Sino Channel Asia Ltd v Dana Shipping and Trading PTE Singapore & Anor

Under Arbitration Act 1996, a person who did not participate in an arbitration may challenge the tribunal’s constitution and the matters submitted to arbitration under section 72(1), even after an award has been made. That application is not subject to the 28-day limits applicable to challenges under sections 67 and 68. A general authority to manage or perform a contract does not ordinarily include authority to accept service of a notice commencing arbitration. Nor will silence, inaction, or an arrangement for a third party to pay the award ordinarily amount to ratification where the tribunal was not properly constituted and the alleged principal did not participate. An award made without jurisdiction may be set aside as other appropriate relief under section 72(1).

Sino Channel had signed a contract of affreightment containing a London arbitration clause. Dana purported to commence arbitration by sending notices to Daniel Cai, an employee of Beijing XCty, a separate company that handled the operational aspects of the contract. Sino Channel did not receive the notices or participate. The arbitrator proceeded as sole arbitrator and made an award in Dana’s favour, which Sino Channel first learned of when it was sent the award.

Sino Channel applied under section 72(1) of the Arbitration Act 1996 for declarations and an order setting aside the award. In the alternative it applied under sections 67 and 68, seeking an extension of time. The issues included whether the application under section 72(1) was available after an award, whether Cai or Beijing XCty had authority to accept service, and whether Sino Channel had ratified the purported arbitration.

1. Section 72(1). The application was available after the award had been made. The reasoning in The Prestige was accepted. Section 72(1) was not confined to interlocutory applications before an award, and no statutory time limit applied to it. A person who did not participate could wait until enforcement proceedings before challenging the arbitration.
2. Actual authority. The principles in Hely-Hutchinson v Brayhead Ltd applied. Although Beijing XCty and Cai had general authority to act in connection with the contract, the authority to accept a notice commencing arbitration was materially different. Such a notice triggered significant legal consequences, including the constitution of the tribunal, statutory powers and duties, and the final and binding effect of an award. General authority to handle contractual performance did not, without more, include authority to accept service. There was no implied actual authority.
3. Ostensible authority. The principles in Freeman & Lockyer v Buckhurst Park Properties (Mangal) Ltd and Hely-Hutchinson v Brayhead Ltd were applied. Sino Channel had not made, expressly or by necessary implication, a representation that Cai or Beijing XCty had authority to accept an arbitration notice. The facts therefore did not establish ostensible authority.
4. Ratification. The principles summarised in SEB Trygg Holding Aktiebolag v Manches required an unequivocal act and clear evidence of adoption or recognition. Mere silence and inaction could not ratify an award where the tribunal was not properly constituted and the alleged principal had not participated. The arrangement that Beijing XCty would settle the award did not unequivocally adopt Cai’s unauthorised receipt of the notice. The reasoning in Dallah Real Estate and Tourism Holding Company v The Ministry of Religious Affairs, Government of Pakistan supported that cautious approach.
5. The tribunal was not properly constituted and the award was made without jurisdiction. Setting aside the award was “other appropriate relief” under section 72(1). The applications under sections 67 and 68 were out of time, and the applications for an extension were rejected.