National Ability SA v Tinna Oils & Chemicals Ltd

An application for permission to enforce an arbitration award as a judgment under section 26(1) of the Arbitration Act 1950 is an “action to enforce an award” for section 7 of the Limitation Act 1980. It must therefore be brought within six years after the cause of action accrued, unless the submission was by an instrument under seal.

The statutory procedure is a summary mechanism for enforcing an award. It cannot be divided into an unrestricted application to obtain a judgment followed by separate enforcement. The special interpretation governing enforcement of court judgments under section 24 of the 1980 Act does not extend to arbitral awards. The materially identical procedure under section 66 of the Arbitration Act 1996 is governed by the same reasoning.

The appellant shipowners obtained two London arbitration awards against the respondent charterers. More than six years later, the owners obtained permission without notice to enforce the awards as judgments under section 26 of the Arbitration Act 1950.

Burton J set aside that order for material non-disclosure and also treated the enforcement application as having been made inter partes. He dismissed it because the six-year period in section 7 of the Limitation Act 1980 had expired: [2008] EWHC 2826 (Comm). Permission to appeal the non-disclosure ruling was refused.

The remaining issue was whether an application under section 26(1), unlike an ordinary action upon an award, fell outside section 7 because it merely obtained a judgment which would be enforced later.

1. Appeal dismissed. An application under section 26(1) of the Arbitration Act 1950 is a proceeding in a court of law and therefore an “action” within the broad definition in section 38(1) of the Limitation Act 1980. Since its purpose is to enforce an award, section 7 imposes the same six-year limitation period as applies to an ordinary action upon the award.

2. The section 26 procedure cannot be divided into an application merely to obtain a judgment and a later application to enforce that judgment. An arbitral award derives its enforceability from the parties’ arbitration agreement and the implied contractual promise to pay the award. Section 26, and the materially identical section 66 of the Arbitration Act 1996, provide summary procedural machinery for enforcing that award. Entry of judgment is part of that enforcement mechanism.

3. An arbitral award differs from a court judgment. A judgment is the State’s adjudication that money is due, whereas arbitral enforcement rests on the parties’ consensual agreement. Enforcement of an award may also be challenged on grounds such as the absence of an arbitration agreement, giving it a wider potential scope of challenge than enforcement of a judgment.

4. The authorities construing section 24 of the 1980 Act did not govern section 7. The treatment of enforcement machinery under section 24 resulted from the particular legislative history considered in Lowsley v Forbes and the earlier interpretation in W T Lamb & Sons v Rider. Those considerations did not require “action” or “proceeding” to receive the same confined meaning in relation to awards.

5. The ordinary and long-understood meaning of the statutory language should be followed. Clarity and accessibility are particularly important in international arbitration. The six-year period had expired, so the application to enforce the awards failed. Coleridge J and Hallett LJ agreed with Thomas LJ.

1. Court of Appeal (Civil Division): The appeal was dismissed. The Court held that section 7 of the Limitation Act 1980 applied to an application under section 26(1) of the Arbitration Act 1950.

2. High Court, Commercial Court: Burton J discharged the without-notice enforcement order for serious material non-disclosure. Treating the section 26 application as having been made inter partes, he also dismissed it as time-barred: [2008] EWHC 2826 (Comm). Permission to appeal the non-disclosure ruling was refused.

3. High Court: Aikens J had granted the owners permission without notice to enforce the arbitral awards as judgments.