State A v Party B & Anor

An application to extend the statutory time limit for challenging an arbitral tribunal’s jurisdiction engages the discretionary factors identified in Aoot Kalmneft v Glencore International AG. The court must give substantial weight to party autonomy, finality, and avoidance of delay and expense. The strength of the proposed challenge is generally not a primary factor, but becomes a primary factor where the delay is substantial. Where fresh evidence is relied upon after very extensive delay and major expenditure, it must be sufficiently transformational to justify reopening the jurisdictional issue. Evidence which merely adds another contrary indication, without changing the overall aspect of the case, will not suffice.

State A applied under sections 70(3) and 80(5) of the Arbitration Act 1996 for an extension of the 28-day period in which to challenge an arbitral tribunal’s jurisdiction under section 67. The tribunal had issued a partial award on jurisdiction in 2015. No challenge was made, and the arbitration proceeded through extensive preparation and a lengthy merits hearing.

State A relied on a document obtained in related proceedings and argued that it materially undermined the tribunal’s jurisdictional conclusion. The application was issued 959 days late. The central issue was whether the delay and the progress and cost of the arbitration could be overcome by the strength of the proposed challenge and the fresh evidence.

1. The application was dismissed. The relevant discretion under section 80(5) was governed by the seven considerations identified by Colman J in Aoot Kalmneft v Glencore International AG: the length of delay; whether the applicant acted reasonably; whether the respondent or tribunal caused or contributed to delay; additional irremediable prejudice; continuation and cost of the arbitration; the strength of the application; and broader unfairness.

2. Those considerations must be applied in light of the statutory policy of party autonomy, finality of arbitral awards, and avoidance of unnecessary delay and expense. The delay in this case was colossal, and the respondents would suffer substantial prejudice through wasted expenditure and further delay.

3. The strength of the proposed section 67 challenge is not ordinarily a primary factor. However, where there has been substantial delay, it becomes one of the primary factors. The longer the delay, the more transformational the fresh evidence must be. No separate, specially formulated fresh-evidence factor was required.

4. The newly obtained letter was capable of making the challenge arguable, but it did not transform the case. The tribunal’s reasoning was based on its independent assessment of the evidence and would have remained unchanged if the letter had been available. The letter would have been treated as one of the possible contrary indications already considered by the tribunal.

5. The tribunal’s partial award therefore stood, and the extension of time was refused.