Stockman Interhold SA v Arricano Real Estate Plc

Permission to appeal a first-instance decision on challenges to an arbitration award under sections 67 and 68 of the Arbitration Act 1996 should be granted only where the proposed appeal has a real prospect of success. The statutory scheme generally militates against a further appeal after the parties have chosen arbitration and already had a hearing before the tribunal.

An application based only on the alleged misapplication of settled principles to the facts will rarely raise a suitable point for appellate consideration. An arbitrator is not functus officio where the award properly reserves jurisdiction or is provisional in relation to a remedy. A court may refuse remission where the proposed argument is not reasonably arguable.

Stockman applied for permission to appeal from the judgment determining its challenges to arbitration awards involving the scope of a remission, the arbitrator’s jurisdiction to award damages, alleged ad hoc submission and waiver, functus officio, and a fraud challenge.

The proposed appeal challenged factual applications of settled principles concerning the remission and the parties’ correspondence. It also challenged the construction of the arbitrator’s Second Award and the conclusion that no substantial injustice had been established in relation to the Fifth Award.

1. Permission to appeal. On a challenge under sections 67 or 68 of the Arbitration Act 1996, permission from the Commercial Court judge who heard the challenge is required. The governing test is whether the proposed appeal has a real prospect of success. The arbitration legislation’s general philosophy militates against a further appeal after the parties have been heard by their chosen tribunal.
2. Scope of the remission. The remission required the arbitrator to reconsider the validity of the exercise of the Call Option and, if the conclusion was revised, to determine the orders and remedies flowing from that conclusion. It was not confined to the previously identified damages claim. The challenge raised no novel point of law and had no real prospect of success.
3. Ad hoc submission and waiver. The reference in the correspondence could not be read as limited to damages in lieu of specific performance. The arguments concerned the application of settled law to the facts and were unsuitable for permission.
4. Functus officio. The arbitrator retained jurisdiction over damages in lieu because the Second Award expressly reserved that jurisdiction and was provisional in that respect. He also retained jurisdiction over damages in addition to specific performance where the escrow arrangements were not complied with. The proposed contrary construction of the Award was rejected.
5. Fraud challenge. The relevant question was whether the proposed argument that a condition precedent had not been satisfied was reasonably arguable. The court was entitled to determine that question when refusing remission. Stockman’s attempt to rely on new points concerning the independence of the depositary parties and the terms of the deposit could not overcome the weakness of the original complaint.
6. Permission to appeal was refused on all grounds.

The judgment concerned Stockman’s application for permission to appeal from an earlier judgment of the same Commercial Court judge. No citation for that earlier judgment is stated in the judgment.