Gold Coast Ltd. v Naval Gijon SA

Under section 79 of the Arbitration Act 1996, the court may extend time for an application under section 57 only where available recourse to the tribunal has been exhausted and substantial injustice would otherwise result. An error in an award is insufficient by itself. The court should consider the strength of the proposed application, the explanation and length of delay, the parties’ conduct, prejudice, and the policy of finality and limited court intervention in arbitration. Where the applicant has a strong prospect of correcting a material error, delay is reasonably explained, and the respondent suffers no material prejudice, an extension may properly be granted.

Gold Coast Limited applied under section 79 of the Arbitration Act 1996 for a retrospective extension of time to apply under section 57 to correct a Sixth Interim Award.

The arbitration concerned a terminated shipbuilding contract. The tribunal had awarded interest on US$20 million, but later accepted that it had erred in quantifying the financing charges and should have addressed interest on other sums due to the Buyer. The Buyer applied to the High Court after the 28-day period had expired. The central issue was whether refusal of the extension would cause substantial injustice and whether the court should exercise its discretion.

1. Application granted. The Buyer obtained a retrospective extension of time under section 79 of the Arbitration Act 1996, until 31 March 2006, to make its section 57 application to the tribunal.
2. Section 79(3) requires the court to be satisfied that available recourse to the tribunal has been exhausted and that substantial injustice would otherwise be done. The existence of an error in the award does not itself satisfy that threshold. Substantial injustice requires a real and substantial effect, rather than mere unfairness.
3. The court applied the discretionary considerations identified in Aoot Kalmneft v Glencore International AG [2002] 1 Lloyd’s Rep 128, while recognising that section 79 has the additional threshold requirement of substantial injustice. Relevant matters included the length and explanation of delay, whether the applicant acted reasonably, responsibility for delay, irremediable prejudice, the continuation and cost of the arbitration, the strength of the proposed application, and broad fairness.
4. The Buyer had a substantial prospect of success. The tribunal had identified an error and indicated that additional sums due to the Buyer should attract interest. The delay was reasonably explained: the error was not identified for approximately 14½ weeks, the Buyer reasonably sought clarification from the tribunal before applying for correction, and the final short delay had a personal explanation.
5. The Yard’s asserted prejudice did not outweigh the Buyer’s substantial injustice. The arbitration and the parties’ claims remained secured by the Accounting and Security Agreement, and the further section 57 application was likely to be determined without extensive proceedings. The extension was therefore granted.