Integral Petroleum SA v Melars Group Ltd

On an application under the Arbitration Act 1996 section 67, the court’s relief is discretionary. The court may confirm, vary or set aside an award, but may also make no order, or remit the matter, where justice requires. This includes a case where a jurisdictional error is inconsequential because the claim would fail in any event.

Section 67(4) prevents the Court of Appeal from granting permission to appeal to itself where the judge below has refused permission. A narrow residual jurisdiction exists where the lower judge made no true decision on permission. It does not apply where the judge made a substantive decision and refused permission.

Integral Petroleum challenged an arbitral award under section 67 of the Arbitration Act 1996. The arbitrator had declined jurisdiction over claims concerning proceedings brought by Melars in Switzerland. Andrew Smith J held that the tribunal had erred by treating itself as having no jurisdiction over every dispute, but refused relief because the error was inconsequential and the claim would fail in any event. He also refused permission to appeal.

Integral then sought permission from the Court of Appeal. It argued that the judge had been required to confirm, vary or set aside the award, and that the matter should have been remitted. The central issues were whether the Court of Appeal had jurisdiction to grant permission after the High Court judge had refused it, and whether the judge could make no order on the section 67 application.

Application refused. Lord Justice Longmore delivered the judgment, with Lord Justice Kitchin agreeing. The court declared that it had no jurisdiction to grant permission to appeal.

1. Section 67(4) of the Arbitration Act 1996 requires the leave of the court for an appeal from a decision under section 67. Where the High Court judge has refused permission, the Court of Appeal cannot grant permission to appeal to itself. The authorities cited in support included Henry Boot Construction (UK) v Malmaison Hotel (Manchester) Ltd [2001] QB 388, CGU International Insurance PLC v Astrazeneca Insurance Company Limited [2006] EWCA Civ 1340 and Michael Wilson & Partners Ltd v Emmott [2015] EWCA Civ 1285.
2. The word “may” in section 67(3) confers a discretion. Even where an application is well founded, the court is not required to confirm, vary or set aside the award. It may make no order for good reason, and has an obvious power to remit an award where appropriate. Here the jurisdictional error was inconsequential because the arbitrator had concluded that the relevant claims arose under the separate Dartex Agreement and would have rejected them in any event. There were also no realistic grounds for challenges under sections 68 or 69.
3. The residual jurisdiction discussed in Cetelem SA v Roust Holdings Ltd [2005] 1 WLR 3555 and CGU was confined to circumstances in which the judge below had made no true decision on permission to appeal. Andrew Smith J had made a genuine decision and had refused permission. His decision to make no order was therefore within jurisdiction.
4. Any argument about how the discretion to make no order should have been exercised had to be made before the judge, or promptly after judgment. It was too late to raise it for the first time in the Court of Appeal. The position in the British Virgin Islands could not affect the Court of Appeal’s jurisdiction.

• Court of Appeal (Civil Division): Under [2016] EWCA Civ 108, declared that it had no jurisdiction to grant permission to appeal where the High Court judge had refused permission.
• High Court, Queen’s Bench Division (Commercial Court): On 10 July 2015, Andrew Smith J refused Integral’s section 67 application and refused permission to appeal.