A Ltd v B Ltd

Section 70(2) of the Arbitration Act 1996 requires a party who participated in arbitration to use up any available arbitral appeal or review process before applying to court. A process is exhausted when it has been fully spent and is no longer available. The question is fact-specific and does not depend on the merits of the party’s conduct or on whether the appeal was determined on its merits. Where an appeal is dismissed for failure to provide security but an extension application remains available, exhaustion occurs when that application is refused. Section 73(2) does not bar a jurisdictional challenge where the party questioned the tribunal’s ruling within the permitted time.

B claimed that A had entered into two cotton-sale contracts containing ICA arbitration provisions. A denied making the contracts but participated in the arbitration while disputing the tribunal’s jurisdiction.

The first-tier tribunal upheld B’s claim and ruled that it had jurisdiction. A gave notice of appeal to the ICA’s Technical Appeal Committee, but the appeal was dismissed after A failed to pay required fees, a deposit and outstanding costs. The ICA later refused A’s application for an extension of time. A then applied under sections 67 and 68 of the Arbitration Act 1996 to challenge the award. The preliminary issue was whether sections 70(2) or 73(2) precluded the challenge.

1. The ICA Technical Appeal Committee procedure was an “available arbitral process of appeal or review” within section 70(2), even though A contended that it had not entered into an arbitration agreement. By participating while contesting jurisdiction, A vested powers in the relevant arbitral process for the purposes of section 82(1).
2. “Exhausted” means that the available process has been used up so that it is no longer available. A party does not exhaust a process by doing nothing, but the question is not whether the process was used prudently or whether the party’s conduct was meritorious. Section 70(2) primarily regulates the sequence between arbitral processes and court proceedings, rather than excluding court proceedings altogether.
3. A had not exhausted the process merely by serving notice of appeal, nor when the appeal was dismissed on 24 April 2013, because there remained a point in seeking an extension of time. The process was exhausted when the ICA refused that application. The test is flexible and fact-specific.
4. A had not waived its jurisdictional objection under section 73(2). It had questioned the tribunal’s ruling within the time allowed by the award.
5. The answer to the preliminary issue was that A’s challenge under sections 67 and 68 was not precluded by sections 70(2) or 73(2).