DDT Trucks of North America Ltd & Ors v DDT Holdings Ltd

An arbitration agreement is legally distinct from the agreement of which it forms part. Termination, invalidity or ineffectiveness of the underlying agreement does not, without more, terminate the arbitration agreement. A challenge alleging that an award was obtained by fraud through perjury requires materially strong new evidence which could not reasonably have been produced earlier and which would probably affect the result. Extensions of time for challenges under the Arbitration Act 1996 are governed by the factors identified in Kalmneft v Glencore, applied strictly where jurisdiction is challenged, having regard to the statutory policy of finality.

DDT Trucks of North America Ltd sought enforcement under section 66 of the Arbitration Act 1996 of an arbitrator’s costs award. DDT Holdings Ltd challenged an earlier award under sections 67, 68 and 69 and sought extensions of time for those applications.

The arbitration concerned whether an agreement signed at Chicago Airport terminated the parties’ distributorship agreement, whether it had been procured by fraudulent misrepresentation, and whether the arbitrator had jurisdiction. Holdings later obtained depositions which it said contradicted evidence given in the arbitration. The issues were whether the arbitration agreement survived termination, whether the proposed evidence satisfied the test for serious irregularity, whether permission to appeal should be granted, and whether time should be extended.

1. All four applications by Holdings were dismissed, and DDT NA was granted leave to enforce the costs award as a judgment or order of the court.

2. Section 7 of the Arbitration Act 1996 codifies the separability principle. An arbitration agreement forming part of another agreement is not invalid, non-existent or ineffective merely because the underlying agreement is invalid, did not come into existence or has become ineffective. Even if the distributorship agreement had been terminated by accepted repudiation or frustration, the arbitration agreement would remain available to determine a disputed claim for compensation. The court applied Harbour v Kansa as the pre-existing position.

3. A section 68(2)(g) challenge alleging that an award was procured by perjury must satisfy the substantial-injustice requirement. The relevant considerations include whether the evidence could have been produced at the arbitration with reasonable diligence and whether it is so strong that it would probably affect the result and, if unanswered, be decisive. The depositions were available before the hearing, and the alleged inconsistencies were insufficient to overcome the arbitrator’s strong credibility findings.

4. For an extension of time, the court applied the Kalmneft v Glencore criteria: delay, reasonableness, responsibility for the delay, prejudice, continuation and impact on the arbitration, the strength of the application, and overall fairness. The policy of finality in arbitration, particularly regarding jurisdictional challenges, required strict application. The applications were weak or futile, the delay was unjustified, and further proceedings would prejudice DDT NA.

5. The arbitrator was apparently obviously wrong in construing the Airport Agreement as concluded with the new company rather than Holdings. However, that error could not substantially affect the parties’ rights because the section 67 and 68 challenges and the applications for extensions of time failed. Permission to appeal under section 69 was therefore refused.