Judge’s arbitration ruling saves the golden goose

In a succinct and, at times, colourful judgment in Midnight Marine v Thomas Miller Speciality Underwriting Agency (formerly Osprey) [2018], Males J has roundly rejected an Assured’s oral application to overturn a decision made ‘on paper’ by another judge for permission to appeal an arbitration award.

The facts of the underlying dispute are that a barge, the Labhauler, listed at sea, losing its cargo overboard, and subsequently sinking in 2007. A claim by cargo interests against the vessel owners was settled, but the vessel’s P&I Club denied cover.  Owners ignored a London arbitration agreement in the P&I Club’s Rules and brought proceedings against the Club in Canada in 2008 for CAD 625,000 (c. £370,000). The Canadian Supreme Court ordered that these proceedings be stayed in 2010, in recognition of the London arbitration commenced by the Club, also in 2008, for a declaration of non-liability. Fast forward to July 2017 and, after seven years of apparent inactivity, the Assured sought to appoint an arbitrator in the London arbitration.

The Club sought and duly obtained an award from the Tribunal that the Assured’s claim was time-barred by the contractual and/or the statutory limitation periods, alternatively that its claim should be dismissed for inordinate and inexcusable delay under s.41(3) Arbitration Act 1996.

The Assured appealed to the Commercial Court, seeking to overturn the award:

  • on the grounds of procedural irregularity under s.68 of the Act, on the basis that the Tribunal had exceeded its jurisdiction in finding that the Assured was a “claimant” within the meaning of the term in s.41(3), such that the arbitrators were entitled to dismiss its claim; and
  • on a point of law under s.69  of the Act, on the grounds that the claim was not time-barred owing to the Club having commenced arbitration for a negative declaration.

Butcher J. dismissed the challenge, without a hearing, on the basis that the arbitrators’ decision on the law was not obviously wrong and nor did it give rise to a substantial injustice to the applicant Assured.

Males J made short shrift of dismissing the Assured’s oral applications to set aside Butcher J’s decision, and for permission to ask the Court of Appeal for leave to appeal the award. In doing so, the judge referred to the “absurdity” of the Assured’s position, and its “insuperable dilemma” on account of its being required to argue seemingly conflicting positions. On the one hand (for the s.68 case), the Assured argued that it was not the claimant in the arbitration and, therefore, that s.41(3) did not apply. On the other hand (for its s.69 case), it sought to argue that its claim had in effect been referred to arbitration and, therefore, was not time-barred.

The Judge did not pull his punches either in expressing his dismay at the parties’ combined costs of £150,000 in this oral application alone. In his comments about ways in which the Court should in future handle applications for leave to appeal arbitrations more efficiently, he continued the long line of English Court judgments that give deference to the consensual nature of arbitration, referring to the over-arching need not to permit the cost of procedural applications to become so disproportionate.  As the judge put it “There is after all such a thing as killing the golden goose”.

As a postscript though, interestingly, Males J indicated that if the s.69 application had stood alone he might have been inclined to grant permission to appeal. A glimmer of encouragement, perhaps, as regards the English Court’s ‘case-by-case’ approach in an otherwise ‘unfriendly’ judgment for those who may be dissatisfied with the outcome of arbitration.

Carrie Radford