause 38 by the statement of facts they provided. The arbitral tribunal upon hearing the dispute agreed with the Owners and held that the demurrage claim succeeded. The tribunal found that the Charterers had been provided with the statement of facts which set out the bill of lading figure and which was ’in reality all that Charterers need to check’. The tribunal concluded therefore that the provision of the bills of lading was not a requirement of clause 38.

Question of law

The Charterers appealed pursuant to section 69 of the Arbitration Act 1996 in respect of the following question of law arising out of the award: “Where a charterparty requires demurrage to be calculated by reference to bill of lading quantities, and contains a demurrage time bar which requires provision of all supporting documents, will a claim for demurrage be time-barred if the vessel owner fails to provide copies of the bills of lading?”

The Court’s decision

The Court disagreed with what it described as an ‘experienced’ arbitral tribunal, on the basis of interpretation of the particular clauses in the charterparty. The Court concluded there was a requirement to provide the bills of lading with the claim in accordance with clause 38. The Court made reference to parts of the charterparty which made it clear that ‘pro-rating for demurrage purposes had to be calculated by reference to the bill of lading quantities’ and noted that the charterparty when referring to supporting documents stated ‘all’ supporting documents should be provided. For these reasons, the failure by the Owners to produce the bills of lading in support of the demurrage claim, barred the entire claim accordingly.

Comment

With only a handful of successful challenges under section 69, this case serves as a useful reminder that section 69 can provide parties opportunity in the right circumstances to appeal an arbitral award on a point of law.

Section 69 of the Arbitration Act is a none mandatory provision, allowing parties to contract out of their right to appeal under this section. Indeed, the rules of many arbitral institutions expressly prevent parties from appealing on a point of law, thereby disapplying its application. Further, the test to obtain leave to appeal under section 69 is notoriously difficult to satisfy and, as a result, very few appeals are brought pursuant to this provision. Please read more in our earlier publications – English courts release latest statistics on arbitration related applications and Appeals under the English Arbitration Act 1996.

England is considered a pro-arbitration jurisdiction as the English Courts have consistently demonstrated a reluctance to interfere with arbitral awards. Even where the high threshold test is met to bring an appeal, such cases are rarely successful. This case is a rare example of a successful section 69 appeal which very much turns on its particular facts. The case demonstrated though that the English courts will exercise their supervisory jurisdiction, where appropriate, to remedy errors of law.