Union Marine Classification Services v Government of the Union of Comoros

An arbitrator becomes functus officio only after finally determining the whole issue referred to him. Whether an award is final must be assessed by reading it as a whole, including its reasons and operative provisions, in their procedural and commercial context. Isolated wording that appears to dispose of every claim does not control if the award was directed to a narrower issue and overlooked a separate claim. The Arbitration Act 1996 permits an obvious oversight concerning an unresolved claim to be corrected by an additional award. Permission to appeal should be refused where, even assuming jurisdiction to hear the appeal, there is no real prospect of success on the merits and further proceedings would serve no useful purpose.

The Government of the Union of Comoros terminated an agreement with Union Marine Classification Services. An arbitrator later held that the termination was wrongful. In a further award, made under section 57 of the Arbitration Act 1996 or paragraph 25 of the LMAA terms, he dealt with the Government’s overlooked claim for an account and damages for unpaid fees.

Union Marine applied under section 67 of the Act to set aside the further award, contending that the arbitrator had become functus officio on publishing the first award. The High Court dismissed the application, held that section 67 did not apply, refused an extension of time for a section 68 application, and considered that the challenge would fail on its merits. The central question was whether the first award had finally determined the whole issue submitted to arbitration.

1. Permission to appeal refused. Even assuming that the Court of Appeal had jurisdiction to entertain an appeal under section 67(4) of the Arbitration Act 1996, the proposed appeal had no real prospect of success. Further argument on jurisdiction would have caused costs without useful purpose.
2. An arbitrator becomes functus officio when the whole issue submitted to him has been determined. The question is whether the first award, properly construed, finally disposed of the matters referred.
3. An award must be read as a whole. Its operative provisions and individual paragraphs must be understood in the context of its reasoning, the issues identified for determination, and the procedural history. The court should avoid a piecemeal construction based on passages which, read alone, appear comprehensive.
4. Here, the award was directed to liability, principally whether either party had repudiated the agreement. The passages relied on by Union Marine, including paragraph 72 and the statement that the Government’s counterclaims failed, concerned repudiation and did not finally determine the separate accounting claim for outstanding fees. The arbitrator had overlooked that claim. His further award therefore corrected an obvious oversight and was within the corrective power conferred by section 57(3)(b) of the Act.
5. Lord Justice Tomlinson agreed, observing that it would be a serious affront to arbitration law if an arbitrator lacked power to correct an obvious error of this kind. The application for permission was accordingly refused.

• High Court of Justice, Queen’s Bench Division: Eder J dismissed the section 67 application, refused an extension of time for a section 68 application, and held in any event that the arbitrator had not become functus officio.
• Court of Appeal (Civil Division): Permission to appeal was refused. The court assumed jurisdiction for the purpose of assessing prospects of success and declined to pursue further argument because the appeal had no real prospect of succeeding.