PEC Ltd v Asia Golden Rice Co Ltd

Where an arbitral tribunal decides that it has substantive jurisdiction and the applicable rules provide no arbitral appeal on jurisdiction, a challenge under section 67 of the Arbitration Act 1996 must be made within 28 days of the first-tier award. An appeal on other issues does not postpone time for the jurisdiction challenge.

The court may extend time under section 80(5). Relevant considerations include the length and explanation of the delay, uncertainty about the applicable time limit, and prejudice to the other party.

PEC sought an extension of time to challenge under section 67 of the Arbitration Act 1996 a GAFTA tribunal’s ruling that it had jurisdiction over a rice sale dispute. PEC had appealed other aspects of the award to the GAFTA Appeal Board, but GAFTA Rule 8.1(b) provided no appeal against a first-tier decision that the tribunal had jurisdiction.

The parties ultimately agreed that an extension should be granted, leaving the court to determine whether time had expired and whether an extension was appropriate.

1. The first-tier award was conclusive and binding on jurisdiction under GAFTA Rules 8.1(b) and 10.1. The only available challenge was an application to the court under section 67 of the Arbitration Act 1996.

2. Under section 70(3), the 28-day period ran from the date of the first-tier award. The existence of an appeal concerning other matters, including overlapping matters, did not postpone the time for a jurisdiction challenge. There was no available arbitral process of appeal or review on jurisdiction under GAFTA Rule 8.1(b).

3. The court left open whether GAFTA appeals generally constitute an arbitral process of appeal for the purposes of section 70(2) and (3). The observations in UR Power v Kuok [2009] 2 Lloyd’s Rep. 495 were obiter. A possible construction was that, where an appeal culminated in an award, time would run from that award, whereas notification might govern a process not culminating in an award.

4. An extension under section 80(5) was appropriate. Applying the factors identified in Kalmneft v Glencore [2002] 1 Lloyds Rep 128, the delay was short, the uncertainty was a satisfactory explanation, and AGR suffered no real or irredeemable prejudice.

5. The extension of time was granted, together with directions in the terms of the parties’ draft order.