North Range Shipping Ltd v Seatrans Shipping Corpn

Article 6 requires fair reasons when a court determines an application for leave to appeal an arbitral award on a point of law. An unsuccessful applicant must at least be told which statutory threshold has not been met. Identifying the failed criterion will usually suffice where the question is not one of law, has no substantial effect, was not put to the tribunal, or lacks general public importance.

Where the issue is whether the award was obviously wrong or open to serious doubt, a reference to the statutory test may suffice, particularly if the judge adopts the arbitrators’ reasons. Otherwise, brief further reasons may be needed to show a fully informed applicant why leave was refused. A challenge to reasons concerns their adequacy, not the correctness of the proposed appeal.

North Range Shipping Ltd, the owner of a vessel, withdrew it from a time charter after alleged non-payment of hire. The charterer, Seatrans Shipping Corporation, contended that the owner had not given a valid three-banking-day notice under an anti-technicality clause.

An arbitral tribunal held that an e-mail notice was invalid because it was sent before the hire became due, regardless of when it reached the charterer’s mailbox. David Steel J refused leave to appeal under section 69 of the Arbitration Act 1996. The owner challenged the adequacy of the judge’s reasons and contended that Article 6 required fuller reasons.

The central issue was the extent to which Article 6 requires reasons for refusing leave to appeal from an arbitral award.

1. Permission to appeal was granted, but the appeal was dismissed. Section 69 of the Arbitration Act 1996 barred an appeal on the merits from a refusal of leave. That restriction did not exclude the Court of Appeal’s exceptional residual jurisdiction to set aside a decision where the integrity of the decision-making process was compromised by unfairness, as it would be by misconduct. The jurisdiction concerned process, not the correctness of the decision on leave.

2. Article 6 applied to the statutory appeal process, although parties who choose consensual arbitration waive Article 6 rights in relation to the arbitral process itself. The court held that the guidance in The Antaios [1985] AC 191, that a judge should say no more than that leave was granted or refused, could no longer stand without qualification.

3. An unsuccessful applicant must be told at least which threshold in section 69(3) has failed. Usually that alone supplies adequate reasons where the proposed question is not one of law, does not substantially affect rights, was not asked of the tribunal, or lacks general public importance. The same may be true where the award is said to be obviously wrong or open to serious doubt, especially where the judge adopts the arbitrators’ reasons. If the basis is not otherwise apparent, the judge must give brief further reasons sufficient to explain the refusal to a fully informed applicant. The court rejected any requirement for detailed reasons.

4. The court accepted that finality in arbitration remained important. Requests for further reasons should be resisted, and permission to challenge their adequacy should be refused save in the plainest case. The reasons are assessed for adequacy only; they cannot be used to reopen the merits of the proposed appeal.

5. Here the judge had adequately explained that the tribunal treated the premature dispatch of the notice as distinct from the later issue of when an e-mail notice took effect. The tribunal had decided only the former issue, which was not of general public importance. The judge’s three concise sentences therefore gave an adequate reason for refusing leave.

• Court of Appeal (Civil Division) — Permission was granted and the appeal was dismissed: [2002] EWCA Civ 405.
• High Court, Queen’s Bench Division, Commercial Court — David Steel J refused leave to appeal from the arbitral award under section 69 of the Arbitration Act 1996, and later refused leave to appeal to the Court of Appeal.