Merthyr (South Wales) Ltd v Cwmbargoed Estates Ltd & Anor

Permission to appeal an arbitral award on a point of law under section 69 of the Arbitration Act 1996 is exceptional. For a private, one-off contractual construction, the general-public-importance route will ordinarily be unavailable. The applicant must show more than an arguable or respectable alternative construction. The award must be shown to be obviously wrong, normally from the award itself and any document it refers to which the court needs to read. The court should not conduct a detailed re-hearing of the construction issue or investigate the factual matrix through extensive evidence. Applications should normally be determined on paper.

The claimant applied under section 69 of the Arbitration Act 1996 for permission to appeal an award concerning production-related rent under a 999-year coal-mining lease. It also brought a separate section 68 application alleging serious irregularity.

The arbitrator, a chartered surveyor experienced in minerals, construed the lease as requiring rent to be calculated by reference to the average selling price of coal sold from the Cwmbargoed Disposal Point, including the coal-washing premium and price-sharing mechanism. The claimant contended that the relevant tonnage and price related to coal extracted from the demised land. The issue was whether the award satisfied the statutory threshold for permission to appeal.

1. Application refused. The claimant had not demonstrated that the award was obviously wrong. Permission to appeal under section 69 was refused. The section 68 allegations were left to be listed separately.
2. Construction of a private contract is a question of law. The question had been submitted to the arbitrator and its determination would substantially affect the parties’ rights.
3. The general-public-importance route under section 69(3)(c)(ii) was unavailable. The construction of a one-off private lease was not a question of general public importance.
4. The applicable test was whether the arbitrator’s decision was obviously wrong. That requires more than a competing construction or a decision which might be wrong. The error must ordinarily be apparent from the award, read with only the contractual material needed to determine the legal question.
5. The court should not turn the permission application into a construction summons by conducting a minute textual analysis or forensic examination of evidence which it had not heard. The parties’ choice of arbitration, the arbitrator’s specialist expertise, and the statutory policy of finality supported leaving the award undisturbed.
6. Section 69(5) establishes a normal paper procedure. A rolled-up process combining permission, the substantive appeal and section 68 issues is exceptional. Here the section 68 allegations concerned procedural evidence, whereas the section 69 issue concerned contractual construction.

First-instance application for permission to appeal an arbitral award under section 69 of the Arbitration Act 1996. A separate section 68 application was directed to be listed for hearing.