Sumukan Ltd v The Commonwealth Secretariat

A decision whether parties have agreed to exclude an appeal on a point of law is a preliminary jurisdictional decision under section 69(1) of the Arbitration Act 1996. It is distinct from a decision granting or refusing permission to appeal. The Court of Appeal may therefore review it despite the first-instance court’s refusal of permission.

A written contract may incorporate an exclusion agreement by clear reference. Excluding an appeal under section 69 is neither unusual nor onerous in a commercial arbitration, so it does not ordinarily require special notice. Article 6 does not require section 69(1) to be read more narrowly where arbitration and the exclusion agreement were voluntarily accepted and statutory safeguards against jurisdictional error and serious irregularity remain available.

An arbitral tribunal made an award in favour of the Commonwealth Secretariat under a contract with the predecessor of Sumukan Ltd. Sumukan sought permission to appeal on a point of law under section 69 of the Arbitration Act 1996.

Colman J held that the contract incorporated the arbitral tribunal’s statute, which made awards final and excluded appeals. He consequently held that the parties had “otherwise agreed” for the purposes of section 69(1). He would otherwise have granted permission to appeal, but refused permission to appeal his own decision.

Rix LJ granted permission to appeal on the effect of article 6 of the European Convention on Human Rights but refused permission on ordinary contractual incorporation. The respondent sought to set aside the permission granted, contending that section 69(6) deprived the Court of Appeal of jurisdiction. The central issues were appellate jurisdiction, incorporation of the exclusion agreement, and whether article 6 or section 3 of the Human Rights Act 1998 required a different result.

1. Appeal dismissed unanimously. The respondent’s application to set aside Rix LJ’s permission was rejected. A ruling on whether the parties have “otherwise agreed” to exclude an appeal is a preliminary question under section 69(1) of the Arbitration Act 1996. It precedes and is distinct from the decision whether permission to appeal from the award should be granted or refused. Section 69(6) therefore did not prevent the Court of Appeal from reviewing that ruling despite Colman J’s refusal of permission: [2007] EWCA Civ 243, paras 27–34.

2. The court distinguished a fundamental question about exclusion of the court’s jurisdiction from procedural restrictions such as compliance with section 70(2) and (3). Those procedural matters fall within the process of deciding whether permission should be granted. The reasoning in ASM Shipping Ltd v TTMI [2006] EWCA Civ 1341 did not require the same treatment of an exclusion agreement. Cetelem SA v Roust Holding Ltd [2005] 1 WLR 3555 concerned a purported order exceeding statutory jurisdiction and did not determine the present question.

3. The exclusion agreement was incorporated as a matter of domestic contract law. The written arbitration clause expressly made the tribunal’s statute part of the contract, and that statute expressly excluded appeals. An agreement excluding an appeal under section 69 is common in commercial arbitration. It preserves finality, speed, privacy and the parties’ choice of tribunal. It is not an unusual or onerous term requiring special notice under the Interfoto principle. Incorporation by reference also satisfied the statutory requirement for writing: paras 35–52.

4. Article 6 did not alter that conclusion. Contractual arbitration may validly waive applicable article 6 rights where the choice is voluntary and free from constraint. The extent of the waiver must be assessed with the arbitral process and statutory safeguards. Sections 67 and 68 preserve court supervision over substantive jurisdiction, impartiality and serious irregularity. The waiver here was limited to a public court hearing on the merits and an appeal on a point of law: paras 53–61.

5. Section 3 of the Human Rights Act 1998 did not require “otherwise agreed” in section 69(1) to be confined to an express exclusion set out in the principal contractual document. Ordinary domestic construction, informed by article 6, provided sufficient protection. The incorporated exclusion agreement bound the appellant, and the appeal was dismissed: paras 62–63.

1. Court of Appeal (Civil Division): In [2007] EWCA Civ 243, held that it had jurisdiction to review the preliminary exclusion-agreement ruling, but dismissed the substantive appeal.

2. Queen’s Bench Division, Commercial Court: Colman J held that the parties had incorporated an agreement excluding an appeal under section 69 of the Arbitration Act 1996. He would otherwise have granted permission to appeal from the award, but refused permission to appeal his ruling.

3. Permission stage: Rix LJ refused permission on domestic-law incorporation but granted permission on the article 6 issue.

4. Arbitral tribunal: The tribunal made an award in favour of the Commonwealth Secretariat on 25 April 2005.