Sun United Maritime Ltd v Kasteli Marine Inc

A challenge under section 67 of the Arbitration Act 1996 concerns the tribunal’s substantive jurisdiction, including whether matters were submitted in accordance with the arbitration agreement. It does not ordinarily extend to the tribunal’s determination of whether a referred claim has subsequently been settled. Settlement is generally a defence to the continuing claim for the tribunal to decide. An alleged oral agreement is not binding where, objectively, the parties intended a written agreement to be a condition of legal effect. A section 69 challenge cannot be used to appeal a finding of fact. Where the issue is fact-sensitive and raises no question of general importance, permission also requires the decision to be obviously wrong or open to serious doubt.

Sun United Maritime Ltd, the charterer, applied to challenge an arbitration costs award made in an LMAA charterparty dispute with Kasteli Marine Inc, the owner. The tribunal had assessed costs at €55,661.11 after the parties failed to complete a proposed written settlement concerning arbitration costs.

Sun United contended that the parties had reached a final oral agreement at €50,000 and that the tribunal was therefore functus officio. It brought a challenge under section 67 of the Arbitration Act 1996 and, alternatively, sought permission to appeal under section 69. The issues were whether the alleged settlement concerned substantive jurisdiction, whether a binding agreement had been concluded, and whether any appealable error of law arose.

1. Section 67. The application did not concern substantive jurisdiction under sections 67(1), 82(1) and 30(1) of the Arbitration Act 1996. The question was not whether matters had been submitted to arbitration, but whether matters already submitted had later been resolved by agreement. The alleged settlement was a defence to the continuing claim for costs and fell within the tribunal’s jurisdiction.
2. An arbitration reference generally includes authority to determine costs, as reflected in sections 59 to 65. Even an agreed settlement does not ordinarily terminate the reference automatically, given section 51.
3. On the evidence, the parties had agreed the costs figure of €50,000, but had also agreed that payment would be made from the escrow account. The escrow arrangements required a written settlement agreement. The contemporaneous documents supported the conclusion that the written agreement was a condition of legal effectiveness, not merely a record of an agreement already concluded. Objectively, the parties did not intend to be legally bound until that document was completed. Since it never was, there was no final and enforceable settlement.
4. The tribunal therefore retained jurisdiction and the section 67 application was dismissed.
5. The section 69 challenge was also dismissed. Whether a binding agreement had been concluded was an issue of fact, not law. Even if a question of law arose, it was fact-specific, raised no question of general importance, and the tribunal’s conclusion was neither obviously wrong nor open to serious doubt. No error of law was shown in the tribunal’s discretionary costs assessment.

Not stated in the judgment. The decision determined applications concerning an arbitral costs award.