Navios International Inc v Sangamon Transportation Group

Section 70(4) of the Arbitration Act 1996 permits further reasons only where they are necessary for the court properly to consider an arbitration application or appeal. It is insufficient that further reasons would merely assist the court. The power is discretionary and should be exercised sparingly, having regard to cost, delay and the statutory policy of finality. Applications should generally be made no later than the related application for permission to appeal or respondent’s notice. The power is directed to obtaining further reasons for the award made, not ordinarily to reopening evidence and obtaining findings for a different award. Failure to seek clarification under section 57 may be relevant to discretion but is not a jurisdictional bar to a section 70(4) application.

Three section 69 appeals arose from a chain of back-to-back time charters concerning liability for US Gross Transportation Tax. Different arbitral tribunals had reached opposing conclusions on whether the relevant charterparty clause required reimbursement only of tax paid by the owner or also indemnified contractual liabilities for tax.

Sangamon, the charterer at the bottom of the chain, applied under section 70(4) of the Arbitration Act 1996 for orders requiring further findings about the incidence of US Gross Transportation Tax. The application was opposed by STX Pan Ocean Co Limited. The central issue was whether those further findings were necessary for the court properly to determine the section 69 appeals.

1. Application dismissed. The requested orders were not necessary for the court properly to consider the appeals. The appeals principally concerned construction of the US Tax Clause. The tribunals had given reasons based on the wording of the clause, and the court could reach its own conclusion on that material.
2. Section 70(4) of the Arbitration Act 1996 imposes a necessity threshold. Further reasons must be needed because the court would otherwise be unable properly to consider the application or appeal. It is insufficient that they would be helpful. This approach was consistent with Cefetra v Toepfer [1994] 1 Lloyd’s Rep 93.
3. The power is discretionary and must be exercised very sparingly. Applications cause cost and delay and may undermine the finality intended by the arbitration legislation. The approach stated in Universal Petroleum v Handels-Und [1987] 1 Lloyd’s Rep at p528 was equally applicable under section 70(4).
4. Applications should generally be issued no later than the application to which they relate. A respondent should ordinarily raise the need for further reasons when serving its respondent’s notice. The guidance in PT Putrabali Adyamulia v Societe Est Epices [2003] 2 Lloyd’s Rep 700 supported that conclusion.
5. Failure to request clarification under section 57(3)(a) of the Arbitration Act 1996 is not a jurisdictional bar. The reasoning in Torch Offshore LLC v Cable Shipping Inc [2004] 2 Lloyd’s Rep 446 concerned the statutory bar in section 70(2) and did not apply by analogy. Such a failure may nevertheless weigh against discretionary relief.
6. Section 70(4) was not an appropriate means of reopening the arbitration to receive further evidence and obtain findings which had not been sought as necessary at the time. The lateness of the application, the small sum in dispute, disproportionate costs, delay and the involvement of three separate tribunals all reinforced dismissal.