Frontier Agriculture Ltd v Bratt Brothers (a firm)

A party loses the right to challenge an arbitral tribunal’s substantive jurisdiction under section 73 of the Arbitration Act 1996 only if it has taken part in the relevant arbitration without maintaining its objection. Participation in appointing an arbitrator may amount to participation, but the correspondence must be assessed objectively and by reference to the particular arbitration. A party that preserves its objection to arbitration concerning a disputed contract does not thereby participate in that arbitration. A challenge also requires a real prospect of success or a triable issue; a bare denial unsupported by sufficient evidence is inadequate.

Frontier Agriculture obtained an arbitration award against Bratt Brothers for breaches of two grain contracts. The award covered both contracts and permission was granted under section 66 of the Arbitration Act 1996 to enforce it as a judgment.

Bratt Brothers applied to set aside the enforcement order, arguing that the second contract had not been made and that the arbitration claim had lapsed under the applicable arbitration rules. Blair J dismissed the application, holding that participation in the arbitration had deprived the appellant of the right to challenge jurisdiction. The appeal concerned participation, the existence of the second arbitration agreement, and whether the alleged procedural defects affected substantive jurisdiction.

1. Appeal allowed. The order of Blair J giving permission to enforce the award was set aside.
2. Under section 73 of the Arbitration Act 1996, participation must be assessed in relation to the particular arbitration. A party may accept an arbitrator’s appointment for one arbitration while maintaining its objection to another arbitration concerning a contract whose existence it disputes.
3. The correspondence was to be viewed objectively. The appellant’s initial communication expressly rejected arbitration under the second contract. Its later statement that the proposed arbitrator was acceptable in principle addressed the arbitrator’s independence and impartiality, and did not abandon the objection to the second contract. The appellant therefore retained the right to challenge substantive jurisdiction in relation to that contract.
4. A denial that an arbitration agreement exists is insufficient by itself. The challenger must show a real prospect of success or a triable issue. There is no practical difference between those formulations: Ashworth v Newnote Ltd [2007] EWCA Civ 793 and Collier v P & M J Wright Ltd [2007] EWCA Civ 1329; [2008] 1 WLR 643. The assessment must take account of the evidence on both sides. On the sparse evidence, the appellant met that threshold.
5. The court did not need to determine the remaining arguments. It observed that the alleged timing defect under the arbitration rules, and the objection to hearing the two arbitrations together, did not concern substantive jurisdiction. Those matters should have been raised in the arbitration and could not later be raised if the award was otherwise valid.
6. The parties were invited to consider consequential orders, including costs.

• Court of Appeal (Civil Division): The appeal from Blair J’s order was allowed and the order permitting enforcement of the arbitration award was set aside.
• High Court, Queen’s Bench Division, Commercial Court: Cooke J granted permission under section 66 of the Arbitration Act 1996 to enforce the award. Blair J dismissed the appellant’s application to set aside that order and ordered the appellant to pay the respondent’s costs.