Shuttari v Solicitors' Indemnity Fund

Permission to appeal an arbitration-related decision may be refused where the proposed challenge has no reasonable prospect of success and the applicant has delayed without good reason. A party who invokes an arbitration procedure cannot ordinarily contend later that the arbitration clause was void or inoperative. Any challenge to the clause should be raised when resisting a stay under Arbitration Act 1996, section 9(4). A subsequent challenge to the award under section 68 may confirm the validity of the arbitration procedure, because it addresses serious irregularity in the conduct of the arbitration rather than the existence of the arbitration agreement. The Human Rights Act’s limited retrospective effect did not assist where the arbitration procedure was invoked before its commencement.

The appellant, a solicitor, challenged an arbitration award made in favour of the Solicitors’ Indemnity Fund after the Fund refused indemnity on grounds of dishonesty. She had herself invoked the arbitration procedure under the Fund’s rules. The award was made on 26 November 2003, and the High Court, Chancery Division, dismissed her application under section 68 of the Arbitration Act 1996 to set it aside and refused permission to appeal.

She later sought permission to appeal out of time, arguing that compulsory membership of the Fund meant that she had not freely agreed to arbitration and that recognition of the award infringed Article 6 of the European Convention. The central issues were whether the Court of Appeal had jurisdiction to entertain the proposed point, whether permission and an extension of time should be granted, and whether the arbitration procedure was invalid.

1. Permission and time. The court refused permission to appeal and any extension of time. The proposed challenge had no reasonable prospect of success, and the fifteen-month delay after the deputy judge’s order had no sufficient justification. The observation in North Range Shipping Ltd v Seatrans Shipping Corporation [2002] EWCA Civ 405 did not alter that conclusion.
2. Conduct inconsistent with invalidity. The appellant had invoked the arbitration procedure herself. If she contended that the arbitration clause was void or inoperative, she could and should have commenced court proceedings and challenged the clause when resisting any application for a stay under section 9(4) of the Arbitration Act 1996.
3. Subsequent challenge to the award. Her application under section 68 of the Act challenged the arbitrator’s conduct and the alleged exclusion of psychiatric evidence. It therefore confirmed the validity of the arbitration procedure as such, rather than reserving a challenge to the existence or operation of the arbitration agreement.
4. Human-rights argument. The arbitration procedure had been invoked before the Human Rights Act came into force on 2 October 2000. Its limited retrospective effect under section 22(4) did not provide a viable basis for the proposed challenge. The court therefore dismissed the application for permission to appeal.

• Court of Appeal (Civil Division): The application for permission to appeal was refused. The court also refused to extend time.
• High Court, Chancery Division: Mr Justice Sher QC, sitting as a deputy High Court judge, dismissed the section 68 application and refused permission to appeal on 20 May 2004.