Indescon Ltd v Sir Robert Ogden CBE LLD

An arbitration notice does not lapse merely because the party serving it delays applying for the appointment of an arbitrator. A term requiring appointment or conduct of the arbitration within a reasonable time will not be implied without satisfying the usual requirements for implication, and delay alone does not necessarily amount to repudiatory breach or abandonment. Where no arbitrator has been appointed, the other party is not generally responsible for progressing the reference. Separate arbitration notices may remain operative, and the applicable Arbitration Act depends on the notice and the parties’ agreement.

Indescon sought declarations concerning the jurisdiction of an arbitrator appointed in relation to disputes arising from a 1989 construction contract. It had served an arbitration notice in 1992 and a further notice in 2000, after lengthy periods of inactivity and negotiations. Anthony Bingham was appointed in 2002 pursuant to the 2000 notice. The defendant challenged the continuing validity of the 1992 notice, contending that the right to appoint had lapsed, that the notice had been abandoned, and that the delay constituted repudiatory breach of the arbitration agreement.

The central issues were whether either notice remained effective, whether the appointment of Mr Bingham was valid, and which arbitration regime governed the resulting proceedings.

1. The claim for declarations succeeded. The right to appoint an arbitrator under the 16 April 1992 notice continued to subsist. In the absence of agreement, the President of the Chartered Institute of Arbitrators was the proper appointing authority.
2. The court rejected the argument that the contractual right to seek appointment had lapsed through effluxion of time. The passage relied on from Leonidas D [1985] 1 WLR 925 did not support a general category of contractual rights described as powers which necessarily lapse unless exercised within a reasonable time.
3. No term requiring application for appointment within a reasonable time was to be implied. The defendant would have had to establish that the term was necessary for business efficacy or obvious to the parties, that breach was a condition entitling termination of the arbitration agreement, and that there had been no acquiescence. Those requirements were not satisfied. The contract’s execution under seal and its 12-year limitation period were relevant to the parties’ intention.
4. Neither the 2000 notice nor the steps concerning Mr Scott amounted to express or implied abandonment of the 1992 notice. The 2000 notice expressly preserved the earlier notice. The invalid appointment of Mr Scott could not establish abandonment, and the defendant had not treated the earlier notice as abandoned at the relevant time.
5. The authorities concerning mutual obligations in an existing arbitration did not require the defendant to progress the 1992 reference when no arbitrator had been appointed. The position would have been different after appointment. Delay might make a later trial difficult or unfair, but the statutory safeguards in section 13(a) of the Arbitration Act 1950 and section 41(3) of the Arbitration Act 1996 protected the respondent.
6. The 2000 notice was valid and Mr Bingham’s appointment under it was valid. The 1992 arbitration was to proceed under the Arbitration Acts 1950 and 1979; the 2000 arbitration was to proceed under the Arbitration Act 1996. The arbitrator could determine the arbitration costs, including costs relating to interim awards.