Guangzhou Dockyards Co Ltd v ENE Aegiali I

Under the Arbitration Act 1996, the court’s statutory appeal jurisdiction from an international arbitration award is confined to questions of law. Party autonomy does not permit parties to enlarge that jurisdiction by agreement. The statutory principle that parties may agree how an arbitration is conducted concerns the arbitral process, while the court’s intervention is governed separately. Clear contractual language is required before an agreement will be construed as creating an exceptional right of appeal on facts. A clause allowing an appeal on any issue arising from an award may therefore be construed, in context, as dispensing with permission for an appeal on a question of law, rather than authorising an appeal against factual findings.

The claimant dockyard sought to maintain a two-part challenge to an arbitration award arising from a ship-conversion contract. Part B was described as an appeal on questions of fact. Part C was a challenge under section 68(2)(a) of the Arbitration Act 1996; that challenge was not the subject of the present application.

The arbitration clause provided that either party might appeal to the English High Court on any issue arising out of an award. The defendant ship owners applied to strike out Part B, arguing that the court had no jurisdiction to hear an appeal on factual findings and that the parties had not agreed to create such a right. The central issues were jurisdiction and construction of the arbitration clause.

1. The application to strike out Part B of the claim form was granted. The proposed appeal concerned factual findings, including the meaning of Chinese law, which is treated as a question of fact in English proceedings. It was not an attempt to recast factual issues as questions of law.

2. The court’s jurisdiction under section 69 of the Arbitration Act 1996 is an appeal on a question of law. The words “unless otherwise agreed by the parties” permit agreement about the operation of that appeal regime, including dispensing with permission, but do not enlarge the court’s jurisdiction to hear an appeal on fact. The arbitrators remain the masters of the facts: The Baleares [1993] 1 Lloyd’s Rep. 215.

3. Section 1(b) states a principle concerning how the arbitration is conducted. It does not confer jurisdiction on the court or govern the interface between the arbitration and the court. Section 1(c), by contrast, provides that the court should not intervene except as provided by Part I. An appeal from an award is an intervention in the arbitration.

4. The court accepted the reasoning in The Chrysalis [1983] 1 Lloyd’s Rep. 503 that the statutory appeal is confined to an appeal on a question of law, and that the parties cannot by agreement confer a wider jurisdiction. The judge noted that the jurisdictional observation in that case was obiter, but found that the later expression of party autonomy in the 1996 Act did not materially alter the position.

5. Article 22.3 did not contain the clear language required to create a freestanding factual appeal. Read with its reference to arbitrations being conducted in accordance with the Arbitration Act 1996, the words “any issue arising out of any award” meant any issue susceptible of appeal under section 69. The clause dispensed with the need for permission for an appeal on a question of law. The court therefore did not need finally to decide whether parties could ever agree to a factual appeal.

6. Part B was struck out. The court was to hear the parties on the precise form of order and consequential matters. Part C remained to be determined.