Royal & Sunalliance Insurance Plc v BAE Systems (Operations) Ltd & Ors

Under Arbitration Act 1996, an agreement by all parties that an appeal on a question of law may be brought removes the need for leave under section 69(2)(b). The agreement need not expressly say that leave is dispensed with or use any prescribed formula. The question is one of ordinary contractual construction. A provision stating that any party may appeal to the court on a question of law arising from an arbitral award can constitute the required agreement, even where arbitration rules would otherwise waive recourse to the courts. The requirements concerning exhaustion of available arbitral remedies and time limits remain relevant under section 70(2) and (3).

A first partial arbitral award required BAE Insurance to pay Royal & Sunalliance Insurance Plc approximately $91.416 million under a financial risk insurance arrangement. The arbitration was conducted under the LCIA Rules, which contained an effective waiver of appeals under section 69 unless displaced.

The parties had also agreed a Disputes Resolution Agreement. Clause 5(iii) provided that any party might appeal to the court on a question of law arising from an award. The issue was whether that wording amounted to the agreement contemplated by section 69(2)(a), so that leave was unnecessary, or merely reinstated a right of appeal still subject to leave.

1. Construction of section 69. Section 69(2) distinguishes between arbitrations where all parties have agreed that an appeal on a question of law may be brought and those where they have not. In the former case, leave is unnecessary. The court rejected the contention that the agreement must be expressed in the clearest terms as an agreement to dispense with leave.
2. Meaning of clause 5(iii). The words permitting any party to appeal to the court on a question of law arising from an arbitral award tracked section 69(1) and, given their ordinary meaning, constituted the agreement contemplated by section 69(2)(a). They were not confined to removing the waiver contained in the LCIA Rules. Clause 5 was an overarching code applicable to all arbitrations under the Disputes Resolution Agreement, including fast-track arbitrations. A provision giving an unrestricted right to appeal on law would ordinarily be understood as requiring no leave.
3. Other considerations. The court found no sufficient contextual reason to depart from the ordinary meaning. The parties’ choice of drafting technique, the treatment of redundancy, other English arbitration provisions, and the related set-off provision did not alter the conclusion. The court did not decide the full extent to which the parties could contract out of the requirements in section 70(2) and (3), but those provisions remained applicable on the construction adopted.
4. Disposition. The crucial sentence amounted to an agreement under section 69(2)(a). Leave was therefore not required to bring an appeal under section 69.