United Tyre Company Ltd v Born

Under section 28(3) of the Arbitration Act 1996, delay in seeking assessment or repayment of arbitrators’ fees is relevant but does not create an automatic time bar. The court must evaluate all the circumstances, including the alleged excess, prejudice caused by delay, and whether the challenge was maintained by early notice. Unreasonable delay alone justifies refusal only in a sufficiently strong case. An appellate court should not interfere with a first-instance evaluative judgment absent an error of principle or a conclusion outside the range reasonably open to the judge.

The appeal arose from a preliminary issue in the High Court concerning whether a party could obtain determination and possible repayment of fees paid to an arbitrator. The fees had been paid under reservation, followed by requests for a breakdown and detailed objections. The application under section 28 of the Arbitration Act 1996 was issued after substantial delay and was initially brought under the wrong provision.

The High Court accepted that the delay was unreasonable but held that it did not bar the claim, particularly because there was no identifiable prejudice and the challenge had been notified at an early stage. The issue before the Court of Appeal was whether the delay required refusal of relief as a matter of principle.

1. Renewed application dismissed. Permission to appeal was refused. Lord Justice Mance gave the leading judgment, and Mr Justice Munby agreed.
2. Section 28(3) of the Arbitration Act 1996 requires the court to consider whether the fees shown to be excessive should be repaid and whether repayment is reasonable in the circumstances. The provision contains no specific time limit. The six-year limitation period is not the applicable legal test.
3. The statutory policy favouring speedy resolution of arbitrations applies as an important consideration to disputes about arbitrators’ fees. Delay is therefore relevant, but it is only one factor in the overall assessment. The court must consider the circumstances as a whole, including the nature of the alleged excess in fees.
4. Where the issue is whether delay alone prevents the application proceeding, the court may assume that the underlying challenge to the fees could succeed. Refusal on delay grounds alone requires either clear evidence of prejudice or a sufficiently strong case that the delay makes repayment unreasonable. Early notice of the intended challenge is relevant because it may prevent the arbitrator being lulled into believing that the issue has been abandoned.
5. The first-instance judge correctly treated the delay as unreasonable, but also correctly considered the absence of real prejudice and the early notice of the challenge. His conclusion that the claim was not barred was a judicial evaluation within the generous ambit available to him.
6. The Court of Appeal found no error of principle or approach, and no realistic prospect that the judge’s conclusion was one which no properly directed court could reach. The application was dismissed, leaving the assessment of the reasonableness and appropriateness of the fees to proceed.

1. Court of Appeal (Civil Division) — On 16 July 2004, the court dismissed the renewed application for permission to appeal: [2004] EWCA Civ 1236.
2. High Court, Queen’s Bench Division, Mercantile Bristol Court — On 18 March 2004, His Honour Judge Havelock-Allan QC held on a preliminary issue that unreasonable delay had not deprived the party of entitlement to determination of the arbitrator’s fees.