National Ability SA v Tinna Oils & Chemicals Ltd

The Court of Appeal dismissed the appeal and held that an application under section 26(1) of the Arbitration Act 1950 (and, in corresponding terms, section 66 of the Arbitration Act 1996) to enforce an arbitration award in the same manner as a judgment is an "action to enforce an award" within the meaning of section 7 of the Limitation Act 1980. The court applied the ordinary meaning of "action"/"proceeding" in the Limitation Act and emphasised that awards are enforceable by reference to the underlying contract; the statutory summary procedure in s.26/s.66 is therefore a means of enforcing that contractual obligation and is subject to the six year limitation period.

The court rejected the appellant's submission that s.26 should be analysed as a two-stage process (first obtaining a judgment, then enforcing that judgment) so as to bring enforcement under the limitation rules applicable to judgments (s.24) rather than s.7. The judges noted important distinctions between arbitration awards and judicial judgments, the broader scope for challenge to awards, and the desirability of giving statutory language its plain meaning for the sake of clarity in international arbitration.

Background and procedural posture

• The appellant owners (National Ability SA), owners of the vessel Amazon Reefer, obtained arbitration awards in London in 1998 and 1999 against the respondent charterers (Tinna Oils & Chemicals Ltd) for sums owed under a 1995 Gencon charterparty providing for London arbitration.
• The owners sought to enforce the awards in England by an ex parte application under section 26 of the Arbitration Act 1950 on 14 July 2008; Aikens J granted leave. That order was set aside by Burton J in the Commercial Court ([2008] EWHC 2826 (Comm)) on the ground of serious material non-disclosure and, on the merits, Burton J held that section 7 of the Limitation Act 1980 applied to applications under section 26, so the six year limitation period barred enforcement.
• Permission to appeal to the Court of Appeal was granted and the appeal was heard before Thomas LJ, Hallett LJ and Coleridge J on 6 October 2009.

Nature of the claim and issues

• The owners sought to enforce arbitration awards as judgments under section 26(1) Arbitration Act 1950 (and in equivalent terms section 66 Arbitration Act 1996). The principal legal issue was whether an application under section 26/section 66 is an "action to enforce an award" for the purposes of section 7 of the Limitation Act 1980 (subject to a six year limitation), or whether it is properly regarded as a proceeding to obtain a judgment and so falls to be treated under the limitation rules applicable to judgments (section 24 and related jurisprudence).

Court's reasoning and subsidiary findings

• The court examined the ordinary statutory language and the definition of "action" in section 38(1) of the Limitation Act 1980 and concluded that an application under section 26/section 66 is a proceeding in a court and therefore falls within the wording of section 7.
• The court distinguished enforcement of an arbitration award from enforcement of a judicial judgment: an award is essentially contractual (an implied promise to pay) and the section 26/66 provisions are procedural means to enforce that contractual obligation, not merely machinery to enforce an already-existing judgment.
• The court observed that challenges to enforcement of an award are wider than challenges to enforcement of a judgment, reinforcing that the summary statutory procedure is concerned with enforcement of awards themselves.
• The Court rejected the appellant's attempt to rely on reasoning applied to section 24 in earlier cases (notably Lowsley v Forbes and its historical foundations) because those authorities turned on a different statutory and historical context; the court emphasised giving clear statutory language its plain meaning to preserve legal certainty in international arbitration.

Disposition The appeal was dismissed and the judgment below was upheld.

Appeal dismissed. The Court of Appeal held that an application under section 26(1) of the Arbitration Act 1950 (and correspondingly section 66 of the Arbitration Act 1996) to enforce an arbitral award in the same manner as a judgment is an "action to enforce an award" within the meaning of section 7 of the Limitation Act 1980. The court relied on the ordinary meaning of "action"/"proceeding", the contractual nature of an award, the wider scope of challenge to awards, and the policy of statutory clarity for international arbitration.

The matter began with an ex parte s.26 application granted by Aikens J on 14 July 2008. Burton J in the Commercial Court set that order aside and held that s.7 of the Limitation Act 1980 applied to a s.26 application; his decision is reported at [2008] EWHC 2826 (Comm). Permission to appeal to the Court of Appeal was granted and the Court of Appeal ([2009] EWCA Civ 1330) dismissed the appeal.