Berkeley Burke Sipp Administration LLP v Wayne Charlton & Anor

An agreement is an arbitration agreement only where the dispute is submitted to a third party for resolution in a manner binding on the parties. A process under which a complainant may accept or reject an ombudsman’s decision does not satisfy that requirement. The possibility of a further arbitral tier does not alter the position where the dispute will ultimately be resolved by arbitration and the resulting decision will bind the parties. An ombudsman’s decision under the Financial Ombudsman Service scheme is therefore not an arbitration award merely because the parties agreed to follow that scheme’s procedure.

Berkeley Burke SIPP Administration LLP sought permission under section 69 of the Arbitration Act 1996 to appeal against a decision made by an ombudsman of the Financial Ombudsman Service. The decision concerned Wayne Charlton’s complaint about losses suffered through a self-invested personal pension.

The parties had agreed that the complaint should be reconsidered after an earlier ombudsman’s decision was accepted as vulnerable to judicial review. The central preliminary issue was whether the later decision had been given pursuant to an arbitration agreement within section 6 of the Arbitration Act 1996.

1. The court determined that the 2014 agreement was not an arbitration agreement within section 6 of the Arbitration Act 1996. The parties had agreed to follow the Financial Ombudsman Service procedure, under which the ombudsman’s decision became binding only if the complainant accepted it.

2. The court held that this optional acceptance was decisive. The ombudsman was not given authority by the parties to determine the dispute in a manner binding on both of them. If the complainant rejected the decision, he remained free to pursue any legal remedy in court.

3. Section 58 of the Arbitration Act 1996 did not assist the applicant. The words allowing the parties otherwise to agree presupposed an arbitration agreement. They accommodated arrangements involving successive arbitral tiers, such as an initial tribunal followed by an appellate tribunal, because the dispute would ultimately be resolved by arbitration in a binding manner.

4. The reasoning was supported by David Wilson Homes v Survey Services [2001] EWCA Civ 34, and the court respectfully agreed with the approach in Clark v Argyle Consulting Limited [2010] CSOH 154. The court also concluded that the Financial Ombudsman Service had power to reconsider the complaint as part of its statutory duty, although that issue was not determinative of the section 69 application.

5. The ombudsman’s decision was not an arbitration award. The application for permission to appeal under section 69 was dismissed.