Gulf Import & Export Co v Bunge SA

An appeal clause in institutional arbitration rules may confer a broad rehearing-based right of appeal, even where the rule governing lapse of a claim does not expressly mention the appeal tribunal. The rules must be construed as a whole, and a commercially sensible construction should be preferred. A challenge concerning the tribunal’s powers under its procedural rules is ordinarily one under section 68 of the Arbitration Act 1996. An ad hoc submission is implied from conduct only where that conduct is consistent solely with the alleged submission.

Gulf bought soyabeans from Bunge under a contract incorporating the FOSFA arbitration and appeal rules. Bunge’s demurrage claim was referred to arbitration but was not renewed within the one-year period in Rule 3. The first-tier tribunal declined to exercise its discretion to revive the claim.

On appeal, the FOSFA Board of Appeal reheard the issue, exercised its own discretion and allowed the claim to continue. Gulf challenged that decision under sections 67, 68 and 69 of the Arbitration Act 1996, arguing that the Board lacked power to exercise the Rule 3 discretion and that Gulf had submitted to that issue, or was precluded from raising the objection, by its conduct.

1. The challenge concerned the scope of the FOSFA rules governing the tribunal’s powers, rather than what matters had been submitted to arbitration. It was therefore a challenge for serious irregularity under section 68(2)(b) of the Arbitration Act 1996, not a section 69 appeal or a challenge to substantive jurisdiction under section 67.
2. Rule 7 established an unfettered right of appeal against an arbitration award. Read with the two-tier structure of the rules, that right enabled the Board of Appeal to reconsider and exercise afresh the Rule 3 discretion. The absence from Rule 3 of an express reference to the Board did not restrict the right of appeal.
3. The contrary construction would produce an anomalous and uncommercial result by making the continuation of a claim depend finally on the first-tier tribunal’s decision. The Board’s conclusion was correct, although its reasoning that “arbitrator/s” itself included the Board of Appeal was not.
4. The applicable test for an ad hoc submission was whether Gulf’s conduct was only consistent with an intention to submit the issue to the Board. Baird Textiles Holdings v Marks & Spencer applied. The broader formulation in Athletic Union of Constantinople (AEK) v National Basketball Association was not adopted.
5. Gulf’s conduct was not only consistent with an ad hoc submission. An estoppel by representation or convention therefore also failed.
6. The application was dismissed. The lateness issue was academic. In any event, sections 31 and 73(1) did not apply to a section 68 challenge, and the Board had allowed the objection to be argued on its merits.

First-instance Commercial Court decision on an application challenging an appeal award of the FOSFA Board of Appeal. No prior court decision is stated.